There's a great deal of crossover interest in biodiesel and ethanol, and that's reflected in the fact that hundreds of Biodiesel Magazine readers also subscribe to Ethanol Producer Magazine (EPM). Both magazines are published by BBI International, and each is a first-rate publication on a steep growth curve. EPM's monthly page count and soaring circulation have mirrored the U.S. ethanol industry's expansion. I sing praises for BBI's other magazine not simply because I'm proud of it-although I am-but because its monthly content serves as a sort of industry benchmarking tool. In addition to BBI's up-to-date plant lists, EPM's exacting construction reports, and coverage of plant groundbreakings and start-ups, are second to none. Our team prides itself in producing accurate reports with great consistency. 
 
 Biodiesel Magazine is younger than EPM, and so is the industry it serves. Nevertheless, our editorial staff is committed to providing the same type of accurate, scrupulous reports on biodiesel plant construction, start-ups and production. However, even though the U.S. ethanol industry is 10 times larger than the U.S. biodiesel industry, the latter has proven to be more difficult to report on in many respects.
 

 Some say the U.S. biodiesel industry is a decade behind the U.S. ethanol industry in terms of its maturation and build-out. I don't think so. In my opinion-leaving irrelevant volume comparisons aside-the vivacious American biodiesel industry is only a few years behind its biofuels counterpart. If I'm right, a rather noticeable gap should be closing between the way project development, construction, permitting and production volume reporting practices are carried out in the biodiesel and ethanol industries. In other words, if the biodiesel industry's maturation level is trailing the ethanol industry as closely as I think it is, the manner in which biodiesel plants-both publicly and privately held facilities-are developed, built, brought on line and maintain production needs to become more uniform and predictable.
 
 I make this assertion not as an expert in either project development or production, but as an editor who oversees two trade journals in similar industries. Our entire editorial staff-now five reporters and three editors-are dually responsible for both magazines. Because the two magazines have similar departments and similar editorial styles, it's easy for us as writers and editors to spot the disparities between the industries represented by our publications. Here's what we see: The 25-year-old U.S. ethanol industry, now dominated by highly efficient dry mills, essentially operates like clockwork. The way plants are developed, financed, built and managed-while not utterly cookie-cutter-like-has a semblance of standardization to it. The size of ethanol plants, too, has become somewhat regularized by necessity. Small ethanol plants just aren't economically competitive anymore, and there aren't many of them left.
 
 Dry mills are developed, built and brought on line in a very mapped-out fashion. While it's not uncommon for developers to begin dirt work before equity and debt financing is completely wrapped up, an official groundbreaking ceremony is usually held when a plant is totally financed and construction is well underway. By and large, it takes about a year to build an ethanol plant. What happens next is very predictable: The new ethanol plant will quickly ramp up to its nameplate capacity-typically ranging from 40 MMgy to 100 MMgy-and probably surpass its nameplate capacity within weeks. A grand opening is held, which often includes a community event and tours of the facility. From that point, the ethanol plant will produce ethanol year-round-24 hours a day, 7 days a week-with the exception of planned and unplanned maintenance. With few exceptions, the ethanol industry is really that predictable. 
 
 Predictability is a good thing. Transparency is a good thing. I think the biodiesel industry could use a little more of each. When a project developer or builder says it's breaking ground on a plant, the industry needs to be able to believe it. When a plant comes on line, the industry and the public should be informed of the facility's production capacity, planned production targets and annual production totals. When plants expand, we should hear about that, too. 
 
 In my opinion, the biodiesel industry needs to follow the ethanol industry's lead on project development and production reporting practices. First, it would be beneficial to the entire industry to have better production numbers-both current and planned-for all U.S. biodiesel plants. BBI International is well respected for its project/plant tracking reports. However, it's extremely challenging to gather accurate production data on existing, under construction or proposed biodiesel plants because there's very little transparency in regards to actual production. Most U.S. biodiesel plants don't operate on a continuous basis and therefore produce below their maximum capacities. That means the public is often left in the dark, forcing people to estimate actual U.S. production totals. Furthermore, several U.S. biodiesel plants run intermittently, depending on the cost of raw materials, market conditions, pretreatment and process success, and perhaps available government funding.
 
 I think it's time for this to change. The biodiesel industry is ready for a new era of openness and pragmatic, managed growth. In Biodiesel Magazine's "Proposed Biodiesel Plant List: 2006," which ran in our June issue, we provided details on 65 would-be plants representing 1.46 billion gallons of potential new production. But what does that really mean? 
 
 In the ethanol industry, 1.46 billion gallons of planned capacity means just that; the only unknown would be the percentage of plants that succeed (i.e., get built) versus those that fail. In the biodiesel industry, however, the success rate of proposed plants isn't the only x-factor to consider. There's also the issue of plants producing far below capacity, and that turns market analysis into mushy guesswork. The trouble is, figuring out how much biodiesel is produced annually by existing producers isn't much easier. It's a problem I'd like to see the industry work on.

19-1294329291.jpg

Reporting actual production volumes should be standard practice in biodiesel industry

Editor's Note

Brie Mathews, a 12-year firefighter and paramedic, worked for three years to introduce the San Francisco Fire Department to biodiesel. After using biodiesel in her personal car, she said the idea to take it to the fire trucks came "out of a concern for my health, my coworkers' health and the health of the people we serve."
 
 This spring, her efforts paid off. The San Francisco Fire Department announced a six-month pilot program to test and monitor the use of B20 in six engines, two fire trucks and one ambulance. The program will take place in the southeastern section of San Francisco, an area that consistently experiences the city's poorest air quality. 
 
 "As firefighters and paramedics, our fire department has done well to protect us from the obvious toxins we're exposed to in fires and hazardous situations, but what I felt we are not so easily protected from are the toxic emissions we are exposed to in everyday fire and medical calls," Mathews said. 
 But the fire department is just one city department taking that leap. 
 
 In May, Mayor Gavin Newsom issued an executive directive designed to increase the pace of municipal use of biodiesel. He issued a directive that requires virtually all city diesel vehicles to run on B20. The city uses about 8 million gallons of diesel per year. 
 
 Among other things, the directive states:

 >Central shops and individual department fleet managers shall identify vehicle and equipment applications that can most quickly be transitioned to biodiesel, and shall make any necessary preparations. 
 >All diesel-using departments shall draft a report listing all diesel vehicles and diesel equipment, and send it to the Department of Environment and the mayor's office by July 1, 2006. 
 >All diesel-using departments shall begin using a B20 biodiesel blend as soon as practicable in all diesel vehicles and other diesel equipment, with the following incremental goals in each department's use of B20:
 >>Initiate and complete biodiesel pilot project by Dec. 31, 2006
 >>25 percent biodiesel use by March 31, 2007
 >>100 percent biodiesel use by Dec. 31, 2007
 Since 1999, the city's Healthy Air and Smog Prevention ordinance has established requirements for city fleets to purchase vehicles using alternative fuels or energy-efficient vehicles with low emissions. San Francisco now has more than 800 alternative fuel vehicles in its fleets.
 
 Several city departments and agencies have successfully used B20, including San Francisco Airport, the Department of Public Works, Muni buses and the San Francisco Zoo. Ferries operating out of San Francisco have also used B20 with excellent results.

San Francisco may experience cleaner air after implementing B20 in its city vehicles.

38-1294329295.jpg

San Francisco mayor announces citywide B20 plan

Minneapolis-based Crown Iron Works recently signed a contract to design a 100,000-tons-per-year (27 MMgy) turnkey biodiesel and glycerin refining facility located in Kuantan Port, Malaysia. The plant, which started construction May 18, according to Finance Director Peter Williams, will use crude palm oil as a feedstock. The plant's owner, Australia-based Mission Biofuels, has secured a five-year off-take agreement for 250,000 tons of the biodiesel. Mission Biofuels also has a five-year contract for feedstock supply. Visit <a target="_blank" href="http://www.missionbiofuels.com.au>www.missionbiofuels.com.au"</a> for more information.

Crown Iron Works to design Malaysian plant

At a recent American Soybean Association teleconference, Ag Processing Inc. (AGP) Senior Vice President John Campbell said the biodiesel industry needs to be aware of its impact on feedstock supply. He said AGP's statistics show approximately 265 MMgy of biodiesel capacity in operation or under construction with an expected 150 MMgy to be produced this year. Seven hundred million pounds of new annual soy oil demand, which would make about 96 million gallons of biodiesel, increases the feedstock by 3 cents per pound.

AGP expects tightening soy oil supplies

A study recently compiled by Diesel Technology Forum (DTF), using data provided by Polk Automotive Intelligence, shows that the number of registered light-duty diesel vehicles in the United States jumped 31 percent in 2005 over the previous year. In 2004, slightly more than 33,500 light-duty diesels were registered, compared to more than 44,000 in 2005. Vehicles in the light-duty diesel category include the Mercedes Benz E-320; the Jeep Liberty; and the Golf, Jetta, Beetle, Passat and Touareq models from Volkswagen.

Study shows LD diesels gaining popularity

In early May, Cargill Inc. announced plans to step up its European rapeseed crush capacity by constructing a new €50 million (approximately US$64 million) at its existing site in the port of Montoir, France. The facility will crush more than 1.3 billion pounds of rapeseed per year, 80 percent of which will be pipelined to Diester Industries-Cargill's strategic partner-for biodiesel production in France (see Business Briefs). Construction is expected to begin in late 2006.

Cargill plans news crush facility in France

International agricultural company Blue Diamond Ventures Inc., formerly Puma Energy Inc., announced its intentions to enter the renewable fuels industry. The company is planning to build a 5 MMgy biodiesel facility in the Caribbean nation of Belize and an ethanol plant in Oklahoma. The biodiesel would be manufactured from soy, canola and palm oils, and animal fats processed at Blue Diamond's facilities.

Blue Diamond to build plant in Belize

Suncor Energy Inc. has signed a contract to supply the Toronto Transit Commission's (TTC) fleet of 1,491 buses with biodiesel through the end of 2007 to meet a clean air initiative in the city of Toronto. Biodiesel use is the next step in providing sustainable energy solutions in  Ontario, according to a Suncor Energy press release. "Using biodiesel fuel in TTC buses will contribute to cleaner air in Toronto," said Don Smith, director of distribution and national sales for Suncor.

Toronto Transit runs buses on Suncor biodiesel

Greenergy International Ltd., a London fuel supplier that offers biofuels, said the company saved more than 40,000 metric tons of carbon dioxide emissions in the first quarter of 2006, according to Alex Lewis, head of communications for Greenergy. The Edinburgh Centre for Carbon Management made the assessment based on the sale of about 4.5 million gallons of biofuels sold by the company during that time period. The British government has proposed companies should supply details of carbon savings.

UK fuel company quantifies emissions savings

Husky Terminal & Stevedoring, an international shipping terminal at the Port of Tacoma in Washington, is now using B20 in its cargo equipment, according to Michael Wasem, media relations manager for the port. The terminal plans to increase to B40 sometime this summer. Before switching to a biodiesel blend, Husky used about 11,200 gallons of low-sulfur diesel per month, 20 percent to 40 percent of which will now be replaced by biodiesel, Wasem said.

Shipping terminal moves to biodiesel blend in Washington

South Dakota Soybean Processors LLC (SDSP) and Australian-based Transocean Group Holdings PTY Ltd. recently incorporated High Plains Biofuels, a proposed 40 MMgy biodiesel facility adjacent to the SDSP soybean processing facility in Volga, S.D. Rodney Christianson, CEO of SDSP, expects site preparation to start this summer and full construction to start in late 2006. At press time, the company  hadn't selected a process technology provider or contractor, or acquired necessary permitting. The company plans to start production in early 2008.

High Plains Biofuels proposed in South Dakota

The bill to mandate biodiesel in California narrowly passed a third reading on the state senate floor June 1. If passed, the bill would mandate 2 percent of the state's diesel fuel to be renewable diesel by 2008, and 5 percent by 2010. In this bill, "renewable diesel" refers to more than just biodiesel, a clarification requested by the California Energy Commission to allow for technological advances in renewable fuels. At press time, the State Assembly had not referred it to a committee.

California biodiesel mandate passes senate

Six members from the Ford EXP & Lincoln LN7 Owners Club are modifying a small manufacturer's diesel engine to power a 1986 EXP exclusively on B100, in hopes of setting a land speed record at the Bonneville Salt Flats in the Biodiesel G/GT Class. According to club administrator Tony Landi, the group needs $5,000 to finish the vehicle modifications before attempting to exceed 100 mph in the biodiesel-powered EXP. For more information, visit <a target="_blank" href="http://www.GreenEXP.org">www.GreenEXP.org</a>.

Auto club members look to set biodiesel speed record

Chevron Technology Ventures LLC-a subsidiary of Chevron Corp.-has purchased a 22 percent equity stake in Galveston Bay Biodiesel LP, a 20 MMgy biodiesel refinery that recently started construction on Galveston Island, Texas. According to Chevron spokesman Leif Sollid, the oil company's equity stake amounts to an investment of $3.5 million. The plant is being designed and built to accommodate future large-scale increases in capacity-up to 100 MMgy, Chevron claims. According to Jenny Ligums, vice president of sales and marketing with Galveston Bay Biodiesel, production is expected to begin in November. 

 
 GeoGreen Fuels LLC has also begun construction on its 3 MMgy biodiesel production facility east of San Antonio in Gonzales, Texas. "[Our technology is a] CF-series process unit with Active Ion waterless technology and real-time automated control," explained director Kathryn Kartchner.
 
 South of San Antonio, SMS Envirofuels Inc. just finished expansion work at its biodiesel plant in Poteet, Texas, said David Pearce, director of operations at the plant. SMS Envirofuels expanded capacity from 1.5 MMgy to 6 MMgy. Pearce said the project was slated to be complete in early June. The plant uses a "continuous parallel batch" process. 
 In Roaring Springs, Texas, Sun Cotton Biofuels is expanding its biodiesel production beyond its current 2 MMgy capacity to 4 MMgy, confirmed part-owner Jerry Wilburn. He also said Sun Cotton Biofuels is expanding its cottonseed crush capacity on-site to ensure feedstock supply for the added biodiesel capacity.

20-1294329292.jpg

Various biodiesel projects underway in Texas

A company interested in both ethanol and biodiesel plants has completed its first project. Vanguard Synfuels LLC, a 15 MMgy biodiesel plant in Pollock, La., began production in mid-April, according to Darrell Dubrock, president and chief executive officer. 
 
 At press time, the facility was producing about 20,000 gallons per day, with a target of 40,000 gallons per day. A former anhydrous ammonia plant was retrofitted for the biodiesel facility, according to Tim Collins, chief financial officer. The plant was designed with the help of Process Technology Associates, an engineering firm in Florida. 
 Vanguard Synfuels is made up of 24 member investors, including Dubrock and Collins. Many of the investors are in the forestry and logging business. In the beginning, that connection led the group to focus on ethanol production. "The original intent was to produce ethanol from gasification of wood chips," Dubrock said. 
 
 The group researched the commercial viability of producing ethanol from gasification of wood chips for about a year and a half, and even operated pilot plants in Denver Colo., and Aberdeen, Miss. Ultimately, the shift to biodiesel production was made until cellulosic ethanol technologies matured. "We decided that it wasn't quite commercially viable yet," Dubrock said. 
 
 The company is looking at the possibility of building a 100 MMgy biodiesel plant elsewhere in Louisiana. At press time, they weren't ready to give specifics, Dubrock said. 
 There are also plans for an eventual expansion of the Pollock facility. The plant is well situated for transportation, with a Union Pacific rail spur on-site. Barge transportation agreements were being worked on for nearby ports, Dubrock said.

23-1294329292.jpg

Louisiana biodiesel project heads toward full production

Kanza Energy LLC has started construction of a biodiesel production plant at the Goodland Energy Center, a 300-acre industrial development site outside of Goodland, Kan., according to Mark Justus, owner of the project development company ReNewable Energy Resources (RER). At press time, dirt work was underway, and major components were expected to arrive from De Smet Ballestra by mid-August. 
 
 Initially, Kanza Energy will produce 10 MMgy. However, the company decided in late spring to increase production capacity to 22 MMgy, in part because it secured a long-term feedstock contract for the additional capacity, Justus said. The additional equipment should arrive from De Smet at the end of 2006. "We're confident that we'll be running the first phase [by January], and the second phase should come on five months after that," he told Biodiesel Magazine.
 

 The plant will enlist a national company for feedstock procurement and biodiesel marketing; however, no official contracts had been signed at press time. Animal fat and vegetable oils will be used as the feedstock, either at once or interchangeably. The process is a hybrid of batch and continuous flow. 
 
 The plant will also sign a national marketing group, but it has received significant interest from local co-ops and fuel distributors for the fuel. "Within the 60-day period that the plant was announced, we had commitments to take away 5 MMgy," Justus said.
 
 The biodiesel facility will be collocated with a coal-fired cogeneration electricity plant, which will supply steam, water and electricity to the biodiesel facility. The electricity plant will also service Ecaruso LLC, an adjacent 25 MMgy ethanol plant. Justus said construction for all three plants is underway. In addition, a soybean and canola seed crushing plant is being planned. RER expects to complete the engineering by the end of the year, Justus said. 
 
 Kanza Energy's precipitous timing avails itself to the new 30-cents-per-gallon biodiesel producer incentive, which was created by a senate bill that was signed by Gov. Kathleen Sebelius this spring. The incentive will be paid on a pro rata basis to qualified in-state facilities for every gallon of biodiesel sold. Producers will be able to file for the incentives July 1, 2007; the program will sunset July 1, 2016.

24-1294329292.jpg

Kanza Energy LLC starts construction

SoyMor Biodiesel LLC, a 30 MMgy biodiesel plant in Glenville, Minn., earned BQ-9000 accredited producer status in May through the National Biodiesel Accreditation Commission. BQ-9000 is a voluntary quality assurance program for biodiesel producers and marketers. 
 
 The actual accreditation doesn't mean as much as what it says about SoyMor's dedication to quality, according to Tim Sullivan, quality systems manager for West Central. "SoyMor employees are committed to using [BQ-9000] to improve their results, and that's where value comes from having the accreditation," he said. Renewable Energy Group, a partnership between West Central and Todd & Sargent, is providing management and other services for the plant.
 
 Sullivan complimented all SoyMor employees for their hard work during the development and implementation of the program. He added that he was confident it would work to continually improve both the biodiesel produced there and the daily operations at the plant. West Central is itself an accredited producer. 
 
 There are three reasons the program is important, Sullivan said. First, the BQ-9000 program is a quality management system that helps improve operational efficiency. It also provides assurance that the facility is consistently producing a product that meets ASTM D6751 specification for biodiesel. 
 
 Finally, the program has marketing advantages. "We believe that the customer market would prefer to buy biodiesel from a BQ-9000 verified facility," he said. 
 Being a BQ-9000 accredited producer makes the facility stand out among other producers as a plant that is making quality, superior product, said Paul Mattson, SoyMor operations manager. It is the first biodiesel plant in Minnesota to achieve accreditation and the seventh plant to be accredited overall. 

 
 It took about five months for the company to go through the accreditation process, which included creating a quality manual, according to Chad Miller, SoyMor operations supervisor. Typically, it takes about a year to complete, but SoyMor wanted to get it done quickly. 
 
 In April, Ag Processing Inc. (AGP) became the sixth BQ-9000 accredited producer, according to John Campbell, senior vice president. The company's Sergeant Bluff, Iowa, plant produces 20 MMgy, but is currently in the midst of an expansion project that will ramp up production to 30 MMgy. It has been producing biodiesel since 1996.
 AGP's accreditation was spurred by customer requests. "It's becoming more of a marketing requirement," Campbell said. In fact, some customers have asked for more stringent fuel quality standards. "We think [BQ-9000] is kind of a minimum standard," Campbell said. "For our purposes, we are going to provide more and better." The company recently developed a Gold Standard program, which Campbell said is more strict than the BQ-9000 program. "That is going to more clearly define for customers what our internal standards are," Campbell said. 
 
 The first five companies to became BQ-9000 accredited producers, in chronological order, are: West Central, Ralston, Iowa; Peter Cremer North America, Cincinnati, Ohio; Johann Haltermann Ltd., Houston, Texas; Imperial Western Products Inc., Indigo, Calif.; and Eastman Chemical Company, Arkansas operations, Batesville, Ark. For more information about the program, visit <a target="_blank" href="http://www.bq-9000.org">www.bq-9000.org</a>.

List of BQ-9000 accredited producers grows to seven

Biofuels developer Xethanol Corp. announced it has entered an agreement with H2Diesel Inc., in which Xethanol will deploy H2Diesel's proprietary biodiesel conversion technology under an exclusive license in North America, Central America and the Caribbean. Xethanol received equity in H2Diesel for its management role. In a separate agreement, Xethanol was granted a sub-license to produce and sell biodiesel using H2Diesel's biodiesel process in certain U.S. states. Under the agreements, Xethanol can also acquire a majority interest in H2Diesel.

Xethanol looks into biodiesel ventures

One of the largest U.S. biodiesel refineries is on line in Iowa Falls, Iowa. Owned by multinational agribusiness leader Cargill Inc., the 37.5 MMgy facility officially began biodiesel production in May, said David Feider, spokesman for Cargill's Grain & Oilseed Supply-North America business unit. 
 
 "We started production on May 15-that was a Monday, and we were prepared to transport our first railcar shipment that Friday," Feider told Biodiesel Magazine. 
 
 The newly built plant, constructed and designed by Lurgi PSI Inc., compliments Cargill's pre-existing soybean crush facility, which is adjacent to the refinery and provides the biodiesel plant with its feedstock.
 
 Cargill also added a glycerin refinery on-site, which will purify the company's byproduct to meet United States Pharmacopoeia (USP) standards, or pharmaceutical-grade glycerin. According to Feider, Cargill is marketing its own USP-grade glycerin and biodiesel. BQ-9000 certification is in progress.
 

 Cargill announced May 30 that it was building a new soybean processing facility in Kansas City, Mo., to replace its existing, yet aged, plant there. Construction is expected to begin this summer with completion of the processing center slated for first quarter 2008. The new facility will boost the company's existing processing capacity of 95,000 bushels per day to 165,000 bushels per day. 
 
 Across the Atlantic Ocean, at one of Cargill's existing sites in Port of Montoir, France, the company is preparing to build a new rapeseed crush plant, which will send oil via pipeline to Cargill's strategic partner Diester Industries for biodiesel production.

26-1294329293.jpg

Cargill starts biodiesel production

In a brownfield construction project, Blue Sky Biodiesel LLC has started retrofitting the old Emmet Valley Fruit building at the Jiano Industrial Park in New Plymouth, Idaho, in order to produce 1 MMgy of biodiesel there. However small, it would be the first biodiesel production facility in Idaho.
 
 Scott Burn, project engineer for Blue Sky, said retrofitting an old building as opposed to erecting a new facility was based primarily on time and cost. The plant will be equipped with multi-feedstock processing capabilities, utilizing virgin oils from soybeans, canola and rapeseed, as well as free fatty acids. 
 
 Blue Sky Biodiesel will market its own biodiesel, and has also overseen all aspects of construction and process engineering for the New Plymouth facility. Burn said the company is interested in pursuing BQ-9000 certification, but in-house quality control is expected to be more stringent than any national or organizational criteria. "We are excited to be a part of the industry and look forward to being the first biodiesel plant in Idaho," Burn said. 
 
 Although Blue Sky Biodiesel will be the first producer in the state, Idaho has had a B20 funding program for several years. It is designed to provide a public demonstration of the use of B20 for both fleet and individual vehicle users, in order to develop a B20 consumer market in Idaho. Funded by a grant from the U.S. DOE and the Community Planning Association of Southwest Idaho, the money is used to decrease the price difference between petroleum and biodiesel blends for partners in the demonstration project. The program began in May 2002 in the southwestern area of Idaho known as Treasure Valley, the state's largest metropolitan area that includes Boise. Later that year, the program expanded to the southern area of the state known as Magic Valley.
 
 Currently, there are three distributors of B20 in Idaho: Baird Oil Company Inc., United Oil and BriCo of Idaho. Likewise, there are three sites in Idaho and one near the Idaho/Oregon border where diesel drivers can purchase B20.

27-1294329293.jpg

Blue Sky Biodiesel starts construction in Idaho

In May, the Canadian provinces agreed to support the Conservative federal government's proposed renewable fuel standard of 5 percent renewable fuel in both gasoline and diesel by 2010. The biofuel strategy was announced in the election campaign of Prime Minister Stephen Harper, and his administration has worked with the Canadian Renewable Fuels Association (CRFA) to draft a proposal. 
 
 Since provincial endorsement, the federal government has been working with key industry groups to develop the details of the strategy. The completed document will be available for Parliament by July 24, according to CRFA Chairman Tim Haig. "We're feeling very positive that in this calendar year we'll have something in place," he said. 
 
 Although Minister of the Environment Rona Ambrose called the biofuel strategy and its timeframe ambitious, some are calling for even more. For example, the Canola Council of Canada is advocating a 2 percent biodiesel inclusion mandate within the renewable fuel standard. In a recent publication, the council detailed this and other suggested policy changes to support the biodiesel industry and prevent ethanol from edging out biodiesel.
 
 Meanwhile, Saskatchewan is lobbying for a 10 percent standard. "In Canada, we can easily meet our domestic needs without much effort," said Clay Serby, deputy premier of Saskatchewan. "Whether it's through oilseeds or biomass or potatoes, we think Canada could easily meet production needs of 6 billion liters by 2008 or 2009." He told Biodiesel Magazine that the feedstock necessary to meet the 5 percent mandate is just one-third of Saskatchewan's annual production of grains and oilseeds.

 
 As it stands, the proposal has endorsement from the three major political parties, as well as the Canadian Petroleum Producers Institute (CPPI). "This is a big step," Haig said.

Canadian Renewable Fuel Standard receives provincial approval

A retired engineer and his sons have built a biodiesel plant in Gans, Okla., and, at press time, anticipated the start of production to take place sometime in June. "We built it ourselves," Erik Davis said of OK Biodiesel. "My dad is a retired engineer, and my brother and I have been in construction pretty much all our lives."
 
 The final equipment will arrive for the completion of the facility in early June, Davis told Biodiesel Magazine. "We expect to install the centrifuge [the weekend of June 2] and have [the plant] fired up [by June 5]." 
 
 OK Biodiesel originally planned to offer its fuel at retail pumps on-site, but the arrangement with its marketer Basin Oil has accounted for all of the projected plant capacity, which is 10 MMgy. "We do have [pumps], but we are not going to use them," Davis said. "Our marketer has everything we can make sold, and then some."
 
 Commodities broker Kesterson Ag of Arkansas will market glycerin for the plant, according to Davis. The biodiesel produced by the facility will be ASTM grade, Davis said. The centrifuge for the batch process facility was purchased from Kyte Centrifuge, a chemical engineering company with offices in Houston and Orlando. "We plan to fill our tanks and have [biodiesel] ready for going out early next week," Davis said. 
 
 The facility will use soy oil as a feedstock and a batch system designed by OK Biodiesel. It will also have a feedstock storage capacity of 40,000 gallons and another 40,000 for finished product. "We are chomping at the bit to get this going," Davis said. "We are making an ASTM-grade product and can't wait to get started." 
 
 Currently, there is only one biodiesel producer in Oklahoma: Green Country Biodiesel Inc. in Chelsea. Earth Biofuels was in the process of opening a plant in Durant in early June.

29-1294329293.jpg

OK Biodiesel to start production in Oklahoma

Green Star Products Inc. announced it has signed a contract to provide engineering and construction services for up to a 60 MMgy biodiesel plant near Smithfield, N.C. The facility, which will initially be 10 MMgy, is funded and owned by Renewable Resources International. The plant site is located at a fuel terminal on the Colonial Pipeline, which carries fuel along the East Coast. TransMontaigne and Kinder Morgan currently distribute fuel at the terminal. The biodiesel facility is expected to use Green Star Products' newly developed conversion reactor, which the company claims takes less than two minutes to convert biodiesel.

Green Star Products slated to build North Carolina plant

Shortly after large agricultural player Louis Dreyfus Corp. announced it had started construction of an 80 MMgy biodiesel plant in Indiana, a smaller producer is ready to come on line in the state.
 
 Integrity Biofuels was charging its production system with water when Biodiesel Magazine talked with President Charles "Shorty" Whittington in early June. He was anticipating finished product leaving the Morristown, Ind., plant in mid-June, which put the project slightly ahead of schedule.
 
 Whittington said the plant will initially produce 5 MMgy, then ramp up to 8 MMgy or 9 MMgy. However, Whittington said the plant wouldn't ramp up until the fuel quality was assured. "We're here for quality," he said.
 

 The plant will be using refined soy oil from a nearby Bunge oilseed crushing facility. Whittington said it is one of the more modern soy crushers in the United States.
 According to Whittington, the plant's load-out and tank storage is capable of ramping up to 30 MMgy, although reaction tanks would need to be added to reach that capacity. The facility was partially constructed in an existing building.
 
 Whittington said in-house engineers designed the plant. "The biggest thing is automation," Whittington said. "We've spent considerable effort in programming." All motors in the facility have variable speed drives, Whittington said. This will allow the control center to maximize efficiency. The plant will also capture waste heat from the process and reclaim all excess methanol. 
 
 Morristown is located just east of Indianapolis in central Indiana. Louis Dreyfus began construction of its biodiesel facility in Claypool, 120 miles north of Indianapolis. Whittington said the Integrity Biofuels project isn't threatened by the Louis Dreyfus plant because of the expected construction timeframe for the Louis Dreyfus facility and the healthy biodiesel market. "Our quality and the market for our biodiesel will be well established," Whittington said. "We'll be able to run with the big boys."
 A ribbon cutting will be held Aug. 1. "We hope to have a lot of gallons under our belt by then," he said.
 
 More information on Integrity Biofuels can be found at <a target="_blank" href="http://www.integritybiofuels.com">www.integritybiofuels.com</a>.
 -Staff Report

30-1294329294.jpg

Integrity Biofuels closes in on start-up

In response to legislative initiatives that North Dakota hopes will make the state amenable to biodiesel producers, two new plants are under construction. All-American Biodiesel, founded by Lee Dirkzwager, has converted an abandoned school in York, N.D., into an office and testing laboratory for the production facility. Lee is also building two new structures, which will house material preparation and final filtration operations for the 1 MMgy plant. 
 
 Dirkzwager expects All-American Biodiesel to begin production in August. It would be the first commercial biodiesel plant in the state, and Dirkzwager already expects the facility to expand to 4 MMgy within three years. All-American Biodiesel will initially use soy oil as a feedstock, as well as canola in the future.
 
 "We came into a seven-acre site that included a 40-year-old school, so [retrofitting] the school is complete, and structurally we are 95 percent [complete] on the other two buildings." Dirkzwager said. "Now we will start on the electrical systems and do some more siding, and the delivery of reactors is scheduled for July."
 

 Dirkzwager would not comment on the process technology or the provider of the reactors for All-American Biodiesel facility. However, he did say his engineering firm, Colorado Webco, which has operations in Vail, Colo., Chicago and Minneapolis, was involved in some biodiesel engineering projects. 
 
 Elsewhere in the state, 80 miles west of York, Archer Daniels Midland Co. (ADM) has broken ground on an 85 MMgy biodiesel plant, adjacent to its canola crush complex near Velva, N.D. It would be the largest U.S. biodiesel plant when completed. The oil-crushing facility has already helped to triple production of canola in the region by providing a local market for canola oil. The biodiesel plant will create 12 full-time jobs when operational, according to a press release from North Dakota Gov. John Hoeven's office. 
 
 Construction on the Velva facility is expected to be complete by April 2007. It will ise the equivalant of 1 million acres of canola annually. ADM also installed a new roller at the crush facility, which will allow it to increase capacity. With more than 290 full-time employees, ADM has more than $165 million invested in production and grain facilities in North Dakota.
 The initiatives North Dakota passed last year to draw biodiesel production to the state included a $400,000 Biodiesel PACE (Partnership in Assisting Community Expansion) program, which will provide up to $650,000 in interest buy-down for a biodiesel plant, a sales tax exemption on all new processing equipment, an income tax credit for any fuel supplier that blends biodiesel fuel to the ratio of 5 percent, and a tax credit equal to 10 percent per year for five years of the seller's direct costs incurred to adapt or add equipment to their facilities for the ability to sell biodiesel blends. The state also has an Agricultural Commodity Processing Facility Investment Tax Credit equal to 30 percent of the investment in building a plant, up to a maximum of $50,000.

ADM, All-American Biodiesel break ground in North Dakota

A 2.5 MMgy biodiesel plant is under construction on five acres of land near East Dublin, Ga. Middle Georgia Biofuels Inc. should be completed sometime in June, depending on what happens during the final stages of construction, according to President Fred Young.
 
 Organizers worked for several years to bring the project to fruition. Then, in September 2005, construction began. Research into better production methods and alternative uses of biodiesel is a focus of the project, Young said. The group hopes to provide biodiesel to bus fleets, and other vehicles and equipment in the area. "We want to service the local school system and those kinds of things," he said, adding that the company plans to market the product itself. 
 
 Currently, the plan is to start out by using poultry fat as a feedstock, he said. However, the plant can process multiple feedstocks. Eventually, Middle Georgia Biofuels will probably take in soy oil, according to Young. 
 
 At press time, the company had five employees. Eventually, the plan was to increase that, but he wasn't sure by how much or when that might happen. 
 
 Young said biodiesel was a good market to be in and compared the birth of the biodiesel industry to the early years of the computer industry. "We think [biodiesel is] a good business to be in for the years to come," he said.

31-1294329294.jpg

Georgia biodiesel plant nears completion in East Dublin

North Carolina can add another hopeful biodiesel project to its list of smaller-scale plants in the planning or construction phase. Tommy Evans of Evans Environmental Energies told Biodiesel Magazine his 3 MMgy project has started the initial construction process in an industrial park in Wilson, N.C., which is located approximately one hour east of Raleigh.
 
 The project, which is slated to be complete in late 2006, is being placed in a new facility near an existing sweet potato processing plant, according to Evans. The project was initiated by Evans in mid-2005. The company was incorporated in January 2006 to build the biodiesel plant. Evans said a feasibility study was conducted and a business plan was written before the final go-ahead of the project. "I think there's a need for it," Evans said. "It's a win-win situation."
 

 Initial work began at the site in May. The plant, which will handle multiple feedstocks, is based on a batch production design. Evans said an engineer was hired to help develop the process technology needed to produce biodiesel.
 
 As of early June, Evans said initial dirt work was underway and a building permit was in hand. He told Biodiesel Magazine the company has spent considerable time lining up the necessary permits for the plant. Zoning changes were needed to approve building the facility. Evans said local regulatory officials had to add biodiesel to its regular use permit.
 The biodiesel plant is designed to easily expand upon completion. Evans said his company has an option on the site immediately adjacent to the plant. He did say the lack of railroad infrastructure near the biodiesel plant will be a limiting factor in possible future expansions.
 
 North Carolina has several biodiesel plants in the planning or construction stages. Piedmont Biofuels Industrial is in the midst of building a 1 MMgy facility in Pittsboro, N.C. Filter Specialty Bioenergy LLC is building a 1.6 MMgy plant near Autryville. The Grain Growers Cooperative Inc. has also been exploring a 30 MMgy plant near Mount Olive, N.C.

32-1294329294.jpg

North Carolina plant begins initial work

here's no question that federal legislation has driven much of the increased demand for biodiesel, but we shouldn't ignore another valuable driver-U.S. state legislation. Across the country, state governments are taking the lead in promoting the production and use of biodiesel. The National Biodiesel Board (NBB) has monitored more than 160 bills specifically addressing biodiesel throughout the various state legislative sessions. While not all the sessions have concluded, many states have already approved groundbreaking legislation.
 Iowa is one of many states this year that has enacted legislation that will significantly impact the use of biodiesel. Gov. Tom Vilsack signed into law two renewable fuels and infrastructure bills, HF 2754 and HF 2759 (see page 27).
 
 Gov. Christine Gregoire in Washington signed into law a 2 percent biodiesel volumetric requirement. The requirement goes into effect Dec. 1, 2008, or when feedstock grown in the state can meet the 2 percent requirement, whichever comes first. Similarly, California Gov. Arnold Schwarzenegger issued an executive order establishing a target of 20 percent renewable fuel use in the state by 2010.
 
 Colorado, Arizona, Hawaii and Maryland added requirements to the books for state fleets to use or give preference to biodiesel blends when available. Kansas will award qualified biodiesel fuel producers with a 30-cent-per-gallon incentive for each gallon they sell, beginning April 1, 2007. Arkansas provides for a 50-cent excise tax credit on B100 gallons used for blending, limited to the first 2 percent of total gallons of biodiesel blended. Meanwhile, Indiana's Gov. Mitch Daniels signed into law an extension of tax credits for production, blending and retail sales of biodiesel.
 
 Virginia passed a Biofuels Production Fund and Grant Incentive Program, while Georgia has defined biodiesel according to the ASTM standard for biodiesel. The state has made this public commitment to accept nothing less than the legal specification for biodiesel. 
 
 Biodiesel laws have also reached the world of heating oil. In New York, Gov. George Pataki signed a residential bioheat credit that takes effect in July. The bill provides for a state income tax incentive that allows homeowners to receive 1 cent per percentage of biodiesel blended into heating oil, not to exceed 20 cents a gallon.
 
 As a whole, bills have also included point of taxation clarification and authorization of studies; they also pertained to schools and buses, and biodiesel promotion. In addition, bills have provided for public lands for oilseed production, conversion allowances and an education fund. A detailed database of state laws and legislation is available to NBB members on the Members Only section of www.biodiesel.org. This valuable membership benefit catalogs current and proposed laws pertaining to biodiesel by state.

 
 As state energy policy brings volumes of biodiesel to various regions, it is increasingly important to advocate relentless fuel quality efforts. These ensure customer satisfaction and enhance biodiesel's reputation as a reliable, high-performance fuel. BQ-9000 remains the premier quality assurance program in North America, and has gained a remarkable amount of traction among biodiesel producers and distributors in recent months. For an update on BQ-9000 participation, visit www.bq-9000.org. 
 
 Many stakeholders have worked very hard to promote the use of biodiesel in their states, and they should be commended for their leadership. State energy initiatives are expected to play a larger role in energy policy, and the momentum for biodiesel gets stronger by the day.

State legislators play a vital role in biodiesel's growth

NBB In Sight

Ed Hegland, a soybean grower in Appleton, Minn., has waited for this news for years. The maker of his tractor, New Holland, has approved the use of B20 in all of its equipment using New Holland engines. It is the first original equipment manufacturer (OEM) to announce full support of B20 in all of the diesel engines that it produces. 
 
 The National Biodiesel Board (NBB) applauded New Holland's decision. "I am elated that New Holland has taken this step to show support for biodiesel, a farmer-grown fuel," Hegland, an NBB director, said. "Their customers asked for it, and they listened. I truly hope others will follow suit soon." 
 
 Dennis Recker, vice president of New Holland Agricultural Business in North America, voiced his support for the renewable fuel. "Biodiesel is the future," he said. "As the availability of fossil fuels becomes a greater problem, we need to look at alternatives. But they must also be cleaner, environmentally friendly alternatives. New Holland is renowned for its innovation and forward-thinking approach, and we are committed to bringing our customers the latest technology and the benefits [that come with it]."
 
 The NBB's close work with New Holland and other OEMs was instrumental to the company's decision to support B20. During the past several years, the NBB and the diesel engine, fuel injection and vehicle companies have engaged in extensive biodiesel research and testing programs to develop an informed, fact-based position on the use of up to a 20 percent biodiesel blend in diesel applications in the United States. Results can be found at www.biodiesel.org/buyingbiodiesel/guide/B20_Fleet_Recommendations.pdf. The effort was based on actual fleet experience with B20 in the commercial marketplace.
 
 In addition, the NBB and all the major vehicle, engine and fuel injection companies are engaged in a research program for new diesel technology. The program tests B20 and lower blends in the advanced diesel-engine platforms mandated by the U.S. EPA, starting with 2007 model year vehicles. 
 
 All major OEMs support B5 and lower blends, provided they are made with biodiesel meeting ASTM D 6751. A growing number are recommending the use of fuel from BQ-9000 companies. BQ-9000 is the NBB's biodiesel industry quality program. 
 
 New Holland has a track record of biodiesel support. In 2003, New Holland was the first large farm equipment company to join the Biodiesel Alliance that connects the widespread support base for biodiesel. The Biodiesel Alliance includes agricultural and health groups, as well as businesses. New Holland also awarded use of its tractors to the nation's two top recruiters of the Biodiesel Alliance.

Hegland refuels his New Holland tractor with biodiesel on his farm

34-1294329295.jpg

New Holland becomes first equipment maker to fully approve B20

The air Fort Lauderdale area residents breathe is a little bit cleaner, thanks to the efforts of Fort Lauderdale Hollywood Airport. Years ago, it was the first Florida airport to implement a clean air shuttle service. Now, the airport has expanded its cleaner-burning fleet and recently hosted a forum to teach other area fleets about the benefits of biodiesel. The National Biodiesel Board (NBB) participated in this forum and presented awards to area biodiesel champions. 
 

 Fort Lauderdale Hollywood Airport has used B20 since March 2004. Today, the fuel powers its fleet of three trams and 56 diesel buses. That includes five hybrid electric-diesel buses recently introduced into the fleet. 
 
 "We use B20 because it reduces emissions with performance that is virtually identical to diesel," said Randy Bond, general manager for ShuttlePort, which services the airport. "I would recommend B20 to any fleet manager." 
 
 The Community Transportation Initiative (CTI) and Fort Lauderdale Hollywood Airport hosted the "On The Road to Clean Air Bus Launch Celebration & CTI Biodiesel Forum." The NBB awarded the office of Rep. Clay Shaw, R-Fla., for his leadership in helping CTI, and also honored the airport for achieving the vision of an environmentally friendly airport shuttle service. The NBB also presented an award to the Broward County Board of County Commissioners, recognizing the airport's successes.
 
 Facilitated by the University of South Florida Center for Urban Transportation Research, the forum provided the opportunity for potential users to learn about the rapidly emerging and expanding biodiesel market. A panel discussion about quality assurance and the development of a sustainable market was led by representatives from the NBB, the Florida Department of Agriculture and Consumers Services, and the Coastal Fuels Marketing Group.

Ft. Lauderdale Hollywood Airport hosts forum on its clean shuttles; receives NBB recognition

Home heating oil blended with biodiesel has recently become more popular in the Northeast, as well as other parts of the country. Now this product has a standard term. The National Biodiesel Board (NBB) has purchased the term "bioheat" for use in signifying home heating oil blended with biodiesel. 
 
 The National Oilheat Research Alliance (NORA) can also use this trademarked name. At its board meeting in May, NORA finalized a sublicensing agreement with the NBB, and will work on broadening the reach of bioheat by managing the trademarked term. To make this emerging industry uniform, NORA and the NBB collaborated to make the term bioheat have some teeth, according to Paul Nazzaro, the NBB's director of petroleum affairs. 
 
 Nazzaro predicts bioheat's demand will inevitably rise. "Bioheat is the beginning of a new era for oilheat," he said. "Through the cooperative spirit of the NBB and NORA, the confidence level is very high that we will continue to meet the challenges facing the energy industry. Through efficient combustion technologies, cleaner burning fuels and a burning desire to sustain market prominence, the new oilheat will be tough to beat."
 
 Oilheat distributors blend bioheat, mostly in the New England and Mid-Atlantic states, from B2 to B20. Bioheat provides the same benefits as biodiesel: enhanced energy security; lower emissions and odor, depending on blend; and economic development. Further, bioheat use shows a decrease in NOx emissions.
 
 As biodiesel continues to grow-thanks in part to the federal biodiesel blenders tax credit, and state tax incentives such as New York's credit on bioheat-other recent developments to expand the industry emerge. A most relevant issue at stake is securing the Underwriters Laboratories acceptance of biodiesel as a blend-stock for home heating oil. The NBB and NORA's joint committee on bioheat is addressing such developments.

 
 More information on NORA can be found at <a target="_blank" href="http://www.nora-oilheat.org">www.nora-oilheat.org</a>.

Bioheat branding ready for cooler seasons

Iowa has always been a leading farm state, and it recently confirmed its position as a leading biofuels state as well. Gov. Tom Vilsack signed into law two renewable fuels and infrastructure bills (HF 2754 and HF 2759) in late May. One major incentive will give retailers a 3-cent income tax credit on each gallon of a B2 blend or higher. To qualify, at least half of the retailer's diesel sales must be B2 or higher blend levels. 
 
 The groundbreaking bill also established a renewable fuels standard, stating sales of ethanol or biodiesel must equal 25 percent of a retailer's fuel sales by 2020. There are exceptions for small fuel retailers. 
 
 The bill provisions will encourage more retail and wholesale sales. According to the Iowa Soybean Association, over 350 fuel distributors in Iowa-50 being retailers-already offer low blends of biodiesel. Thanks to this tax credit and other support provisions, distributors will likely expand sales as well. Distributors can be considered retailers if they sell non-taxed off-road fuel to farms, for example.
 
 Specifics of Iowa's biodiesel and renewable fuels bills include the establishment of a 3-cent-per-gallon tax credit until 2012; a system for the delivery of infrastructure support for biodiesel point-of-sale, as well as infrastructure grants; 50 percent cost-share assistance up to $50,000 per project for biodiesel-related projects, such as retail sites or terminal racks; statutory recognition of the ASTM and U.S. EPA definitions of biodiesel; and support for increased state monitoring of fuel quality.

Iowa passes aggressive biofuels legislation

National Biodiesel Board (NBB) members are invited to attend the 2nd Annual Biodiesel Congress, and will receive a 10 percent discount. The congress, to be held in São Paulo, Brazil, on August 22-24, will include the status of the biodiesel program in Brazil-as well as internationally-and production and use opportunities.
 
 The event setting will also offer a Technical Production Workshop and an Investment Workshop. More information on the congress and how to register can be found at www.Agra-Net.com or by e-mail at <a target="_blank" href="http://conferences@agra-net.com">conferences@agra-net.com</a>.

São Paulo will host the 2nd Annual Biodiesel Congress in August.

36-1294329296.jpg

NBB members receive discount to Biodiesel Congress

The growth of biodiesel continues, not only in the number of plants opening, but in the ease of fuel flowing to consumers. New terminal and retail openings in the past month highlight that growth.
 
 Terminal access near Chicago

 Distributors will now have greater ease acquiring biodiesel in the Chicago area. In May, two automated blending facilities opened. Wolf Lake Terminal in Hammond, Ind., and Western Petroleum Co. in Argo, Ill., will offer rack injection 24 hours per day. Gulf Hydrocarbon, a member of the National Biodiesel Board (NBB), supplies fuel to Wolf Lake. The NBB estimates that 27 terminals have made investments to make biodiesel a significant part of their businesses.
 
 First B20 pump in regional Georgia
 Davis Oil celebrated Middle Georgia's first B20 pump opening May 5. At the ribbon cutting in Centerville, the Middle Georgia Clean Cities Coalition said that local citizens use more than 1.4 million gallons of biodiesel. Now the fuel will be more convenient to the area's users. U.S. Biofuels of Rome, Ga., an NBB member, supplies the biodiesel to the retailer.
 
 New Iowa pumps
 Des Moines diesel drivers can "go bio" more easily now. Biodiesel is available in soy-based B10 at some Krueger BP Amoco stations in Des Moines. According to the Iowa Soybean Association, Krueger is one of the first retail fuel companies in central Iowa to offer soy biodiesel to both on-road vehicles (semi-trucks) and consumer vehicles. There are three Krueger BP area locations where consumers can purchase B10: 
 >14th Street NE in Des Moines
 >9th Street SW in Des Moines
 >54th Avenue NW (Hwy 141) in Grimes, Iowa

Krueger BP Amoco offers B10 in the Des Moines metro area

40-1294329296.jpg

Biodiesel access improves throughout nation

Biodiesel producer and distributor Earth Biofuels Inc. is getting visual help marketing its brand of biodiesel. Dallas-based SkinzWraps Inc. signed an exclusive agreement to handle Earth Biofuels marketing campaign, including designing and managing the company's brand image. The campaign includes signage on gas station pumps and islands that sell Earth Biofuels product, as well as Earth Biofuels' refinery tanks, billboards, tankers and promotional vehicles. Other SkinzWraps clients include PepsiAmericas Inc., Clear Channel Communications and the U.S. Marine Corps. More information on SkinzWraps can be found at <a target="_blank" href="http://www.skinzwraps.com">www.skinzwraps.com</a>.

SkinzWraps designed the artwork for this pump dispensing BioWillie-brand biodiesel

42-1294329297.jpg

Earth Biofuels launches marketing campaign

Soltron, an enzyme manufactured in the United States by Solpower Corp., was shown to reduce NOx and other emissions from biodiesel use in a study funded by California's Bay Area Air Quality Management District, according to Matt Cohen, general manager of Solpower. The testing was part of a feasibility study on production and use of biodiesel. During field testing of tailpipe emissions, Soltron added to B20 reduced carbon monoxide, hydrocarbons, particulates and NOx cumulatively an average of 83 percent, and NOx by 5.9 percent. Laboratory testing showed adding Soltron to soy-based B20 reduced NOx 9.4 percent. Soltron also stabilizes and eliminates water contamination and biological growth in biodiesel without toxic biocides, Cohen said.

43-1294329297.jpg

Fuel additive reduces NOx in California study on biodiesel

Transpacific Industries Group Ltd. (TPI) and Australian Renewable Fuels Ltd. (AR Fuels) executed a heads of state agreement in April, according to a TPI press release. The two companies are forming an unincorporated joint venture to look into the feasibility of developing a biodiesel plant in Brisbane, Queensland. The proposed facility, once completed, will produce about 11.8 MMgy of biodiesel annually. 
 
 The companies are looking to locate the plant next to an existing cooking oil facility owned by TPI in the Port of Brisbane. Depending on approvals and construction, the facility is expected to be in production by the second half of 2007.

Australian companies make plans for biodiesel plant project

TexCom Inc. signed a letter of intent with Lurgi PSI to build a 35 MMgy biodiesel plant in Seabrook, Texas. Lurgi will provide the process technology, design and plant construction, according to Lou Ross, chief executive officer of TexCom. The Seabrook facility is the first of several south-central U.S. biodiesel plants that TexCom plans to build and operate. The plant will be located at an existing chemical terminal, Ross said. The plant design will incorporate diesel storage for on-site blending. TexCom is based in Houston, Texas, and Lurgi is based in Memphis, Tenn.

45-1294329298.jpg

Lurgi to build TexCom project in Texas

In an effort to reduce diesel emissions and promote the use of renewable fuels, Florida has joined the Southeast Diesel Collaborative. This regional partnership was formed by the U.S. EPA to protect public health, and increase the production and use of biodiesel. The reduction of idling at truck stops, increase of incentives for the production and use of vehicles that will burn biodiesel, and cooperation with manufacturers of engines and heavy equipment will be issues that the eight-state collaborative will focus on in order to reduce harmful fumes from petrol-diesel in the region

Florida joins Southeast Diesel Collaborative

The Arlington, Va.-based Methanol Institute, in collaboration with the worldwide International Fuel Quality Center, released a report titled, "A Biodiesel Primer: Market and Public Policy Developments, Quality, Standards and Handling" in April. "People in the emerging biodiesel industry are looking for basic information, particularly information on proper handling and management of chemical feedstocks," said Greg Dolan, Methanol Institute's vice president for communications and policy. The report also addresses use and production of the fuel on a global scale. Methanol is used in biodiesel production during pretreatment and the transesterification process. The report is available at <a target="_blank" href="http://www.methanol.org">www.methanol.org</a>.

46-1294329298.jpg

Methanol Institute issues biodiesel report

D1 Oils PLC, a UK-based biodiesel producer and refiner, has awarded an exclusive franchise agreement to D1 Australia Limited. D1 Australia will open 16 facilities over the next three years in Australia and New Zealand. To facilitate the purchase and operation of the first four refineries, the company will hold an initial public offering of shares on the Australian Stock Exchange. "We were attracted to D1 by the modular and flexible nature of the D1 20 refinery," said Andrew McGuckin, CEO of D1 Australia.

47-1294329299.jpg

D1 20 modular refineries, shown above, are manufactured in Sunderland, England.

49-1294329299.jpg

D1 plans biodiesel franchises in Australia, New Zealand

Bio Solutions Manufacturing Inc. of Hattiesburg, Miss., has finalized a deal for equity financing with T&T Capital of Switzerland, which will provide the opportunity to develop and market biodiesel and other environmental products. Bio Solutions currently services many municipal waste systems and a growing number of restaurants in the United States, and has recently acquired a unique patented grease extractor to be used in conjunction with bioremediation to extract usable oils from waste greases to make biodiesel. T&T Capital has financed several companies involved with biodiesel and other environmentally responsible products.

BioSolutions receives financing from T&T Capital

Diester Industries, a French pioneer in biodiesel production, has contracted Technip Inc. to engineer and build a turnkey facility in Montoir-de-Bratagne, France. Technip, a Paris-based oil and gas company with an array of petrochemical engineering and construction services, has already built one biodiesel plant in Rouen, France, and is currently carrying out the construction of two others in Sete and Compegnie, France. The Diester facility will use sunflower and rapeseed oils as feedstocks, and is expected to produce 75 MMgy.

Technip awarded project in France

Piedmont Biofuels Cooperative, a member- and worker-owned co-op in Moncure, N.C., recently hired Matthew Rudolf as the company's newest executive director. According to Piedmont Biofuels, Rudolf's hiring took place at the 2006 National Biodiesel Conference in San Diego in February. Rudolf had been working in Guatemala for nearly two years before recently returning to his home state of North Carolina to assume his new position with Piedmont Biofuels. In Guatemala, Rudolf founded a biodiesel organization with a group of chemists and engineers called Combustibles Ecologicos.

51-1294329300.jpg

Piedmont Biofuels hires new executive director

In early May, PowerShift Energy Company Inc., wholly owned by HTH Wind Energy Inc., announced the addition of Susan Westfall, the company's new vice president of marketing and human resources. Westfall comes to PowerShift from her own start-up company, Westfall Communications Inc., a marketing, communications and public relations firm serving renewable energy industries, among others. PowerShift is partnering with ReFuel America Inc., owned by NewGen Technologies Inc., in a joint-ventured 60 MMgy biodiesel project headquartered in Fairfield, Iowa. According to PowerShift, engineering has begun on-site, and construction of the facility is expected to start soon.

52-1294329410.jpg

PowerShift hires new VP of HR, marketing

A team of students from Appalachian State University (ASU) in Boone, N.C., recently won the U.S. EPA's 2006 P3 award for its work on biodiesel and sustainability. The P3 Award-which stands for People, Prosperity and the Planet-was introduced in 2004 to give college students the opportunity to help develop sustainable practices that empower communities to overcome environmental challenges. 

 
 The ASU team, one of six winning groups, won the P3 Award for its biodiesel project called, "Closing the Biodiesel Loop: Self-Sustaining Community-Based Biodiesel Production," a closed-loop demonstration system of manufacturing biodiesel using solar thermal heating; wastewater bio-remediation; a passive, solar greenhouse; methanol recovery; soap making; and composting.

53-1294329412.jpg

ASU student Alyssa Mckim makes glycerin soap from biodiesel byproducts.

55-1294329413.jpg

Appalachian State students win EPA award

The United Soybean Board recognized Gerhard Knothe with the Industrial Uses of Soybean Oil Award at the American Oil Chemists' Society conference in May. Knothe is a research chemist for the USDA Agricultural Research Service, National Center for Agricultural Utilization Research. His biodiesel research includes property relationships of biodiesel components, as well as analytical methods for biodiesel. The award recognizes outstanding research into new industrial applications or uses for soybean oil.

56-1294329416.jpg

USB gives Knothe soybean oil award

On the long list of biodiesel plant development "must haves," permitting ranks with equity drives and choosing a design/build team. But with a flurry of proposed U.S. projects evolving into a blizzard, some experts believe permitting is also becoming one of the most overlooked necessities of producing biodiesel by the book. 
 
 Recent reports-both confirmed and unconfirmed-of proposed and under-construction biodiesel plants progressing without all necessary permits would seem to verify an unsettling issue in the industry. Several sources tell Biodiesel Magazine about a former biodiesel producer that at least temporarily shut down due to permitting issues. Also, several months ago, a well-publicized incident in Washington no doubt led to heavier scrutiny of the safety and legality of some biodiesel operations.
 
 It's apparent some facilities, whether by choice or by accident, are moving ahead without the necessary permits in hand. "There are probably more than we even care to know about," says Leland Tong, chairman of the National Biodiesel Accreditation Commission (NBAC) and consultant with Marc-IV Consulting. "A large company like REG (Renewable Energy Group) that already deals with permits on a crushing plant-they have people that specialize in permitting and away they go. But a couple of guys that weld a tank together to [produce] a couple million gallons per year-they don't worry about permits."While the current market dynamics and profit-making potential are turning project development into a frenzy, those in the know issue a clear warning. 
 
 "There's no excuse [not to have proper permitting]," American Ag Fuels COO Brett Damman says. "If you're smart enough to build a biodiesel plant, you're smart enough to get it permitted."
 
 Fuzzy Area for Industry 
 Tong says that, for many, biodiesel plant permitting is an industry gray area. The relative "newness" of the industry and lack of experienced environmental engineers is contributing to the problem. Although they are becoming more familiar with it, regulatory officials are just starting to become accustomed to biodiesel production. That means the industry is, in some respects, helping the watchdogs do the watching. 
 
 "I do know this is an issue for our industry," Tong says. "I get a lot of calls from state regulatory folks about how to classify this. They don't have a general emissions profile for a biodiesel plant. There are no standard numbers that a regulator can use to classify a biodiesel plant."
 
 Making things even more complicated are the many and varying process technologies being touted and utilized in the marketplace. Standard emissions figures are sometimes times hard, if not impossible, to come by.
 

 A prime example of the lack of industry familiarity is evident when talking with Howard Gebhart of Colorado-based Air Resource Specialists Inc. Despite a wealth of experience with air permitting in the ethanol industry, Gebhart has yet to jump headfirst into the biodiesel fray. At this point, Gebhart hasn't seen the need to, since the ethanol industry is more active than ever, and because biodiesel isn't as complicated-or at least it shouldn't be.
 
 Minnesota Milestones
 As with many things biodiesel, the state of Minnesota was first to house a large-scale commercial facility. Naturally, the state's regulatory agencies were also among the first to deal firsthand with permitting the plants. 
 
 With offices in Minneapolis, the law firm of Lindquist & Vennum PLLP helped obtain proper permitting for the SoyMor facility, which currently produces 30 MMgy in Glenville, Minn. The plant recently became the latest to become accredited by the NBAC. Lindquist & Vennum also worked with the Minnesota Soybean Processors (MnSP) facility in Brewster, Minn., on its permits.
 
 In a state that's seen its fair share of emissions issues with the ethanol industry, Lindquist & Vennum's Todd Guerrero tells Biodiesel Magazine the single biggest issue he faced was explaining that biodiesel isn't ethanol. "Many people thought that, like ethanol and the problems it had with odor, biodiesel would have similar odor issues," Guerrero says. "It took some explaining to local authorities that those issues weren't going to be similar to ethanol-especially the older ethanol projects."
 
 REG Project Engineer Mark Vermeer aided the Minnesota Pollution Control Agency (MPCA) in forming guidelines for biodiesel plant permitting. Other states, such as Iowa, are becoming increasingly familiar with regulating biodiesel plants, according to Vermeer. REG has worked on several large-scale projects in Iowa, where Vermeer says it takes approximately three months to permit a facility. However, Vermeer says, in other states and/or projects with unique permitting challenges, it could take up to nine months to properly permit a plant.
 
 REG has mostly worked on large greenfield sites, which Vermeer says are typically easier to permit than brownfield locations. Now that some greenfield sites are growing to 30 MMgy and above, the permitting issues are also increasing.
 

 The MPCA's Rich Sandberg says the Glenville and Brewster plants are now covered by the U.S. EPA's prevention of significant deterioration (PSD) requirements, which necessitate the application of best available control technologies (BACT). Certainly not uncommon, PSD requirements are based on the nature of emissions from a facility. "Size plays into it," Sandberg says. "It's not uncommon at all. With the refining of biofuels and biodiesel, the issue is that the boilers frequently will trip some of these requirements."
 
 Sandberg also says MnSP is considering using biodiesel in its boilers. "We see value in that because of the low sulfur content in biofuels versus distillate fuels," Sandberg says. There are some unknowns with it, such as NOx emissions, Sandberg admits. "The anticipation is that it won't go up," he says. "But we don't have a lot of data."
 
 When Minnesota's three biodiesel plants went up, there wasn't a lot of data on plant emissions. Now that's beginning to change. It shows the evolution of biodiesel plant permitting. "It wasn't extremely difficult to work through this," Sandberg says. "The facility had to come up with its own information. We had to find the rules and regulations that apply to this facility."
 
 Managing Methanol
 In many smaller-scale biodiesel plants, the methanol handling and/or recovery systems are a significant permitting focal point. In large-scale producers, permitting typically focuses on the boilers used to provide process heat. Like the difference in plant size, there are also differences in plant design.
 
 "There are variations in so many different process designs," says Jake Stewart of Biodiesel Industries. "If you're not recovering all of your methanol, and have a vacuum recovery system, you'll have more problems with air emissions. If you're losing methanol, you're losing money. That's a scenario that's a loss-loss on permitting and from an economic standpoint."
 Methanol, Guerrero confirms, has been one of the biggest sticking points experts have encountered in permitting biodiesel plants. "It's the one that gets the regulators' and local officials' attention," he says. "There has to be a containment plan in place to make sure methanol isn't spilling out."
 While methanol's explosiveness and evaporative characteristics are a concern, it isn't the only regulated liquid in a biodiesel plant. As with other industrial facilities handling significant amounts of liquids, oil feedstocks, biodiesel, chemicals and coproducts are subject to Spill Prevention, Control and Countermeasures Plans (SPCCPs). 
 
 Expanding and Communicating
 American Ag Fuels in Defiance, Ohio, is currently expanding its plant. The company's plans include a methanol distillation system. Currently, the plant sends its excess methanol to an outside entity, which purifies the alcohol and returns it to the facility.

 
 As COO, Damman brings unique permitting experience to the project from his experience as a code official. He gives several key pieces of advice to start-up companies. He says working with a knowledgeable engineering firm to understand the code issues is crucial, and he suggests that project developers establish a preliminary layout of the project, based on code requirements. "You can't do it without getting your nose in the code," Damman says.
 
 American Ag officials followed such a plan. After holding an initial meeting with regulatory officials to discuss the preliminary plan, they invited officials to an on-site meeting once the plans were fully developed. Those meetings were crucial to the company's success in obtaining its permits. Reaching out to officials and neighbors is something American Ag and others stress.
 
 "We approach it as you're dealing with the people that are going to be the most affected by the project," Guerrero says. "From our perspective, we encourage developers to know who their neighbors are. It's important in the city and in rural greenfield projects. You have neighbors in both spots. Work with them."
 Stewart agrees. "Having a good communicative relationship with the local permitting officials is absolutely critical," he says.
 
 Most permitting experts agree that it's for a potential project's benefit to contact an engineering firm that understands the state and local codes. 
 The good news is that regulatory agencies are becoming increasingly familiar with the biodiesel process and its emissions profile. Hopefully, the rest of the biodiesel industry will follow suit and avoid the issues that afflicted fuel ethanol in its formative years. "Generally, the industry has learned many things from the ethanol industry-and how to approach permitting is one of them," Guerrero says. 
 
 Dave Nilles is a Biodiesel Magazine staff writer. Reach him at dnilles@bbibiofuels.com or (701) 373-0636.

59-1294329417.jpg

60-1294329418.jpg

It looks like environmental permitting could be a bigger issue in the U.S. biodiesel industry than previously thought. With some producers reportedly partially eschewing the process, it's important to end any such trend before it becomes widespread. While certainly not a "how-to" article, Biodiesel Magazine talks to some industry experts about an issue that's apparently coming to a head.

Permitted to Proceed

When Archer Daniels Midland Co. (ADM) announced in October 2005 that it was planning to build a 50 MMgy canola oil-based biodiesel plant in Velva, N.D., the industry took notice. After all, it was the largest proposed biodiesel plant in the United States at the time. So when the agri-giant later upped the size of the future facility to 85 MMgy, it was like a shot across the bow for other existing and would-be producers-a sign that a major oilseed player was getting in the game.
 
 Granted, Ag Processing Inc. started producing biodiesel in Sergeant Bluff, Iowa, years before most politicians knew what it was, but ADM's entrance seemed to signify a few important things: It was more proof that biodiesel had definitely arrived, and, finally, the industry was going to see a major biodiesel plant built alongside a large crush facility.
 While Biodiesel Magazine intended to discuss the feasibility and economics of building a biodiesel plant collocated with an existing crush facility, industry experts made it clear that it isn't necessarily the location of such an enterprise that provides an advantage-if there really is an advantage at all. Rather, any competitive edge is gained in locking up feedstock supply. 
 
 Renewable Energy Group Project Engineer Mark Vermeer points out that collocating a biodiesel plant with an oilseed crusher provides little to no benefit if no feedstock contracts exist. 

 
 But building next to an oilseed crush facility does make sense. That's why existing oilseed companies are beginning to do just that (see sidebar, page 48-49). The benefits are significant if there are contracts in place because shipping costs are virtually nothing. However, for every biodiesel producer, the goal is obtaining a constant supply of feedstock.
 What does the introduction of the big oilseed players mean to the industry? "It is very significant," Vermeer says. "They carry a big stick in a feedstock-limited industry."
 
 A Tidal Wave of Capacity
 The National Biodiesel Board holds that a goal of 1 billion gallons of U.S. biodiesel production by 2015 is a reasonable target on an aggressive but steady timeline that allows for managed, sustainable growth. It also allows for feedstock markets to adjust and develop alongside the industry. However, the opposite appears to be happening. With up to 50 projects claiming to be edging closer to production, a wall of biodiesel could possibly be coming on line within the next 18 months. "If it all comes on line, it's more capacity than we have economically viable feedstock sources for," says Marc-IV Consulting's Leland Tong.
 
 Delta-T's Larry Sullivan agrees. "There is no way [the biodiesel industry] can continue to announce the plants it has announced and reach a national basis," he says. "There simply isn't that much oil to go around. The diesel market can handle that much biodiesel-there will be a market for the biodiesel out there-but logistics will be a profound problem in the future." 
 
 Several sources tell Biodiesel Magazine that railcar shortage is already becoming a problem in moving product and obtaining feedstock. It's an issue that has negatively affected many facets of the agriculture industry for years.
 
 Biodiesel plants located adjacent to crush facilities do hold an advantage in railcar availability and access. However, even these projects aren't immune to the laws of supply and demand. 
 
 Located on the Union Pacific Railroad and along the Interstate 90 corridor, Minnesota Soybean Processors (MnSP) has been producing biodiesel since fall 2005. Initially using Volga, S.D.-based South Dakota Soybean Processor's refined soy oil as feedstock, MnSP now utilizes its own soy oil from its 100,000-bushels-per-day soy crush facility. The plant produces approximately 770,000 tons of soy meal and 200,000 tons of crude soybean oil annually, which is treated at MnSP's soy oil pretreatment facility.
 Despite its vertical integration, things haven't gone easily regarding the biodiesel plant. Plant management attributes successive short soy crops in southwest Minnesota and biodiesel start-up costs to a weaker-than-expected financial position. Narrowing soybean margins are also affecting the plant's early success.
 "Yet the primary business is meal," Sullivan says. "If I build a 3,000-ton-per-day crush facility with 30 [MMgy] to 50 MMgy of biodiesel, my primary business would be meal. The second business would be vegetable oil or biodiesel."

 
 Soy Meal Dynamics Change
 For biodiesel producers building next to an oilseed crushing facility, the economics of soybean meal still come into play. "No one builds that kind of crush plant without having a business plan to sell the meal primarily," Sullivan says.
 Some are starting to see the market dynamics shift. Declining domestic meal demand and increasing soy oil demand for biodiesel may eventually result in the soybean crush being driven by oil demand rather than meal demand. Several industry insiders said as much at a recent biodiesel investment conference in St. Louis. If such a shift pushes soy meal prices lower, soybean prices may be supported by high soybean oil prices. As it stands, the soy crush will fall short of the USDA's 2006 projections.
 Discussing soy meal brings to light the commodity nature of this industry, something that bridges into fuel ethanol. Tong provides an example: "An ethanol plant can be built in the middle of a corn field," he says. "The plant can draw that feedstock in from where it is located. With a biodiesel plant, the input is the byproduct of another industry. I could put a biodiesel plant in the middle of a soybean field, but I can't get the oil out of the soybeans."
 
 Feedstock Neutrality Becomes Priority
 With agri-giants like ADM and Cargill beginning to use their own soy oil in their own biodiesel facilities, the pressure is falling on stand-alone plants to survive in a more costly market.
 
 "Feedstock neutrality is a must," says Jake Stewart, vice president of Biodiesel Industries. "If you build a high-volume facility around one feedstock with little flexibility, that to me … is a risky place to be. If there is a hedging mechanism, like an ADM or Cargill has, you can mitigate some of that risk. Feedstock neutrality, or being closer to feedstocks and closer to the end-market, allows nimbleness through the natural turbulence of the industry."
 
 A quick look at U.S. soy oil prices would seem to support Stewart's view. Prices have thus far been on an incline in 2006. Overall, soy oil production has risen slowly but steadily in the last two decades to nearly 19 billion pounds per year. Soy oil prices have spiked occasionally but typically have stayed within the 20-to-22-cent range. The 20-year low was 14 cents in 2000 with a high of 30 cents in 1984. Soy oil spiked again as recently as 2003 when it again reached $0.30. In its latest report, the USDA predicted that record U.S. soybean carryover coupled with stable output may boost demand even more in 2006-'07.
 
 Stewart says that may lead the industry to the beginning of a new model of production. "The model we're working out of now is a value-added model," he says. "The major agricultural companies can hedge by having a food commodity demand and biodiesel demand on the oil. That helps stabilize the price and raise the price of the oil. For biodiesel production, it doesn't have long-term viability for our industry. To the extent we can vertically integrate and focus on creating fuel, it will stabilize pricing and growth of the industry."
 The landscape of the biodiesel industry continues to change. While no universal business model exists, feedstock prices in the near future may force the hand of some potential producers. 

 
 "At some point the economies of scale are going to come into play," Tong says. "It's going to boil down to the cost of production. There are niches for smaller plants in certain areas, but the primary cost is still your feedstock." 
 
 Dave Nilles is a Biodiesel Magazine staff writer. Reach him at dnilles@bbibiofuels
 .com or (701) 373-0636.

61-1294329419.jpg

63-1294329419.jpg

A growing trend in the biodiesel industry is major oilseed players building large-scale plants near crush facilities. However, experts say the key isn't where you build, but where you're getting your feedstock from.

Crushing Questions

Ethanol production capacity in the United States is growing rapidly, leaving many to wonder exactly how the high demand for ethanol might tighten the domestic supply of available corn, pushing prices per bushel upward. When it becomes more profitable to grow corn than soybeans, farmers read that as a signal to plant more corn, contributing to projected flat or negative soybean production in coming years and potentially affecting the food, livestock and biodiesel industries in different ways. It's important to keep in mind that even though the economic pendulum of supply and demand swings both ways, soybean oil hasn't driven soybean production demand historically. Also soybean oil isn't the only product available to fill the position served by it in the food and industrial markets, in theory; several vegetable oils of comparable quality are suitable for biodiesel production-perhaps more so than soybean oil. The same is not true for U.S. ethanol production and its current reliance on yellow dent. This may have long-term implications on how much domestically grown and crushed soybean oil will play into future feedstock choices made by U.S. biodiesel producers as this industry builds out, and what "immediately substitutable" contenders to domestically produced soybean oil could inch their way into U.S. biodiesel feedstock supplies. 
 
 Corn Demand, DDGS and Rising Corn Prices
 Billions of gallons of ethanol production capacity are under construction right now, leading to what virtually everyone agrees will be an early domestic ability to produce the 7.5 billion gallons of renewable fuels that refiners will be required to blend into diesel and gasoline supplies by 2012, as laid out in the current federal renewable fuels standard (RFS). With a diesel fuel market roughly four times smaller than gasoline and biodiesel's relatively immature stage of development relative to ethanol, it's clear that biodiesel will satisfy only a small but growing percentage of the RFS. 
 
 Ethanol's demand on historically overproduced corn, and the lack of stand-in substitute feedstocks to make ethanol with, has led experts like Chris Hurt, Purdue University agricultural economist, to foresee corn demand this year as depleting surpluses from previous harvests, significantly contributing to higher corn prices and increased production of the grain in subsequent years. 
 
 It's not as if any of these circumstances will prompt farmers to consider something they haven't before. "Farmers make decisions every year as far as what to plant," says J. Alan Weber, an economic advisor to the National Biodiesel Board (NBB), who works for Marc IV Consulting. "But I think the ethanol and biodiesel markets will increasingly play into that decision-making process." 
 
 As fast as ethanol production is increasing, so too is the presence of distillers grains growing in the feed markets. Distillers grains is the protein, fat and fiber fractions of corn left over after ethanol producers ferment alcohol from the starch. "Part of the problem has to do with the [coproduct] of ethanol production, the DDGS, which is [increasingly being] used as protein feed in rations," says Allen Baker, an economist with the USDA's Economic Research Service (ERS). "It's competing against soybean meal. Those [animal markets] that can better utilize DDGS will have an advantage over those that can't." 
 
 Changing Markets

 USDA baseline projections and studies by the Food and Agricultural Policy Research Institute, and Promar International, indicate relatively flat or perhaps negative growth in domestic soybean acres planted in the next three to five years. "If the baselines are correct, there will probably be a reduction in terms of harvested soybean acres," Weber confirms. "[The] baseline projections also show increases in acres of corn being harvested, some of which might be at the expense of soybean acreage or some at the expense of other crops." 
 
 Historically, the demand for soybean meal as protein in livestock rations has been the major driver in determining at what price per bushel the market commands for soybeans. Therefore, the use of soy oil in the food industry or the production of mono alkyl esters-given that the largest single feedstock used for biodiesel production in the United States is soybean oil-has not driven farmers to plant soybeans. Instead, the vegetable oil's versatile nature as a byproduct resulting from the manufacturing of soybean meal has given way to its proliferation as domestic feedstock of choice for biodiesel producers, especially those situated in the Soybean Belt. Of course, staunch backing from the United Soybean Board, the American Soybean Association (ASA) and the NBB doesn't hurt soybean oil's position in these markets, either. 
 
 Increased distillers grains and lower soybean meal prices combined with increasing demand for soy oil from the biodiesel sector-propping up the per-bushel-price on soybeans-could lead to what outgoing ASA president Bob Metz says would be a lowering of overall food prices. "People say if biodiesel production increases, it would cause food prices to rise," Metz tells Biodiesel Magazine. "We say food prices would drop." Metz, who sits on the board of an ethanol plant and is invested in several more, says as oil drives the soybean markets, soybean meal prices would be more reasonable, and therefore, expenses rearing feedlot cattle or dairy cattle, for example, would be less, and beef milk and butter prices, etc., would follow suit. 
 
 Theoretical Alleviation 
 While a sizeable portion of domestic biodiesel is derived from soy oil, biodiesel meeting ASTM D 6751 quality specifications can obviously be made with virtually any fat or oil supply. Naturally, the less one pays for a feedstock is directly related to its quality and the process costs associated with refining that lipid-bearing material into biodiesel. 
 The same could be said about the relationship price shares with feedstock quality for ethanol production in the United States (i.e., the low-cost feedstock of lignocellulosic biomass and the much higher production costs of cellulosic ethanol technologies, intertwined with the complicating variable of the loss of efficiencies). However, there are far fewer incrementally decreasing economically competitive options available along ethanol's price and feedstock quality curve. 
 
 A host of theoretically available, yet only regionally practical, substitutes for soybean oil in the U.S. biodiesel industry could imply a certain amount of elasticity in soybean oil demand from the food and biodiesel industries, but experts say this isn't the case.. The economical competitiveness of these candidate feedstocks is highly dependent on producers' regional access to "alternatives" and the nature of particular procurement arrangements (e.g., a renderer finding more value in biodiesel production from certain types of fats versus selling those fats on the open market, etc.).
 
 "I would say soy oil demand is relatively inelastic," says Mark Ash, a USDA ERS agricultural economist who specializes in oilseeds. "There may be some price substitution, but there are relatively few substitutes for soybean oil." Ash tells Biodiesel Magazine that the food industry could substitute comparable vegetable oils for soy oil rather quickly. "But, companies within the food industry are resistant to changes in formulation," he says, qualifying his hypothesis.
 
 Ash and other experts say there are practical market-driven options available to hedge what could otherwise be a dramatic price hike for soybean oil coupled with an equally drastic reduction in its demand from this industry. 
 

 Practical Alleviation
 Nearly 50 percent of the soybeans produced in the United States are exported in the form of whole beans, meal or oil, Metz says. Even though the USDA's publication titled Oil Crops Outlook, released June 12, shows U.S. soybean exports increasing in the 2006-'07 marketing year, a different outlook may be in order beyond that as domestic methyl soyate production capacity multiplies. 
 
 Naturally, the export market could absorb some of the increasing domestic demand for soy oil. According to Ash and the USDA, the United States is exporting 1.1 billion pounds of soybean oil out of the country this year. The NBB's Weber believes that these exports would be susceptible to penetration by future increases in domestic demand. "As demand for biodiesel increases, the first area to draw on more soybean oil supply would likely be the [more than 1 billion pound] supply being exported," Weber says. This supply may help protect against too rapid or too sharp of an adjustment, helping to hedge off higher prices.
 
 This potential solution to alleviate increases in domestic demand while keeping prices relatively stable by exporting less could eventually lessen U.S. positioning in the world trade markets, Ash states. "There are few places in the world that can grow corn as efficiently as in the United States," he says. "Soybeans, on the other hand, grow well in a lot of different places. There's a large capacity for soybean production in South America, Brazil for example." 
 
 Brazil has the ability to vastly increase its soybean production, converting non-rainforest acres currently used for grazing into soybean acres for example. "Brazil could step up production and the United States could export fewer soybeans," Ash tells Biodiesel Magazine. Palm oil production is also increasing globally. 
 
 Baker (USDA ERS) says that he has heard quite a few consultants ask, "If biodiesel production is the goal and large quantities of oil are needed to meet that goal, why not exploit oilseed crops with oil content higher than soybeans to meet that objective?" For instance, the oil content of canola doubles that of soybeans. To give this perspective, Ash quantifies the oil output from an acre of soybeans versus an acre of canola. "Canola can average 500 pounds of oil per acre harvested, whereas an acre of soybeans can produce about 460 pounds of oil," he says.
 
 More and more biodiesel producers primarily using soy oil are prepared to use a variety of different feedstocks as the economics tilt in any particular favor. It's quite imaginable that the future makeup of U.S. biodiesel feedstocks may become more diverse compared to what is being used today. "Maybe in five or 10 years, soy oil will still dominate usage in this country, but much of it will depend on where the biodiesel plant is located," Ash predicts. It is foreseeable that soybean oil would still make up a majority portion of the feedstocks demanded by biodiesel plants in the Soybean Belt near large crush facilities, while plants on the East and West coasts would be economically driven to use more locally available sources of fats, oils or greases-or cheaper and available imported feedstocks. 
 
 All things considered, skyrocketing soybean oil prices aren't something we're likely to experience any time soon, Ash says. The potential to divert some soybean and soy oil exports to meet the growing domestic demand, the increased competitiveness of non-soy based feedstocks domestically and, for better or worse, the availability of reasonably priced imports from other large soybean producing countries are predicted to keep soybean oil prices in the United States relatively stable. 
 
 Ron Kotrba is a Biodiesel Magazine staff writer. Reach him at <a href=mailto:"rkotrba@bbibiofuels">rkotrba@bbibiofuels</a>

 .com or (701) 746-8385.

In the United States, starch-based ethanol from corn, and biodiesel often derived from soy oil, each serve great functions as renewable fuels in their respective markets. Although both fuels are renewable, they couldn't be more different otherwise. Trace these differences back to their roots, though, and an indisputable commonality exists-the need for farmland.

Competing Commodities with Common Goals

Handling cargo requires heavy-duty equipment, but it doesn't have to produce dirty emissions, insists Darcy Vaillant, manager of maintenance at Terminal Systems Inc. (TSI) in Vancouver, British Columbia. That's why after over two years of testing, TSI implemented the use of B20 in all of the 227 diesel engines at its two terminals-Vanterm and Deltaport. "Once I went up to B20 in testing, the reduction in emissions was impressive," says Vaillant, who initiated and led the biodiesel initiative. Biodiesel, combined with exhaust scrubbers in the heavy machinery, has resulted in a 30 percent reduction in annual diesel engine emissions. The company seeks to reduce emissions by an additional 10 percent when it upgrades to B30 by the end of this year.
 
 TSI is the first terminal operator in Canada to implement such a significant emissions reduction program, according to Vaillant. "We are hoping that other terminals will follow our lead and use biodiesel because the impact of doing so is huge," Vaillant says. "TSI recognizes the need to reduce air emissions now to help protect our environment and our children's future."
 
 TSI joins several large fleets in the region that have already moved to biodiesel. Many of these, including Deltaport, have contracts with Canadian Bioenergy Corp. (CBC), a biodiesel supplier based in British Columbia, according to President Ian Thomson, who says, "TSI is the most interesting because of the equipment they run and because it's a very visible, prominent facility down on the port."
 
 With Vanterm and Deltaport combined, TSI handles the bulk of Vancouver's container traffic, bringing the total handling capacity of cargo to nearly 1.4 million 20-foot equivalent units in 2005. TSI, which is a wholly owned subsidiary of Orient Overseas International Ltd. (OOIL) of Hong Kong, is also the largest terminal employer in the Port of Vancouver, with an annual payroll exceeding $150 million. 
 
 Vanterm, located in Vancouver's inner harbor, is a 76-acre site with two container berths and seven dockside gantry cranes. There are 101 diesel engines at Venterm. At 160 acres, Deltaport has over twice the area and is located in Vancouver's outer harbor. This port requires 126 diesel engines, which includes seven dockside gantry cranes, to service the two container berths. Clearly, these two ports require a lot of fuel to operate; Vaillant says that the annual consumption of the terminals is upwards of 5 million liters (over 1.3 million gallons). "At a B20 blend, that's a lot of biodiesel," he notes.
 
 Emissions Testing
 The pilot project for the program, which began in 2003, was the first biodiesel pilot study with a large private fleet in western Canada, according to TSI. Even though it is not news that biodiesel reduces emissions, TSI "wanted to verify internally that they would get the results that they understood they would," Thomson says. "They also had some unique equipment, such as large cranes. It's not your typical biodiesel application."
 
 Before Vaillant was willing to test biodiesel on the company's machinery, he had to confirm his understanding of its capabilities. He tested how the fuel reacted to cold and with rubber. The results were satisfactory enough for him to progress with the implementation and testing plan specifically designed by him and CBC. 
 This spring, Vaillant chose six different pieces of machinery to test in order to ensure that biodiesel could be utilized throughout the terminals and would reduce emissions regardless of equipment. "There was quite a lot of organization to coordinate machinery and have it tested while it was in operation," he says. "It was quite complex." 
 The emissions tests measured levels of NOx, carbon monoxide, carbon dioxide, total hydrocarbons and particulate matter. At press time, the final emissions testing results were not available for release. As a control measurement, emissions were tested on the six machines before any biodiesel was added. "We had a base to work with on individual machinery," Vaillant explains. "Next, we drained our fuel tanks, loaded the B5 and did tests again. We saw emissions reductions right away." After two weeks at B5 with no problems and steady emissions results, they made the step to B10. 

 
 The blend testing was implemented incrementally by 5 percent every two weeks. At the end of May, B20 was implemented successfully. At this time, Vaillant also added scrubbers, which reduce particulate matter. He says the combination reduced the emissions by 30 percent. 
 
 Scrubbers are not a new addition to the terminal. In fact, TSI started to use scrubbers 20 years ago to reduce the black soot coming from diesel engine exhaust. "At that time, we were not looking to reduce emissions," Vaillant notes. "It was used to keep the pulp clean in the sheds and eliminate the black soot coming down on the pulp and paper [being stored at the terminal]."
 
 When testing initially began, Vaillant was concerned about potential for filter plugging in the older equipment. "I was worried about the deterioration of hoses and other rubber components, as well as the sludge that had previously settled in the older fuel tanks," he says. Though biodiesel "cleans anything," TSI has not encountered any plugged filters in the two-year testing program-even after biodiesel was run consistently in the machinery. "We replace the filters every 300 hours as per our maintenance schedule, and they look fine," he says. 
 
 He mentions that they may have had more problems had any of their equipment been older. TSI has a relatively new fleet, with the exception of 10 inland container cranes that are pre-1990s. Vaillant feels comfortable testing blends over B20.
 	 
 Operations
 Now that the terminals are geared up for B20, they require significantly more biodiesel on a regular basis. Each terminal has a tanker that internally services the engines by wheel-to-wheel fueling. The tankers buy the bulk diesel (they are serviced by separate companies) and fill the tanks 80 percent full. Then they employ a splash-blending method to make a B20 blend. 
 
 CBC supplies TSI with biodiesel at Deltaport and is looking at building a biodiesel production facility with an annual capacity of over 40 million liters (10.5 million gallons). However, Thomson could not share the construction timeframe. In the meantime, it acquires soy-based biodiesel from the United States. TSI acquires tallow-based biodiesel for the Vanterm terminal from West Coast Biodiesel, which is a division of West Coast Reduction. 
 
 Even though winters in Vancouver are relatively mild, Vaillant assures that the terminals will not use a blend higher than B20 in the winter if the biodiesel is made from animal fat because of the higher cloud point. "We run a lot of machinery, and I can't have it shutting down when it gets below zero [degrees Celsius]," he says. He may also install heaters in each individual fuel tank.
 

 Yes, there are still tests to be run and costs to incur to upgrade to B30. For example, Vaillant is considering getting a heated tank for blends higher than B20. He admits that there was significant cost in the testing. Implementation, however, was "very easy" and relatively inexpensive. "We didn't have to change anything on any of our equipment," he says. "[Conversion] was a matter of getting the blend and bringing it down here." In addition, he notes that as the rising costs of diesel come into effect, the cost of biodiesel is also favorable. At press time Vaillant said it was a penny cheaper per liter than petroleum diesel fuel. 
 
 TSI has been a leader in quality control and an example for companies considering the switch (many have already contacted Vaillant). For example, every load that comes in is tested. "I said we want consistency, and the only way we could do that was to get it tested," Vaillant says. Thomson has been impressed. "They've moved quickly, and it's a good business to serve because they know what they want and they've invested in the facilities to make the biodiesel work," he comments.
 
 TSI is proud of its accomplishments thus far. "Biodiesel is reliable, and it's a cost effective way of achieving our goals in emissions reduction targets," Vaillant says. "Plus, biodiesel smells a lot more pleasant than diesel fuel. It's already made a difference." 
 
 Ultimately, this project was done for environmental reasons. "TSI wants to be a leader in environmental stewardship," Vaillant says. "We don't just work here; we live here. We all have children, and we want to work on the environment. We plan on being here a long time-maybe I won't be here, but my kids will be. We want to reduce our environmental footprint, and that's just part of the deal." 
 
 Anduin Kirkbride McElroy is a Biodiesel Magazine staff writer. Reach her at amcelroy
 @bbibiofuels.com or (701) 746-8385.

Darcy Vaillant wants the mountains east of Vancouver, British Columbia, to maintain their beauty, as well as their fishing spots, for future generations. As manager of maintenance for Terminal Systems Inc., the biggest container terminal in Canada, he is in a position to be able to make a significant impact on diesel emissions coming out of the Port of Vancouver.

Loading Up on B20

Maybe a Jewish cowboy writer who grew up in Texas will do something besides drive the state's economy and educational system into the toilet-that's what some in Alamo country are saying about Kinky Friedman, independent candidate for governor.
 
 Friedman has had dozens of articles written about him over the course of the past year in venues ranging from the New Yorker and CBS Sunday Morning to The Houston Chronicle. For the most part, the media have focused on his political incorrectness, his ranch with over 60 rescued dogs, his signature use of the color pink, and his cigar smoking and well-documented drug use. They've also focused on his out-of-left-field promises, such as giving free parking to anyone who uses renewable fuels. In fact, Friedman's support of biodiesel, in particular, has become a significant part of his platform. "Biodiesel-it's good enough for Willie Nelson's tour bus, and the city of Denton is using it to fuel its entire fleet of diesel trucks," Friedman states on his Web site. "Biodiesel is fuel you can grow. That's good for farmers, good for the air, good for the Texas energy industry and good for Texans. With biodiesel, everybody wins but OPEC."
 
 Despite his antics, slurs and sordid past, supporters say that Friedman represents new-century thinking in regard to the nation's energy situation, and that he wants Texas to lead in the production of biofuels the way it has led in gas and oil exploration. "As far as biodiesel goes, Kinky Friedman would certainly be the most progressive candidate," says Jake Stewart of Biodiesel Industries, which operates a 3 MMgy biodiesel plant in Denton, Texas, that is powered by landfill methane and provides B20 for the town's diesel vehicle fleet. "He's really running in the Jesse Ventura niche. He came out of the gates, and people were like, 'Is this a joke, or is it for real?' It would be an understatement to say that he is an underdog … I mean he is not picked to win by any stretch, but regardless of whether he gets elected or not, the messaging and the voicing there is valuable."
 
 Leaders in the industry agree that Friedman is forcing the other candidates to talk about biofuels and introducing the topic into the political conversation-but not without a few glitches. "He's certainly running on the ticket of biodiesel, but he still uses [the terms] vegetable oil and biodiesel interchangeably. … In that regard, he still has a way to go," says Jeff Plowman of Austin Biofuels, a biodiesel retailer servicing the central Texas area with 17 B20 locations and four B99 pumps. 

 
 Texas is the leading biodiesel production state, and Friedman has made the fuel a cornerstone of his campaign. But some say biofuels-both biodiesel and ethanol-are an easy sell politically, and that candidates latch onto issues that demonstrate a popular appeal. "Biodiesel kind of has an apolitical niche," Stewart says. "It's kind of like motherhood and apple pie. It's an easy ticket to sell politically." 
 
 Others view the touting of biodiesel on the political front as insincere, especially when some of the statements seem misinformed or half-cocked. "The whole Kinky Friedman thing just doesn't turn me on," says Plowman. "He says things like he is going to make Willie Nelson his energy secretary, which we don't have [in Texas] anyway." Plowman did agree with his colleagues, however, that biofuels have been pushed to the forefront of this election because of Friedman's efforts. "It's an issue that everyone is going to have to talk about," Plowman says. 
 
 But the biggest issue for biodiesel in Texas is not the gubernatorial race, however. Ironically, while several positive developments have taken place recently in Texas, the dark cloud of the Texas Low Emissions Diesel Program (TxLED) has lingered over the industry. This would essentially outlaw biodiesel in Texas as an overabundant emitter of NOx. 
 The recently formed Biodiesel Coalition of Texas (BCOT) represents the Texas biodiesel industry both politically and as a trade interest group at the state level. "In that sense, we have consolidated our voices, which no other states have done," Stewart says of the group Biodiesel Industries has joined. BCOT was able to get an extension-or a "stay of execution," as Plowman called it-after biodiesel was initially ruled non-TxLED compliant. This meant that it was illegal to blend biodiesel with petroleum diesel. This was a big deal, as Texas represents the largest diesel market in the United States and is one of the largest producers of biodiesel in the country. "I believe it was pushed by the additive companies to get a piece of our industry," Plowman says. 
 
 The Dec. 31 deadline requires BCOT to present technical and/or legal arguments that would lead the TxLED program to retract its initial ruling of biodiesel as non-compliant. "Our goal is to give the Texas Commission on Environmental Quality (TCEQ) the technical information they need to exempt biodiesel or to view biodiesel for all of its benefits more comprehensively, [rather] than to point at an Achilles heel and eliminate biodiesel from the Texas market," Stewart says. "I believe that the technical argument has shifted, and we as an industry need to be more outspoken. There is some onus on the industry to start talking about NOx and biodiesel in a different light." 
 
 Meanwhile, the National Renewable Energy Laboratory (NREL) has stated that there is no information that concludes whether or not biodiesel decreases or increases NOx, which Stewart believes is the most technically responsible stance on the issue. "We'd like to see this just go away-if you're going to ban biodiesel in Texas, obviously it's not a great thing for us," says Peter Bell, CEO of Distribution Drive, a distributor and marketer of BioWillie-brand biodiesel blends and a wholly owned subsidiary of Earth Biofuels. "So we would like to see [the deadline] extended or to see this thing go away completely." When asked if the election of Friedman would help this precarious situation, Bell says, "Absolutely yes-or as Kinky would say-'Why the hell not?'" 
 
 As part of his campaign, Friedman contends that family farms are falling off by the day in Texas, and agricultural energy sources are a way to amend this problem. "His message is basically, 'Let's put the American farmer back to work,' and regardless of the candidate, the message is important for Texas," Stewart says. "This is a state that has so much feedstock production potential and really represents the biodiesel production model as a whole-'from soil to oil' as I call it-which would have a positive ripple effect on the state's economy."
 
 Supporters claim Friedman would have a positive effect on the growing biodiesel industry in Texas as a lawmaker and highly visible spokesman, who smokes cigars and rides around in pink cars wearing a black cowboy hat. "BioWillie is supporting Kinky, and hopefully he will support us when he gets in," Bell says. "Kinky Friedman is our man, and he is going to make Willie Nelson his energy minister if he gets in, so we think that will be pretty fantastic for biofuels in Texas." 
 
 Nicholas Zeman is a Biodiesel Magazine staff writer. Reach him at nzeman@bbibiofuels.com or (701)746-8385

An independent campaign for governor is a hard row to hoe in Texas, but self-appointed biodiesel spokesman Kinky Friedman has his sights on the top office. As the gubernatorial race draws into the homestretch for the November vote, the novelist, musician and comedian may be a real contender for the title. Biodiesel Magazine relays perspectives from Lone Star State industry stakeholders on an unusual champion and eccentric supporter.

A Real Contender? Kinky Friedman, Biodiesel and the Race for the Texas Governor's Mansion

At a time when many conventional insurance companies might be challenged to keep pace with the unique requirements of the fast growing biodiesel industry, existing and future producers are increasingly seeking out firms that dedicate people, time and resources to the demanding field in which they operate. 

 
 For those in the business of biodiesel production, however, finding expert, tailored insurance services hasn't always been possible. Now, IMA Financial Group Inc.'s Biofuels Practice Group is on a mission to change that. The insurance broker's biofuels-focused team is making a name for itself as one of the industry's biodiesel plant insurance brokers. It's doing so by proactively identifying the insurance needs of producers and giving its clients a competitive edge by helping them manage risk and obtain-if needed-insurance coverage. "We're not proposing to be good at everything," says Jeff Grace, IMA account manager. "We are proposing that we're good at a few things, and one of those [things] is taking care of our ethanol and biodiesel clients." 
 
 Officially formed less than a year ago, IMA's Biofuels Practice Group has been building a solid background of service within the industry for more than three years, says David McKinney, account executive. After first providing insurance brokerage services to the ethanol industry, the group started working with biodiesel plants in 2005. Like so many service providers that got their biofuels feet wet in the ethanol business before making a leap into the smaller, but equally upward-bound biodiesel business, McKinney says the Biofuels Practice Group once found it difficult to negotiate optimal insurance coverage at affordable prices for ethanol plants. "Most of the insurance companies didn't want to have anything to do with ethanol because it was a new industry that had no history," he tells Biodiesel Magazine. 
 
 The company worked to find insurance markets willing to at least consider writing insurance coverage for ethanol plants. As an insurance broker, the group helped educate insurance companies about ethanol. Once the companies had a better understanding of ethanol plants and the overarching risks the industry was facing, it was easer to find companies willing to provide insurance coverage, McKinney explains. Now, ethanol has a much firmer foothold as an established industry. The biodiesel industry, however, is still going through many of the same growing pains ethanol weathered. "Biodiesel is where ethanol was three or four years ago," McKinney says, reiterating a variation of a statement made so frequently by firms serving both industries. "It's considered a relatively new industry from an insurance standpoint. … They don't know a lot about it."
 
 The good news for biodiesel producers is that it's not going to last forever. As time goes on, more and more insurance providers are willing to provide coverage for producers. "There's more of a marketplace now than there was even four or five months ago," McKinney says. "We expect that that will continue to expand, which is good for the biodiesel industry."
 
 IMA is ranked as the 16th largest privately held insurance brokerage group in the nation. The 30-year-old company has 400 employees in seven offices and provides risk management services to many different industries in all 50 states. IMA's Wichita, Kan. based Biofuels Practice Group focuses solely on the biofuels industry, however. In all, the service group includes 10 IMA associates. The group is an associate member of the National Biodiesel Board as well as national ethanol-related associations. "We truly have a specialty unit that is dedicated to servicing [the biofuels] industry and this industry only," Grace says. 
 
 IMA's Biofuels Practice Group is working with more than 50 biofuels plants in the United States, either those on line, under construction or being developed. That includes more than 1.9 billion in insured property values representing more than 1.6 billion gallons of biofuels, most of which is ethanol. However, the biodiesel side of the business is growing, Grace says. 
 
 Delivering Insurance Knowledge
 In its work in the biodiesel industry, IMA has found there is a lack of understanding of the types and levels of insurance that should be considered by biodiesel producers, McKinney says. That's especially true of the smaller plants-7.5 MMgy or less. "What we're finding is that either they are having to go without coverage because they couldn't find a market, or that the market that presented them with coverage is overpriced, quite honestly," McKinney says. 
 

 Not realizing what options are out there or what is needed, a producer might not consider directors' and officers' coverage, for example, which protects the board of directors in the event of a claim against the company. Or, for instance, a producer might not look at carrying builders risk insurance to protect the company if something happens during construction. 
 
 Since many facilities are located in rural areas, most of them end up dealing with a local insurance broker. While that may be good from a relational standpoint, the broker probably isn't familiar with good insurance markets and coverage needs of the biodiesel industry. "It's extremely important that the broker understand the business, and that's true whether it's biofuels, restaurants or contractors. The broker that understands that industry is always going to get you the best deal … coverages and prices," McKinney tells Biodiesel Magazine, adding that in a newer industry like biodiesel, it's particularly important. 
 
 In contrast, as well as having a solid biodiesel knowledge base, IMA operates as an independent agent, meaning it works with more than 40 insurance groups that represent more than 150 other insurance firms, McKinney says. Out of that number, perhaps 25 of those companies would be willing to consider providing coverage to a biodiesel facility. From those, there might be five that offer the right pricing and coverage for a particular facility. "The key is that we start out with a large number as opposed to just a single company that we can go to," he tells Biodiesel Magazine. 
 
 Before and After Start-Up
 With literally hundreds of check-off items to consider when developing, building and operating a biodiesel plant, insurance needs can easily be neglected. McKinney and Grace say they understand that. "The insurance issue isn't the largest issue these guys face by far. It's not even close. But it is an important issue," Grace says. 
 As an insurance broker, IMA helps biodiesel producers understand the various exposures, or risks, and helps them manage risk, perhaps through insurance. Physical risks, such as injuries to workers or third parties may be part of that, Grace says. 
 
 Having the proper insurance coverage is critical in negotiations with stakeholders like lenders and builders, McKinney says. The broker can help its client understand the insurance requirements included in those and other contracts. That's why it's so important for producers to select an insurance broker before the first shovelful of dirt is moved. The broker can work with the producer by helping plant owners, developers or management understand the impact of plant location, feedstock, transportation and offtake agreements, Grace says. Those things, in the end, have an impact on coverage and price. 
 
 IMA does a lot of work up front, before construction starts, to make sure all insurance requirements are met, McKinney says. If the contractual requirements with the lenders or contractors aren't met, financial close can be delayed or jeopardized. It's like buying a home. The lending agreement contains things that are critical for the buyer to know, including things that could affect whether the loan goes through. "You just need to be sure you know what you just signed," McKinney says. 
 
 Of course, the company also works to align the insurance needs of its clients with what insurance companies are willing to provide biodiesel plants. In all, IMA's contractual analysis services have the biggest impact on it's producer-clients. "That is where we spend a tremendous amount of our time, honing our trade, if you will," Grace says. 
 

 Beyond making sure all the contractual i's are dotted and t's crossed, working with an insurance broker in the pre-construction phase of project development has a positive impact on overall insurance costs, McKinney says. For example, if a biodiesel plant is well-protected in terms of water supply and fire protection, it can positively impact the cost of property insurance. "If you'll think of those things early in the construction phase and integrate those in the construction process, then at the end, you are much more likely to have a great availability of markets and a much better price," he says. 
 
 More important than insurance premiums, however, is making sure the facility has adequate insurance coverage. "The bigger, long-term issue to me is, 'Are you adequately insured based on your exposures, or are you not?'" Grace says. "If you are not adequately insured, then you are going to have bigger issues to face than your insurance premium." 
 For more information, check out IMA's Web site at www.imacorp.com or call the company's Biofuels Practice Group at (316) 266-6290.
 
 Holly Jessen is a Biodiesel Magazine staff writer. Reach her at hjessen@bbibiofuels
 .com or (701) 746-8385.

IMA Financial Group Inc., an insurance brokerage company, doesn't just work with biodiesel producers-it makes it a priority to understand the industry and educate insurance providers about the growing biodiesel industry. Within its dedicated Biofuels Practice Group, IMA associates focus on services biodiesel producers need.

Covering Biodiesel

One of us recently had lunch with a longtime colleague, Don Hofstrand, from Iowa State University and discussed the changing landscape of grain supply and demand, particularly as it relates to renewable energy consumption. It made us reflect on the maxim, "good facts obscure the law," and the corollary "the law is defined in times of changing facts." The surge in renewable fuels is premised on the abundant, renewable supply of grain feedstocks at commercially stable prices. The dramatic changes in supply and demand, occurring within 50 miles of biofuel facilities throughout the Midwest grain-producing states, are also having local and regional effects on grain feedstock. Because of these changes, more facilities are revising their practices, procedures and risk assessment when assessing start-up potential, expansion and ongoing operations. 
 
 Many consultants and databases are available to conduct grain availability studies within a given area. Some studies even assess the changes of corn and soybean plantings and availability. In areas with new consumption sources, it may take a year or two before area supply and demand adjust.
 
 While many developers and facilities assume grain availability, lenders and financing sources are requiring contracted grain procurement. The Uniform Commercial Code (UCC) generally covers grain procurement contracts where grain is defined as "goods," similar to commercial transactions. Federal and state clear title laws, however, have a separate procedure for obtaining and clearing a security interest in grain sourced from producers, which generally will not be identified as part of a UCC search. Grain procurement agreements should have provisions about purchasing grain free and clear of liens, with a recognition that undisclosed liens may subject the buyer to "double payment" if the federal clear title provisions are not complied with. The grain clear title laws do not cover products manufactured from grain, such as oil, but in times of short grain supplies, oil suppliers who contract grain purchases may nonetheless be at risk.
 
 To be enforceable, the language of feedstock procurement contracts generally needs to describe the purchase/sale transaction, price, quantity and delivery requirements. Developers sometimes propose to "lock up" their supplies with "requirements contracts" or contracts that generally provide that the supplier will meet all of the feedstock requirements of the facility at market price. Vague language will make the contract more difficult to enforce. We generally recommend using ranges of volume and pricing to reflect the parties' intention. If it is the intent to purchase feedstocks at any price, that intent should be clearly stated.
 
 For many contracts, failure to deliver feedstocks will result in direct (the difference between the contract and the market price) and consequential damages (loss resulting from not having the feedstock, particularly if substitute feedstock cannot be acquired). Some contracts waive these provisions or specify liquidated (specified and limited) damages, which need to be carefully considered.
 
 Feedstock procurement and pricing presents a substantial risk profile in all biofuels facilities, particularly for biodiesel. A timely review of these risks is necessary, and the risks must be addressed in feedstock procurement agreements. 

 
 Mark Hanson and Todd Guerrero are members of the Agribusiness & Energy Practice Group of Lindquist & Vennum PLLP, a leading provider of legal assistance on renewable energy projects throughout the country. They can be reached at (612) 371-3211.

67-1294329420.jpg

68-1294329424.jpg

Feedstock: Procurement contracts must help manage risk

July 2006

Business Briefs

Xethanol looks into biodiesel ventures

Green Star Products slated to build North Carolina plant

Earth Biofuels launches marketing campaign

Fuel additive reduces NOx in California study on biodiesel

Australian companies make plans for biodiesel plant project

Lurgi to build TexCom project in Texas

Florida joins Southeast Diesel Collaborative

Methanol Institute issues biodiesel report

D1 plans biodiesel franchises in Australia, New Zealand

BioSolutions receives financing from T&T Capital

Technip awarded project in France

Piedmont Biofuels hires new executive director

PowerShift hires new VP of HR, marketing

Appalachian State students win EPA award

USB gives Knothe soybean oil award

Columns

Editor's Note

NBB In Sight

Legal Perspective

Featured

Permitted to Proceed

Crushing Questions

Competing Commodities with Common Goals

Loading Up on B20

A Real Contender? Kinky Friedman, Biodiesel and the Race for the Texas Governor's Mansion

Covering Biodiesel

July 2006.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Xethanol looks into biodiesel ventures

Green Star Products slated to build North Carolina plant

Earth Biofuels launches marketing campaign

Fuel additive reduces NOx in California study on biodiesel

Australian companies make plans for biodiesel plant project

Lurgi to build TexCom project in Texas

Florida joins Southeast Diesel Collaborative

Methanol Institute issues biodiesel report

D1 plans biodiesel franchises in Australia, New Zealand

BioSolutions receives financing from T&T Capital

Technip awarded project in France

Piedmont Biofuels hires new executive director

PowerShift hires new VP of HR, marketing

Appalachian State students win EPA award

USB gives Knothe soybean oil award

Columns

Editor's Note

NBB In Sight

Legal Perspective

Featured

Permitted to Proceed

Crushing Questions

Competing Commodities with Common Goals

Loading Up on B20

A Real Contender? Kinky Friedman, Biodiesel and the Race for the Texas Governor's Mansion

Covering Biodiesel

July 2006