Rome, Ga.-based Peach State Labs (PSL) introduced itself to the U.S. biodiesel industry June 2, unveiling a bold plan to produce as much as 36 mmgy by early 2005. In addition to oilseed feedstocks, PSL will utilize chicken grease, recycled vegetable oil and high-fat content oils in the production of biodiesel.

Relatively unknown in the biodiesel industry before the announcement, PSL joins several companies delving into production ventures this year. However, despite being a new name in biodiesel production, the company is not inexperienced. PSL has been in business since 1987 and has a track record of innovation and leadership in the development of chemical products for a variety of industries. The company's history of success will undoubtedly help it cross over into renewable fuels.

The combination of industrial processing and environmental stewardship is part of PSL's tradition. In addition to biofuels production, the company services customers worldwide, focusing on key industries that include flooring, textiles, coatings and paints, consumer products, leather and institutional water treatment. In fact, the company holds over 20 federal patents and has a solid record of compliance with all federal, state and local statutes.

Environmental responsibility is a top priority with all PSL products. PSL's chemicals are developed with solution-based results, ensuring that the products are durable, safe and environmentally sound. With a focus on "green" products, as well as its core capabilities, PSL enters the biodiesel industry at a time of notably high consumer demand for clean, affordable fuels.
"Peach State Labs is producing biodiesel in response to rising [petroleum] prices … and strong customer demand," said Rick Sargent, president and CEO of PSL. "We also have a desire to produce environmentally-friendly products."

As much as 36 mmgy
The company is on track to produce 60,000 gallons of its trademarked "SoyMet" biodiesel this summer. Production is expected to increase to 3 million gallons per month by the end of the first quarter of 2005, according to Sargent. He added that the SoyMet product line offers zero petroleum toxins, lower emissions, low sulfur (it has 0.0003 percent sulfur), and 17,000 Btus per pound (equivalent to No. 6 fuel oil).

High petroleum prices driving market
One factor that makes biodiesel production attractive to PSL is the current and projected prices of petroleum products. Sargent suggests that the price of fuel in Europe, where petroleum diesel is around $5 per gallon, is a sign of what's to come in the United States.
"The price of oil just won't be getting cheaper," he said. "The days of gasoline under $2 per gallon will soon be behind us."

The primary reason for this projection is the fact that demand is sharply increasing; yet oil production has peaked, or will peak soon. This disproportionate demand is largely due to a global population increase and the industrialization of Third World countries. According to Sargent, China, India and Russia are expecting growth of 15 percent to 18 percent in the very near future, creating further burden on the global petroleum supply.

"The increased demand for oil is problematic for those who want low prices because the discovery of oil, and its production, will peak in the near future," said Sargent, adding that North American oil production peaked in the 1970s, South American production peaked in the 1980s and Middle Eastern oil production will peak around 2020. "Then, take into account the fact that natural gas prices continue to rise. This provides a great opportunity for PSL and other biofuels producers to step in and create a supply chain to manufacturing plants now."

Incentive needed
For the biofuels industry to truly prosper, it needs more than rising energy prices. It needs legislative support.
"The high energy prices present a great opportunity for the U.S. government to help agriculture and really address the nation's energy challenges," Sargent said.

Passing an energy bill with a Renewable Fuels Standard, along with incentives for agriculture and other similar measures, are ways in which the government, according to Sargent, should get involved in helping the biofuels industry flourish.

Entering at right time
The actions of corporations such as Archer Daniels Midland Co. and Cargill Corp. may indicate what the future holds. "These companies are buying soybean and plant oil futures further out, so it's fairly apparent where they see the future headed," Sargent said. PSL too has been working to secure long-term commitments of soybeans from Brazil.

PSL is very optimistic that, especially with the escalating pricing trends in the petroleum market, they are entering the biodiesel market at the right time.

"We should be able to make a profit and help reduce sulfur emissions at the same time," Sargent said, explaining that the company's goal is to market its fuel for use in B25 blends. "In a B25 mix, with No. 6 or No. 2 diesel fuel, the same power is produced, but the biofuel has virtually no sulfur. The fact is, with our blend, we are able to reduce sulfur emissions and compete in [the market]."

Fuel for process energy
PSL's primary customers will be manufacturing plants, where the fuel can be used as a plant boiler feedstock. "Right now natural gas is the only clean fuel manufacturers can burn, but the price is rapidly increasing," Sargent said.
Diesel fuel, on the other hand, isn't clean and its price is increasing as well. "Biodiesel, however, is competitive in price to natural gas and can meet or exceed 2015 air standards implemented by the Environmental Protection Agency," Sargent said. "By 2015, biofuels should be cheaper too."

PSL is currently focusing its marketing efforts in Georgia but expects to expand that focus as production increases. "Being located in Georgia makes the rollout in Georgia easier. Georgia is also a ripe market with air quality restrictions and a solid demand for alternative fuels," Sargent said.

PSL will kick off its production efforts at its Rome, Ga., facility. The company also recently acquired a plant in Dalton, Ga., which will help it meet its production goal of 3 million gallons per month by 2005.

Increased demand for energy products, rising prices for petroleum-based products and natural gas and a greater emphasis on the environment makes PSL optimistic about the future of biofuels.

"Our production target is to go as far as we can. It is possible we will produce even more [than 36 mmgy] in the future," Sargent said. "The fact is, the needs for alternative fuels will continue to increase, and there is currently tremendous room for renewable plant source fuel."
"Economically, it just makes sense for us, and others, to produce biofuels," Sargent said. "The whole country, not to mention the environment, benefits."

The National Biodiesel Board reported in its newsletter that increased use of American-made fuels like biodiesel and ethanol would generate an additional $71 billion of income for the United States over the next 15 years through increased gross production and job creation. That promising outlook is encouraging to Sargent.

"The biofuels industry is on the cusp of achieving great success," he said. "As soon as the government realizes this, I think that will be a major step forward."