Around this time each year, we address biodiesel-blended heating oil. Our perennial review of this topic-Bioheat-reminds readers of the potential that this still-marginal market for biodiesel holds. This month's cover story, "True Calling" by Biodiesel Magazine Senior Staff Writer Ron Kotrba, is particularly compelling because it prompts us, if indirectly, to consider the real possibility of a 1 billion-gallon-per-year market for biodiesel as a component of the distillates used for home heating and power. 
 
 The story points out that if only 5 percent of the 10 billion gallons of heating oil consumed annually in the United States was replaced with biodiesel, this would open up a 500 MMgy market for biodiesel. Double biodiesel content to 10 percent, which is well within current acceptable thresholds, and we're looking at a 1 billion-gallon market. Double it again, and … well, you get the point. What's more, however, is that new peripheral applications for heating fuel, including combined heating, air conditioning and power generation systems for single-family homes, raises the bar even higher. That's just in the United States. At press time, a bill was introduced in Canada's Parliament that would require 2 percent average renewable content in the nation's heating oil by 2012.
 
 The North American heating oil market isn't exactly booming, however. In the United States, only 7.5 percent of homes burn oil for heat, and more than 80 percent of them are in the Northeast and central Atlantic states. Heating oil, while efficient, isn't "green," and it's less convenient and more expensive than natural gas because delivered fuel is well above $3 per gallon right now. For these and other reasons, heating oil has a negligible share of the nation's new construction market. The question is: Can its reputation be rescued by biodiesel? 
 
 Heating oil advocacy groups and fuel distributors bill heating oil, especially when blended with biodiesel, as clean, safe and affordable. With broader applications emerging for electricity generation and air conditioning, Bioheat could win a place alongside other green heating and power sources such as geothermal and solar power. For that to happen, however, consumers must be convinced that Bioheat is clean, safe and reliable. We know it's clean; burning biodiesel-blended heating oil results in fewer emissions from nitrogen oxides and particulate matter. We know it's safe; blending biodiesel into heating oil raises the flash point of the fuel, making accidents more unlikely than they already are. As for reliability, perhaps the pending acceptance of B5 (or higher blends) in the ASTM heating oil spec, D 396, will start to ensure that operational issues with Bioheat are rare and unacceptable. Lock in those three selling points, and a 1 billion-gallon market is very possible.
 
 Tom Bryan
 Editorial Director
 <a href="mailto:tbryan@bbibiofuels.com">tbryan@bbibiofuels.com</a>

Trust, Not Price, Will Drive Bioheat Market

Editor's Note

Dynamic Fuels LLC has selected Geismar, La., as the location of its first renewable diesel production facility, which is slated to be operational in 2010. Tulsa, Okla.-based Syntroleum Corp., a partner in the Dynamic Fuels joint venture with Tyson Foods Inc., said the $135 million plant will be adjacent to a Lion Copolymer facility. The site was chosen to utilize existing infrastructure and available hydrogen needed in Syntroleum's patented and trademarked Biofining process. The 75 MMgy plant will produce renewable synthetic diesel and jet fuel using low-grade fats supplied by Tyson. Syntroleum's process is adapted from its Synfining process, which produces synthetic diesel from Fischer-Tropsch products derived from natural gas.

Dynamic Fuels selects renewable diesel site

Iowa renewable fuel industry leaders recently wrote letters to several U.S. senators, calling for them to support an amendment added to the Farm Bill by Sen. Saxby Chambliss, R-Ga., that would expand Farm Credit Services' lending authority to renewable fuels facilities. Currently, Farm Credit can only lend to a start-up biodiesel or ethanol plant if the facility is 50 percent farmer-owned. The letter pointed out that this was reasonable in the early days of the renewable fuels industry, but now bigger, more expensive plants are being built, "making it impossible to achieve 50 percent farmer ownership."

Biodiesel leaders request Farm Credit expansion

Rising soybean prices and a lack of financing led to the bankruptcy of a 2 MMgy biodiesel facility owned by Green Country Biodiesel Inc. in early November. The company filed for asset liquidation of the Chelsea, Okla., facility in a Tulsa bankruptcy court, listing debts of about $255,000 with assets totaling about $127,000. Green Country's largest unsecured creditor was agricultural giant Cargill Inc., which was owed $128,000 for soy oil. Green Country reported about $47,000 in revenue for part of 2005, the facility's inaugural year of operation. The company generated about $860,000 in revenue in 2006 with nothing earned in 2007.

Green Country Biodiesel files for bankruptcy

American Renewable Fuels Inc., a subsidiary of Australian Renewable Fuels Ltd., has renewed plans to locate a 75 MMgy biodiesel facility near Clovis, N.M. The project, first announced in February 2006, was revisited after the Australian company closed its two 12 MMgy biodiesel plants in Picton and Adelaide, Australia, which had started production in 2006. A 50 percent increase in feedstock costs, infrastructure investment demands from petroleum producers and unfavorable changes to Australia's biodiesel tax credit program were the main causes of the closures. The Clovis plant is expected to be operational by September 2009.

Aussies revisit New Mexico project

The U.K. Transport Secretary unveiled the country's Renewable Fuels Agency in early November. The agency will be responsible for the day-to-day monitoring of the Renewable Transport Fuels Obligation, which will be implemented in April. It ultimately requires that 5 percent of U.K. fuels consist of biofuels by 2010. Ed Gallagher, former chief executive of the Environment Agency, will act as chairman of the new organization. Four others were named to the agency's board. At press time, a chief executive was going to be named at the beginning of the year. The agency will be based in Hastings, East Sussex.

U.K. forms Renewable Fuels Agency

In Scotland, the Stagecoach bus company is offering discounted bus fares to customers in exchange for their used cooking oil. All households on a select route, which carries 15,500 passengers per week, received a free container for the oil. The oil is then converted into biodiesel by Argent Energy Ltd., a 50 MMly (13 MMgy) producer since 2005. Argent is supplying biodiesel for a six-month trial, in which eight buses have been retrofitted with two tanks: one 40-liter (11-gallon) tank for petroleum diesel to start the vehicle and one 184-liter (49-gallon) tank for B100 to operate the vehicle all day.

Scotland offers discounted fares for waste vegetable oil

GS CleanTech Corp. has signed its second agreement in two months with an ethanol producer to acquire corn oil from distillers grains for biodiesel production. Global Ethanol LLC, which owns Midwest Grain Processors LLC in Lakota and Riga, Iowa, and GS CleanTech will jointly own and operate GS Global Biodiesel LLC, a biodiesel plant adjacent to the 100 MMgy ethanol facility in Lakota. The companies will extract approximately 10 MMgy of crude corn oil and produce 10 MMgy of biodiesel with the option of scaling up to 30 MMgy. In October, GS CleanTech Corp. signed a similar agreement with Northeast Biofuels LLC in Volney, N.Y. n

GS CleanTech adds corn oil supplier

In late October, the U.S. EPA issued a report, titled "Guidance for Biodiesel Producers and Biodiesel Blenders/Users," with the intent to clarify its regulatory requirements to which all U.S. biodiesel producers are held accountable. 
 

 Although the issuance wasn't necessarily something new, it served as a reminder that the EPA enforces the appropriate measures to ensure quality throughout the fuel supply chain. The eight-page document, which is available on the EPA's Web site, addresses the actions that the agency has the authority to take against producers of out-of-spec product. It also includes updates on biodiesel emissions characteristics.
 
 Through its guidance, the EPA reiterates its authority to penalize producers taking shortcuts on quality assurance, which some say is more than a friendly reminder. "There are assets that must be protected," an ASTM committee member told Biodiesel Magazine. Among those assets are company reputations. Some fuel distributors have concerns about off-spec biodiesel merging into the mainstream, where accountability would be more difficult to track unless ground-level EPA enforcement of biodiesel quality was enacted. The EPA reminds methyl-ester biodiesel producers that if their product doesn't meet ASTM D 6751 specs, monetary penalties up to $32,500 per day may be issued. The document also provides warning that credentialed EPA inspectors have authority to enter premises at any given time for inspection to determine compliance with all registration and quality measurements, including gathering fuel samples and information from plant records. 
 
 For blenders and end-users, the agency says B20 and lower blends are more popular with consumers and therefore more closely monitored for quality. Higher blends should be approached on a case-by-case basis. Original engine manufacturer Chrysler approved B20 in Dodge Ram fleet applications, for instance, but the EPA reminds users that most OEMs only approve biodiesel use in blends up to 5 percent. 
 In addition to the review of its regulatory requirements, the agency also rebuked the emissions results it released five years ago. Its 2002 biodiesel emissions analysis indicated that biodiesel blends lead to higher nitrogen oxide emissions, but the EPA now admits that study was deficient in engine sample representation and the emulation of real-world cycle and load activity. "The magnitude of biodiesel NOx impact still remains controversial," the agency stated. "[The] EPA has recently shown experimentally that this impact is proportional to test cycle load. Using this information and working in cooperation with the stakeholders, [the] EPA has developed a proposal for a Collaborative Biodiesel Emission Test Program to address the NOx issue. The funding for this test program is currently uncertain. However, we continue to believe that a well-designed study such as this is necessary to accurately determine the effect of biodiesel on emissions. In addition, [the] EPA is currently updating the 2002 biodiesel study using test data that have become available in recent years." 
 
 This conclusion is significant considering state, regional and national organizations rely on the EPA to make informed decisions about the use of biodiesel. For example, the Texas Low-Emission Diesel debate in the populous eastern portion of Texas may have been avoided without the EPA's 2002 data indicating that biodiesel slightly increased NOx, the target effluent in the EPA's charge to reduce mobile diesel emissions. 
 
 While the EPA's future role in assuring biodiesel quality is uncertain, biodiesel advocates believe recent measures taken by the industry to improve ASTM D 6751 specs, and stricter process management fueled by fears of the unknown, may keep the federal regulatory wolves at bay-for a while anyway.

EPA offers guidance to producers

The beginning of 2008 marks four months into the implementation of the usage of renewable identification numbers. During this time, biodiesel producers and other parties that must comply adjusted to the new system of RIN transfers and reporting requirements. 
 
 The third quarter 2007 renewable fuel volume and RIN transaction reports-the first reporting requirements under the new system-were due to be submitted by regulated parties and biodiesel producers Nov. 30. However, in response to a request from the Petroleum Marketers and Convenience Stores of Iowa, the U.S. EPA extended the regulated parties' deadline to Feb. 28. Regulated parties are refiners, blenders and importers. The reporting deadline for biodiesel producers wasn't extended. Typically, quarterly reports are due two months after the end of the quarter. The fourth-quarter report and year-end compliance report are also due Feb. 28.
 
 To help parties to understand the basics of compliance and report preparation, the RINSTAR Renewable Fuel Registry held a RIN Boot Camp on Oct. 30. According to Clean Fuels Clearinghouse President Clayton McMartin, 234 people representing more than 100 companies participated in the webinar, an Internet-based conference. About one-third of the participants were biofuel producers or importers, and the remaining group consisted of marketers, blenders, refiners and exporters. EPA representatives gave presentations and answered questions. 
 
 McMartin said it was apparent from the questions that compliance with the renewable fuels standard, from which the RINs were implemented, isn't up to par. "I think people are just now realizing this is for real," he said. Poll data gathered during the webinar revealed that 59 percent of respondents hadn't started on the third-quarter report, while just 5 percent had already completed and submitted the report to the EPA.
 

 Another poll showed that 61 percent of respondents said they receive RINs at least one day after the product transfer document. "One of the most revealing things from the webinar is that RINs are not accompanying renewable fuel as required by the regulations," McMartin said. "RINs are to be transferred the same day the product is transferred. I see companies that are two months behind on their transfers." 
 
 Another webinar will likely take place in January and cover year-end compliance, McMartin said. With the right system, he said reporting can be simple. "We built our system on a solid foundation of a database," he said. "We account for every transaction, which allows us to put everything back together. We keep the data organized, so that report can be generated the day after the quarter ends."
 
 Some RINSTAR registry customers have found this to be true. "For less than $200 and just a few minutes of my time, we had our third-quarter reports into the EPA," said Mike Swan, operations manager at Holland Terminal Inc. "I sent these reports through [the EPA's Central Data Exchange] system, which is a minor accomplishment on its own."
 
 McMartin said the registry continues to grow each week. "We are handling as many as 800 transactions a day now-up from around 250 in September," he said. "Our transaction rate is on a pace of 10,000 transactions per month." He added that approximately 20 percent of the transactions involve biodiesel. The transactions are among more than 30 member companies, which he said accounts for more than 1 billion gallons of renewable fuel transfers annually. "That shows you how much [fuel] trading happens before it gets to the end-user," he said.

RIN webinar offers tips

ICIS, a global publisher of chemicals information, announced the winners of its International Innovation Awards in November. Carotech Ltd., a Malaysian palm-oil-to-biodiesel producer, received the Best Innovation Award in the category of small or medium enterprises. Carotech has patented and integrated a process that extracts and concentrates natural phytonutrients from virgin crude palm oil while producing biodiesel and glycerin. The company has been supplying its trademarked CaroDiesel to Europe, the United States and Japan since 2003. Its biodiesel plant is located in Ipoh, Malaysia.

Carotech receives Best Innovation award

Montana's newest oilseed crop, camelina, may get a big boost this coming year from two joint ventures announced this fall to develop the crop for biodiesel production.
 
 Montana-based Great Plains Oil and Exploration-The Camelina Co. conducted a series of grower meetings across the state's northern-tier counties in the fall. The company is hoping to recruit growers to expand camelina acres for its new partnerships. In August, Great Plains announced a partnership with INEOS Enterprises, a U.K. manufacturer of specialty chemicals and oil products. The partnership seeks to boost the production of camelina in the state's, Canada and the Pacific Northwest to 100,000 acres. INEOS Enterprises currently has a French plant that crushes more than 100,000 tons of rapeseed each year for the fuel and chemical market. Its Web site indicates plans to dramatically increase its European biodiesel production. Great Plains also has a partnership with Ohio-based Peter Cremer North America LP to supply camelina for the company's Nexsol brand of biodiesel. Great Plains said it is willing to contract all the camelina acres that Montana growers are willing to plant. In addition, 2007 growers were offered the opportunity to plant up to 50 acres in the fall for harvest in the early summer of 2008 to test the plant's winter hardiness. 
 
 In a separate project, Sustainable Oils Inc. was formed in late November through a joint venture between Seattle-based Targeted Growth Inc. and Houston-based Green Earth Fuels LLC. The new company aims to produce 100 million gallons of camelina-based biodiesel by 2010 in a U.S. location yet to be determined. Targeted Growth is a crop development firm working in the United States and Canada to improve biofuel crops including soybeans, canola and, most recently, camelina. It plans to sell its new camelina seed variety to farmers through Western State Breeders Inc. in Bozeman, Mont. Green Earth operates a 90 MMgy multi-feedstock biodiesel facility in the Galena Park Liquids Terminal owned by Kinder Morgan Energy Partners LP on Houston's ship canal.

Montana camelina acres may increase

More than 480 people from more than 50 countries gathered in Vienna, Austria, in early November for the International Congress on Biodiesel, organized by the American Oil Chemists' Society. 
 
 The conference, themed "The Science and the Technologies," was aimed at people working on the technical side of the industry, said Michael Haas, general chairman of the congress and a biochemist with the USDA Agricultural Research Service. "We put a lot of energy into assembling a high-quality, balanced international program," he said. "We had scientific presentations and poster sessions on a number of topics ranging from governmental policy and new chemistry for making biodiesel to engine performance on biodiesel."
 
 Haas said the event also aimed to provide a platform for global-scale networking. "It was a tremendous opportunity for people who had seen each others' work and heard each others' names to really meet each other," he said. "I myself met people with whom I had e-mail correspondence for four or five years."
 
 The importance of biodiesel quality, the need for international quality standards, the sizeable exportation of biodiesel from the United States to Europe, shrinking margins due to high feedstock costs and shifting government policies toward biodiesel were among the many issues discussed in and outside of each session. "Biodiesel producers in Germany are hurting because of high feedstock costs and dropped tax protection," Haas said. "The fact that more than half of all biodiesel produced in the United States is exported to Europe, and the strain that this is putting on the relationship between the U.S. and European biodiesel communities, was the most surprising thing I heard at the meeting."

 
 On the technical side, Haas said there was substantial work presented on solid phase catalysis for biodiesel production. Other sessions included engine performance and emissions, glycerol utilization, new feedstock supply, government policy and tax situations worldwide, fuel properties, new production technologies, quality assurance specifications, and life cycle and sustainability analysis.
 
 Despite challenges in the industry, there were signs of optimism for the long-term viability of biodiesel production. "I think there was a feeling of optimism, that the industry had already overcome so many roadblocks and was looking toward the future," Haas said. "If you think about what we are going to learn over the next two years-if jatropha is as good as it is said to be and if algae are a viable feedstock-we'll see the appearance of biodiesel production in new countries around the world."

Raffaello Garofalo, secretary general of the European Biodiesel Board, left, and Joe Jobe, chief executive officer of the National Biodiesel Board

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International group gathers for biodiesel congress

A new Internal Revenue Service policy will have an impact on the biodiesel industry as requirements for 637 M registration go into effect for blenders using B99 below the terminal rack. Until recently, blenders were able to purchase B99 at the rack with the assumption that all tax obligations had been met, and then go on to blend it with petroleum diesel to arrive at lower blends, such as B2 and B5. The previous IRS policy treated B99 as a blended fuel and allowed upstream blenders to add 0.1 percent petroleum diesel to B100, take the blenders tax credit and then pass along a portion of that savings with the sale of B99.
 
 However, the new policy changes the way the IRS categorizes blended fuels. According to the Petroleum Marketers Association of America, the IRS determined that B99 isn't a taxable motor fuel because it doesn't contain paraffin, and therefore it isn't considered a blended fuel. Marketers blending B99 below the terminal rack are subject to 637 M registration and aren't eligible for the blenders tax credit.
 
 IRS 637 M registration governs the federal excise tax, and a 637 M registration requirement means that parties now handling B99 as a taxable motor fuel will have to change practices and handle it as a nontaxable motor fuel. They will also have to pay the 24.4-cent federal excise tax when it is again blended with petroleum diesel to make lower biodiesel blends.
 
 Although the shift in policy still hasn't been formalized with an IRS rulemaking document that was expected in 2006, the PMAA is advising blenders below the terminal rack to apply for 637 M registration at <a href="http://www.irs.gov" target="_blank">www.irs.gov</a>.

IRS to require blender registration

In an effort to improve the quality of life for their citizens by reducing the barriers to international trade and investment, the United States and European Union unveiled a framework in early 2007 for promoting the integration of their economies, fostering collaboration and innovation, and reducing regulatory barriers. To that end, an initiative was passed at a summit in April, which established the Transatlantic Economic Council. The group, charged with overseeing the efforts of the framework, met for the first time in early November.
 
 One task the TEC aimed to tackle in the inaugural meeting was harmonizing the technical standards that define biodiesel, as well as ethanol. Commerce is the driver for this endeavor, not issues of quality, said Stu Porter, manager of business development and projects for BBI Biofuels Canada. He expects the TEC to agree on a loose framework for biofuels standards by the end of the year. The committee will focus on a kind of "umbrella framework," he said, because the half-dozen or so differences between the ASTM and EN standards for biodiesel quality prove "a challenge to the establishment of uniform standards."
 
 The TEC is cochaired by Allan Hubbard, assistant to the U.S. president for economic policy, and director of the national economic council; and Guenter Verheugen, vice president of the European Commission. Although the specifics of the TEC plan weren't available at press time, a joint statement released by the council said, "Our experts have reached a preliminary agreement on the areas in which existing standards for pure biofuels are compatible and will, by the end of [2007], identify areas in which additional progress can be made in 2008."

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International council to develop

Goshen Energy Resources Inc., a wholly owned subsidiary of City Capital Corp., has signed a joint venture contract with Native American Biofuels International, which represents the biofuels interest of nearly a dozen Native American tribes. 
 

 The partnership has three primary objectives: to facilitate the development of biofuels and other renewable energy resources, and the infrastructure necessary to implement such a program; to establish a low-cost feedstock source on tribal lands to produce biodiesel at higher profit margins; and to secure base operating services contracts with governmental departments.
 
 The first phase of the partnership agreement includes the procurement of a five- to 10-year purchase contract, which Goshen projected at press time to be in place by December 2007.
 
 "Goshen Energy Resources provides NABI with a more technologically advanced and strategic approach to developing and distributing biofuels," said James Cooke, NABI chief executive officer. "This [joint venture] will allow the tribes we represent an opportunity to broaden their profit potential in a positive way, utilizing Goshen's advanced systems, processes, and extensive government and community relationships."
 
 In August, Goshen Energy announced its plan to enter the bioenergy industry by investing in biodiesel production. "Our partnership with [NABI] provides us a stable crop source for biodiesel production to service our customers over the longer term," said Ephren Taylor, City Capital chief executive officer. "Additionally, [Cooke] brings us over 15 years of experience in securing significant multi-million dollar governmental contracts. We believe this partnership with help us directly increase our shareholders' value and enhance our bottom-line profits."
 
 Initially, Goshen Energy also planned to build five regional hubs to distribute its biodiesel. Possible locations included coastal South Carolina; Louisville, Ky.; Las Vegas; Philadelphia; Dover, Del.; Los Angeles; and Dallas. "It was the urging of several individuals and groups in these five cities that encouraged us to pursue the biofuels arena," Taylor said.

Native American tribes enter biodiesel arena

Pennsylvania Gov. Edward Rendell introduced a $10 million development grant to initiate local biofuel research and development that would help to meet the state's renewable energy demands. The grant supports 24 local biodiesel projects that would replace about 95 million gallons of petroleum diesel. The grant is part of the governor's Alternative Fuels Incentive Grant program that would leverage another $108 million in private investment. The grant program will also help to achieve Rendell's state goal established under his PennSecurity Fuels Initiative to produce and consume nearly 1 billion gallons of biofuel by 2017.
 
 The PennSecurity Fuels Initiative would enact a statewide B2 mandate once in-state biodiesel production reaches 30 million gallons with incremental increases up to 20 percent once annual production capacity reaches 300 million gallons.
 
 One notable biodiesel project is being headed by specialty materials company Rohm and Haas, which was awarded $752,000 to demonstrate its trademarked and patent-pending Amberlyst BD20, a novel polymeric catalyst technology that would convert free fatty acids in low-quality biodiesel feedstocks into biodiesel. The technology would expand the list of available feedstocks, giving biodiesel producers greater flexibility and increased volumes. Rohm and Haas intends to build a mobile, pilot-scale facility that would be made available for trials at other established biodiesel plants in Pennsylvania.
 
 "We're really excited because we believe that this technology is a good one for the biodiesel industry," said Rohm and Haas Process Chemicals Research Manager Rajiv Banavali. "I think we're bringing it at the right time when the industry is really looking for cheaper raw materials."
 
 In addition to supporting technology advancements, the alternative fuel grants also provide financial incentives to would-be producers. The program awards 5 cents per gallon to Pennsylvania biodiesel producers, up to 12.5 MMgy. 

 
 To learn more about Pennsylvania's biofuel initiatives, visit <a href="http://www.governor.state.pa.us" target="_blank">www.governor.state.pa.us</a>.

Free fatty acid oil is treated with Rohm and Haas' Amberlyst BD20 technology prior to esterification.

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Pennsylvania paves way for biodiesel growth

Web exclusive posted Dec. 20, 2007, at 10:40 a.m. CST
 
 <a href="http://www.verasun.com" target="_blank">VeraSun Energy Corp.</a>, the nation's largest dry-mill ethanol producer, has begun work on an oil extraction facility at the 120 MMgy <a href="http://verasun.com/Facilities/aurora.cfm?ID=2&CFID=106385&CFTOKEN=15428754" target="_blank">VeraSun Aurora</a> plant in South Dakota. The oil extraction facility will extract corn oil from distillers grains, one of the coproducts from the corn starch-to-ethanol process. The company made the announcement this morning that the facility is targeted to be on line in the fourth quarter of 2008 and is expected to produce 7 MMgy to 8 MMgy of corn oil from 390,000 tons of distillers grains. That corn oil could be used by the biodiesel industry as a feedstock. The company said the addition of that corn oil to the market could result in additional biodiesel production without increasing feedstock demand.
 
 "The production of two biofuels from one kernel of corn makes economic and environmental sense," VeraSun Vice President of Corporate Development Pete Atkins said. "This is a great example of the innovation that will continue to develop as the industry matures. We are pleased to contribute to the commercialization of this technology."
 
 VeraSun has plans to build similar facilities at its plants in Fort Dodge, Iowa, and Charles City, Iowa, when construction at Aurora is complete. VeraSun's plants have been designed with similar footprints so as to make replication of new technologies and processes such as the oil extraction facility. The company recently merged with U.S. BioEnergy to form the nation's largest dry-mill ethanol producer and noted that the U.S. BioEnergy plants will also facilitate replication of technologies and processes.
 

 VeraSun announced its corn oil extraction technology in November 2006.

VeraSun begins work on oil extraction facility

The biodiesel industry chose Minnesota farmer-leader Ed Hegland to chair the National Biodiesel Board at the board's mid-November meeting in Washington, D.C. A soybean grower from Appleton, Minn., Hegland will help lead the organization during a year of continued growth and challenges for the alternative fuel. 
 
 Hegland has served as a board member for the nonprofit trade association since 2004, representing the Minnesota Soybean Research & Promotion Council. He was elected to the NBB's governing board in 2006. 
 
 "We have had some great successes in the growth of the industry and in policy in Washington, D.C., over the past few years," Hegland said. "Going forward, our board will work together to build upon those and be the unified voice for a sustainable future for the biodiesel industry." 
 
 Other officers elected to lead the board are Vice Chair Gary Haer of Renewable Energy Group Inc., Secretary Graham Noyes of Imperium Renewables and Treasurer Ed Ulch of the Iowa Soybean Association.
 
 It was the first election held under NBB's newly adopted structure to help ensure the industry's ability to speak with one voice. The structure streamlines and clarifies NBB's membership categories, guarantees more biodiesel producers seats on the governing board and envisions an increasing proportion of biodiesel producer-leaders over time. Other board members include:
 
 › Jim Conway, Griffin Industries (reelected) 
 › Kris Kappenman, Archer Daniels Midland Co. (reelected) 
 › Darryl Brinkmann, American Soybean Association and immediate past NBB chair (reelected) 
 › Jeff Trucksess, Green Earth Fuels 
 › Bob Metz, South Dakota Soybean Research & Promotion Council (reelected) 

 › Jake Stewart, Organic Fuels 
 › Denny Mauser, Western Iowa Energy 
 › Greg Anderson, Nebraska Soybean Board (reelected) 
 › David Womack, Tennessee Soybean Promotion Board (reelected) 
 › Robert Stobaugh, Arkansas Soybean Promotion Board (reelected) 
 › Chuck Neece, FUMPA 
 
 The NBB recognized Darryl Brinkmann for his years of dedicated service to the industry and as the outgoing board chair. He served in that role from 2004-'07. Also recognized were outgoing board members Fred Wellons, Tellurian Biodiesel; Gene Gebolys, World Energy, who was chairman of the regulatory committee; Jim Boushka, Smithfield BioEnergy; Bill Ayres, Ag BioEnergy; and John Campbell, Ag Products Inc.
 
 Cantwell honored for biodiesel work
 The NBB presented Sen. Maria Cantwell, D-Wash., with the National Energy Leadership Award for her role in promoting biodiesel development. The award was in recognition of Cantwell's efforts as a member of the Senate Finance Committee and the Energy and Natural Resources Committee to promote the production and use of biodiesel. Cantwell accepted the award at the NBB board meeting.
 
 "Looking forward, there are many opportunities for the biodiesel industry during this exciting time," Cantwell said. "Our challenge in Washington, D.C., is going to be how to level the playing field. We need to stop (providing incentives for) fossil fuels, and level the playing field for new products in the marketplace, such as biodiesel."
 
 New resolutions steer board

 Three committees adopted new resolutions to help guide the industry. The technical, marketing and regulatory committees met and passed resolutions to address quality assurance, biodiesel as an answer to carbon reduction and legislative action. 
 
 The technical committee's resolution stated, "NBB encourages all biodiesel producers to monitor B100 production using appropriate performance-based tests to minimize the potential for filter clogging above the cloud point with B20 and lower blends." It adopted this resolution to help address refinement of the ASTM specification for precipitates above the cloud point. The NBB is vigilant in taking precautions in cold weather, and the technical committee members voted unanimously to ensure that even though fuel might meet the ASTM specification, fuel producers must monitor their fuel for cold weather properties above that called for by ASTM. The original equipment manufacturer and petroleum industries have requested actions like this be taken, and the NBB is being responsive.
 
 The marketing committee's resolution stated, "NBB supports a market-based system to reduce carbon emissions, which includes a recognition of the greenhouse gas reduction benefits of biodiesel." This will encourage the industry to promote biodiesel for its lifecycle carbon reduction and its eligibility as a fuel that can help participate in carbon reduction goals and programs.
 
 For more information on the regulatory committee's resolution, read "Washington watch."
 
 Washington watch: NBB considers issues, policy resolutions
 The National Biodiesel Board convened Nov. 13-14 in Washington, D.C., and implemented a new process for the consideration of the positions and resolutions that serve as the basis for NBB's federal affairs advocacy efforts. The process encouraged the input and participation of NBB's membership in crafting new resolutions and reviewing the organization's existing policies.
 
 The consideration of issues and resolutions in NBB's regulatory committee, which focuses on matters pertaining to federal and state affairs, led to the adoption of several new resolutions, including:
 
 › Support of public funding for biodiesel fueling stations 
 › Establishment of an internal NBB workgroup to promote to federal policymakers the superior carbon and energy balance properties of biodiesel 
 › Commitment on addressing the food-versus-fuel debate as it relates to biodiesel and engaging constructively to support sustainability standards for domestic biodiesel production.

 
 In addition, the trade committee adopted a resolution stating, "The NBB supports multilateral trade initiatives that strive to remove tariff and non-tariff barriers that impede the free flow of feedstock and fuels. The NBB also supports the use of provisions available under current law to reduce costs for biodiesel producers." 
 
 The resolutions adopted by the regulatory and trade committees were unanimously approved by the overall NBB membership and the governing board.
 
 Activities in NBB's regulatory and trade committees also included members of the regulatory committee engaging in a spirited but collegial discussion regarding the structure of the federal renewable fuels standard. Discussion focused on how the program could be best modified to incorporate a renewable requirement for diesel fuel that will help create a stable, viable domestic market for biodiesel. As would be expected, different opinions were expressed regarding the proper size and structure of a biodiesel fuels program. 
 
 The regulatory committee, full NBB membership and the governing board decided to stay with the organization's current position that calls for the creation of a Biodiesel Fuels Program as part of the RFS that would provide a 1 billion gallon domestic use requirement for biodiesel by the year 2012. This is consistent with H.R. 3781, introduced by Reps. Baron Hill, D-Ind., and John Shimkus, R-Ill., in the U.S. House, and S. 1616, introduced by Sens. Richard Durbin, D-Ill., and Charles Grassley, R-Iowa, in the U.S. Senate. The NBB actively supports both bills.
 
 As for NBB's existing federal priorities, the NBB has continued its support of efforts to extend the current biodiesel tax incentive, which plays a vital role in helping make biodiesel price competitive with conventional diesel fuel. From a public policy perspective, the tax incentive has succeeded in its original goal of creating a growing domestic biodiesel industry. A long-term extension of the credit will help further this worthwhile policy objective.
 
 NBB also expressed continued support for a reauthorization of the Commodity Credit Corp.'s Bioenergy Program as part of the new Farm Bill. The Bioenergy Program helps biodiesel producers offset feedstock costs, and NBB continues to support a program that is adequately funded and provides support for all gallons of production.
 
 The proper federal policy framework will help the U.S. biodiesel industry succeed. The input and engagement of NBB's membership in formulating the association's positions and resolutions plays a critical role in helping NBB interact with policymakers and federal agencies in a manner that best reflects the industry's priorities. 
 
 Members provide valuable webinars

 The National Biodiesel Board and its commercial Web site, AllThingsBiodiesel.com, have teamed up with two of its members to offer valuable, free webinars on financial services/lending and risk management/insurance for biodiesel companies.
 
 Biodiesel Financial Services, under parent company Vendor Lease Management Group, manages financial services for dozens of companies and will host its presentation Jan. 24. Huntleigh McGehee, a full-service insurance broker, will present Jan. 17. Both presentations are open to the hosts' fellow members.
 
 Biodiesel Financial Services, in "Financing Options for Equipment Acquisition," will cover where companies can get financing for things other than construction, through banks, loan companies, shareholders and other innovative means. It will also discuss the types of available lease financing and their different structures. "One of the specialties of our company is new renewable fuel companies just starting up," said Vice President Dean Stolberg, who will present the webinar. "We will help them weather the storm until they are self-financing. That's what this webinar will help them do as well." 
 
 Huntleigh McGehee's webinar, titled "Is Your Investment Insured Properly?" will discuss insurance and risk management, review various coverage types, and which are right for various business sizes. The presentation will offer information on proper valuation of property, business interruption/extra expense and coinsurance. "We see the alternative fuels market as a growing dynamic industry, similar to the risk management industry," said Vice President Danny Stevens, who will present the session. "We enjoy working with individuals and companies that also see the value in alternative fuels and want to be a part of this important piece of our future." 
 
 Parsippany, N.J.-based Biodiesel Financial Services is a private firm financing programs for companies that manufacture test and measurement equipment, and scientific instrumentation. It helps existing and emerging companies in the renewable fuels arena finance and acquire equipment for labs to help analyze the fuel, and other equipment as needed. It also serves companies that might not obtain financing from traditional sources because of a lack of revenue. For more information on Biodiesel Financial Services, visit <a href="http://www.vlmglease.com/biodiesel-financial.html" target="_blank"<www.vlmglease.com/biodiesel-financial.html</a>.
 
 St. Louis-based Huntleigh McGehee is a full-service insurance broker serving accounts throughout the world. It helps clients ensure the best possible coverage for the least amount of premium. Other services include employee benefits. Its specialty industries include oil, gas, renewable fuels and construction. For more information, visit <a href="http://www.huntleigh-mcgehee.com" target="_blank">www.huntleigh-mcgehee.com</a>. Stevens can be reached at <a mailto:dstevens@hmrisk.com">dstevens@hmrisk.com</a> or (314) 746-4774.

 
 To register for the webinars and for more details, visit <a href="https://www1.gotomeeting.com/register/215992685">https://www1.gotomeeting.com/register/215992685</a> for "Financing Options," and <a href="https://www1.gotomeeting.com/register/199783059">https://www1.gotomeeting.com/register/199783059</a> for "Investment Insured Properly." Biodiesel Financial Services and Huntleigh McGehee will provide additional webinars later as requested. Non-members are also welcome.
 
 Valuable education at February conference
 The National Biodiesel Conference & Expo is the most comprehensive annual forum for biodiesel education. This year's event, held Feb. 3-6 in Orlando, will feature production, technical, fuel distribution, policy/regulations, markets and users tracks, as well as auto and engine manufacturer sessions. The conference also holds non-track conference sessions like BQ-9000 training and a biodiesel production technology course.
 
 Sessions include:
 › Pipelines: The Underground Pathway to National Supply Assurance
 › Glycerin is In

 › Feedstock Procurement and Risk Management
 › Engine and Vehicle Warranties--Updates from cutting-Edge Biodiesel Supporters
 › Fuel Quality Survey Says
 › and B20 Case Studies: Document, Document, Document.
 
 The conference, which continues to grow, offers top-notch general sessions and speakers. On Feb. 3, NBB CEO Joe Jobe and long-term trends analyst Don Reynolds will discuss the conference's theme, "Navigating a Changing Landscape." On Feb. 4, former astronaut Jim Lovell will discuss the challenges space exploration faced, at a time when biodiesel faces its own challenges. Feb. 5 will feature feedstock developments that ensure long-term viability of the industry in "Biodiesel: The Next Generation."
 
 Networking events, including a golf tournament, help strike the right balance of work and play. Pre-registration ends Jan. 25, after which attendees must register on-site at a higher rate. Visit biodieselconference.org for more information.
 
 Biodiesel draws candidates' focus 
 Two presidential campaign events in Iowa demonstrated the bipartisan support for biodiesel in America. President candidates and Sens. John McCain, R-Ariz., and Hilary Clinton, D-N.Y., participated in separate biodiesel events hosted Nov. 6 by National Biodiesel Board member Renewable Energy Group Inc.
 
 McCain attended the ribbon-cutting ceremony for REG's new 60,000-square-foot headquarters and state-of-the-art laboratory in Ames, Iowa. Clinton toured the REG-network Central Iowa Energy LLC biodiesel facility in Newton, Iowa, a community hit hard by the closing of Maytag Corp. operations. Two-thirds of the employees at the 30 MMgy plant used to work at the Maytag facility.

NBB board meeting recap

"Guns and butter" was the classic economic model describing the relationship of two commodities that served as a paradox describing the relationship between a nation's investment in defense spending versus domestic programs. In the biodiesel business there has historically been a similar paradox between the constantly moving and highly volatile variables of energy and ag commodity prices. 2007 saw a fundamental shift in commodity pricing. Table 1 shows that all of the primary fats and oils for biodiesel production steadily moved up in close correlation to each other throughout 2007. Table 2 is a graph published in the Nov. 7 issue of Kingsman Biodiesel Weekly that demonstrates the completion of the nexus between agriculture and energy. It shows that in 2007, all the major global vegetable oils began to move in strong correlation to crude oil prices. This happened while U.S. fats and oil inventories rose. It's a remarkable shift that means agricultural lipids are now being globally traded as an energy commodity.
 
 <center><img src="/images/upload/20071220012914.jpg" alt="" />
 Table 1</center>

 
 <center><img src="/images/upload/20071220013013.jpg" alt="" />
 Table 2</center>
 
 The most destabilizing factor the U.S. biodiesel industry faces as we start 2008 is the economics of inordinately high feedstock costs. At the November 2007 NBB meeting in Washington, D.C., we discussed in great detail the confluence of factors leading to high global triglyceride prices. Soybean oil futures have gone from 18 cents per pound in February 2005 to 47 cents per pound in December 2007, representing a 160 percent increase in that time frame. The U.S. dollar is at a 15-year low, crude oil prices are at inflation-adjusted all-time highs, and there have been increases in agricultural inputs, freight costs, acreage competition and inclusion of commodities as a portfolio component. Simply, the markets are looking at existing global lipid production and speculating that it will not be enough to meet future global demand.
 
 Economic modeling commissioned by the NBB in 2004 and 2005 predicted that feedstock supply and pricing would be the significant future constraint on the industry. The study did not predict $100 per barrel crude oil, U.S. dollar devaluation or the confluence of the above factors happening simultaneously or so soon. 
 
 NBB has recommended a three-part plan for addressing this threat. First, in the near term, the industry has to be effective in its federal and state public policy goals in order to remain viable during this period of rampant speculative commodity pricing. To do so, we must be more unified and engaged as an industry in our coordinated government affairs efforts. 
 
 Second, in the medium term, we should do more to encourage and promote breeding programs and other means to provide yield and oil content improvements from conventional oilseeds, expanded acres of new oilseed crops, and breeding programs that will lead to sustainable oilseed crop production on non-productive lands. 
 
 Third, in the long term, we should do more to support research programs that will result in commercial algae production as a lipid source. It will be a tremendous challenge oversee the disciplined, simultaneous execution of all three parts of this plan, all of which put a heightened focus on the sustainability of natural resources. Even if we are successful in all areas, we may not see relief from these dynamics for some time, which means that 2008 is likely to be a difficult year for many in the biodiesel business.
 
 <center><img src="/images/upload/20071220013028.jpg" alt="" />
 Table 3</center>

 
 If there is a bright spot in all of this, it is that the current commodity pricing is sending powerful economic signals to agriculture to increase overall lipid production. Those signals will help stimulate innovation in the ag, industrial and technology sectors. It is a little-known fact that agriculture as an industrial sector has one of the best records of energy efficiency improvements of all U.S. industries over the past 40 years (Table 3). U.S. farmers have demonstrated they are among the most innovative, adaptive and willing to embrace technology improvements. 
 
 Our industry is currently constrained by the "guns and butter" model which links commodities to correlation pricing. However, if we are successful at addressing these goals to sustainably produce more fats and oils, we will put ourselves on a realistic path of growing more of our fuel supply. In this way I prefer to think of the "guns and butter" model as the tradeoff between increasing our reliance on the unstable geo-politics of crude oil (guns) versus increasing our reliance on agriculture (butter). In my view, I'd rather put more of my future in the hands of farmers and less of it in the hands of global oil barons and commodity speculators.

NBB In Sight

China-based biodiesel and specialty chemicals producer China Clean Energy Inc. reported a record $5.5 million in revenue in the third quarter of 2007, up 48 percent compared with its third quarter of 2006. CCE also reported a record high in gross profits, totaling $1.4 million, up 37 percent from 2006. Record-high international oil prices and increasing domestic demand were the two major drivers. Exports of specialty chemical products continued to grow and made up 36 percent of the total third-quarter revenues.

China Clean Energy sees strong third quarter

Grapevine, Texas-based GreenHunter Energy has closed the first offering of a new $60 million private placement convertible notes that will be used toward funding the company's retrofitted 105 MMgy biodiesel facility in Houston. The refinery is 50 percent complete and should begin full production by March, according to company President Gary Evans.  GreenHunter has also acquired biodiesel-powered electrical generators from a third party in Panama City, Panama, that will be used to power the biodiesel plant and sell excess electricity to the Houston power grid, Evans said.

GreenHunter Energy finances project, acquires generators

Wilks Enterprise Inc. recently launched a portable infrared spectrometer for user-friendly, on-site analyses of biofuels. The new instrument, called the InfraSpec VFA-IR Spectrometer, can measure biodiesel blend ratios in diesel fuel and total glyceride during the biodiesel production process. Using the InfraSpec Spectrometer for making pass/fail determinations for total glyceride can significantly reduce analysis time and increase reactor throughput by as much as 20 percent, according to the company.

Wilks Enterprise introduces portable spectrometer

New York-based JM Science has introduced an automatic titrator that performs pH, acid/base, complexometric, redox, Karl Fischer, photometric, nonaqueous and ion-selective electrode measurements that can be applied to biodiesel. The Aquacounter COM-300A automatic titrator also determines the total acid and base in oils, and water hardness. The system includes downloadable software and a cable allowing connection to the customer's computer. Additional features include one-touch calculations with a statistics package and built-in method memory. An optional Karl Fischer kit add-on is available to enhance titration for moisture determination.

JM Science introduces titrator

Eight biodiesel manufacturers, which produce a total of 1.5 million tons, created the Netherlands Biodiesel Industry Association in late October. The group is hoping to generate political support for biodiesel by touting its low carbon dioxide emissions and the reduction of foreign oil dependency. The eight companies-Biodiesel Kampen, Biopetrol Rotterdam, Biovalue Holding, Clean Energy, Dutch Biodiesel, J&S BioEnergy, Rosendaal Energy and Sunoil Biodiesel-produce enough biodiesel to replace at least 10 percent of the country's mineral diesel as early as 2009, according to the association. The country, with its western European shoreline, is also an ideal international distributor of the fuel.

Netherlands companies form biodiesel association

In late October, French company Axens received the 2007 Kirkpatrick Award for Chemical Engineering Achievement from Chemical Engineering magazine. The award was given to Axens as a result of its sustained commercial demonstration of Esterfip-H, the company's solid catalyst for biodiesel processing. Esterfip-H was released commercially in early 2006, licensed by Diester Industrie in Sete, France. In May 2007, a biodiesel plant in Sweden began using the heterogeneous catalyst in production. According to Axens, six additional biodiesel plants around the world are licensing the technology and are in various stages of development.

Axens receives chemical engineering award

As is true in all industries, patents and other types of intellectual property are critical to the biodiesel industry. Some owners use their patents to prevent competitors from making certain formulations or using beneficial processes to obtain a competitive advantage. Others earn income by licensing patents. 
 
 A recent U.S. Supreme Court decision changes the landscape in a way important to both patent owners and those against whom patents may be asserted. In its farthest-reaching patent decision in decades, KSR v. Teleflex, the Court recalibrated the standard for determining whether an invention is "obvious" and therefore unpatentable or invalid.
 
 Obviousness standards are intended to prevent a patent holder's monopoly on an obvious combination of known elements. The standards are also employed by patent examiners to reject claims and by litigants to attack the validity of opponents' patents. An invention is not patentable if, in view of the "prior art" (earlier inventions, patents and technology), it would have been obvious to a person with ordinary skill in that particular trade or industry. 
 
 Before the KSR decision, a "teaching, motivation or suggestion" standard was applied to provide uniformity in obviousness determinations. Under that standard, a patent claim could be proved obvious only if the prior art, the problem's nature, or the knowledge of a person with ordinary skill in the art revealed some motivation or suggestion to combine elements of the prior art. The standard required that when determining obviousness, the prior art had to be directed toward solving the same problem the patentee was trying to solve. KSR changed all that.
 
 KSR involved a patent on an adjustable automobile gas pedal fitted with an electronic, rather than mechanical, means of interacting with the throttle. Prior art had disclosed an adjustable pedal, the utility of placing an electronic sensor on the pedal, and the utility of placing the sensor on the pedal's support structure and not on the footpad. The only improvement in the patent was the placement of the sensor on the pivot point of the pedal assembly. 
 
 The lower court found that the claim was not obvious because the elements in the patent incorporated from the prior art did not serve the same purpose there as they did in the new invention. The Supreme Court decided this narrow view of obviousness was wrong, citing "little difference" between the patent and the existing elements in the prior art. The fact that the elements were to be used for a different purpose did not prevent the Court from determining that the patent's invention was obvious. The Supreme Court reversed the lower court's decision and found the asserted patent invalid on the basis of obviousness. In short, the Court rejected the previous rigid rules and required application of common sense to determine whether an invention is really new or just an obvious combination of known technology. 
 

 The Supreme Court's ruling is likely to make many issued patents more vulnerable to validity challenges because many existing patents were issued under the standard the Supreme Court has now rejected. A result of this ruling will be increased uncertainty for patent holders about the validity of their patents. In addition, the ruling will make some patents more difficult to obtain. Applicants seeking patents based on incremental improvements over the prior art will have a harder time overcoming obviousness. 
 
 The new standard will cause many patent owners to reconsider the value of the patents they hold. They may be less likely to assert patents, fearing that they will be held invalid and that the cost of asserting them in litigation is not justified. Those against whom older patents are asserted are likely to challenge those patents' validity. 
 
 Not all patents will be worth less or rendered invalid, but many will be subject to more scrutiny now that it is easier to invalidate patents, which takes away some advantages patent holders once had. 
 
 David Allgeyer and Christopher Russell Smith are with Lindquist & Vennum. For more information, visit <a href="http://www.lindquist.com">www.lindquist.com</a> or contact Allgeyer at (612) 371-3216 or Smith at (612) 371-3533.

901-1294329944.jpg

902-1294329945.jpg

Supreme Court Decision Affects Patents

Todd & Sargent Inc. recently received the Excellence in Construction award from the Iowa chapter of Associated Builders and Contractors Inc. The company was honored for its work designing and building Iowa Renewable Energy LLC, a 30 MMgy biodiesel plant now on line in Washington, Iowa. Renewable Energy Group managed the construction of the facility and now markets its biodiesel. The Excellence in Construction awards are judged on complexity, attractiveness, unusual challenges, completion time, workmanship, budget and safety.

Biodiesel plant builder honored

Richard Gephardt, former U.S. House majority leader from Missouri, recently joined the advisory board of Benefuel Inc. The company announced late last year that it would build the first commercial-scale biodiesel plant that uses a solid catalyst for the conversion of vegetable oils and animal fats to fuel. "I'm excited about its technology because it supports local farmers and workers while solving one of the most pressing issues we face as a nation-reducing the environmental footprint of our energy use," Gephardt said.

Former U.S. House majority leader joins Benefuel board

Heating oil has a reputation of antiquation. It's one of those unique forms of energy able to conjure imagery of weather-worn New Englanders in old Victorian town homes, or the dying breed of Midwestern farmer aging alongside crumbling agrarian empires of rusty implements and dilapidated buildings. Short, gray days when life slows to a crawl atop the packed, accumulating snow; the vicious circle of snowfall and shoveling, plowing and blowing, only to do it all over again tomorrow; cold, long, dark nights spent inside looking out. 
 
 The Northeast and central Atlantic states have by far the highest concentration of heating oil usage compared with other regions-the Energy Information Administration reports 83 percent in 2005-but homes sparsely peppered across the nation are warmed by oil in the fall, winter and early spring months. Nationwide, slightly more than 8 million households out of 107 million, or 7.5 percent of U.S. homes, burn heating oil for warmth, according to the U.S. EPA. National Oilheat Research Alliance President John Huber says this represents about 10 billion gallons of diesel fuel a year. 
 
 In the fall, weather projections indicating colder than normal winter temperatures typically induce supply and pricing fears in the heating oil markets sending prices upward. This winter, record-high heating oil prices were expected even though the National Oceanic and Atmosphereic Administrations outlook covering the first three months of 2008 predicted above-average temperatures for most of the continental United States. However, temperatures in the Northeast, from New York to Maine, were given a big question mark-an equal chance of above-average, normal or below-average temperatures for those same three winter months. Despite the unknown in the Northeast and warmer winter weather throughout the rest of the country, heating oil prices are expected to hit record highs this winter. "We're close to an all-time high for heating oil, in inflation-adjusted dollars," Huber told Biodiesel Magazine in November. "1980 is still a touch higher, but we're getting up into that range now. I've heard people pricing up in the $3.30 to $3.50 a gallon range for delivered heat." The EIA's short-term energy outlook formulated in November 2007 forecasts heating oil prices to hit season highs in first quarter 2008 at $3.07 a gallon in the Northeast and $3.08 a gallon out west for delivered heat, including state taxes. 

 
 Armed with a list of advantages fuel oil has over its competition, this energy with an aging reputation is being repackaged for a new generation of consumers. Despite information from EIA, which states most older U.S. homes outside New England have replaced oil burners with propane or natural gas, and that oil no longer has an appreciable share of the new construction market, heating oil advocacy groups and fuel distributors bill heating oil, especially when blended with biodiesel, as clean, safe and affordable. Moreover, new systems technologies with greater utility are emerging, and may help heating oil and biodiesel gain footing as an attractive source for residential heating, air conditioning and electricity. 
 
 <center><img src="/images/upload/20071221100947.jpg" alt="" /></center>
 <center><img src="/images/upload/20071221101159.jpg" alt="" /></center>
 
 Comparisons
 EIA Administrator Guy Caruso recently testified before a legislative subcommittee in Washington D.C., where he told Congress that depending on temperatures this winter, residents using electricity for heat could expect a 3 percent price increase, natural gas an 11 percent increase, propane a 20 percent increase and heating oil an increase of 26 percent compared with the previous year. Andrew Schuyler, director for the Northeast Biofuels Collaboration, tells Biodiesel Magazine the oil industry has systematically scaled down petroleum bulk storage capacity over the past two decades. If bulk storage capacity is lean, then increasing heating oil production to meet expected increases in demand would do no good because there would be no place to store the excess supply. But that's only part of the story. "While some of this can be attributed to changes in crude oil availability, the consolidation of the oil industry and its preference for tight supplies is well documented," Schuyler says. "There's been a lot of talk about the industry's use of 'just-in-time' inventory management, which is designed to ensure that product only arrives at retail points when it's needed. While this clearly increases profits, it also leaves regions like the northeast vulnerable to any type of supply disruptions, such as weather or geopolitical events." Despite this news, fuel distributors and proponents of heating oil say when adjusted for inflation and on a per million British thermal units basis, heating oil is still an economical choice. "Natural gas prices have not moved up as steadily as petroleum prices have risen," Huber says. "This has a lot to do with the fundamentals of petroleum, and of biodiesel. It's an international market for those products, so as the dollar declines in value, they've got to make it up, so the price has gone up. Natural gas is still very much a domestic market. America has had a bit of a manufacturing recession after Katrina and Rita, so a lot of demand for natural gas has still been depressed but the supply has been there." So while natural gas prices appear more attractive than heating oil this winter, propane, which consists of 50 percent petroleum and 50 percent natural gas, is less so. "Propane is still probably more expensive than heating oil," Huber continues. "In general, propane has been more expensive and according to the DOE will continue to be higher priced in the market." Even at record petroleum highs, biodiesel is still priced higher than diesel fuel at the retail level. "The two products, biodiesel and fuel oil, track each other," Huber says. "If biodiesel is a little more or a little less than petroleum, you're going to have a market. You can't go much higher or you'll lose market, and if you go much lower, then you'll sell out instantly, so it's got to be in range." 
 
 Biodiesel's True Calling
 In December, just as ASTM was expected to pass a B5 measure in D975, the on-road diesel fuel spec, advocates for biodiesel use in home heating applications expect D396, the heating oil spec, to do the same. NORA and the National Biodiesel Board have trademarked the name "Bioheat" to market home heating oil blended with quality biodiesel up to and including 20 percent. "We're still completing our research so we have not settled on what that exact blend should be," Huber says. "But when the ASTM ballot for B5 in D396 is passed, we'll move the Bioheat trademark to say it means a 5 percent blend. … I would rather move the industry up 5 [percent], 7 [percent] or 9 percent as opposed to moving it up 50 percent, or using off-spec product, and then having disasters and getting the idea into the general community that this product doesn't work as heating oil." 
 
 Heating oil blends higher than B30 are not recommended, and results from a comprehensive study undertaken over several years at Brookhaven National Laboratory in Upton, N.Y., in conjunction with New York State Energy Research and Development Authority, explain why. While heating oil blends up to and including B30 displayed as good or even better combustion and operational characteristics than pure petroleum heating oil, "it was observed that, with blends of over 30 percent biodiesel concentration, the cadmium sulfide flame sensor would sometimes not see the flame sufficiently and, hence, the control system would shut down the burner as a safety precaution," C.R. Krishna, BNL, and R.J. Albrecht, NYSERDA, wrote in a paper detailing BNL's findings. "This occurrence was a function of the system, the airflow settings, the control system parameters, the [B]ioheat blend ratios, etc., and was not seen in all the systems tested. Caution is therefore suggested in the use of [B]ioheat blends with high biodiesel concentrations." Huber explains those findings. "With some of the higher blends, the fuel is burning so cleanly that the cadmium cell that's traditionally been used in the industry will not register the light waves," he says. "It's almost a pure-white flame [with biodiesel] whereas oil tends to burn yellow. Realistically, a lot of next-generation sensors on furnaces are using ultra violet where this will not be an issue. But we have 8 million to 10 million homes using the existing equipment, so we can't get ahead of what customers' equipment can do." 
 
 Not only do higher blend levels increase the possibility of operational issues, but BNL also states one of its primary findings in its lengthy study was that somewhere between B30 and B40, the upper limit on viscosity as defined in D396, was reached. BNL also determined, not surprisingly, that the pour and cold filter plugging points of heating oil increased proportionately to the blend, "but proper cold weather additives can more than offset any such increase." In addition, the flash point increases as the biodiesel percentage increases, and can be used by fuel distributors and advocacy groups as an additional selling point for the safety of biodiesel-blended heating oil. The BNL study also replicated what other open-flame combustion tests of biodiesel have displayed over the years, the reduction of nitrogen oxide emissions. Particulate matter emissions (2.5 micron size), directly and primarily dependent on the fuel's sulfur content, were shown by BNL to decrease proportionally as biodiesel percentages increase. 

 
 New Markets
 Cleaner, safer and economically competitive on a per-Btu basis, biodiesel-blended heating oil is an attractive energy choice. "In a world concerned with global warming and as a nation trying to move away from relying on the Middle East, our industry has been very receptive to Bioheat," Huber says. According to Schuyler, "If there was ever a time to convince elected officials that we need to seriously alter our relationship with fossil fuels, it's now. We may have reached the so-called 'perfect energy storm'-we have high energy prices, a war that Alan Greenspan recently noted is largely about oil, and the words 'climate change' rolling off the lips of every serious candidate for president." 
 If only 5 percent of the 10 billion gallons of heating oil consumed annually in the United States was replaced with biodiesel, this would represent a 500 million gallon market-more than the U.S. biodiesel industry produced last year. Some states already have legislation on the books requiring use of biodiesel-blended heating oil in municipal buildings. Other state legislatures such as Massachusetts deliberated bills requiring low-blend mandates. All of these efforts would help get biodiesel usage in home heating oil to the B5 market saturation level. "But this doesn't mean a top limit, so if you're in that market, there can be some room for long-term growth in some of the offshoots we're looking at," Huber says. 
 
 These "offshoots" include combinatory heating, air conditioning and power generation systems for single-family homes. Hot water systems utilizing heat generated from combustion of heating oil, which essentially heat water for free when the heat is on, already exist and are gaining in popularity. NORA and equipment manufacturers are looking to go one or several steps further than this. "In the heating oil industry, we essentially have a tank of fuel at someone's home," Huber explains. "That presents some great opportunities, one of which is trying to develop electricity to supply backup for people using heating oil. Or if electricity rates go up high enough, they can produce their own power at home. Electricity rates are going up all around the country pretty radically." In states like Alabama, Kentucky or Tennessee, where lower-priced 
 
 Tennessee Valley Authority power is accessible, this might not be as attractive an option as it would be in other states. "In New England, they're using power from either high-priced nuclear plants or high-priced oil or gas plants," Huber says. The closer energy is made to its end user, the less that's lost. "That is something that could make this very attractive at some point," Huber says. NORA has an ongoing project investigating the possibility of powering air conditioning, the heat pump for which is typically run by electricity, with heating oil too, so one unit could supply both the heat and the air conditioning for the home. Biodiesel Magazine will follow these developments as they progress. 
 
 Higher-priced biodiesel, even without government usage requirements, would still command a presence in the marketplace. "Probably not as much," Schuyler says. "But there is definitely a segment of the population, particularly in the Northeast, who are willing to purchase slightly more expensive, value-added products. On the other hand, people who are struggling financially may not be able to afford any price increase. Therefore I think one of our biggest challenges is to diversify our fuel markets, which will lead to lower costs for both traditional and alternative fuels. In other words, a healthy biodiesel market will compete directly with petroleum for market share, and that competition will be good for consumers, the economy and the environment." 
 
 Huber says a lot of dealers market bio because they think it's an attractive ecological product and it sets them apart as a better industry. "There's demand for it-current demand-and even if the price for Bioheat is a bit higher, those who are running fuel distribution companies are saying, 'I want to be a quality company that sells this type of product.'"
 
 Ron Kotrba is a Biodiesel Magazine senior writer. Reach him at <a href="mailto:rkotrba@bbibiofuels.com"> rkotrba@bbibiofuels.com</a> or (701) 738-4962

880-1294329934.jpg

As biodiesel struggles for widespread acceptance as a transportation fuel, it has found a warm, cozy home in the residential heating oil market.

Biodiesel's True Calling

John Van Dam thought he was going to be busy this fall selling canola seed to farmers who could potentially make more on the oilseed than on the wheat they would normally plant. Then wheat prices skyrocketed and biodiesel margins tightened, leaving Van Dam's expectations unfulfilled. The national canola product manager for Winfield Solutions LLC isn't discouraged, however, because developments around the nation indicate it may only be a matter of time before canola reaches its potential in the United States. 

 
 In 1962, when Van Dam moved to Park River, N.D., canola fields reached fewer than 100 miles east and west of him in the northern counties of North Dakota and Minnesota. Interest in canola has mushroomed in the past few years, he reports. "I've been exposed to canola in 38 states in the past three years, including in Alaska-whether it's for simple testing or people wanting to try some seed or doing seed production." This winter he added a 39th state, Hawaii, where he's provided seed and consulting on canola production.
 
 The key to canola's expansion is its development as a winter crop. Canadian plant breeders developed spring canola in the 1960s from rapeseed varieties, but yields can be drastically reduced if high temperatures occur during flowering. That trait has limited the canola growing region to Canada and northern regions of North Dakota and Minnesota. Winter canola varieties have the potential to expand the growing region greatly. Winter canola planted in the fall, flowers in moderate spring temperatures and is harvested in early summer. Double cropping opportunities are limited, however. "In areas where canola grows really well, you won't be getting the crop off until the end of June or July," 
 
 Van Dam says. "These are areas where they're getting 3,000- to 3,500-pound crops, which require a longer [growing] season." Thus it doesn't work well in double cropping situations with corn or soybeans, limiting its potential in the Corn Belt. Winter canola is catching on among winter wheat growers as an alternative winter crop and in most years provides a better return to the grower. Farmers in Georgia, Florida and south Texas can't plant winter canola, however, because it requires a couple weeks of continuous freezing temperatures to trigger the plant to switch from growing vegetation to its reproductive stage. Thus, the warmer states are testing spring canola planted in the fall. 
 
 Great Plains
 The biggest growth in canola acres has occurred in south central United States where wheat is king and winter canola fills an important niche. "Canola rotates so nicely with wheat," Van Dam says. "It doesn't have the same insects or weed pressure. We've also seen some extremely positive wheat yields after canola." To help farmers there adopt the crop, several initiatives are being developed. The Great Plains Canola Association was officially launched last summer to support growers in Oklahoma and Kansas. The agricultural universities in both states are working together to support canola breeding and agronomic improvements. The crop received another major boost by the modification of the cottonseed crushing plant in Oklahoma City operated by the Producers Cooperative Oil Mill. The plant is contracting with canola growers for its first crush in 2008. 
 
 Developments in Oklahoma and Kansas have prompted neighboring states to investigate the oilseed crop. "I've had a lot of discussions with people in Tennessee, Kentucky and Arkansas, all are looking at using canola for biodiesel," Van Dam reports. Small acreages are also being planted as a feedstock for biodiesel production in northeastern United States, including the states of Vermont, Maine and Maryland. A farmer who grows five acres of canola and gets 1,200 pounds per acre can produce enough oil for a few hundred gallons of biodiesel. 
 
 Southeast 
 Biodiesel is also driving interest in canola production in North Carolina. "We have seven smaller biodiesel plants, 1 MMgy to 4 MMgy," says Anne Tazewell, the transportation program manager with the North Carolina Solar Center at North Carolina State University. "We're building the market for locally produced fuels that are marketed locally." The North Carolina Bioenergy Crop project, which is funded through the tobacco settlement in an effort to develop alternative crops, is in the second season of canola trials planted at four sites, growing 56 winter canola varieties. Nic George, biofuels project coordinator, says the variety trials have produced a wide range of yields, but 3,000 pounds per acre should be achievable. In North Carolina, winter canola will give growers another option for a winter cover crop, one with a higher value than other alternatives.
 

 With farm program subsidies for cotton in question, and the potential for maximum canola yields in Georgia, Ben Deal, a Bristol, Ga., farmer and board member of the U.S. Canola Association, firmly expects the crop will gain ground in his state once wheat prices return to normal. A cottonseed processor in southeast Georgia was ready to begin contracting for canola this year, when the project was put on hold. "We had a good bit of acres of canola lined up for fall seeding and then $8 [per bushel] wheat happened," Deal says "With wheat's infrastructure already in place, it was like shooting yourself in the foot not to grow wheat." Under good management practices and ideal weather conditions canola growers can expect 60 to 70 bushels (3,000 to 3,500 pounds) per acre, he says. In Georgia, canola could replace winter wheat and be double cropped with soybeans, peanuts, cotton, grain sorghum or other crops. There's a potential for outstanding yields from canola, Deal says. "The University of Georgia has exceeded 100 bushels (5,000 pounds) per acre on test plots several times," he says. 
 
 Georgia tried to develop canola as a crop in the mid-1990s, but abandoned it when markets didn't materialize. This time, Chickasha of Georgia LLC has plans to put an idled oilseed extractor back into service crushing canola at its cottonseed processing plant. The initial plan was to add a biodiesel processor to utilize the oil produced by the 800-ton-per-day crusher, but that has been put on the back burner, Deal says.
 
 Biodiesel Mandates
 West Coast producers became interested in canola for two reasons: biofuels mandates in California and the Pacific Northwest and dairy producers like using canola meal in feed rations. In a feed deficit area, canola meal will have a competitive edge over meal shipped in from Canada. 
 
 In California, Van Dam says growers in the Sacramento Valley are testing spring canola planted in the fall. "The summers are too hot for canola and the ground is too valuable. They have a lot of high-input, high-return summer crops. But in the winter, they're looking for something to cover that ground, and that's where we saw canola fitting in," he says. Canola wouldn't require any fertilizer to produce yields from 1,900 to 2,400 pounds per acre if it's planted on ground that was once planted to highly fertilized vegetable crops. The oilseed crop also requires little or no added water, so growers would save on irrigation costs. Van Dam says one trial field was so dry at flowering time that it was irrigated once, and still yielded 2,400 pounds per acre. "That's intriguing people," he says. "There are a number of projects going on now to see how much water canola needs." Irrigators in other regions have also had good results. In the Columbia River Basin of the Pacific Northwest, canola yields 3,500 to 4,000 pounds per acre under irrigation, Van Dam says. New biodiesel producers in the area are looking for canola production to begin so they have a local feedstock source.
 
 Canola Country Developments
 While canola is being developed in new areas, North Dakota and Minnesota remain the dominant producers. Canola's share of the biodiesel market was boosted this year when Archer Daniels Midland Co.'s 85 MMgy biodiesel plant came on line alongside its canola crushing facility at Velva, N.D. Two other canola biodiesel projects on the drawing board in Hallock, Minn., and Munich, N.D., have evolved into canola crushing facilities for the food market. Northstar Bioenergy underwent a name change to Northstar Agri Industry LLC when organizers decided to focus on building a crushing facility first. "We're designing the infrastructure and the plant site to accommodate biodiesel once the economics get straightened around," Northstar President Neil Juhnke says. "Our project was always an integrated plant with crushing capacity for our own oil." The plant will crush 340,000 tons of canola annually yielding 34 million gallons of oil per year and more than 190,000 tons of meal. 
 
 Van Dam serves on the board of the Northern Prairie EnviroFuels LLC, which is planning a canola facility near Munich, N.D. Originally proposed as a 30 MMgy biodiesel plant, the plan now is to build a 10 MMgy crushing plant plumbed for the future addition of a biodiesel plant. 
 
 Canola growers in the region are concerned about the build up in crushing capacity. ADM's Velva facility crushed 1.3 million metric tons (1.4 million tons) of canola in 2006, which was twice the amount grown in the United States that year, a company official said at a canola forum last year. What wasn't sourced from U.S. growers was imported from Canada. Canada produces about 12 million acres of canola per year compared with 1 million acres in the United States. 

 
 Like other crops this year, canola prices have been high. In mid-November, prices at Velva were $19.84 per hundredweight compared with a Minneapolis cash price of $9.92 per bushel for soybeans. With canola weighing in at 50 pounds per bushel, the price comparison would be $9.92 per bushel for canola. It is more difficult to compare oil prices because unlike soy oil, canola is not publicly traded. One industry observer commented that canola oil is currently running at a premium to soy oil, unlike a few years ago when it was priced lower. Crush margins would appear to favor canola as the seeds produce 37 percent to 40 percent oil, compared with 18 percent to 20 percent for soybeans. With numbers like that, canola is likely to increase its presence in the biodiesel market.
 	
 Susanne Retka Schill is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:sretkaschill@bbibiofuels.com">sretkaschill@bbibiofuels.com</a> or (701) 738-4962.

A field of winter canola near New Bern, N.C., had an ideal stand two weeks after 

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This field of spring canola near Sacramento, Calif., was planted in October 2006 and harvested in early June 2007. Yields ranged from 1,800 to 2,400 pounds per acre. 

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In 2006, spring canola under irrigation in north central Montana yielded 3,200 pounds per acre. 

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Canola is being touted around the United States as an oilseed crop with great potential. Not long ago, biodiesel was the big driver behind that interest, but for now, economics have redirected that focus to the food market.

Canola Waits in the Wings

Biodiesel is finding new life as a fuel in generators and turbines to produce electricity. The application is gaining a lot of interest in states where traditional electricity from coal is too dirty or too remote. Some of the best applications for stationary power from biodiesel are in places where fuel oil is already used, and where it's expensive. Both Alaska and Hawaii currently use a form of crude oil as an electricity source. Liquid fuels are cheaper to ship than coal and have more British thermal units per pound, so there's more power in a shipload of fuel. 
 
 In Alaska, the large population centers of Anchorage and Fairbanks are on what's called the rail belt, a large energy grid powered by hydroelectricity and natural gas. Most of the remainder of the state's population, however, resides in rural villages spaced far apart, often only accessible by air or water. The majority of these villages get their electricity from diesel, according to James Jensen, biofuels program manager for the Alaska Energy Authority. Many of these towns have microgrid diesel-generated power of less than 1 megawatt, he says. These towns purchase diesel in bulk twice a year when barges can access the communities. Fuel prices can range from $3 to $6 per gallon. "I would say biodiesel is probably most appropriate in rural villages where diesel is very expensive," Jensen says. "To be cost effective, biodiesel has to be produced locally, or it will be just as expensive as imported diesel."
 
 Locally produced biodiesel could be made with fish oil, which is removed from waste materials during processing. Fish oil has valuable properties for animal feed, aquaculture, pharmaceuticals and cosmetics, and is usually worth more than diesel. However, many villages are so far away from the markets, that transportation costs make the price of the fish oil lower than that of diesel, according to John Steigers, project 
 development manager for Precision Energy Services Inc. Since 2001, he has worked with seafood processors to demonstrate the use of fish oil as a direct substitute for diesel in their reciprocating diesel engines used on-site to produce electricity. UniSea Inc., a company in the Dutch Harbor in the Aleutian Islands, uses up to 600,000 gallons of fish oil per year in its engines, he says. Of course, fish oil is not a solution for everyone. "With raw fish oil, you have to pay close attention to the engine," Steigers says. "The reason you would go with biodiesel is that you could use it in all modern engines." Additionally, he says there is a market for biodiesel in places such as parks and wildlife refuges where fuel spills have greater consequences. 
 
 Alaska's commercial fishery industry currently produces 8 million gallons of fish oil, but has the capacity to produce up to 21 million gallons using all of the fish that are harvested, according to Steigers. While this may seem sufficient for a commercial biodiesel facility, Steigers notes that collecting the feedstock in a central location wouldn't work. "The fish processing might happen for two months here, three months there and hundreds to thousands of miles apart," he says. "In order to process waste, we would have to move the fish oil production facility with the fisheries." 

 
 Steigers is assisting the AEA in a project to develop and operate a portable module capable of rending fish oil from the waste that fish processors grind and dump. The AEA issued a request for proposals, which is available on its Web site, and it expects that respondents will begin module operations this summer. "What we want, is that when a processing facility operates in a community, it would leave the oil in the community," he says. "[The oil] would be used as an energy fuel, either as a boiler fuel, engine fuel, or if you had a small, portable fish oil production facility, you could match that up with a small, portable biodiesel production facility. Our concept is once you have the feedstock established, then it's fairly straightforward to make biodiesel from that feedstock." He estimates such a facility would make less than 100,000 gallons per stop. 
 
 In Hawaii, 30 percent of the state's imported oil is used for electricity generation, according to the Hawaiian Electric Co. HECO recently announced plans to build a 110-MW generating station at its Campbell Industrial Park generating station. Actual construction of the 110-MW simple-cycle combustion turbine generating unit is expected to begin early this year and be in service by mid-2009. In an agreement with the State Department of Consumer Advocacy, HECO pledged to fuel the unit entirely with biofuels. The generating station is projected to use 5 MMgy to 12 MMgy of biodiesel, supplied by Imperium Services LLC, which is an affiliate of Imperium Renewables Hawaii. 
 
 Imperium Renewables opened a 100 MMgy biodiesel facility in Washington last May, and plans to build a 100 MMgy plant at Kalaeola Harbor on Oahu. According to HECO, Imperium will work with them to promote the development of locally grown feedstocks. In a report from the Hawaii Agricultural Research Center, if recommendations are followed and expected yields are attained, Hawaii could produce more than 150 MMgy of biodiesel from local feedstocks. Imperium has agreed to preferentially purchase sustainably grown Hawaiian feedstocks where available and to cooperate and comply with the "Environmental Policy for the Hawaiian Electric Company's Procurement of Biodiesel from Palm Oil and Locally-Grown Feedstocks," prepared by HECO and the Natural Resources Defense Council.
 
 Clean Choice
 Biodiesel is also an economically viable electricity source in places less remote than the 49th and 50th states. In places such as Texas and Vermont, it can be used as a source for clean electricity. Last year, Biodiesel Magazine featured Texas-based Biofuels Power Corp., located in Oak Ridge North, a suburb of Houston, in the May 2007 issue (see "Electricity by the Gallons"). The company is meeting a demand for renewable electricity in Houston, where air emissions are highly regulated by the U.S. EPA. It generates 15 MWs of electricity from B100 made by its sister company, Safe Renewables Corp., and is one of the only companies in the United States consistently producing electricity from B100. When Biodiesel Magazine previously spoke with Chief Operating Officer Ken Crimmins, the company was operating three used diesel Caterpillar generators to produce 5 MWs, and it was expecting the delivery of a 10-MW General Electric turbine. Crimmins expected sales to be most profitable in the hot summers, when electricity demand is highest. 
 
 A lot has happened since then. "To say it was the coolest summer in south Texas would not be a lie," Crimmins laments. "Consumers enjoyed very low prices because we had abnormal weather patterns … We made a decision to sell power during the peak [hours] every day. It would have been nice to have gotten a greater rate of return. We were willing to suffer the small setbacks minute to minute to get the greater good, which is to demonstrate that a biofuel can turn animal renderings into electrons."
 
 While the company was dealing with poor pricing, it was also installing the 10 MW turbine. The turbine was turned on Sept. 10, and has been operational every day since, Crimmins says. The turbine will provide advantages for the company. "The turbine consumes 1 1/2 times more fuel [than the generators] but it can use a fuel that costs half the price," he says. "We're looking for the opportunity to run even lower quality biodiesel in the turbine made from inedible products that are way below food grade. Biodiesel from brown grease and other things that would never go into a reciprocating engine can be blended into a turbine. By focusing our efforts on inedible oil stocks, we're not competing with the food chain." Crimmins is also seeking to install a 2.5 MW steam turbine that can burn fuels that are below biodiesel grade, such as glycerin and wet methanol. This is all part of an effort to make electricity economical. "Because it's fungible, people don't care where it comes from as long as it's the same price," Crimmins says.
 
 Although Vermont isn't remote and its air emissions aren't highly regulated by the EPA, its state legislature is interested in incentivizing investment in renewable energy. The political climate and a search for alternative fuels led the Vermont Public Power Supply Authority to consider generating electricity with biodiesel-powered turbines. The authority is planning to install two 20-MW GE turbine units this year, which it is purchasing from the city of Los Angeles. VPPSA General Manager Scott Corse expects to close on the deal in March and move the turbines to Swanton, which is in the far northwest corner of the state about 60 miles south of Montreal. Also in Swanton is Biocardel Vermont LLC, a soy-based biodiesel producer that is ramping up to 4 MMgy. The soy is being grown in Quebec and crushed by a company in Richmond, Quebec. "There have been conversations to see if it's a feasible crop for Vermont growers, and to maybe open a crushing facility in Swanton," says Biocardel General Manager Stephen Daigle. He says the plant already has a sustainable customer base in the region, which includes transportation, home heating oil and the stationary power units.
 

 Corse estimates the turbines will use about 500,000 gallons of biodiesel per year, but that number could be higher or lower depending on demand. Similar to the Houston operations, these turbines will serve as peaking plants, which means they will only operate when power is needed and when it's economical to run.
 
 Another factor influencing biodiesel demand is the blend ratio. In its air quality permit application, the VPPSA indicated it could use natural gas, heating oil or B20. "All three of those fuels have reliable information on emissions," Corse says. Then, in order to scale up to a higher blend, the VPPSA will seek permission to test varying grades of biodiesel and reapply for another air quality permit. Corse says he would like to operate the turbines on B100, but he hasn't been able to find emissions data on B100 for these specific turbines. "If we had information that we thought was credible and applicable, we might modify our permit application now rather than waiting to amend it later," he says.
 Construction and installation of the turbines, which is expected to take four months, cannot begin until the air permit has been issued. The VPPSA applied for the permit in mid-November, and Corse expects it will take about six months.
 
 These projects are certainly not comprehensive of the U.S. biodiesel-fueled stationary power applications currently under development. Other projects in Texas, New York and Tennessee are also generating electricity and building a market for biodiesel. Though it is a more expensive fuel to produce electricity than coal, these projects demonstrate that in the right conditions, it can be the best choice.
 
 Anduin Kirkbride McElroy is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:amcelroy@bbibiofuels.com">amcelroy@bbibiofuels.com</a> or (701) 738-4962

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Under the right circumstances, biodiesel can be a clean, local, economically viable source of electricity. Biodiesel Magazine highlights some of the projects being developed across the United States.

A New Generation

A native to the Far East and a cultivated crop there for more than 3,000 years, the soybean is a relative newcomer to the United States. First introduced in the 1770s, soybeans were initially grown for forage. It wasn't until the mid-1900s that the first U.S. cultivar was released. Although hundreds of domestic varieties have become available to farmers since that time, the genetic diversity of these lines is disturbingly narrow. "If you trace the pedigrees back, there are about six ancestral lines that contribute more than 50 percent of the genes to the varieties which we currently grow in the U.S.," explains Randall Nelson, a soybean geneticist for the USDA Agricultural Research Service at the University of Illinois. "That's not very much."
 
 When two plants are significantly different in terms of the genes that they can pass on, there is a greater chance that their progeny will inherit a unique or desired trait such as higher yield or increased oil concentration. To increase the genetic diversity of the cultivars available in the United States then, researchers like Nelson introduce genetic material from exotic varieties-from soybeans cultivated or discovered in such places as China, Korea, Japan or eastern Russia. Seeds from these exotics are stored at the University of Illinois in the USDA's soybean germ plasm collection. "This is the collection of the genetic diversity of the soybean and its relatives that we and lots of other people use for research and breeding," says Nelson, who is curator of the collection. Of the 20,000 different soybean varieties in the collection, 17,000 are exotics. "My take on the situation is that we could do better because we have these other 17,000 lines that we haven't used," he says. "This is the genetic diversity that can be used to improve a species."
 

 In addition to his duties as curator, which include maintaining the seeds and helping other geneticists and breeders gain access to the collection, Nelson and colleagues work to develop high-yielding lines that originate-at least in part-from exotic varieties that are currently not being used by anyone else in the country. 
 
 The traditional way to improve soybean yields-as with most crops-is to take two high-yielding varieties, cross them, look at the progeny after several generations and see if any provide yields that are higher than the parents. For soybeans, crossing involves taking the pollen from the flower of one plant, placing it on the sticky stigma of another plant's flower and allowing seeds to develop. This hybrid seed called the F1 seed is then planted. Then because soybeans are normally self-pollinating, the plants that grow are allowed to form seeds, which are called F2 seed. Things start to get interesting when this seed is planted because any genetic differences that result from the crossing manifest in this generation. "These plants segregate," says Jim Orf, a soybean geneticist at the University of Minnesota. Some may be taller, some may be shorter, some may mature earlier than others; some may have higher yields or provide seeds with higher oil content or show resistance to agricultural pests. However, it's hard to do anything with individual plants so scientists grow them for several more generations, Orf explains. 
 
 Once scientists have enough seed from a single promising parent they plant rows of that variety in several different locations to conduct yield evaluations. These are usually done for two years in the state and another two years regionally before these varieties are released to farmers, Orf says. "We need to do it over several years because we don't know what the weather conditions are going to be like once a variety comes out," he says. "Looking at data from just one year is not going to give you a reliable estimate of how it's going to do over several years. We try to pick those breeding lines that perform at the top for several years in a row." 
 
 During the past six or seven years, Nelson and colleagues have released about 15 soybean lines, each with a genetic contribution from an exotic variety ranging from 25 percent to 100 percent. The yield of these varieties is comparable to commercially available lines, however, they aren't yet ready for farmers to use. Rather, these lines become available for breeders like Orf to use as parents.
 
 New Varieties
 Orf and colleagues recently released two higher yielding varieties suitable for central and southern Minnesota. The improved performance of these plants is in part due to pest-resistance traits; one variety carries resistance to a fungus called Phytophthora, which causes root rot, while the other is resistant to soybean cyst nematode, which is the single most damaging soybean pest in the United States. Limited quantities of this seed should be available to farmers for the first time this spring, Orf says.
 
 Likewise, Pioneer Hi-Bred International Inc., a DuPont Co. business, focused on developing and commercializing advanced plant genetics, recently announced that the company would introduce five high-yielding varieties for spring planting pending final trial results. These new choices for farmers stem from an advanced molecular breeding technology developed by Pioneer called Accelerated Yield Technology. The technique allows researchers to identify genes associated with high yields and focus development efforts on lines that have those genes. "Full implementation of AYT combined with molecular breeding technologies will enable Pioneer to make a new class of soybeans that has unprecedented yield potential relative to anything we have ever seen," says William Niebur, vice president of DuPont Crop Genetics Research and Development.
 
 The first variety that the company hopes to introduce to farmers this year is an AYT version of the Pioneer brand 94M80, which set the world record soybean yield of 139 bushels per acre in 2006. "These technologies allow us to incorporate a complete package of offensive and defensive characteristics that could make 100-plus bushel soybean yields a common occurrence in the very near future," Niebur says.
 
 High yield and pest resistance are not the only traits that soybean breeders work to enhance. Geneticists and breeders at North Carolina State University have been working for more than 35 years to develop high-oil soybean varieties. The program wasn't originally aimed at generating better lines for biodiesel production, rather the focus of the program was on soybeans that produce more oil per acre," says Joe Burton, research leader and geneticist at the USDA's Soybean and Nitrogen Fixation Research Unit at NCSU in Raleigh. "The growth of the biodiesel industry in recent years is "a happy coincidence." 

 
 Through standard breeding techniques, Burton and colleagues have developed several high-oil soybean lines. One, dubbed NC-Raleigh has been available to farmers for about three years. This variety resulted from a cross between a high-oil breeding, or germplasm, line developed by Burton and a high-yielding variety. Since the university has a winter nursery in Puerto Rico, it only took about three years to generate F5 seed. Although the new variety has been the most productive variety in the USDA trials in North Carolina, farmers have been slow to start planting it because it doesn't carry the Roundup Ready gene. This gene provides resistance to the herbicide of the same name, which farmers spray on their fields. "NC-Raleigh just doesn't fit the production systems that farmers have now," Burton explains. "Farmers have gotten accustomed to planting the Roundup variety and spraying with that. That's what they like." 
 
 Although the productive NC-Raleigh line may never be widely used as a variety itself, it is used in crosses. "I'm sure the variety is being used as a parent by private and public soybean breeders because it is productive," Burton says. In fact, his team is focusing on that very thing now. The new crosses that Burton's team is doing are between NC-Raleigh and other lines with higher oleic acid content, which has been shown to reduce the pollutants of diesel and biodiesel called nitrogen oxides, or varieties with lower saturated fatty acids, which have been shown to improve the performance of biodiesel in cold weather. "From the biodiesel point of view, we've really just begun this program," Burton says.
 
 Although it's too early to tell what will come of these crosses, it's fair to say that like the exotic lines stored in the Illinois seed bank, NC-Raleigh will likely have more of an impact as a breeding tool than as a variety itself. By using the raw material provided by the best beans of today, soybean geneticists can continue to mix-and-match heritable traits in an attempt to tailor-make the better beans of tomorrow. 
 
 Jessica Ebert is a Biodiesel Magazine staff writer. Reach her at <a href="mailto:jebert@bbibiofuels.com">jebert@bbibiofuels.com</a> or (701) 738-4962.

To cross two plants, geneticists take the pollen from the flower of one plant and place it on the stigma of another plant's flower.

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Jim Orf crouches between rows of soybeans in a test field at the University of Minnesota.

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Geneticists at North Carolina State University use traditional breeding 

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Biodiesel producers agree that scientific and technological breakthroughs are needed to keep the industry growing. While some of these advancements occur in the areas of engineering and process design, others originate in the test fields of private, academic and government soybean-breeding laboratories.

Breeding Better Beans

Aside from the profit motive, biodiesel project developers and producers recognize that stimulating rural and urban economic growth, rejuvenating agricultural resources and reducing a country's dependency on imported oil are prevailing motives behind industry development. That is certainly the case in Central America. Although Europe, Brazil and the United States have a considerable lead on Central America in terms of biodiesel capacity, the country can use the models developed by others to position itself as a viable competitor within the global biodiesel market. 
 
 Costa Rica, El Salvador, Honduras and Guatemala are considered to be the best equipped to expand their biodiesel production, based on their current production capabilities, the organization of their ag industries and their governments' ability to recognize the importance of biofuels and to legislate accordingly. Nicaragua and Panama also have potential. "These countries already have a long tradition of producing the crops that are basic for biodiesel production," says Arnaldo Vieira de Carvalho, senior renewable energy specialist for the Inter-American Development Bank, the oldest and largest regional bank in the world. The IDB is the main source of multilateral financing for economic, social and institutional development in Latin America and the Caribbean. Through loans and grants the financial institution helps to finance development projects and support strategies to reduce poverty, expand growth, increase trade and investment, promote regional integration, and foster private-sector development and modernization of developing countries. "Central America is in a very good position to accelerate its biofuels movement," de Carvalho says. "It may not be moving as fast as Brazil or the United States, but it'll gradually get there if more projects continue to establish a biodiesel footprint."
 

 Leader of the Pack
 Of all the Central American countries, Costa Rica seems to be the most politically amenable to the establishment of a biodiesel industry. The country has had no standing army since 1949, it is a democratic republic (considered more democratic than the United States), more than 90 percent of its transportation fuel is diesel based and it's capable of producing oil feedstocks such as jatropha and palm. Most importantly, Costa Rica intends to be carbon neutral by 2021 and to displace 25 percent of the oil it imports with renewable sources by 2010. 
 
 Compania Nacional Bio Combustibles, a Costa Rican biodiesel producer formed in early 2007, plans to build a 20 MMgy biodiesel plant in Port Caldera. The facility will have rail access to the Port of Caldera allowing it to process imported raw palm oil. The rail access would facilitate the distribution of CNBC's biodiesel to the domestic and global off-take markets. The company will also collect waste vegetable oil from within the country, and it has secured the rights to purchase 4,300 acres of property for a jatropha plantation to diversify its feedstock supply. The jatropha oil, however, won't be available for processing until 2011. According to CNBC Founder and President Aaron Ariel, the facility is expected to be fully operational in November 2008 and initial plans are to export the refined biodiesel to surrounding Latin American and South American countries. At 20 MMgy, the projected capacity of the CNBC plant is large for a Central American country. Small-scale projects are focused on gradually introducing biofuels into the domestic market, whereas the large-scale facilities are producing for export, which is CNBC's initial goal, Ariel says. "If you build a 100 MMgy biodiesel refinery in Costa Rica, the country won't be able to absorb it unless you start marketing it to private enterprises like municipalities and so forth," he says. "Our primary target right now is to export our biodiesel. If the government wants it, we will provide it as well." 
 
 In August, New York-based Amelot Holdings Inc. and Pan-Am Biofuels Inc. of Park City, Utah, formed a joint venture to develop a 2,000-acre jatropha plantation in Guanacaste, Costa Rica. The plantation, when fully operational in mid-2008, would produce up to 3 million gallons of crude jatropha oil. The project has been successful thus far because of the region's ideal jatropha growing conditions and a unique, low-risk funding method, says Pan-Am Biofuels President and Chief Executive Officer Joseph Black. "[Costa Rica] is very eco-conscious and they believe that the biofuels industry will reinvent farming, revitalize the economy and protect their national interest [regarding dependence] on fossil fuels," he says. "They import 100 percent [of their oil] from Venezuela at this point. They really welcome biofuels into their country."
 
 Pan-Am Biofuels produces jatropha saplings from selected and tested seeds and offers turnkey projects to corporations and individuals seeking to develop plantations. Pan-Am partnered with Amelot because of its expertise in foreign relations and forestry management. Amelot, which has been in the forestry industry since 1998, provided consulting services regarding seeds, fertilizer, land management and soil testing. Currently, the partnership's efforts are aimed at improving its 81-acre jatropha seedling nursery. The seedlings will be produced from seeds imported from India. Once the trees mature, they will be moved from the nursery to a plantation that will have the capacity to hold about 2 million jatropha trees. Pan-Am also has a research and development lab at the nursery where it will be able to optimize productivity of the trees. Along with the jatropha trees, castor plants that produce oil for biodiesel production will be grown. 
 
 The crude jatropha oil will be stored in tanks that Pan-Am has established on-site. Amelot Holdings has exclusive rights to all of the oil produced by the plantation and its initial plans are to sell it to domestic refiners in Costa Rica, according to Black. In the future, both parties may consider using mobile units to refine the crude jatropha oil on the plantation, Black adds. "That's not something that we're including in our business plan at this point," Black says. "Right now, we're looking strictly at pressing the seeds, extracting the oil and then selling the raw crude oil to be processed into biodiesel. If it works out where it's eminently more profitable and more efficient to have a mobile processing refinery right on the premises, where we can go from farm to farm during the harvest, then we'll certainly take a look at that. We want to keep it simple right now."
 
 Jatropha's Advantages
 While palm, soybean, other vegetable oils and waste grease continue to be feedstocks of choice for biodiesel production, producers have been turning to jatropha. The inedible crop thrives in subtropical regions and has been elevated to the top of the list as a primary source of feedstock for biodiesel production in Central America. A single jatropha tree yields approximately 1 gallon of biodiesel. Other advantages are: it doesn't compete with existing food crops, uses less energy to produce, its glycerin byproduct can be used in the petrochemical and specialty chemical industries, it's low in sulfur, and the husks that hold the seeds are high in nitrogen and can be used as a fertilizer. "There's always been a focus on Central America when it comes to certain agricultural feedstocks [for biodiesel production], certainly from the U.S. perspective," says Craig Frank, chairman of Alternative Fuels Americas, an emerging farm-to-fuel producer in the global biodiesel sector. The Florida-based company signed an agreement with Technoserve Guatemala, the local branch of a nongovernmental organization that works with entrepreneurs in poor, rural areas of developing countries, to develop a 600-acre area in southern Guatemala to experiment with different jatropha varieties. AFA plans to produce about 80 MMgy of biodiesel to sell directly to domestic markets. The company has a five-year expansion plan that calls for the aggregate control of at least 100,000 hectares (247,105 acres) for jatropha. In addition to its plans in Guatemala, AFA intends to expand its farm-to-fuel venture into Costa Rica, Panama and El Salvador. "Part of the challenge with these smaller, developing countries is that they don't have a whole lot of room for error," Frank says, adding that starting small could be the best strategy for other producers looking to do business in Central America. "If they make a mistake with a [large-scale] investment it could take [a country's] whole initiative down. They have to find ways to mitigate those risks."
 
 Bryan Sims is a Biodiesel Magazine staff writer. Reach him at <a href="mailto:bsims@bbibiofuels.com">bsims@bbibiofuels.com</a> or (701) 738-4962.

Ariel knows how valuable jatropha is for biodiesel production in Costa Rica. He has a young jatropha tree in his office that could grow up to 20 feet tall. 

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Pan-Am Biofuels and Amelot Holdings intend to grow young jatrpha saplings in Costa Rica and harvest the trees once they reach full maturity, which takes three to four years. 

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Several different types of jatropha fruits and seeds, such as the ones shown above, are a plentiful and viable feedstock in Costa Rica for biodiesel 

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Some Central American countries seem to have the political will and the resources to develop a biodiesel industry. Biodiesel Magazine takes a closer look at one of the more promising countries, Costa Rica, and a couple of business developments that are poised to capitalize on the country's resources.

Emerging Opportunities on Uncharted Grounds

Quality is the name of the game in biodiesel these days. Filter-clogging impurities made headlines in 2006 and biodiesel producers don't need adverse press in an economically demanding era. With any business, entrepreneurs rise to the challenge and create innovative and economical solutions to industry problems. "Purification is only one part of the production process and is one, in our opinion, that is too frequently overlooked," says Michael Benzies of Filtertechnik. "Industry standards are becoming increasingly stringent and upstream procedures need to be adhered to in order to be in a position to even start purifying."

 
 A key step in producing quality biodiesel is washing to remove impurities such as excess caustic catalyst, methanol, soaps and free glycerin. Along with filter clogging, unwashed biodiesel can cause seal failures, clogged fuel injectors, damaged fuel pumps and other problems in diesel engines. In the United States, the most common method of removing these impurities is wet washing. Wet washing uses water as a solvent to carry away the impurities, leaving the pure biodiesel behind. But wet washing has disadvantages. It's a time-consuming step requiring many hours for the biodiesel and water to completely separate. Wet washing can also leave residual traces of water in the fuel. "In drier areas you may have water restrictions," Benzies says. "You may need some treatment if you have really hard water. But the real problem comes with the high levels of soaps and emulsions that form if the wet wash isn't performed properly. You then have a risk of having a very poor separation of the fuel and the water and an extended separation time. The final problem is the disposal of the hazardous effluent waste which is the byproduct of the wet wash. It may be that you have to wash seven or eight times in order to achieve clarity."
 
 Dry washing is an alternative. In dry washing, an adsorbent is added that attracts and combines with impurities, separating them from the biodiesel. Some systems use ion exchange resins as the adsorbent (see "Waterless Washing Machine" in the May 2007 issue), while others use a mineral called magnesium silicate, one type of which is marketed under the name Magnesol by the Dallas Group of America Inc. Recently, lubricant purification specialist Schroeder Industries became the exclusive distributor for a Magnesol-based dry-wash system created by Filtertechnik. "Having looked at various dry-wash systems including competitive silicates and resin systems, we decided to run with the Magnesol product based on several factors: first and foremost, it's one of the few products that had independent verification put on it," Benzies says. "It's one of the few products that published performance data, which is absolutely vital."
 
 Keeping Watch
 Schroeder's system works in a similar fashion to other dry-wash systems (see "Adsorbing It All" in the March 2005 issue). After crude glycerine is separated and removed, and excess methanol is vented, Magnesol powder is added to a tank of biodiesel and agitated with a mixer for about 25 minutes. The process uses 0.5 percent to 1 percent Magnesol by weight, depending on the level of contaminants in the batch of biodiesel. So, 2,000 pounds of biodiesel, which is about 265 gallons, would require 20 pounds of Magnesol. The powder attracts polar molecules and separates them from the nonpolar biodiesel. Methanol, water, glycerin and catalysts are all polar molecules. "That's effectively what happens when the Magnesol comes in contact with the crude methyl ester," Benzies says. "It adsorbs all the impurities."
 
 After agitation, the biodiesel is circulated through Schroeder's wash columns to filter out the Magnesol and its cargo of contaminants. "Moving across to the wash stage, it is at this time when we start to see things improving in terms of visual clarity," Benzies says. "The advantage of using our systems in conjunction with Magnesol is that the towers enhance the clean-up process. At this point we see a rise in clarity for the first time. The milkiness and cloudiness that you see in your crude methyl ester is now replaced by a bright, golden crisp color."
 
 After the biodiesel reaches the desired level of clarity, it is transferred to a final polish tank. Schoeder recommends that all biodiesel go through a polishing step to maintain stringent quality standards, irrespective of the washing method. They also encourage biodiesel producers to be rigorous with their own quality testing. "We are the only producer of filter and purification systems that actually encourage producers to do these tests simply because they don't lie to you, and will tell you exactly how good your purification method is," Benzies says.
 
 Schroeder's polishing filter units can handle from 500 liters per hour (132 gallons per hour) to 2,500 liters per hour (661 gallons per hour) and remove residual particulates and water. An innovative part of the units is the built-in monitoring systems that include particulate counters and water monitors. The monitors display the level of contamination on liquid crystal display screens and can be downloaded to a computer for real-time monitoring and batch tracking. The system can also send e-mail alerts and even download alerts to cell phones. "Archiving traceability, building up records, having control of your production process is absolutely important," Benzies says. "If someone has problems with their vehicle they instinctively blame the fuel. That's one of the things producers have to keep in mind, they need to have some sort of in-house traceability that says that that particular batch was a good batch."
 
 Performance

 Magnesol was compared with wet washing by researchers at Iowa State University, Benzies says. The results showed significant results after just 20 minutes of processing. "The performance data showed a massive decrease in glycerin and the moisture removal capability and methanol reduction," he says. "More importantly, if you look at the soap reduction capability, it's just staggering in a short space of time to get from a high level to an acceptable level. That is one of reasons we have embraced this dry-wash medium." 
 
 The dry-wash systems have other benefits. The cost of operating a dry-wash system is lower than a wet-wash system. Disposal and water treatment costs are also lower with a dry-wash system. Lower cost is not the biggest selling point, according to Benzies. "In our opinion, producers change from wet to dry for two reasons, speed and fuel quality" he says.
 
 Filtertecknik compared biodiesel produced by its system with other commercially available fuels, with surprising results, Benzies says. "When we did particle counts on standard petrodiesel, it was shocking how dirty it turned out to be," he says. "Now we are under no illusions that it didn't leave the refinery at this cleanliness level, but with so many underground storage facilities and dirty nozzles, this is the cleanliness level that is being used in a lot of the motor vehicles today." Wet-washed biodiesel was cleaner than the petrodiesel. The dry-washed biodiesel was cleaner still, with a lower moisture level than the wet-washed biodiesel.
 
 Trends
 Since 2004, biodiesel producers in the United Kingdom have adopted dry-wash systems. That year, 70 percent of producers used wet washing and 20 percent didn't wash their biodiesel at all. By 2006, 43 percent of producers surveyed were dry washing their biodiesel and 47 percent were still using wet-washing systems. "It wouldn't surprise me if the dry systems were to surpass the wet systems [in 2007]," Benzies says. The reasons for this shift were because wet-wash producers were experiencing problems, dry-wash systems have now come into their own and are available on the market, and industry standards have become more stringent, he says.
 
 U.S. biodiesel producers are also interested in this new technology, says Jonathan Dugan, a product specialist with Schroeder Industries. However, with the current financial challenges facing the industry, producers are being cautious with capital investments. He says they talked to a couple of producers about developing the technology. "There has been some frustration with folks on the capital equipment side asking 'Why isn't anybody buying anything?'" Dugan says. "Until the government puts on a tax credit or we figure out a cheaper feedstock, it's a little bit of a waiting game. But if crude goes up another $20 or $30 we could see a swing where biodiesel is profitable again. At this time, people aren't interested in retrofits. They are more interested in paying for the technology they've already purchased."
 
 In addition, many producers are hesitant to change from a well-established process. "Some of it has been slow going," Dugan says. "The acceptance has been good. But it has been confusing for some about how they would apply it. Water washing has been the de facto standard for quite some time. Adsorbent technology is new to folks so we are trying to explain to them how it works and why it works and how it can save them money. But it's coming along."
 
 Tightening water supplies, plus the cost of treating effluent in many areas of the United States will be a factor in biodiesel production, Dugan says. He described a visit to a biodiesel producer who used wet washing largely because he had a favorable agreement with the municipal water and sewer service providers. "They said if the local municipality hadn't been so gracious in helping to get the business started, they would have had to go to Magnesol and a dry-wash process," he says. "When they build their next plant, it may be a different story. It has everything to do with the local rules and government."
 
 Despite the current challenges in the biodiesel industry, there are still a lot people interested in building new plants. These companies are taking a good hard look at using dry washing, Dugan says. "We have spoken to a lot of folks," he says. "We have our systems specified into a lot of medium-sized plants and we're talking to some of the larger plants. I think that as soon as it makes sense to build up the industry capacity, we will see an influx of business that we can't even imagine. That's really exciting for us."

 
 Jerry W. Kram is a Biodiesel Magazine staff writer. Reach him at <a href="mailto:jkram@bbibiofuels.com">jkram@bbibiofuels.com</a> or (701) 738-4962.

The BD-6000 Final Polishing Unit can be outfitted with Schroeder Particle and Moisture monitoring technology.

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In a challenging economic environment, producing a top quality product is one way to maintain a competitive edge. For biodiesel producers, that means finding the most economical way to wash and polish their crude biodiesel to the highest possible standard. Schroeder Industries says its system can produce clean biodiesel quickly and inexpensively.

Cleaner and Clearer

Tight budgets, accountability for results, corporate politics, employee retention woes, litigation concerns-the mere mention of these stressors may accelerate your heart rate. If so, you might be in a leadership position such as a manager, key executive or chief financial officer. Factor in global manufacturing concerns, research and development challenges, time-to-market pressures, strict quality standards and today's tough governmental guidelines, and chances are you're not just any leader, but one in the biodiesel or biofuels industries.
 
 Workplace stress is a fairly common ailment, lurking among 40 percent of the general workforce, according to recent studies. However, leadership stress differs greatly from that suffered by typical employees. For instance, a scientist might lose sleep over an especially complicated calculation not testing as expected in the lab. His or her supervisor, the head of the R&D department, may be stressing over whether his or her inability to secure more government funding will cost that scientist a job. While the sales department administrative assistant feels overwhelmed by a cubicle mate's annoying daily habits, his or her manager is wondering how they are going to motivate 25 people to increase their sales figures by 30 percent before month's end.
 
 The responsibility and accountability leaders bear can be a heavy burden. The pressure to meet objectives, manage people and make tough-sometimes life-changing-decisions often weighs heavily on the hearts and minds of decision makers as they struggle to keep a balance between effectively moving the company toward its goals and keeping those around them happy. Many times, the responsibilities come at the expense of the leader's personal time and peace of mind.
 
 However, not all stress is negative. Certain types of stress actually help drive performance and can be the foundation for extraordinary innovation and accomplishment. The pressure to succeed, meet goals and beat the competition can be positively channeled into R&D, performance management and competitive strategies that enable individuals, teams and entire organizations to develop breakthrough technologies, devise creative solutions to seemingly insurmountable problems and deliver results that were beyond expectations.

 
 For executives, the problem with stress occurs when the pressure becomes more dominant than the objective. During these times, management styles tend to become more blunt and dictatorial, decisions become rushed, and ultimately, the executive and organization suffer very real costs as performance falters. In worst cases, the executive suffers mental and physical illness. 
 What is the solution to stress? As an executive, simple techniques can be used to manage leadership stress and possibly even maneuver it to an advantage.
 
 Become a Better Delegator 
 As a leader, you're the one who's accountable for results. Your career rides on the performance of others. As a result, you may be tempted to "do it all yourself" or micromanage every task. According to an article in the Wall Street Journal written by Kayleen Schaefer, "The reason so many leaders have trouble giving up projects is because they've risen up the corporate ladder by doing everything themselves." 
 
 The higher one rises in an organization, the less feasible the do-it-yourself strategy becomes. As responsibilities grow, so does the need to effectively get work done through others. To become a better delegator, expand skills in the following areas:
 
 › Hiring: Do you hire people who are smarter and more technically capable than you are? Most executives say that they want to hire the best. In reality, they tend to hire people who are slightly less competent than they are. If you are going to be an effective delegator, you need to build a team you can trust, and hiring the right people is the most important first step.
 
 › Training: Once the right people are on staff, it's important to make sure the team's skills are kept up-to-date. Create a proactive plan to regularly evaluate each person's skills and knowledge, and plan for their future training needs. The more current people's skills are, the easier it will be to delegate with confidence. 
 
 › Management: Of course, competence alone does not make delegation work. You also need effective managerial systems. While it is beyond the scope of this article to review different management structures and philosophies, the challenge is to find the methods that best provide the information and fit the culture of the organization. Ideally, the system ensures people clearly understand their goals-and your expectations-while providing key indicators to monitor performance and ensure those goals are being met.
 › Delegation: With the right people and processes, delegation is a much easier task. All that remains is to determine what and to whom to delegate. As a starting point, prioritize the tasks that only you can do, and then get everything else off your desk. Anything that can be done by someone else should be done by someone else. During delegation, provide a concise explanation of what is expected and a clear deadline when it's expected to be done. Ask follow-up questions to ensure that the person being delegated to understands the project and is willing and able to meet the deadlines.
 

 Force Yourself to Take Breaks 
 Successful leaders typically have little or no free time in the workday. However, one of the keys to beating stress is to give the mind and body occasional chances to recharge. In other words, take a break once in a while. The following provides a few ideas for creating a healthy balance.
 
 Schedule daily mini-breaks, and plan several mental breaks throughout the day. For example, if you're in front of a computer most of the day, schedule two or three daily three-minute walks. If you're going to be locked in meetings most of the day, use breaks to step outside, stretch, walk or listen to music. If your job requires constant movement, schedule a five- or 10-minute sit-down break every few hours. Balance is about not doing the same thing all day long.
 
 Strike a better work/life balance. It almost goes without saying that vacation time is crucial to beating stress. That means a vacation where you're not attached to a laptop, cell phone or other remote device. Yes, it's hard to get away from the office, but that's the only real way to unwind. 
 
 Getting beyond vacations, make time to take stock of personal priorities and the role that work plays in helping achieve your objectives. Often, stress is caused by a feeling of being out of control. The simple act of putting things in perspective can help regain control and have a very positive impact on mental well-being.
 
 Tune out at the end of the day. Most leaders take their work home with them each night. Whether you're physically checking e-mail or just thinking about issues at the office, there comes a time when you need to leave work and leadership responsibilities behind. Set personal time boundaries and stick to them. For example, decide to turn off your cell phone as you walk in the front door each evening, or stop checking e-mail after 9 p.m. To ensure that work time is as productive as possible, have time that is truly down time.
 
 Maintain a Positive Attitude
 When leadership stress is at its peak, one may feel down or even doubtful about their abilities. You may find yourself dwelling on the "shoulds" in your professional life-I should be making more money, I should be handling this latest project better, My staff should like me more, etc. This is just stress wearing down on self-confidence and resolve. Don't give in. 
 
 This is the time to refocus on something positive. One easy solution is to remind yourself of something pleasant in another area of life, such as your daughter's softball team's big win last night or the pride felt when you climbed Mount Rainier last month. Another solution is to write down a physical list of assets and accomplishments, and when feeling overwhelmed by stress, pull out the list and remind yourself of all the things you have done and the people whose lives you have positively impacted.

 
 Certain stressors inherent to the biodiesel industry will never disappear. In fact, they may become exacerbated with fluctuations in the economy and availability of skilled employees. Whether it's the pressure of keeping up with industry standards or dealing with tight budgets, leadership stress can have a negative impact not just on your performance, focus and well-being, but that of the company. CEOs, senior executives and managers dictate the level of stress throughout the organization. If you efficiently delegate, properly maintain balance and think positively, you will be able to rise above leadership stress and take the team and the company with you.
 
 Patrick B. Ropella is president and CEO of Ropella & Associates, an executive search and consulting firm. Reach him at (850) 983-4777 or <a href="http://www.ropella.com">www.ropella.com</a>.

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Managing Leadership Stress

A compact modular plant design that uses proven techniques for process optimization and energy integration can improve biodiesel plant economics and speed up the construction or expansion process. Modular design can also result in substantial cost savings due to reduced components, and ease of access, operation and maintenance.
 
 Biodiesel plants represent an ideal opportunity to employ modular designs. Their scale lends itself well to modularization of all or significant portions of the production process. Modular techniques can positively impact equipment selection and configuration, producing a compact plant layout, and improving product quality and profitability.
 
 Modular designs typically have a smaller footprint than field-erected plants. Storage tanks are usually free-standing, but the vast majority of the process equipment can be modularized and strategically located, lowering capital costs and improving plant efficiency. A well-implemented 
 modular design takes advantage of a combination of horizontal and vertical layouts to locate equipment in an optimum spatial relationship. An experienced modular system designer can minimize space requirements, reduce piping runs and, in some cases, eliminate pumping requirements by allowing for gravitational flow.
 
 In order to maximize cost savings, it's important to consider a modular design at the beginning of the project, whether new plant construction or expansion of an existing facility. Consult a design specialist early in the process, particularly during project conceptualization before process design has commenced. This is when critical decisions on equipment selection and configuration, instrumentation and controls, and block valve specification can have a major effect on plant layout. 
 
 Experienced modular plant designers should have the multi-disciplined capability to provide a custom design that incorporates expertise in process, structural, mechanical, piping, heat tracing, insulation, instrumentation and electrical design. Engineering expertise, when applied to modular designs, can reduce feedstock drying and pretreatment costs, improve biodiesel washing, purify biodiesel to ASTM standards, recover high-purity methanol and salable glycerin, minimize utility consumption and reduce plant emissions.

 State-of-the-art modular fabrication techniques and experienced engineers can quickly produce a process package. Modular assembly and construction can be more efficient and safer than traditional construction since 70 percent to 80 percent of the work is done in a controlled environment with crews familiar with the workflow, accessibility and techniques of modular construction. Most on-site modular plant construction is done at grade, which minimizes work "in position" on site, saves assembly time and creates a safer worksite.
 
 Process Optimization
 Optimizing key process steps during the design phase results in many improvements that streamline plant operation, reduce process inventories and improve operating costs. Process equipment may be more efficiently utilized by applying proprietary designs to the reaction and wash section, converting batch operations to continuous flow and reducing residence times from hours to minutes. 
 Biodiesel purification can be optimized by using the most economical and efficient unit operations, including evaporation, distillation and extraction.
 
 The recovery of methanol after the reaction stage usually requires a rectification column, which must be properly designed to minimize energy use and maximize recovery. This part of the process may also be designed as an integral part of the flash evaporation section. Vacuum can be used to minimize product temperatures and reduce degradation of the biodiesel.
 Purification of the glycerin byproduct can significantly upgrade its value so that it may be suitable for pharmaceutical, cosmetic, fragrance or food-grade use.
 
 Process dynamics and control strategies can be optimized by carefully matching the operating ranges of instrumentation and hydraulics to the equipment. The full range of operating conditions is considered in a plant-wide approach. Operational range can be improved by building sufficient turn-up and turn-down where needed into the design where needed and eliminating over-design. 
 
 Quality Assurance
 Biodiesel and feedstock quality testing are mandatory at biodiesel plants. Laboratory and pilot plant testing can be tied into the modular plant design, allowing for the development of process data that's used to improve production. For example, testing is recommended for proper acid neutralization and the removal of soaps and fatty acids that cause foaming and fouling problems. Testing can also optimize the flash evaporation steps, any required distillations and new technology for the wash portion of production. Testing helps in equipment selection, instrumentation and control strategy, and may be required for hydraulic design of the plant to accommodate a wide range of operating conditions.
 
 Laboratory testing is critical due to the wide variability of biodiesel feedstocks. Oil sources vary regionally and may vary throughout the growing season, resulting in changes in oil composition. The production process must be resilient enough to accommodate a wide range of operating parameters to adjust to feed variations.

 
 Online analysis of biodiesel purity is typically the fastest way to acquire data analysis. Rather than waiting 24 to 48 hours to receive results from a third-party laboratory, analytical techniques can provide immediate results in the field, allowing plant and design engineers to rapidly optimize the production process, speeding up the design changes required to maintain plant performance.
 
 Energy Integration
 Modular biodiesel plant design also offers the ability to incorporate heat integration methodology. Multiple opportunities exist to use process streams to heat and cool other process steams within the plant. For example, in a recent biodiesel expansion project, heat integration produced an energy savings in excess of 50 percent over the original design basis.
 
 The three major objectives when integrating energy within a modular biodiesel plant include minimizing heat source requirements, chiller and cooler load, and pumping and power use.
 
 Waste heat recovery can dramatically reduce utility use by using warm products such as glycerin, biodiesel and methanol to heat incoming feed and intermediate streams. A good designer will take advantage of liquid-to-liquid heat interchange and gas-to-liquid interchange, including using cold feed to condense vapor streams, which saves on chiller costs or other energy required for condensing.
 Modular systems are ideal for energy integration because the process streams are close together in the compact design. Circuit runs are shorter, eliminating long stretches of piping that would increase the cost of the system. An integrated modular approach also allows condensing process vapor streams to be used as sources of heat. Short piping runs minimize heat loss and condensation in the lines. Close attention to the relative elevations of equipment in the plant layout will prevent pocketing.
 
 Utility requirements, and therefore operating costs, can be reduced in several ways. For instance, a design may require cooled air for condensing to reduce the need for cooling towers and refrigeration units. Another advantage is the mixture of horizontal and vertical layout so that, in some cases, streams can flow by gravity from an upper to a lower module instead of pumping horizontally. This not only reduces utility requirements, but can eliminate pumps, further reducing the system's capital cost.
 In conclusion, new construction or expansion design comes down to the bottom line. In the alternative fuels marketplace, margins are tight. A properly designed modular system using innovative process techniques can reduce investment capital costs for construction, and reduce operating costs and utility requirements through energy integration. The result is an increase in product and coproduct values, producing a more competitive biodiesel plant. 

 
 Steve Lavorerio is founder and president of 
 The ChemPro Group. Reach him at 
 <a href="mailto:slavorerio@thechemprogroup.com">slavorerio@thechemprogroup.com</a> or (973) 299-1880. Charlie Bambara is founder and 
 vice president of engineering at The 
 ChemPro Group. Reach him at <a href="mailto:cbambara@thechemprogroup.com">cbambara@thechemprogroup.com</a>. Vince Fuschetti is the owner of Advance Process Technology LLC. Reach him at (908) 216-5426.

Modular design is a cost-effective technique for optimizing construction, minimizing downtime, maximizing fabrication quality control and reducing on-site construction costs.

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Customized modular plant design requires experience and multi-disciplined capabilities to provide the most cost-effective combination of services.

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State-of-the-art modular fabrication techniques coupled with engineering skills can produce complete modular process packages in a short timeframe. 

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A Modular Approach to Plant Design

Like many biodiesel industry pioneers, Scott Johnson began making biodiesel with some basic equipment and know-how. In 2005, Johnson and his wife Kathy commuted a combined 440 miles per day and faced diesel fuel bills that totaled more than $900 per month. Out of necessity, Johnson set up a small-scale biodiesel production facility and quickly dropped his fuel bills to only $350 per month.
 
 Even though the money savings was beneficial to his family, Johnson still had to endure skepticism by others in his community. "I had people laughing at me," he says. "The guy that was delivering the methanol … was laughing at me, calling me the crazy guy trying to make his own fuel."
 
 However, after friends and neighbors heard how much the Johnsons were saving on their monthly fuel bills, the skepticism quickly turned into intrigue. "In a short time, I had more and more people ask me if I could make it for them," Johnson says. "… It came to the point where a few of us began discussing a full-fledged biodiesel production facility." 
 
 Johnson and four other owners sat down during the second half of 2005 and began mapping out their plan for what is now one of the largest biodiesel plants in the state of Washington. Just two short years after his first batch of biodiesel, Johnson, now president of Burbank, Wash.-based GEN-X Energy Group Inc., operates a large-scale biodiesel production plant strategically positioned in the southeastern part of Washington state. 

 
 The GEN-X plant is permitted for 5 MMgy of biodiesel, but Johnson estimates the plant could produce 15 MMgy without any modifications. The plant could easily go to 40 MMgy with a couple more reactors and centrifuges, he says.
 
 Equipment Needs
 Since the Gen-X project wasn't going to be just another small-scale biodiesel operation, the newly formed company turned to its local equipment distributor, Spokane, Wash.-based Northwest Pump & Equipment Co., for advice on the proper equipment needed for each application within the plant. Rick Fuqua, Northwest Pump's resident biodiesel expert, consulted with Johnson and immediately began discussing the company's pump options since pumps are one of the key components within a biodiesel production plant. Fuqua suggested to GEN-X the use of Blackmer ProVane motor speed sliding vane pumps for their methanol recovery, caustic (potassium phosphate), Magnesol and multiple oil feedstock-transfer applications. Johnson agreed and installed Blackmer pumps throughout the facility. 
 
 "Blackmer pumps are known for their reliability," Johnson says. "You can use them in all different kinds of applications and we certainly do just that in this plant. Another nice thing about Blackmer pumps is that they will benefit us financially. Since they're simple to work on-it's easy to change the vanes and easy to maintain-we don't have to worry about downtime." 
 
 GEN-X also uses the Blackmer XL Series of sliding vane pumps for high-speed truck loading and transfer rate applications throughout the plant. Both series of pumps are designed for reliable continuous duty in biodiesel production operations. The sliding vane technology provides biodiesel producers with superior self-priming and suction capabilities. This suction capability can benefit biodiesel operators by stripping lines of residual product in order to improve production yields and avoid contamination issues. 
 
 The sliding vane technology principles ensure proper sealing and volumetric output performance, even after significant time in service. This eliminates the efficiency-robbing "slip" that shortens the life of lobe and gear pump technologies. The ProVane and XL Series provide smooth, sliding vane action without metal-to-metal contact, which reduces pump friction, eliminates galling and minimizes agitation of fluids. 
 
 Introduced in 2005 by Grand Rapids, Mich.-based Blackmer, the ProVane provides added benefits to GEN-X and other biodiesel producers due to its many "designed in" features such as the hydrodynamic journal bearing-a unique, fluid-boundary-forming principle-that eliminates shaft-to-bearing contact. The shaft hydroplanes above the bearing surface on a cushion of liquid. In this hydrodynamic condition there is no metal-to-metal contact or wear, and bearing life can be significantly extended. It also maintains optimum bearing characteristics even under a wide range of operating conditions, such as the ones found in the GEN-X biodiesel production plant. Reduced shaft/bearing contact minimizes friction and results in higher mechanical efficiency and smart energy cost savings.
 
 Besides the typical hiccups that plague nearly every new plant, GEN-X has had a promising first few months of operation. In part, their success can be attributed to the proper selection of equipment throughout the plant and Johnson's prior production experience. 

 
 Feedstock Partnerships
 At press time, the GEN-X biodiesel plant was on track to produce a modest three million gallons of B100 in 2007, but Johnson says he plans on quickly hitting its long-term goal of 40 MMgy. With a Tyson Foods rendering facility 12 miles away, GEN-X has the groundwork in place to acquire enough tallow oil to become a significant producer of biodiesel in the northwestern United States. 
 
 "Our feedstock backbone is tallow oil from the Tyson Foods rendering plant just down the road," Johnson says. "They could supply us with between 5 million and 8 million gallons of tallow per year. There are also a lot of other oil sources around that could be used for another million gallons per year, but Tyson is a key partner for us moving forward."
 
 In April 2007, ConocoPhillips and Tyson Foods announced a strategic alliance that would allow the major oil company to use beef, pork and poultry by-product fat (tallow oil) to create a transportation fuel, according to a Tyson press release. After that news hit the streets, Johnson and the rest of GEN-X wanted to know what that meant for their long-term plans with the local Tyson plant. 
 
 "When the ConocoPhillips/Tyson Foods partnership on tallow was announced, I called my contact at Tyson and asked him about the situation," Johnson says. "He assured me that it won't impact our agreement."
 
 In addition to Tyson, GEN-X is working with farmers and crushers in the area to bring local seed oil into the plant. Johnson says he also sees a large opportunity to partner with some of the restaurants in the area for second-use oil that would supply about 10,000 gallons of feedstock per month. It's not a significant amount, but Johnson says he is more than happy to work with anyone with the same mindset.
 
 "Another partner that we've signed an agreement with is Westway Feed Products Inc.," Johnson says as he walks out the back door of the GEN-X facility and points to the adjacent Westway operation. "They provide feed to livestock industries in the area. Westway can use our glycerin, which is a byproduct of our biodiesel production process, as a feedsource. Therefore, we are closing that loop between the feed, tallow and biodiesel." 
 
 Many other opportunities will likely be presented to Johnson in the coming months, but GEN-X is certainly positioned for a significant growth spurt in the future. 
 

 Future Plans
 With a new 18,000-square-foot facility, 11 employees and a brand new company, Johnson and the other owners at GEN-X are already thinking about the next chapter in their story. "All of us are very excited about how far we can take this," Johnson says. "Fernando Moreno, our vice president, Ray Benavides, our vice president of sales and marketing, Joe Stanton, our director of plant operations, Brian Moreno, a stockholder, and I are happy to come to work and finally be doing something that actually helps make a difference." 
 
 Johnson mentions that GEN-X would like to open or partner with a crushing plant and crush locally grown seeds. They are working with several farmers in the area to reach that goal. Two crushers that work with GEN-X recently started operation and are already at 100 percent capacity because the price of canola peaked at the same time they opened. 
 
 "We are also creating an engineering firm that would be located here," Johnson says. "We're going to bring an engineer on board, John Forrest, who has a tremendous amount of experience in the oil industry. That way, he can focus on engineering projects and we can focus on creating biodiesel."
 
 GEN-X continues to refine its process along with growing its base of solid partnerships. When the company first discussed the idea of opening a biodiesel plant, Johnson and the other owners were nervous about the potential customer base in the northwest United States. Today, GEN-X is bursting at the seams and is a true testament to the "build it and they will come" mentality.n
 
 Doug Cumpston is the western regional manager at Blackmer. Reach him at <a href="mailto:cumpston@blackmer.com">cumpston@blackmer.com</a> or (616) 241-1611. For more information on GEN-X Energy Group Inc., visit <a href="http://www.genxenergies.com">www.genxenergies.com</a> or call (509) 547-2447.

Cumpston, left, Fuqua, center, and Johnson, right, stand near the Blackmer XL Series sliding vane pump used to load tanker trucks with finished biodiesel. 

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A Blackmer ProVane motor speed sliding vane pump is used here for methanol liquid transfer. 

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Johnson kneels next to a motor speed sliding vane pump located in the plant. 

900-1294329943.jpg

Generating Momentum in the Pacific Northwest

You may have heard that everything is bigger in Texas. As a leading biodiesel-producing state, with capacity having grown to more than 280 MMgy in 2007, the old adage rings true. Our biodiesel refineries, much like our petroleum refineries, range in sizes, inputs and locations, but all are cohesively focused on making sure our local industry continues to solidify itself as the biodiesel capital of North America. 

 
 The Biodiesel Coalition of Texas Inc. is a non-profit corporation created by biodiesel pioneers and industry leaders to ensure that biodiesel receives favorable treatment by state regulatory agencies and the Texas legislature. After completing our second annual Texas Biodiesel Conference and Expo in Austin in early September, the unified BCOT team continues to develop strategies and advocacy platforms that demonstrate the environmental and economic benefits of biofuels.
 
 Among the pressing topics highlighted at the conference were the three major challenges the Texas biodiesel industry contended with in 2007, including an ongoing air quality debate, the recent expiration of an important state production incentive left unfunded by the Texas legislature, and a complete lack of demand for biodiesel in Texas. 
 
 The first issue is a nearly three-year-old threat by the Texas Commission of Environmental Quality's Texas Low Emission Diesel Program to outlaw popular biodiesel blends if the emissions profiles show evidence of an increase in smog-forming nitrogen oxides, or NOx. BCOT continues to work with TCEQ to emphasize that regulations should view low blends of biodiesel as part of the solution-not part of the problem-to Texas air quality challenges. We are hopeful that the TxLED issue will be amicably resolved by early this year. 
 
 Second, being an agriculture and energy power, Texas has the infrastructure and know-how to be America's leading biofuel state. Under a former state program, Texas gave 20 cents per gallon to biodiesel producers, but only after collecting 3.2 cents for every gallon they made. The Texas Department of Agriculture estimates producers received roughly $12 million in state money the past fiscal year. The recent loss of this production incentive is a huge blow to the growing local industry at a time when the amount of biodiesel made in Texas has jumped 110 percent in the past year. In light of President George W. Bush's push to increase the renewable fuels standard by a factor of five, the question is not whether or when additional production will be built, but where it will be built. To ensure that new production develops in Texas, the state needs to compete with the more than 30 other state incentive/mandate programs.
 
 The third challenge facing biodiesel in Texas is the lack of a market for the fuel in its own state. With the cost to produce biodiesel at record levels due almost entirely to increasing feedstock costs, local producers are being forced to look overseas for product sales in order to stay in business. With a long-term goal of providing economically viable fuel domestically, the industry requires a state program that supports standards for existing biodiesel capacity in Texas while also being progressive enough to encourage continued capacity growth. It is imperative for the Texas biodiesel industry to secure a targeted state fuel standard that sets an ambitious, yet achievable, goal for the future production of biodiesel in Texas. 
 
 As a group, the Texas biodiesel industry faces its own unique challenges but also shares in working through the same issues that continue to plague all biodiesel interests throughout the United States. We, as an industry, are committed to working together with local, state and federal legislative bodies, agencies and both the private and public sectors to ensure that biodiesel becomes an established fuel for America.
 
 Jennifer E. Ligums is co-founder and vice president for BioSelect Fuels, a developer and operator of biodiesel facilities, and spokesperson for the Biodiesel Coalition of Texas. Reach her at <a href="mailto:jligums@bioselectfuels.com">jligums@bioselectfuels.com</a> or (281) 768-4912.

903-1294329945.jpg

Biodiesel in Texas: Leadership Through Teamwork

Talking Point

Web exclusive posted Jan. 4, 2008, at 8:41 a.m. CST

 
 Houston-based biodiesel producer Nova Biosource Fuels Inc. has finalized a $41 million senior secured credit facility with WestLB AG, one of the world's leading financial services providers for alternative energy companies. The facility-or credit loan-includes a $36 million construction loan that will convert to a term loan at the completion of the company's 60 MMgy biodiesel facility in Seneca, Ill., which is expected to be completed this month.
 
 The financing deal also includes a $5 million working capital facility. The non-recourse finance structure-a loan where the lending bank is only entitled to repayment from the profits of the project the loan is funding, not from other assets of the borrower-will also be used towards the completion of the Seneca plant. WestLB AG, New York Branch assumed the role as sole arranger, bookrunner and administrative agent on this financing deal.
 
 "This [finance deal] allows us to show that our projects are viable from an economic standpoint when everyone else is going out of business," said Nova Biosource Fuels Vice Chairman and President J.D. McGraw.
 
 WestLB has a venerable presence in the global renewable fuel and energy sectors, providing corporate capital commitment strategies, advisory services and innovative financing solutions for its global clientele base such with Nova's unique finance investment.
 
 According to McGraw, this is the first biodiesel plant in the nation to have been financed in this nature and the first for either party.
 
 "[This deal] enables us leverage where we're going to be able to have some flexibility of the money we put into [the Seneca] facility to use towards other future plants," McGraw said. "We hope to announce something in the near future on our next facility."
 
 Nova's 60 MMgy plant in Seneca continues on pace for mechanical completion this month with start-up operations anticipated to commence some time in February. The company is focused on building and operating a number of plants with a goal of attaining production capacity of between 180 MMgy to 220 MMgy. In particular, Nova is investing to improve the profitability of its 10 MMgy plant in Clinton, Iowa while also completing the Seneca facility.
 
 Nova's business strategy for the next three years includes building up to seven biodiesel plants with production capacities ranging from 20 MMgy to 100 MMgy.
 

 On the Web
 <a href="http://www.novabiosource.com" target="_blank">www.novabiosource.com</a>
 <a href="http://www.westlb.com" target="_blank">www.westlb.com</a>

Nova Biosource Fuels finalizes unique financing deal for new Seneca facility

Web exclusive posted Jan. 10, 2008, at 3:28 p.m. CST 
 
 Archer Daniels Midland Co., Bayer CropScience AG and Daimler AG plan to jointly explore the potential for a biodiesel industry based on Jatropha (Jatropha curcas L.). A respective memorandum of understanding was signed by the companies, Bayer Crop Science announced Jan. 9. 
 
 Jatropha, a tropical plant from the Euphorbia family, is seen by the three cooperating partners as a promising alternative energy feedstock for the production of biodiesel. Biodiesel derived from Jatropha nut kernels has properties similar to those of biofuels obtained from oilseed rapes. It is also characterized by a positive carbon dioxide and lifecycle greenhouse gas balance. 
 
 In this project, the companies are seeking to develop production and quality standards for Jatropha-based biofuel. ADM operates multiple biodiesel plants in Europe and has two U.S. biodiesel facilties, one in Velva, N.D., that it wholly owned and another in Mexico, Mo., which it holds a 49 percent marketshare in.
 
 Bayer CropScience plans to develop and register herbicides, soil insecticides and fungicides for disease and pest control of Jatropha plants. At the end of last year, Daimler AG completed a wide-ranging five-year research project which demonstrated that Jatropha can be used and cultivated to obtain high-quality biodiesel and studied the use of this fuel in test vehicles. The company will continue to explore the interactions between fuel and engine in vehicles powered by Jatropha biodiesel and mixtures of this and other fuels. 
 

 Jatropha is actually a "wild plant", and therefore it has never been professionally cultivated. Recent studies show a potential of approximately 30 million hectares of land on which this plant could be grown, especially in South America, Africa and in Asian countries such as China, India or Indonesia. Since Jatropha can be cultivated on barren land, it does not compete for land that is being used for food production, and thus provides farmers with an additional source of income. 
 
 Source: Bayer CropScience

ADM, Bayer and Daimler partner on Jatropha biodiesel project

Web exclusive posted Jan. 11, 2008, at 10:29 a.m. CST
 
 <a href="http://www.usda.gov/wps/portal/usdahome">USDA's </a> first major report of the year gives official numbers to what is already mostly factored into the markets-this year's U.S. ending stocks for wheat are forecast to be the lowest in 60 years. The world-wide short wheat crops of recent years on top of the newly emerged demand for biofuels have added fuel to record-breaking prices for all crops. USDA's Jan. 11 World Agricultural Supply and Demand Estimates give the numbers. 
 
 Corn projections
 
 U.S. corn ending stocks for the 2007-'08 crop year are reduced 359 million bushels from the previous report based on lower estimated production and increased feed and use. Corn supplies for 2007-'08 are also lowered 94 million bushels based on lower estimated production. While the acreage planted to corn was not adjusted, the yield per harvested acre was dropped from the earlier estimate of 153 bushels per acre to 151.1 bushels per acre. That compares with last year's national average yield of 149.1 bushels per acre. The season-average farm price for corn is projected at $3.70 to $4.30 per bushel based on the sharp rise in both cash and futures prices that have been sustained during recent weeks.
 
 Oilseed projections

 
 U.S. oilseed production for 2007-'08 is estimated at 80 million tons, down 100,000 tons from last month, and 16.6 million tons below last year's record. Small reductions for soybean and canola production were offset by increases for sunflower seed, cottonseed and peanuts. Soybean production is estimated at 2.6 billion bushels, down 9 million bushels from last month's estimates based on a slightly lower yield. The soybean yield is estimated at 41.2 bushels per acre. Soybean exports and crush projections are unchanged from last month. Soybean stocks are projected at 175 million bushels, down 10 million from last month. If realized, stocks would be at the lowest level since 2003-'04. Soybean oil stocks are projected higher this month reflecting increased production due to a higher extraction rate. The U.S. season-average soybean price range for 2007-'08 is projected at a record-high $9.90 to $10.90 per bushel based on the sharp rise in cash and futures prices in recent weeks. Soybean oil prices are forecast at 45.5 to 49.5 cents per pound compared with 41 cents to 45 cents last month. 
 
 Wheat projections
 
 While biofuel feedstock buyers generally don't need to pay close attention to what's happening in the wheat market, this year the short world crop is helping drive all crop prices up. USDA's WASDE report said its U.S. wheat ending stocks projections for 2007-'08 are raised this month by 12 million bushels due to lower projected domestic use. At 292 million bushels, this year's ending stocks are forecast to be the lowest in 60 years. 
 
 An important detail in the use projections is that USDA reduced projections for seed use by 2 million bushels based on lower-than-expected hard red winter wheat planted area as reported in Winter Wheat Seedings. The season-average farm price is projected at $6.45 to $6.85 per bushel, reflecting strong cash and futures prices and lower-than-expected hard red winter wheat seedings. The projected range is well above the record of $4.55 per bushel in the1995-'96 crop year.

USDA releases first supply, demand report of year

Web exclusive posted Jan. 11, 2008, at 10:39 a.m. CST
 
 <a href="http://www.bioselectfuels.com/about.html">Bioselect Galveston Bay</a>, mired in a lawsuit with former partner Chevron, will pay off creditors and resume plant improvements with a $15 million bridge loan from an unidentified investor.
 
 The Galveston Island, Texas, producer will use more than $2 million to pay off 17 vendors that filed liens against the company in the fall of 2007, said Galveston Bay attorney A. Craig Eiland. The $6 million in liens has been settled for the reduced amount. The bulk of the settlement will go to J.M. Davidson, the Corpus-Christi contractor that performed much of the work on the startup biodiesel facility.
 

 Galveston Bay began operations in May 2007 with a 20 MMgy plant, with immediate expansion plans for a 100 MMgy capacity. It refines soybeans and other agricultural crops into biodiesel for use in the marine, trucking, industrial and commercial markets. A planned expansion stalled when minority partner Chevron declined to participate in a financing scheme known as "pay to play" in August 2007. The lawsuit followed. It reads more like a domestic dispute than a contractual one. Galveston Bay charges Chevron with abandonment. It claims that Chevron led the biodiesel partners on with promises of future financing. In reliance of those promises, Galveston Bay did not seek other financial suitors and its attractiveness to venture capitalists waned. Chevron counters that it fulfilled its contractual duties and wasn't obliged to participate in subsequent rounds of financing until the expanded plant was completed.
 
 "Pay to play" gained favor during the dot com craze, when struggling companies needed infusions of funds to stay viable. New rounds of financing gave start-ups new life and weary investors some relief and validation. Chevron claims in this case that participation in each round of financing was voluntary, and it exercised its option not to stay in the game. The down side of "pay to play" is that later investors generally buy in at a lower valuation than the entrepreneurs, diminishing the founders' share values. But it also enables struggling ventures to move on to later stages of development and not become stalled due to financing hurdles. That appears to be the case here. Galveston Bay announced plans to expand capacity to 40 MMgy by summer 2008.
 
 Biodiesel Magazine Staff Writer Sarah Smith has written an in-depth story about the Galveston Bay v. Chevron lawsuit. The article will be published in the March 2008 issue of Biodiesel Magazine.

Galveston biodiesel plant gets $15 million lifeline

Web exclusive posted Jan. 16, 2008, at 12:28 p.m. CST 
 
 Trading company CME Group has announced new pre-open closing times for all oilseed contracts traded on CME Globex. Contracts listed at the Chicago Board of Trade, the Kansas City Board of Trade and the Minneapolis Grain Exchange will now close at 4 p.m. CST. The adjusted time affects trades on soybean, soymeal and soy oil futures, as well as South American and mini-sized soybean futures. Mary Haffenberg of CME Group said the closing time change from 4:30 p.m. to 4 p.m. was put in place in order to keep closing times uniform with other markets. Closing trading at 4 p.m. allows clocks to be reset to the next day so that when trading resumes, the electronic time stamp is correct.

January 2008

Business Briefs

Carotech receives Best Innovation award

China Clean Energy sees strong third quarter

GreenHunter Energy finances project, acquires generators

Wilks Enterprise introduces portable spectrometer

JM Science introduces titrator

Netherlands companies form biodiesel association

Axens receives chemical engineering award

Biodiesel plant builder honored

Former U.S. House majority leader joins Benefuel board

Columns

Editor's Note

NBB In Sight

Supreme Court Decision Affects Patents

Talking Point

Featured

Biodiesel's True Calling

Canola Waits in the Wings

A New Generation

Breeding Better Beans

Emerging Opportunities on Uncharted Grounds

Cleaner and Clearer

January 2008.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

Carotech receives Best Innovation award

China Clean Energy sees strong third quarter

GreenHunter Energy finances project, acquires generators

Wilks Enterprise introduces portable spectrometer

JM Science introduces titrator

Netherlands companies form biodiesel association

Axens receives chemical engineering award

Biodiesel plant builder honored

Former U.S. House majority leader joins Benefuel board

Columns

Editor's Note

NBB In Sight

Supreme Court Decision Affects Patents

Talking Point

Featured

Biodiesel's True Calling

Canola Waits in the Wings

A New Generation

Breeding Better Beans

Emerging Opportunities on Uncharted Grounds

Cleaner and Clearer

January 2008