When biodiesel burst onto the national radar earlier this decade it was the 'next big thing' in the world of biofuels. Ethanol had blazed a luminous trail and the road seemed obvious for bold, home-grown energy entrepreneurs. Just stake out your soybean fields, raise $20 to $30 million and get out your shovels-not. 
 
 Of course we thought the $1/gallon blender's credit would make up for any short-term feedstock differential between crude petrol and virgin vegetable oil. Hurricane Katrina helped more than a little by putting Americans over a barrel, of petroleum that is. Maybe we could do this after-all with $0.35/lb. 'RBD' soy-oil. That was nixed too. 

 
 Reality set in. And by now, most of us think we know the rest of the story. But a funny thing happened on the way to bankruptcy court, and someone forgot to tell the hobbyists, on-farm producers and home-brewers. If anything, their numbers have increased. Here in Wisconsin, or "cheese-country," we've discovered that there is more to this than just a penny or two at the pump. Energy independence means procuring your own raw materials locally, and refining without the help of the lengthy, cut-throat, commercial supply chain.
 
 The Wisconsin Department of Revenue reported earlier this year that approximately 100 'Blenders Reports' were coming in each month, with checks for $4, $7, and sometimes as much as $11.50. This is in accordance with state law, as there is a 2-cent-per-gallon 'tank inspection fee' on all fuels consumed within the state. This made the State's Office of Energy Independence (OEI), charged with helping facilitate Governor Doyle's 20 percent renewable energy by the year 2020 goal, curious.
 "We've always been supportive of the state's small-scale producers," says Maria Redmond, an alternative fuels specialist with the state. "But now we're really trying to reach-out and encourage their efforts. Every local gallon is renewable." 
 
 Earlier this year the Wisconsin Biodiesel Association's not-for-profit arm, the Green Diesel Wisconsin Foundation, replied to Redmond's request for proposal and was granted $40,000 for a 12-month program of education and outreach aimed directly at the backyard crowd. The Foundation immediately hired Robert Brylski, a former million-gallon-a-month commercial producer with Sanimax Corp., to head up the program.
 
 "We've been teaching people small-batch production through the state's technical college system for several years now," says Brylski, who is also a trained chemist. "I think the self-reliance aspect is what really catalyzes this crowd. Well-the potassium hydroxide does too."
 
 The program kicked-off just last month with what was supposed to be press conferences in multiple locations. But there was another interesting phenomenon going on here-Brylski and the Foundation found out that their constituents don't particularly care for the limelight. In fact, if you bring the TV cameras you can count most of them out. 
 
 "We kept trying to set things up on the farms and in the garages of the folks we thought were shining examples of how to produce quality fuel safely," he says. "But one by one they were ducking back into their garages and barns. No one wanted to be a poster boy-or girl-for the program." In fact, the harder he cajoled and prodded, the harder they resisted. 
 
 "We learned something important in this," Brylski says. "We need to capitalize the 'I' in 'energy independence' and respect people's desire for a low profile. Even though the government supports what they're doing, they're still leery of regulation." 
 Farmer, feedstock producer, home-brewer and long-time renewable fuels advocate Jamie Derr of Marshall, Wis., puts it this way: "I think a low-key, rolling start to this program is the best approach. If the state wants to tally up the home-grown gallons, they're going to have to come in with some carrots and make sure to keep any paperwork to a minimum."
 

 Small-scale ethanol is also encouraged in the state's outreach program with support for a recent workshop by Alcohol Can Be a Gas author David Blume, at Madison Area Technical College. At $270 per person there were no empty seats for Blume's two-day workshop on how to make and use ethanol at home. Brylski has also seen growing interest in small-scale, on-farm ethanol production using non-traditional crops such as cattails and crop wastes. 
 Many small-scale producers are drawn in by co-product streams, and the options small-scale production facilitates. "Meal quality and livestock feed flexibility are added benefits when pressing your own beans for oil for fuel feedstock," Derr adds. "In some ways it's a 'Back to the Future' model of farming."
 
 The Wisconsin Farmers Union, which has been holding renewable fuels workshops since 2006, indicates that it has also seen an uptick in interest for home distilling though much of its early work was focused on biodiesel.
 For more information on the Wisconsin Small-Scale Producer Program, visit <a href="http://www.therenewablenetwork.com/">http://www.therenewablenetwork.com/</a>
 
 H. Tony Hartmann is CEO of Great Lakes Ag Energy, a bioenergy project development and consulting company. Contact him at <a href="mailto:thartmann@greatlakesagenergy.com">thartmann@greatlakesagenergy.com</a> or (608) 215-4446.

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The Power of One

Posted August 31, 2009
 
 SRS Engineering Corp., a leading bioenergy company that offers complete solutions for engineering and manufacturing biodiesel plants, made the Inc Magazine's Fastest-Growing Private Company in the year 2009 List. SRS Engineering ranked #60 out of the Top 100 in the Energy Industry and #2118 overall on the Inc 5000. 

 
 SRS Engineering experienced a 149.8 percent growth in the last four years, summing $5.4 million revenue in the year 2008. The company credits its success to its 25 years of recognized engineering and good standing in the industry, and states its reputation is backed up domestically by several Fortune 500 companies and by renowned corporations worldwide. 
 
 "We are thrilled and honored to receive this prestigious ranking", says Clayton Hawranik, CEO of SRS Engineering. "Our company has been truly devoted to designing, engineering, and manufacturing biodiesel plants and equipments that would stand out in the industry as the most energy efficient and technologically advanced in the industry. We have gathered decades of our process and engineering knowledge and poured it all into this new biodiesel industry." 
 
 SRS Engineering states its success is driven by and is and largely credited to its valued team of engineers and dedicated staff who constantly seek advancements in its process and technologies. The biodiesel industry is constantly changing, and SRS Engineering states part of its success is due to the fact that its team welcomes change and strives to stay on top. 
 
 About SRS Engineering Corp. 
 Headquartered in Murrieta, Calif., SRS Engineering Corporation has been manufacturing custom process equipment for various industries for more than 20 years. The company offers a wide range of biodiesel equipment, including high-FFA pretreatment systems, high-purity methanol recovery systems, glycerin purification, continuous-flow reactors, and complete turnkey biodiesel plant solutions. SRS is uniquely positioned to deliver everything from small biodiesel plants to large-scale biodiesel refineries. 
 
 For more information, visit <a href="http://www.srsbiodiesel.com">www.srsbiodiesel.com</a> or call (800) 497-5841. 
 
 Click here to view the Inc. Top 100 List – Energy Industry 
 http://<a href="http://inc.com/inc5000/2009/lists/top-industry-energy.html?sort=listrank&order=&o=0">inc.com/inc5000/2009/lists/top-industry-energy.html?sort=listrank&order=&o=0</a> 

 
 Click here to view SRS Engineering's Company Profile on Inc 500 É 5000
 http://<a href="http://inc.com/inc5000/2009/company-profile.html?id=200921180">inc.com/inc5000/2009/company-profile.html?id=200921180</a> 
 
 #### 
 
 SOURCE: SRS ENGINEERING CORP.

SRS Engineering ranks #60 in the Top 100 Energy Industries

SRS Engineering makes the Inc Magazine's Fastest Growing Private Company in 2009 list

Posted September 11, 2009
 
 USDA boosted its projections for the U.S. corn and soybean crop in its monthly World Agricultural Supply and Demand Estimates report issued Sept. 11. The corn crop was projected to hit a record 161.9 bushel per acre yield while soybean yields were projected at 42.3 bushels per acre. Total U.S. soybean production was forecast at 3.25 billion bushels, up 46 million based on those higher projected yields on the projected 76.8 million acres to be harvested. Ending stocks were project at 220 million bushels, up 10 million, in spite of a projected increase in exports expected due to a short soybean crop in India. The soybean crush projections for the U.S. were raised 20 million bushels due to those higher projected soybean meal exports for the 2009-'10 marketing year.
 
 USDA projected soybean oil stocks at a record high of 3.1 billion pounds at the end of the current, 2008-'09 marketing season, also noting increased use of soybean oil for biodiesel of 100 million pounds and reduced soybean meal exports. Soybean oil use for biodiesel was raised to 2.1 billion pounds compared to 1.85 billion pounds in the current marketing year and 3.24 billion pounds in 2007-'08. Soybean exports for 2008-'09 were projected at a record 1.28 billion bushels, up 15 million from last month reflecting exceptionally strong shipments in the final weeks of the marketing year. The increase was offset with lower residual, leaving ending stocks unchanged at 110 million bushels.
 
 The U.S. season-average soybean price range for 2009-'10 was projected at $8.10 to $10.10 per bushel, down 30 cents on both ends of the range. The soybean meal price was projected at $250 to $310 per short ton, down $10 on both ends. The soybean oil price range was unchanged at 32 to 36 cents per pound.
 
 Global soybean production was projected at a record 243.9 million tons, up 1.9 million as increased production forecasts for the United States and Brazil were partly offset by reductions for China, India, and Canada. Brazil soybean production was projected at 62 million tons, up 2 million from last month due to an increased area projection reflecting favorable soybean prices relative to corn. China soybean production was reduced 0.4 million tons to 15 million based on lower yields resulting from untimely dry conditions in northeastern growing areas. India soybean production was reduced 1 million tons to 9 million due to reduced harvested area and lower yields. A late start to planting resulted in lower-than-expected area sown. Lower yields are projected due to a period of dryness in late July and early August. 
 
 Global rapeseed production was almost unchanged as lower production for Canada is offset by higher production for EU-27. The EU-27 crop benefitted from record yields in France. 
 

 Global oilseed trade for 2009-'10 was raised 0.7 million tons to 91.8 million. Increased soybean imports for China account for most of the change. Global oilseed stocks were projected higher mainly due to higher soybean stocks in China and the United States, which were only partly offset by lower stocks in Argentina and India. China soybean imports for 2008-'09 were raised to a record 39.8 million tons. 
 
 A record projected corn yield of 161.9 bushels per acre has the USDA boosting its U.S. corn production figure to 13 billion bushels for the maturing crop. The resulting increase of 193 million bushels from the previous month's estimates were projected to get used up by increased exports and domestic use. In particular, higher than expected corn use for ethanol for the current marketing year had the USDA lowering its beginning stocks by 25 million bushels based on record July and August production of gasoline blends with ethanol as reported by the Energy Information Agency. Total U.S. corn use for 2009-'10 was projected at a record 13.0 billion bushels, 980 million bushels higher than the current marketing year. Ending stocks were projected 14 million bushels higher. The 2009-'10 marketing-year average farm price was projected lower at $3.05 to $3.65 per bushel, compared with $3.10 to $3.90 per bushel last month.

WASDE: Record soy oil stocks projected

Technical maturity and commercial viability of algal biofuels is a much debated topic, with estimates ranging from three years to multiple decades. However, most people involved in this emerging technology area agree that algal biofuel commercial economics are extremely challenging, highly variable, and subject to dynamic, speculative, and volatile commodity markets. Therefore, understanding and addressing algal biofuel economic drivers is equally as important as maturing growth, harvesting, and conversion technologies.
 
 On June 3, the U.S. DOE released a request for information (RFI) that solicits comments to a draft version of DOE's "National Algal Biofuels Technology Roadmap," which provides a framework for qualifying and prioritizing algae technology development objectives. Release of the DOE's draft roadmap and renewed government interest in further developing commercial algal biofuels technology has motivated Diversified Energy to share results from a comprehensive body of work associated with algal biofuels economics, with the intent of advancing algae commercial feasibility conversations and focusing development resources on critical commercialization parameters. Over a two-year period, an exhaustive technical, engineering, cost, and economic model was constructed, reviewed, and matured to provide a realistic baseline assessment of algal biofuel economics and the cost drivers associated with commercial-scale algae production. Results from this algal biofuels modeling and analysis effort indicate a clear set of economics-driven research and development priorities, which can be summarized as follows:

 1. Re-focus research and development (R&D) activities towards minimizing operations and maintenance (O&M) costs for algae production systems
 2. Emphasize coproduct capture and marketability to maximize revenue generation
 3. Aggressively develop technologies and processes that significantly improve total algae yields, without dramatically increasing costs.
 4. Reduce total capital costs of algae production and harvesting through advanced technology 
 While this set of priorities may not be revolutionary to people in the algal biofuels business, details supporting these recommended priorities are enlightening and provide a framework for prioritizing research, development and commercialization initiatives. 
 
 The Economic Model and Analysis
 The model used to perform the commercial economic analysis includes more than 50 independent variables supported by detailed engineering specifications, commodity market data and vendor quotes for equipment costs. The model is based on a generic baseline algae growth system and is not specific to any particular technology. It is largely recognized that these analysis results could vary depending on the growth architecture selected and assumptions for algae productivity. However, the general trends and economic/commercialization drivers presented here will apply to virtually any algae production system; and the overall research, development and commercialization priorities are applicable to the broader algal biofuels community. Finally, details of this analysis have been consolidated and simplified into graphical form in order to convey key points and provide support for the suggested R&D and commercialization priorities. 
 
 The accompanying graphics (A through D) illustrate a summary of the model results, which are used to justify the following set of algal biofuels development recommendations. The first recommendation is to refocus R&D activities towards minimizing operations and maintenance costs for algae production systems, where O&M costs include all expenses required to operate the algal biofuels system on an annual basis.

 
 Figure A shows a consolidated set of O&M cost drivers and clearly indicates that utilities (including electricity and water), CO2, maintenance of the algae growth system, labor, and nutrients have the greatest influence on operations costs. Given that most discussions on algal biofuels O&M center around CO2 access and nutrient availability, it was surprising that utility costs accounted for more than one-third of total O&M expenses. However, when considering the amount of energy required to transport, handle and process extremely large volumes of water and biomass material, along with considerable evaporative water losses, it becomes apparent why utilities are a significant cost driver. The cost of CO2 for this analysis assumes that CO2 must be purchased for the algal biofuels commercial system, which may or may not be the case depending on project location strategies. Therefore, the following research, development and commercialization priorities suggested include:
 - Algal biofuels growth, harvesting (including oil extraction), system architectures and processes should be developed and matured in a way that minimizes the amount of energy (electricity and others) and water required for nominal operations.
 - Technologies should be developed and policies implemented that reduce/eliminate the cost of CO2 for algal biofuel systems.
 - Algal biofuel technologies should be designed in a way that maximizes lifetime/longevity and minimizes annual maintenance requirements.
 
 The second recommendation is to emphasize co-product capture and marketability in order to maximize revenue generation. One of the most enlightening discoveries from the modeling and analysis conducted was the realization that triacylglycerols (TAGs) for biofuel production represent a relatively small portion of algae-related revenue opportunities (Figure B). 
 
 The model assumed an algae strain with an oil/TAG content of 20 percent and a nutraceutical content of 2 percent. Granted, claims have been made that several algae strains and production techniques, including stressing, may result in 50 percent or more oil yields. However, the fact remains that 50 percent to 80 percent of the material produced in an algal biofuels system will be something other than oils used for biofuel conversion. For this analysis, these other materials were categorized as either meals/solids or nutraceuticals. While nutraceutical content in the baseline algae strain is very small, current market values for these products are extremely high and, as illustrated, can have a dramatic impact on overall project economics; although the risk of market saturation and depreciating product values exists when considering large-scale algal biofuels production. It is also worth noting that not all algae strains contain nutraceuticals and may not have the revenue opportunities presented here. Nevertheless, realization of these algae revenue drivers resulted in the following research, development and commercialization priorities:
 - Harvesting and oil extraction technologies need to focus on highly efficient separation and capture of all valuable algae materials while minimizing energy and capital costs.
 - Coproduct markets must be rigorously analyzed on a regional, national and international basis to assess the feasibility of realizing revenue opportunities for meals/solids and nutraceuticals.

 
 Third, a recommendation is being made to aggressively develop technologies and processes that significantly improve total algae yields, without dramatically increasing costs. This research, development and commercialization priority is straightforward and requires no detailed explanation. If the same unit area can produce 2 to 3 times the algae, assuming that productivity and capital/O&M correlations are less than linear, then total project economics improve. Algae yield is a major project economics sensitivity variable, and technologies that efficiently increase algae production yields should be aggressively developed and matured.
 
 The final recommendation resulting from this modeling and data analysis is to reduce total capital costs of algae production and harvesting through advanced technology.
 
 Capital costs for an algal biofuels production system are a major commercial viability concern. Estimates vary wildly, with ranges of $10,000 per acre installed to more than $100,000 per acre installed. The goal of this analysis was to quantify total capital cost drivers for a baseline algae production system in order to focus technology development priorities in areas that would have the greatest impact. Figure C illustrates the capital cost drivers for the baseline system, and it is very clear that the algae growth system, water management/harvesting/extraction, and CO2 delivery infrastructure have the greatest capital cost impact. As a result of this capital cost analysis, the following research, development and commercialization priorities are suggested:
 - Focus R&D resources on algae growth system architectures that require minimal capital cost expenditures.
 - Develop water management, dewatering, harvesting/extraction processes and technologies that require minimum infrastructure.
 - Mature low-cost CO2 delivery systems or implement policy to provide incentives, grants and loan guarantees that will reduce or eliminate CO2 infrastructure costs.
 
 The analysis model also includes a commercial project economics component that allows for commercial viability assessments based on capital, O&M and revenue variables. Using a net present value discounted cash flow approach (including debt/equity ratios and rates, taxes, terminal value and depreciation), analysis was performed to determine the sensitivity of TAGs production costs as a function of changes to five critical commercial system parameters. A summary of this sensitivity analysis is provided in Figure D, which clearly illustrates the relative impacts of O&M costs, coproduct values, productivity, oil content and capital costs on TAG production costs. Results from this sensitivity analysis are consistent with the research, development, and commercialization priorities presented here and reinforce the need to focus on algal biofuels economic drivers in order to realize commercialization objectives.

 
 Phillip Brown is president and chief operating officer of Diversified Energy. He can be reached at <a href="mailto:Phillip.Brown@diversified-energy.com">Phillip.Brown@diversified-energy.com</a>.

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The race is on to develop the first commercial-scale algal biofuels production system that can generate substantial investor returns and create a new transportation fuel infrastructure model.

Algal Biofuels R&D and Commercialization Priorities: A Commercial Economics Perspective

With the development of the audit function, the organization builds and maintains an in-house presence for continually monitoring risks associated with asset protection, loss prevention, and compliance efforts throughout the organization. Through the execution of individual internal audits, controls and processes in place to mitigate risks are evaluated, enabling the organization to determine the effectiveness of those oversight efforts. Development of the internal audit function also gives the organization the necessary expertise for devising and implementing annual internal audit plans.
 
 The internal audit department serves the organization in a broad monitoring capacity. While external audits focus exclusively on risks related to financial reporting, internal audit evaluations identify and assess potential operational risks throughout the organization, as well as risks associated with financial reporting activities. Based on those evaluations, the board of directors and management can determine whether those risks align with the organization's risk appetite, and what responses are needed to mitigate any risks deemed unacceptable.
 
 To ensure that internal audit assessments cover any relevant potential risks and related controls, all areas of the organization must be open for internal audit, and all areas must receive attention by the internal audit department. Assessments gleaned from those expansive evaluations allow management to make more informed decisions, decisions that enable the organization to identify and mitigate unacceptable risks, decisions that promote long-term growth. By exercising such oversight, the internal audit department also provides assurance to employees, investors and other stakeholders.
 
 Risk Assessment 
 Findings from an organization's annual risk assessment offer a basis for developing the internal audit universe, which provides a structure for rating and organizing items to be addressed in annual internal audits. The internal audit universe focuses on risk factors that influence the organization, such as inherent risks, financial, fraud, operational, compliance, and technology-related risks, and regulatory risks relevant to the specific organization. 
 
 Risks differ from one entity to another and the internal audit universe must reflect the organization's business and internal audit strategies. Within that perspective, the internal audit objectives must address process-level risks. A metal-plating company, for example, may face an array of entity-level risks, including changing customer preferences, cost increases for materials, potential liability exposure, or the possibility of more stringent regulatory requirements. While all of those risks would need to be considered as part of the company's overall risk assessment and enterprise risk management efforts, only certain ones may be addressed by the internal audit function.
 

 The internal audit department would monitor related process-level risks, including the operational risks associated with properly storing, handling, treating, and disposing of the various chemicals used in metal plating operations. Such assessment would address whether actual practices conform to internal policies, and whether those policies were effective in mitigating risks. That evaluation would also monitor whether those activities were conducted in compliance with current workplace safety, environmental protection and other regulatory standards.
 
 Risk assessments for internal auditing purposes consider the potential impact of a risk, the likelihood of it occurring, as well as quantitative or qualitative nature of each risk. Those assessments also consider the effectiveness of related internal controls.
 
 In a manufacturing facility, for example, the collapse of an overhead crane during production hours would be catastrophic. Evaluations might reveal, however, that regular, prescribed schedules for inspections and preventative maintenance are followed, with detailed documentation archived for each inspection and maintenance activity. With such efforts, the risks associated with a crane collapse are effectively mitigated.
 
 An assessment of the various IT elements used throughout the company may yield different results. Incompatibilities between legacy hardware or software and newer technology may require manual intervention to transfer data from one system to another. Such manual intervention presents inherent risk for errors. 
 
 Some of the controls surrounding those IT-driven processes may rely on manual activities, too. Manual processes may be used, for example, to reconcile balances for some accounts. That activity presents further inherent risks to data integrity. Some of the data affected by those manual interventions and reconciliations may also support significant accounts, accounts that have a material impact on the company's financial reports. 
 
 Based on such risk assessments conducted throughout the organization, the Internal Audit Department develops the risk-rated internal audit universe. That universe includes all items that require monitoring and that can be audited. Each item is rated on a risk scale such as a scale of 1 to 3, with 3 representing the highest level of risk, 2 indicating a moderate level of risk, and 1 signifying a low level of risk.
 
 Using the Risk-Rated Universe 
 The risk rating assigned to each item in the internal audit universe determines the frequency that an item requires auditing. That frequency can range from once a year to once every three years or for very low risk areas, never. Reviewing such ratings enables the internal audit department to devise annual audit plans that include items requiring examination that year. 
 
 Processes with the highest risk ratings of 3 would merit annual internal audits. Such processes would include crucial financial reporting functions, as well as operational processes that present considerable risk potential to the organization. Processes with risk ratings of 2 would be subjected to biannual internal audits, while low-level risks – processes with a risk rating of 1 - could be audited once every three years.

 
 In the examples cited above, the operational risk associated with a potential overhead crane collapse could merit a rating of 1 because the related controls – regular, documented physical inspections and preventative maintenance – are effective. Some of the IT processes that rely upon manual intervention for transferring data from a legacy system to a newer system present considerable opportunities for error, even if that data doesn't support crucial financial reporting or operational processes. Those processes could be given risk ratings of 2. The IT processes that support crucial accounts or depend upon manual controls would receive the highest risk rating of 3.
 
 Considerations besides risk ratings also determine what areas require inclusion in the internal audit universe. Some items must be evaluated annually to meet various compliance requirements. Review of the past year's audit may also highlight vulnerabilities, exposures of misstatement, or errors in the process to identify the audit objectives. Those issues would need to be addressed in the annual audit plan, too.
 
 Such evaluation promotes continuous improvement and helps ensure that all items requiring attention receive the appropriate amount of monitoring in each annual audit. 
 
 Organizations vary immensely in internal audit needs, with company size, business strategies and risk appetite influencing the volume of necessary internal audit monitoring activity. Such factors help determine the proper size and staffing requirements of the internal audit function.
 
 To properly address specific internal audit needs, the internal audit department should be staffed with individuals whose skill sets include management planning review, financial reporting, and IT operations. The internal audit function may also need to deploy specific regulatory expertise based on the industry within which the organization operates.
 
 The volume of audit work defined by the risk-rated audit universe determines the appropriate staffing level for the organization. Based on best estimates for conducting a yearly audit and related monitoring efforts, 1,800 hours of annual internal audit work would equal one full-time staff member. 
 
 That volume of annual work may not equate to an exact number of staff members. Organizations vary, too, in the number of staff members they need for each skill set. To address either scenario, organizations may outsource some internal audit work to attain optimal staffing and skill set levels.
 
 Residual Benefits

 The internal audit strategy provides a foundation for development of the internal audit function. That development gives the organization a means for continually monitoring the risks associated with asset protection, loss prevention, and compliance efforts.
 
 The internal audit department and the internal audit universe can then be expanded to accommodate organizational growth and any changes facing the entity. That provides the means for conducting individual annual audits. Depending upon the organization and its circumstances, internal audit findings may also be applicable to external audits.
 
 By continually identifying and assessing risks, the internal audit function provides the board of directors and management with the information they need to determine whether risks align with the organization's risk appetite. Through applying enterprise risk management principles, unacceptable risks can then be mitigated. That safeguards the organization, nurtures its growth, and provides ongoing assurance to all stakeholders.
 
 Alyssa G. Martin, CPA, MBA, is the Dallas executive partner and the firm-wide Partner in charge of the Risk Advisory Services group at Weaver and Tidwell, LLP. Reach her at (817).332-7905 or (972) 448-6975.

Alyssa Martin risk advisory services partner, Weaver & Tidwell

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The internal audit strategy provides the foundation for development of an organization's internal audit function.

Internal Audit Development: Building a Continual Monitoring Presence

Coverage in this month's issue illuminates an interesting phenomenon. On one hand, the banking collapse and recession have crippled lending to the point where many would-be successful biodiesel plant projects are "on hold." It doesn't help that uncertainty over the fuel standard implementation is ongoing, without indirect land use considerations, thanks to some of your hard work. But some key participants tell me they do not expect the final rule to come out until well into 2010, not in January, as hoped. Nevertheless, associate editor Nicholas Zeman writes a feature in this issue on proposed projects, called "Future Destinations," which looks at plant projects-some slowly moving forward while many others are on hold. And despite the message of a fringe environmental element spewing sentiment on the evils of first-generation biofuels, this should be a promising time for building out and maturing the biodiesel industry. Consumers and the government now seem to fully recognize that energy independence and climate change mitigation are necessary for the health of the nation and the planet. But the bankers are not lending like developers would like. 
 
 So there's an obvious and clear financing issue today. On the other hand, quite a few biodiesel plants just opened their doors for business. It's clearer than ever that there is no "normal" in this industry, which might partly explain why it appeals to me-some of my friends and colleagues say I'm not normal. But a couple of these new facilities aren't producing methyl esters. One is using thermal depolymerization to make a renewable diesel product. Another existing biodiesel refinery, Healy Biodiesel in Kansas, is retrofitting its plant in a partnership with tech provider Cetane Energy to hydroprocess multifeedstocks into green diesel. These newly opened plants range in size from a couple of million gallons, such as the Milligan Bio-Tech plant in Canada, to the large-scale Crimson Renewable Energy LP plant in California, a 30 MMgy biodiesel and glycerin refinery. Another facility, Ever Cat Fuels of Minnesota, is using the novel Mcgyan process to make biodiesel. Susanne Retka Schill writes a feature article, titled "New Systems and Strategies," in this issue, profiling several of these new biodiesel producers. The headline really says it all. 
 
 So how does one reconcile these two divergent situations, the finance freeze and a string of plant openings? I can speculate. Maybe some of these projects secured their finances well before things went completely bad. Maybe others are privately financed within a larger parent corporation. Others yet just may be more successful business people, financially more savvy than their competitors. Some plans, of course, are simply more sound than others. Then there are those who say it's not what you know, it's who you know, and sometimes that is true. Whatever the reasons-and quite possibly what's going on is survival of the fittest-it's certainly an interesting occurrence, and time, in this business. 

 
 Ron Kotrba
 Editor
 Biodiesel Magazine
 <a href="mailto:rkotrba@bbiinternational.com">rkotrba@bbiinternational.com</a>

Two Conflicting Messages

A small automotive research and manufacturing company in Denver is developing a hydraulic-biodiesel hybrid vehicle. Lightning Hybrids has advertised that the LH4 four-door sports sedan will average 100 miles per gallon and go from zero miles per hour to 60 miles per hour in under six seconds. Lightning says that there is a waiting list for the vehicle which will first be available in 2010.  

Lightning's LH4 combines sport car detailing with efficiency, averaging 100 mpg. PHOTO: LIGHTNING HYBRIDS INC.

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Lightning develops biodiesel hybrid sports sedan

PTT Research and Technology Institute of Thailand and Toyota Motor Thailand Co. have signed a memorandum of understanding for the joint development of bio-hydrogenated diesel (BHD). According to Toyota, vegetable oil treated with the hydrogenation process is similar in structure to diesel fuel but higher in quality. "It contains a cetane value higher than 80, has more complete combustion, [is] sulfur free, and produces less pollution," Toyota stated. In the research collaboration, PTT will conduct further research and testing on the biofuel and Toyota's engineering subsidiary will evaluate engine performance, testing for any negative effects on parts and fuel injection systems. Toyota said its preliminary tests showed "BHD produces less pollution and allows longer engine life compared to traditional biodiesel."
 
 Shigeki Suzuki, managing officer, Toyota Motor Corp., Japan, said with the Thai government's support of expansion of oil palm plantations in Thailand, Toyota would like to introduce BHD to get the best value out of palm oil and assure farmers that growing palm oil is worthwhile. In addition, Thai Minister of Energy Poonpirom Liptapanlop said the collaboration will lead the way to utilizing non-food feedstocks such as jatropha and seaweed. 
 
 Liptapanlop, who chaired the signing ceremony, said the combination of rising oil prices and economic growth is negatively affecting Thailand and that both energy conservation efforts and alternative fuel development are needed to cut oil imports. Public oil company PTT is the first to develop alternative fuels in Thailand including "gasohol, palm diesel and biodiesel B5, as well as natural gas for vehicles, according to Prasert Bunsumpun, CEO and president."

Thai Institute, Toyota collaborate

Shippers of goods, from paper to food, are asking their carriers to use biodiesel. This grassroots effort to achieve sustainable shipping does not rely on legislative enforcement. As a matter of fact, the American Clean Energy and Security Act (HR 2454), which sets emissions standards for some industries, is still caught up in the Senate. Even when the bill passes, it will be a long time before the effects trickle down to the majority of manufacturers and distributors. Rather, the resolve of consumers drives companies to search for sustainable shipping methods. 
 
 Consumers are asking for products that have less negative impact on the environment. Sustainable shipping of those products, using renewable fuel and other methods for reducing emissions and increasing fuel economy, is part of the solution. Biodiesel's American-made roots and reduced lifecycle CO2 emissions over straight petroleum make it a perfect candidate for sustainable shipping. 
 
 Granted, most of the shippers looking for sustainable shipping methods are producing or distributing products that appeal to environmentally conscious consumers-for example, recycled paper products and organic food. But, this is a huge and growing customer-base for truckers and commercial fleets. As a matter of fact, Blue Sky Shipping of San Francisco fields calls every week from shippers wanting to use biodiesel when transporting their goods. Blue Sky can only service the San Francisco Bay area with their seven trucks that run on B100 sourced only from used restaurant grease. Blue Sky is developing a "Sustainable Trucking Network" of mostly owner-operators who use biodiesel. When the company gets a call from either a current customer, such as New Leaf Paper, or a new customer that is outside the Bay area, they have a network of truckers to service the customer. Charles Whitwam, owner of Blue Sky Shipping, said, "Our customers love the fact that we use biodiesel. By shipping with biodiesel, they do their part to lower greenhouse gasses."
 
 Another example is Clif Bar & Co. of Berkley, Calif. Their customers want peace of mind that the energy snacks they consume were produced and transported in sustainable ways. So, to accomplish this, Clif Bar asked its Los Angeles-based carrier, States Logistics, to use biodiesel when shipping their goods. States Logistics liked biodiesel so much it now uses the fuel in all of its trucks, including three vehicles powered by soy-based B99 and four that run on B5. A recent joint study with the National Biodiesel Board showed that over a six-month period, States Logistics reduced CO2 emissions by about 70 tons versus using straight petroleum diesel. Ryan Donovan, vice president of operations and business development for States Logistics, said, "This is something that we do for our customers, like Clif Bar & Co., and they can tell their customers. We all benefit from using biodiesel to reduce our carbon footprint throughout the supply chain."
 

 Even the largest U.S. carriers use biodiesel. JB Hunt has long fueled with biodiesel in states such as Illinois, where a state tax incentive keeps the cost of B11 often lower than straight petroleum diesel. But recently a customer, Method Home, requested that only biodiesel be used when shipping their goods. The owners desire to ship their "green" home and personal care products sustainably. Method Home is one of the fastest growing consumer products companies in North America. Jerrod Mounce of JB Hunt said, "We have positioned ourselves to be able to meet our customers' demand for more sustainable transportation solutions, and biodiesel is one way we are able to do that." 
 
 Grassroots demand for sustainable shipping with biodiesel will rely on the revised renewable fuel standard (RFS2) to ensure an adequate supply. The amount of one billion gallons of biomass-based diesel by 2012 required by the RFS2 can easily be met by the existing biodiesel industry. But, a dispute has arisen over what qualifies as a feedstock for biomass-based diesel, based on life-cycle greenhouse gas (GHG) reduction goals. 
 
 After Congress passed the Energy Independence and Security Act of 2007, which contains RFS2 goals, they left interpretation to the U.S. EPA. In its interpretation, EPA is taking into account land-use change-chopping down forests-when determining GHG reduction measures for biomass-based diesel. Based on the EPA's gauge, the only current commercially produced biodiesel that qualifies is made from used restaurant grease. About 70 percent of biodiesel produced in the U.S. is made from soybean oil, so clearly the RFS2 cannot be met with used restaurant grease alone. 
 
 If first use biodiesel is not included in the RFS2, then much of the biodiesel produced in the U.S. will not qualify. The "land use change" debate should not apply to the U.S. farmer. No substantial amount of new farm land is being developed in the U.S. for growing oil producing crops, such as soybeans. As a matter of fact, total cropland acres in the U.S. shrunk from 445 billion acres in 1997 to 406 billion in 2007, according to the USDA.
 
 So far, the EPA has agreed to grandfather-in biodiesel from plants in production or under construction by December 2007 as it did for existing ethanol production. The EPA will continue to study the affect of indirect emissions based on land-use changes, but the biodiesel industry needs them to act now. As stated by the National Biodiesel Board, "The RFS2 volume goals simply cannot be met if vegetable oils are disqualified from the program. There is no indication that Congress sought to impose a penalty on existing production of biodiesel, which does not significantly impact land use change."
 
 Enforcing the RFS2 as originally stated in the Energy Independence and Security Act of 2007 ensures that home-grown, American-made biodiesel is widely available for shipping goods and services. As the debate over life-cycle GHG reduction, based on land-use changes, continues to delay enforcement of the RFS2, the biodiesel industry is held in limbo. One redeeming fact is that more and more consumers want to know that the products they consume were shipped sustainably, causing enlightened companies across the country to take action-often in the form of shipping only with carriers using biodiesel. 
 
 Sharon Bell is a public relations professional representing clients in the biodiesel industry. Reach her at <a href="mailto:sharonb@shriverproductions.com">sharonb@shriverproductions.com</a> or (972) 352-8698.

A Blue Sky Shipping truck, which uses biodiesel, displays decals for its customer, New Leaf Paper. PHOTO: BLUE SKY SHIPPING

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Sharon Bell, public relations professional, biodiesel industry

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A JB Hunt truck fills up on biodiesel at Gas City in Romeoville, Ill. PHOTO: GAS CITY

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Shippers find that biodiesel can help improve their environmental image, but this may be fleeting depending on the outcome of RFS2 implementation.

Why Do Shippers Ask Carriers to Use Biodiesel?

Cherry Hill Township in New Jersey will be using B20 in its 40-vehicle fleet thanks to a state Local Government Biodiesel Fuel Rebate Program. Moving away from petroleum diesel has long been on the townships to do list, said Mayor Bernie Platt, but the higher cost was a deterrent to using the pollution-reducing, green alternative fuel. The New Jersey Board of Public Utilities operates the rebate program to fund the incremental difference in cost between biodiesel and petroleum diesel. The New Jersey program is funded by $500,000 from the petroleum overcharge reimbursement fund created after lawsuit settlements with major oil companies which date back to the 1970s energy crisis.

NJ supports local biodiesel use

Following  small business tours late last year, Rhode Island legislators modified the state's biodiesel fuel tax exemption to make it more effective. The previous tax exemption on B100 had a very small impact which the legislators learned from biodiesel producer Newport Biodiesel, Newport, and distributor T.H. Malloy & Sons Inc., Cumberland. The new legislation passed in July makes blended biodiesel manufactured in Rhode Island exempt from state fuel taxes amounting to 32 cents per gallon.

Rhode Island expands tax exemption

In a bill introduced to India's Parliament on July 6, the Indian Ministry of Finance said it wants to reduce the duty on biodiesel imports from 7.5 percent to 2.5 percent, and exempt blended fuels from an excise tax on domestically produced goods. 
 Last year when India raised oil prices, citizens took to the streets in protest. The Indian government controls the country's fuel pricing mechanism, and despite the riotous episode in 2008, it has taken steps to deregulate the market in recent years. The state does, however, still heavily subsidize domestic prices of oil products such as diesel, LPG and kerosene for consumers. Demand for petroleum products in India has been influenced by the government's pricing schemes. Industry analysts point out that when diesel prices were significantly lower than other fuels such as gasoline, demand for diesel rose substantially, by as much as 25 percent between 2006 and the first half of 2008. A move towards adjusting tariffs to increase biofuels usage in a transportation fuels market as large as India's could be a boon for the biofuels industry.

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India considers cutting import tax on biodiesel

A German report, "Oil Dilution of a Passenger Car Diesel Engine in Operation with blended Diesel Fuel B10," was released this summer on research conducted at the Institute for Mobile Systems' Chair of Reciprocating Machines at Otto-von-Guericke University Magdeburg. Results indicate that when B10 and post-injection for diesel particulate filter (DPF) regeneration are used, there's minimal concern of fuel dilution at low loads, but at high loads the problem was significant. Systems using additives rather than post-injected fuel to create a DPF regeneration condition could support up to 30 percent bio blend. Optimization of late post-injection, meaning timing and quantity of fuel post-injected, could provide solutions, the report concludes. Contact Biodiesel Magazine for a copy of the report abstract.

German report looks at  B10, fuel dilution in vehicles

Midlands Biofuels, a 300,000-gallon-per-year biodiesel refinery in Winnsboro, S.C., began producing recently. According to founder and CEO Brandon Spence, Midlands Biofuels collects waste vegetable oils from area schools, correctional facilities and restaurants, then coverts it into biodiesel for sale into the Columbia, S.C., markets. "It seems as though the economics just won't support large plants in our area," Spence said, adding that even though his plant is "small," his company has lots going on. Midlands Biofuels created the first biodiesel apprenticeship program in the state. Also, the company plans to build more of these smaller-scale facilities in the future using the same business model.

Midlands Biofuels producing in SC

A rocket using renewable JP-8 fuel approached the speed of sound (Mach 1) and an altitude of about 20,000 feet in a demonstration flight conducted by the fuel maker, the Energy & Environmental Research Center at the University of North Dakota, and the rocket builder, Flometrics Inc. 
 

 "The demonstration worked very well, and we were pleased with the fuel. In fact, it performed better than expected," said Steve Harrington, president of Flometrics. "The initial launch was a little explosive, which we call a hard-start, but it ended up working very well." The EERC fuel was created from renewable crop oils, such as canola and soybeans. The fuel was tested at the Wright–Patterson Air Force Base Research Laboratory, a cosponsor of the test, and met all of the screening criteria for JP-8 aviation fuel, a petroleum-based fuel widely used by the U.S. military.

A rocket was successfully launched using renewable jet fuel in a summer test conducted in California's Mojave Desert. PHOTO: EERC 

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Rocket hits Mach 1 on biofuel

In July, the National Biodiesel Board welcomed the Gas City station in Romeoville, Ill., as the newest stop in the BioTrucker network of truck stops selling environmentally friendly, domestically produced biodiesel blends. BioTrucker is a network of more than 5,000 fueling locations now accepting the BioTrucker Fuel Card, offering trucking companies and owner-operators the benefit of purchasing fuel without a transaction fee, and at cash prices. More than 800 of those in-network stations now sell biodiesel blends nationwide. Truckers can visit the BioTrucker website at www.biotrucker.com to easily find stations carrying biodiesel blends, with state or route search functions.
 
 To celebrate its introduction into the BioTrucker network, Gas City offered customers a savings of 50 cents off per gallon on the purchase of B11 biodiesel blend during a BioTrucker promotion there on July 23rd. More than 50 semi-trucks, pickup trucks and diesel cars lined up at the truck stop to buy biodiesel at a discount during the two-hour promotion. The B11 blend, common in Illinois, normally sells for about the same price as regular diesel fuel. Gas City plans to add more of its stores to the BioTrucker network in the near future. 
 
 First to benefit from the biodiesel fuel savings at Gas City was the Volkswagen Jetta TDI Cup racing series transport team, fueling up its trucks en route to the Autobahn Country Club in Joliet, Ill., for the Jetta TDI Cup race that weekend. Volkswagen of America is using biodiesel blends to power its entire 2009 Jetta TDI Cup racing series, from the race cars running on a Syndiesel B5 biodiesel blend, to the transport trucks and generators running on up to B20 blends. NBB member Hyperfuels, a division of Gulf Hydrocarbon Partners, is the official fuel sponsor for the 2009 Volkswagen Jetta TDI Cup race series.
 
 More information about the BioTrucker program can be found at www.biotrucker.com. More information about the Volkswagen Jetta TDI Cup racing series can be found at VW Motorsports or www.media.vw.com.

The Gas City station in Romeoville, Ill., is the newest stop in the BioTrucker network of truck stops selling biodiesel blends. PHOTO: NBB 

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Expanding BioTrucker Fuel Card Program benefits truckers, motorsports

If you are serving on the board of directors of a biodiesel company, you are likely well aware of the fiduciary duties that directors owe to the company and the company's shareholders. These fiduciary duties include the duty of loyalty, which requires directors to act in good faith and in the best interest of the company, and the duty of care, which requires directors to exercise appropriate diligence in acting on behalf of the company.

 
 You may be unaware, however, that there are circumstances in which directors also owe fiduciary duties to the company's creditors. It is now well established in many jurisdictions that once a company becomes insolvent, the fiduciary duties owed by directors of the company shift from the company's shareholders to its creditors. The justification for this shift is that while a company remains solvent, any increase in the company's value ultimately benefits the company's shareholders. However, if a company is insolvent, the creditors of the company step into the shoes of the shareholders as the residual beneficiaries of an increase in the company's value. This distinction is important to directors because a director's failure to fulfill his or her fiduciary duties may result in personal liability, and may not be covered by a directors and officers (D&O) insurance policy.
 
 So when exactly does a company cross the line from being solvent to being insolvent? Unfortunately, the all-too-often answer is, "it depends." Although most courts have found that a statutory filing such as bankruptcy is not a prerequisite to finding that a company is insolvent, courts have applied varied-and sometimes inconsistent-standards. Some courts employ a balance sheet test, finding that once a company's liabilities exceed its assets, the company is insolvent. Other courts utilize a cash flow standard, finding that a company is insolvent if it is unable to meet its maturing obligations as they become due in the ordinary course of business. For any given company, these two tests, among others that may be applied, could result in different conclusions, meaning that a company may be considered solvent in one jurisdiction and insolvent in another.
 
 To further complicate matters, some courts have held that even if a company is solvent, but is operating within a "zone of insolvency," directors owe fiduciary duties to the company, the company's shareholders and the company's creditors. Other jurisdictions disagree and refuse to extend directors' fiduciary duties to the company's creditors if the company is merely within the "zone of insolvency" because unlike shareholders, a company's creditors are afforded protection through a number of other means, including contractual agreements. Given the difficulties encountered in determining whether a company is considered solvent or insolvent in any given jurisdiction, it is no surprise that determining whether a company is in the "zone of insolvency," and precisely when it entered into it, is even less clear.
 
 So how does a director effectively fulfill his or her fiduciary obligations when it may be unclear as to whom those fiduciary duties are owed? As a general matter, directors should strive to maintain independence, exercise due care and act in good faith in order to receive the full protection of the business judgment rule; a doctrine that shields directors from personal liability as long as business decisions are made based upon reasonable information and with a degree of rationality, even if those decisions later turn out poorly. Rather than acting for the benefit of any single group, directors of financially distressed companies should focus on maximizing the value of the company as a whole in order to limit the risk of personal liability. Additionally, the actions taken by directors to maximize value should be appropriately documented so that there is a record detailing how and why certain decisions were made in order to prevent "Monday morning quarterbacking" by future litigants. To avoid personal liability, directors will be best served by considering these issues when the company first faces financial distress rather than attempting, after the fact, to justify decisions made at a time when the directors owed fiduciary duties to the company's creditors.
 
 Mark D. Wickham is a corporate attorney with BrownWinick, a Des Moines, Iowa-based law firm serving the renewable fuels industry. Reach him at <a href="mailto:wickham@brownwinick.com">wickham@brownwinick.com</a> or (515) 248-6623.

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How Directors of Financially Distressed Companies Can Avoid Personal Liability

A prototype 3 MMgy hydroprocessing renewable diesel plant designed by Cetane Energy LLC of Carlsbad, N.M., will be duplicated at Sedgwick, Kan., this year. Healy Biodiesel Inc. is the first to license the hydroprocessing technology.
 "It's all about feedstock flexibility and fuel quality," said Ben Healy, president of Healy Biodiesel. After a year of examining different new technologies, Healy signed with the New Mexico firm. "Cetane Energy's Gen II technology will allow us to break into markets never possible before with traditional biodiesel," he said. "We are also very impressed with the quality of fuel that Cetane's technology can put out on a consistent basis." Healy Biodiesel expects to begin the technology transition in November 2009, which will also expand its capacity from 1.2 MMgy when completed in April 2010.
 
 Cetane Energy is the first to engineer hydroprocessing at a small scale, CEO Richard Aves said. "We had to spend a lot of time in scaling down the process, paying attention to the details in controlling reactions efficiently," Aves said. 
 In a simplified description of the process, hydroprocessing uses heat and pressure over a solid-state catalyst to break down the long carbon chains in fatty molecules, replacing oxygen bonds with hydrogen to make a hydrocarbon. Although hydroprocessing requires heat and pressure, it actually is energy efficient, Aves said, since in addition to producing renewable diesel the process generates natural gas, which in turn can be used to fuel the process. Depending on the cost of hydrogen, the process can be cheaper than biodiesel production, Aves added. About 90 percent of the production cost (not counting the feedstock itself) is in hydrogen costs, which can range between 30 cents and 80 cents per gallon of fuel produced. The capital cost for building a plant is estimated to range between 75 cents and $1 per gallon, according to Aves. 
 
 Since opening in April, the prototype plant at Carlsbad has produced about 250,000 gallons of renewable diesel by early August. An advantage for the biofuel is that since it is a hydrocarbon similar to petroleum-based diesel it has energy content equal to diesel fuel, and can be handled in existing infrastructure and diesel engines without modification. While biodiesel often sells at a discount to rack prices, Aves says the higher cetane rating between 70 and 80 should give renewable diesel at least a 10 cent premium over rack prices. "Right now we get rack price, but we think we're giving away value."
 
 -Susanne Retka Schill

Cetane Energy completed its prototype 3 MMgy hydroprocessing plant at Carlsbad, N.M., in April. PHOTO: CETANE ENERGY 

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Hydroprocessing goes small scale

Asia is a hotbed for renewable energy activity and the engineering company building Neste Oil's renewable diesel plant in Tuas, Singapore, Rotary Engineering Ltd., is "looking to take great involvement in this sector," said Judy Kan, spokesperson for the engineering firm. The company announced in July the closing of a $36 million dollar deal to provide electrical and instrumentation works as well as mechanical, piping, painting and steel structures for Finnish Neste's $1.2 billion project in Tuas, Singapore.
 
 "Their involvement in this space is not very long, but at the same time they are not new to these types of projects," Kan said. Rotary's venture into this area began in 2006 with its involvement in Itro Pte. Ltd., "a joint venture with Italy's Sofinter SpA Group, to build, operate and jointly-own an isotherm plant that treats hydrocarbon industrial waste products to generate steam energy to support the needs of the process plants," the company stated. 
 
 Rotary's experience with biodiesel-related projects includes building storage and other facilities for Oiltanking Odfjell Terminal Singapore Private Limited and a $24 million contract for Nexsol Pte. Ltd., in Singapore. 
 
 Providing engineering, procurement and construction services for the petrochemical and renewable sectors, other ongoing projects include a $745 million contract to build a tank farm at Jubail Saudi Arabia for Saudi Aramco Total Refining and Petrochemical Co. Rotary Group has more than 7,800 employees and a large portfolio of high-profile clients including Oiltanking, ExxonMobil Asia Pacific, Thai Tank Terminal Xiamen Paten and local company Hin Leong Trading. 
 

 The company's full-service portfolio features control room and other instrument installation, connection works, junction box erection, cable laying and telecommunication system construction. 
 
 Neste Oil's Tuas plant is scheduled for completion in 2010 and will have an annual capacity of 800,000 metric tons, "making it the world's largest facility producing diesel fuel from renewable feedstocks." Rotary said it expects to have the erection of steel structures, underground piping and painting works completed by March. 
 
 "It's always a pleasure when a client returns with repeat business," said Chia Kim Piow, chairman and managing director at Rotary, of Neste's Tuas project. "Over the past several years rotary has established itself as a key player in ecofriendly projects. These contracts serve to enhance Rotary's position as an important player in this exciting market."
 
 Singapore remains a key market for Rotary and is actively expanding its presence in Malaysia, Thailand, Indonesia, India, Australia, China and the Middle East, countries looking to grow their renewable energy markets. "As their experience in this area grows, Rotary will be looking to take partial or whole ownership in some of these projects," Kan said.
 
 So far this year, Rotary has reported revenue gains of 13 percent and an after tax profit of $4 million. 
 
 -Nicholas Zeman

Neste Oil, which owns the renewable diesel plant in Finland shown above, is also building facilities in the Netherlands and Singapore. PHOTO: NESTE OIL 

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Rotary Engineering: building out renewable diesel projects in Asia Pacific

Posted August 19, 2009
 
 <a href="http://www.rmse.biz/index.html">Rocky Mountain Sustainable Enterprises LLC</a> has signed an offtake agreement with Gray Oil Company Inc. for its 4.5 MMgy biodiesel plant under development at Fort Morgan, Colo. The $5 million plant scheduled to break ground this fall will supply up to 4.5 million gallons annually to the regional fuel distributor.

 
 "We are excited to be working with Gray Oil, a premier fuel distributor in the Rocky Mountain region, and market leader in the adoption and promotion of biofuels," said RMSE CEO Aaron Perry. "This agreement helps us close the loop on truly sustainable biodiesel supplies that are regionally sourced, produced and used, while delivering highest value to our restaurant and commercial facility customers." Perry added that local permits are in place and the company is close to completing financing arrangements.
 
 Launched in 2005 at Boulder, Colo., Rocky Mountain Sustainable Enterprises has developed a regional commercial cooking oil recycling service with over 1,500 customers under the trademarked name "recycOil" and annually conducts a Thanksgiving turkey oil recycling campaign to raise consumer awareness. The company has operated a waste oil processing center for four years.
 
 After a three-year due diligence technology period, RMSE selected an advanced multi-feedstock production technology from a European company for the Fort Morgan, Colo., plant. The company describes the Fort Morgan facility as the first in what it has trademarked as the Colorado bioXchange project, with plans for a string of integrated "regionally-scaled solutions in waste and biomass up-cycling." In addition to producing biodiesel from recycled vegetable oils, the company is working with an engineering firm to assess the feasibility of using glycerol and the organic sludge left from oil preprocessing along with other waste streams to produce biogas in an anaerobic digester. The Colorado bioXchange concept laid out on the company Web site also includes the development of fertilizer products as well as vegetable and fresh water fish culture at the biorefining facility.

Proposed Colorado plant signs offtake agreement

Renewable Energy Group Inc. held a ribbon cutting ceremony for its new research center in Ames, Iowa, on July 28. In his opening comments, company chairman and CEO Jeff Stroburg said the new laboratory and research facility will help advance "new technologies for the new bio age." In total, REG spent about $2 million in the center and received a $740,000 investment from the Iowa Power Fund. Story Construction, which used 11 subcontractors from the surrounding community, built the research center inside the company's headquarters located in an Ames industrial park.
 
 A main priority for the research center will be development and commercialization of new, alternative feedstocks for biodiesel production. "It's a very difficult project to take 50 different feedstocks because every one of them converts differently," Stroburg said. "And we have to have more feedstocks than soybean oil." 
 
 More than 20 plant oils and animal fats ranging from the routine to the exotic are being studied at the new lab. REG biochemical engineer Shannon Sanford said some of these materials, such as Chinese Tallow oil, were not easy to obtain for testing and analysis. In total, seven full-time REG researchers work in the lab on feedstock commercialization, biodiesel production support, quality testing, and feedstock analysis. Some of the feedstock information learned will be made public. 
 
 Other research being conducted at the REG research center includes developing a method to detect sterol glucosides at levels below 50 parts per million. Parag Shah, REG research chemical engineer, said this work builds on Archer Daniels Midland Co.'s previous sterol glucoside detection work, which couldn't identify such low levels of the contaminant. Sterol glucosides are thought to be responsible in part for filter clogging due to precipitate formation in biodiesel at temperatures above the cloud point. 
 The scientists are also studying free and entrained moisture in B100, biodiesel blends and in ultra low sulfur diesel (ULSD), to better understand the relationship between moisture and neat ULSD, neat biodiesel, and blends of the two fuels. This is said to be important work required to help increase biodiesel movement in the pipelines.
 
 Stroburg said the new facility is not only being used as research and lab support for REG's network of biodiesel plants, but REG will also partner with other companies that need additional lab space. "There's a lot of lab space out there, but there's also a lot of demand for lab space," he said. 
 
 One of these partners is General Atomics, the San Diego-based company working with REG and the U.S. military to study how battlefield-derived waste plastic dissolved in biodiesel performs in gensets powering military encampments. The system includes a grinder that chews up waste plastics and dissolves it in biodiesel, which is kept at about 140 degrees Fahrenheit as the fuel is fed to the genset warm. The dissolved plastic makes the fuel higher strength, or more energy dense, than regular biodiesel. General Atomics is currently retrofitting a 60 kilowatt genset in Iowa just north of Ames. According to Doug Kostlan, REG manager of corporate business development, the genset is similar to those being used in Afghanistan today and is equipped with camouflaged paint to allow researchers to closely mirror real life scenarios during the studies. 

 
 Behind its San Diego headquarters, General Atomics has a large raceway pond it uses to study algae. The company will use the REG lab space to study and analyze 20 to 30 different species of algae. 
 
 Elevance Renewable Sciences is another company sharing REG lab space. Chief Financial officer Patrick Kelly said through metathesis, a process used to break down molecular chains in renewable feedstock to their more fundamental building blocks, the company can make a range of biochemical products to replace conventional petroleum-based materials. Elevance Renewable Sciences has exclusive rights to the metathesis process for all industrial applications. 
 
 -Ron Kotrba

REG quality support technologist Kelsey Vincent shows how the bench-scale batch reactor works. PHOTO: RON KOTRBA, BBI INTERNATIONAL

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A model of General Atomics' raceway PHOTO: RON KOTRBA, BBI INTERNATIONAL

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REG biochemical engineer Shannon Sanford, left, talks to visitors touring the lab about the variety of oils and fats she and other researchers will be analyzing. PHOTO: RON KOTRBA, BBI INTERNATIONAL 

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Feedstock saplings growing in the lab PHOTO: RON KOTRBA, BBI INTERNATIONAL

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Feedstock research center opens in Iowa

Algae research was validated and boosted this summer when two projects involving NASA Glenn Research Center and ExxonMobil Corp. were announced.
 
 "Under a Space Act Agreement, NASA is partnering with Seambiotic USA to model growth processes for microalgae for use as aviation biofuel feedstock," said Ami Ben-Amotz, chief scientific adviser to Israeli-based Seambiotic Ltd. "The goal of the agreement is to make use of NASA's expertise in large-scale computational modeling and combine it with Seambiotic's biological process modeling to make advances in biomass process cost reduction." Seambiotic, which was founded in 2003 in Ashkelon, Israel, is scaling up a pilot process using carbon dioxide emissions from a coal power plant to cultivate algae for the nutriceutical and biofuels industries. The 5-hectare facility is expected to begin production in late 2009.
 
 ExxonMobil announced its $600 million commitment for a comprehensive algae research program in partnership with California genetic researchers at Synthetic Genomics Inc. Under the terms of the agreement, SGI will work in a systematic approach to find, optimize and/or engineer superior strains of algae; and to define and develop the best systems for large-scale cultivation of algae and conversion into biofuels. SGI plans to build a new research facility at San Diego. ExxonMobil's research and engineering expertise will be utilized throughout the program, from the development of systems to increase the scale of algae production to the manufacturing of finished fuels.
 
 As milestones in the agreement are met, SGI will receive up to $300 million for the work over the next five to six years. "This agreement between SGI and EMRE represents a comprehensive, long-term research and development exploration into the most efficient and cost-effective organisms and methods to produce next generation algal biofuel," said J. Craig Venter, founder and CEO of SGI. "We are confident that the combination of our respective expertise in science, research, engineering and scale-up should unlock the power of algae as biological energy producers in methods and scale not previously explored."
 
 Scientists at SGI have been working internally for several years to develop more efficient means to harvest the oils that photosynthetic algae produce. Traditionally, algae have been treated like a crop to be grown and harvested in a process that can be expensive and time consuming. One of SGI's achievements has been in engineering algal strains that produce lipids in a continuous process and even secrete hydrocarbons directly. However, such engineered algae may ultimately not be cost effective, Venter said. "It may cost more to build bioreactors that would contain the engineered algae." As part of the project, SGI will investigate thousands of strains, looking for desirable properties such as tolerance for high sunlight levels and concentrations as well as viral resistance. "There's a wide range of algae in the environment and we're finding a lot of exciting varieties," he added.
 
 ExxonMobil has looked at all biofuel options over the past couple of years, said Emil Jacobs, vice president of research and development at ExxonMobil, in a news conference following the announcement. The company examined the scalability, technical challenges, environmental performance and economics of several technologies, he said. "Algae biofuels rose to the top." Jacobs added that ExxonMobil identified three needed research areas, one of which is the algae strain development SGI has been working with. The second area will be looking at the three major production systems now being considered in the emerging industry- open ponds, closed ponds and photo bioreactors. The third piece will be to develop the large, integrated systems that pull it all together. "We need improvements in all three areas," he added. The goal will be to produce lipids as a biocrude that can be processed in existing refinery systems and distributed as a green hydrocarbon fuel in the existing transportation fuel infrastructure.

 
 -Susanne Retka Schill

Seambiotic is scaling up its pilot algae production facility at Ashkelong, Israel, to 5 hectares. PHOTO: SEAMBIOTIC

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Algae research advances in ExxonMobil, NASA collaborations

Jatropha development is moving forward as Abundant Biofuels Corp. offers long term contracts and D1 Oils plc refocuses its business. Abundant Biofuels, based in Monterey, Calif., announced the availability of long-term, five to 10 year contracts to supply jatropha oil to U.S. refiners. "They could be slated to begin in 12 months to 18 months and for any quantity up to 35 million gallons, and we can expand from there," said CEO and Chairman Charles Fishel. Abundant Biofuel's first plantings to come into production are in northern Mindanao in the Philippines, where the company is working with local economic developers to reforest tribal lands. Fishel estimates that by 2012 Philippine jatropha production could reach several hundred million gallons. Abundant Biofuels has stated in its commitment to sustainable economic development and biofuels that it will not divert land from food production or use irrigation, and it will not permit deforestation. The company is also planting jatropha in Peru, the Dominican Republic and other developing nations. Fishel reports the company will potentially have access to 6 million acres of jatropha.
 
 D1 Oils plc, based in the U.K., is reorganizing its jatropha development efforts to focus on plantings totaling about 540,000 acres in northeastern India, Malawi and Zambia where the crop has performed well and will be scalable, according to D1 Oils' spokesman Graham Prince. The reorganization follows the dissolution of a joint venture between BP Amoco plc and D1's planting operations. Prince said the dissolution of the joint venture reflects BP's decision to refocus its efforts. "They still remain interested in our concept, and will keep an option open to buy our stock in the future." While there were advantages in the partnership with BP, Prince said there was also a downside in "introducing another company with another set of management when tight cost control is so important." 
 
 Reintegrating the planting operations with D1's plant science division will allow the company to supply its technology to third parties, Prince added. The first of those agreements was announced at the same time as the dissolution of the joint venture. Under the five year agreement with Bedford Biofuels Inc., D1 will supply plant science and planting technology and services to the Alberta-based company that is developing commercial jatropha plantations in Kenya and Zambia for biodiesel production. 
 
 A recent study done at the University of Twente in the Netherlands called into question jatropha's viability as a sustainable biofuel crop, saying the plant's water footprint is greater than rapeseed or soy. Both Prince and Fishel said that has not been their experience, although they acknowledged that jatropha is not the miracle crop that initial euphoric reports indicated. Prince said D1 has learned more about the plant science in the past two or three years and moved away from areas where it won't thrive. While jatropha grows under a wide variety of conditions as a weed, Fishel said, its performance as a crop is dependent upon growing the right varieties in the right environment. Varieties well adapted to areas in the Philippines with good rainfall see yields of 380 gallons per acre, and Fishel expects plant science advancements will eventually more than triple those yields. 
 
 -Susanne Retka Schill

Tribal leaders seeded the future jatropha nursery on the deforested hillsides in northern Mindanao, Philippines. PHOTO: ABUNDANT BIOFUELS

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D1 Oils, Abundant Biofuels report progress in jatropha development

The Miamisburg, Ohio-based biodiesel technology provider and producer, Jatrodiesel Inc., is now offering oil collection and clean up services for the industry. Jatrodiesel has the permits and licenses necessary to collect oils and has developed skid-mounted equipment that can process waste greases into pristine oils needed for biodiesel production. "It's basically 300 square feet to 400 square feet and sits directly in front of our process equipment," says Jatrodiesel founder Raj Mosali. 
 
 Restaurant grease is loaded with contaminants and impurities that cannot be processed into biodiesel, but Jatrodiesel's added technology pretreats the material for fuel refining. "There are basically three phases to the oils you collect from restaurants, which are water, emulsions and food sediment. You need to eliminate these in order to make a quality feedstock," Mosali said. 
 
 Jatrodiesel can clean a truck load of collected oil-about 6,500 gallons-in less than eight hours."On the technology side, we have tested the equipment we built, running over 800,000 gallons of raw, unclean, unfiltered used cooking oil through the equipment to date and it performed phenomenally," Mosali said. "Used cooking oil is about four percent to five percent free fatty acid (FFA) content, which stays the same after going through the process." 
 

 Mosali said that it has been relatively easy to sign up restaurants, which are very attracted to the collection program, getting paid for a substance they used to have to dispose of themselves. "Our success rate in signing up restaurants is about 60 percent," Mosali says. "A lot of others, like McDonald's, have contracts with RGI (Resource Geoscience Inc.) or Darling International, which are long-term contracts and they can't get out of them even though our program is better, and the benefits are greater for them. Nevertheless, we have signed up about 135 restaurants already in the past few months and have another 58 that we are evaluating."
 
 A part of Jatrodiesel's business model now involves supplying other biodiesel plants with oils for production. "We started developing this system when the cost of feedstock, like soy and canola oil, were going through the roof," Mosali said. "We had to buy oil at reasonable cost and started collecting oil from area restaurants."
 
 Waste grease can be difficult to process and when Jatrodiesel started out in 2004, it did not possess the technology necessary to handle it, but soon upgraded its technology to refine many different grades of fats and oil. To date, the company has either built or provided process technology for 10 plants in the United States and abroad. "We are also now offering a methanol distillation column to help biodiesel plants recover their costs so they can recycle some of their inputs," Mosali said. 
 
 -Nicholas Zeman

Part of Jatrodiesel's system processes used cooking oil at 15 gallons-per-minute, reducing moisture, impurities and unsaponifiables from 15 percent to less than 1 percent with minor increases in free fatty acids. PHOTO: JATRODIESEL

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Jatrodiesel implements oil collection, cleanup system

We know RFS2 is at a critical juncture that will certainly impact the face of our industry. We know that implications of the rule making process will have a direct and measured impact on our industry for years to come. Ensuring the RFS2 is implemented in a workable fashion tops the National Biodiesel Board's list of priorities. 
 
 The RFS2 was always intended to be a "safety net." The sad truth is that, right now, it would be more like a "lifeline" if only it were in place. 
 
 But what does it matter beyond production levels, outside Biodiesel Magazine readers, and aside from feedstocks? What is RFS2 in the real world? How does it impact the Americans who have chosen to make biodiesel their fuel of choice and, in turn, what does it do to the progress we've made on national energy security? 
 
 To find the answer to those questions, I returned to our roots and visited with one of biodiesel's longest-standing customers. More than 15 years ago, North Carolina's visionary fleet managers started looking into biodiesel as a reliable alternative fuel, and as a solution to reduce air pollution. Today the state is home to one of the largest biodiesel-powered fleets in the country.

 
 The state needed to cut emissions, and biodiesel was the only thing that made sense according to Drew Harbinson, director of the North Carolina Department of Transportation Equipment and Inventory. He told me, "it was the most effective and easiest way to transition to an alternative fuel."
 
 North Carolina first used B20 in select areas, and then in all non-attainment counties. Three years ago it expanded to statewide use of biodiesel blends.
 
 Of the DOT's 23,000 pieces of equipment, 8,000 are powered by B20. Among the 8,000 is every single diesel-powered vehicle and piece of support equipment except standby generators. In a normal year, the fleet burns 11 million gallons of B20. 
 As strong biodiesel advocates, the people of North Carolina have stood up to would-be challenges. In the early part of this decade, the state worked with North Carolina State University for a research project on real-world duty cycles to test NOx emissions. That study showed a drop in measured NOx emissions and helped drive current accepted conclusions that NOx change can be assumed neutral. From the program's beginnings they have also had a tight watch on quality and now require the state fuel contractor to be BQ-9000 certified. Now they are watching the EPA closely for fear their success is about to be derailed. 
 
 The EPA has proposed requiring a minimum level of certain types of feedstocks in all gallons of biodiesel and has proposed one of the most complicated and costly certification and tracking programs imaginable. The result would be the distortion of markets and a costly and burdensome compliance program. All of this would be aimed at ensuring a feedstock mix that would most likely occur anyway in overall volumes based on price, region and availability. 
 
 "I see [the proposed rule] driving costs up to double the 30 cent [premium] we currently pay," Harbinson said. "It's going to have a real negative impact on the growth of the industry-I don't see how it can't. Fewer producers will drive the price up further. At that point you have significantly increased the price of the fuel, and we would have to rethink our approach." 
 
 "Rethinking" for some fleets could mean a return to petroleum, which is exactly what the RFS is intended to discourage. 
 
 "The good we've done with our own fleet, the millions of tons of carbon reduction is significant," Harbinson pointed out. "You can make a significant impact on air quality."
 
 In the real world, biodiesel's future impact on air quality will depend on how the EPA's final rule calculates biodiesel's greenhouse gas impact, and will determine whether fleets like those in North Carolina can continue using biodiesel, an alternative fuel that has been working for them for more than a decade.

 
 We cannot possibly know where this industry will be in six months, but we are working tooth and nail to ensure that North Carolina and the many thousands of biodiesel users there retain access to the renewable fuel that works.
 
 Visit our RFS2 Action Center (http://www.biodiesel.org/news/RFS/) if you haven't already, and send your comments to the EPA today. Your input will make an impact on the final rule, and ensure that biodiesel is a part of our nation's "real world" energy plan.
 
 By Joe Jobe 
 National Biodiesel Board CEO

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RFS2 in the Real World

National Biodiesel Board Director of Sustainability Don Scott recently pointed out another way to view discussions about food and fuel: 
 Give a poor nation some grain and it may eat for a day. Teach a poor nation to farm and humanity will benefit for generations.
 
 Teaching the world to farm today means utilizing advancements that produce more food, feed, fiber and biofuel with less land area and less environmental impact than old farming technology. A key piece to the new farming revolution is the utilization of food coproducts for biofuels. Biodiesel is a great example of utilizing coproducts and waste to make food production more sustainable.
 
 The equation is simple-successful growth in biodiesel is driving innovation in plant science research. Results of biodiesel's influence in improving practices and outcomes include agricultural technology advancements, improved plant yields and more food on the same acres of land.
 
 For example, data on national soybean yields from 1975 to 2006 show that the yield has increased at the rate of 0.6 bushels per acre per year. Yet, the fertilizer application rate has essentially remained the same. During the same time the herbicide application rate declined to one-fifth of its rate in 2000. Plus, reduced herbicide applications have the added benefit of requiring less diesel for field spraying further improving farming practices.
 
 These improved practices can be translated to improve outcomes around the globe and bring a new light to discussions about biodiesel's positive impact on agriculture and food supplies.

Biodiesel triggers research, innovation to grow food supplies

The 2009 Volkswagen Jetta TDI Cup racing series had just passed the half way point at press time, when race organizers, drivers, and fans alike acclaimed this biodiesel-powered "green racing" series an utter success.

 
 Volkswagen of America named Hyperfuels, a division of NBB member company Gulf Hydrocarbon Partners, as the Official Fuel Sponsor for the 2009 Volkswagen Jetta TDI Cup race series. The Volkswagen Motorsports team is using biodiesel blends to power the entire 2009 Jetta TDI Cup racing series, from the race cars running on Hyperfuels' Syndiesel B5 biodiesel blend to the transport trucks and generators running on up to B20 blends. As a result, by the end of the season the overall carbon emissions produced by the series will be reduced by more than 40,000 pounds. 
 
 Clark Campbell, Motorsport Manager for Volkswagen of America Inc., said, "The Syndiesel B5 biodiesel blend has proven itself to be a powerful, high-performance fuel, and our drivers have responded favorably to it." Many of those drivers, including the current championship points leader Timmy Megenbier, stated they are experiencing noticeably better torque, better fuel economy and better overall response from the Syndiesel B5 blend compared to the regular ultra low sulfur diesel fuel they ran on last season. 
 
 The National Biodiesel Board and Hyperfuels have been highly involved with the 2009 VW Jetta TDI Cup season thus far, having conducted biodiesel training sessions for all of the racecar drivers, mechanics and transport teams, dealers, public relations staff and VW corporate trainers. Hyperfuels and NBB have also been featured in numerous Jetta TDI Cup race broadcasts and media materials. 
 Stay tuned to the action for the remainder of the season by visiting VW Motorsports or <a href="http://www.media.vw.com">www.media.vw.com</a>.

Volkswagen of America named Hyperfuels the official fuel sponsor for the 2009 Volkswagen Jetta TDI Cup race series. PHOTO: NBB 

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Volkswagen Jetta TDI Cup series powers ahead on biodiesel blends

Several more biodiesel companies have achieved the highest level of industry-recognized quality assurance, a sign that quality remains a top commitment among U.S. biodiesel producers. The National Biodiesel Accreditation Commission most recently recognized Imperium Renewables in Grays Harbor, Wash.; Scott Petroleum in Greenville, Miss.; Direct Fuels out of Euless, Texas; Louis Dreyfus in Claypool, Ind.; and Blackhawk Biofuels located in Danville, Ill., as BQ-9000 biodiesel producers. In addition, West Coast Reduction based in Vancouver, BC, and Wilson Fuel Co., Halifax, Nova Scotia, earned BQ-9000 Marketer status.
 
 Gary Haer, vice president of sales and marketing for Blackhawk Biofuels' parent company, REG Inc., said large fleets and fuel distributors are writing BQ-9000 into fuel purchasing requirements. 

 
 "There's no question that today the petroleum industry is demanding biodiesel from BQ-9000 Producers," Haer said. "They know that BQ-9000 accreditation means consistent, efficient production of high quality fuel to help meet the nation's renewable energy demands." 
 
 BQ-9000 is a voluntary fuel quality assurance program overseen by the NBAC and adopted by the National Biodiesel Board and the Canadian Renewable Fuels Association. BQ-9000 couples the foundations of universally accepted quality management systems with the product specification, ASTM D 6751. 
 
 There are currently 34 biodiesel production facilities certified as producers under the program and 17 companies certified as marketers.

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New companies join elite in quality assurance

In an ongoing effort to increase biodiesel visibility, support and sales, the National Biodiesel Board is working to understand how the public perceives the alternative fuel. Working with Moore Information, NBB is overseeing a comprehensive research process that will provide the basis for future communications efforts. The project will give NBB members and biodiesel stakeholders' guidance about what drives and strengthens biodiesel support. This summer NBB held two focus groups to kick off the effort, one in Boston and one in Denver. The focus groups offered different regional and environmental perspectives. 
 
 In Boston, the 12 participants were identified as community leaders. Generally, the group was supportive of alternative energy, enthusiastic about home grown fuel and the more they heard about biodiesel, the more they liked it. While they were somewhat skeptical of detailed facts, they were impressed by biodiesel's benefits. Interestingly, biodiesel was not among the alternative energy sources with which they were familiar at the onset of the focus group, which demonstrates significant opportunities for education and biodiesel promotion. 
 
 In Denver, participants were identified as environmentally aware. Group members were familiar with biodiesel, even knowing many of biodiesel's attributes and benefits, and generally how it is made. They repeated some misconceptions about biodiesel, but additional information helped to strengthen their support and left several asking "where do we get it?" They were impressed by biodiesel's diversity and clean air benefits as well as the fact that biodiesel made from soybeans uses only the oil portion of the bean, leaving the meal available for food and feed. In contrast to the Boston group, this group easily differentiated biodiesel from other biofuels. However, after hearing negative messages, they were less certain of their support.
 Highlights prepared by Moore Information from the focus groups include: 
 
 - The aspects of a "renewable" and "sustainable" fuel are appealing.
 - Reducing our nation's reliance on foreign oil is a major benefit.
 - Health benefits are important, for people and the environment.
 - America should pursue biodiesel.
 

 Overall the focus group reiterated what earlier studies demonstrated-support for biodiesel exists but is fragile. Most biodiesel "supporters" may be easily swayed by misconceptions or misinformation, emphasizing the critical importance of continued biodiesel education and communications efforts. 
 
 Information from the focus groups will be applied to develop and test specific biodiesel messages, and will empower stakeholders to effectively advocate biodiesel. This comprehensive research is the most extensive public opinion testing in NBB history.

NBB tests public's view of biodiesel

What started as small-scale, backyard biodiesel production, Piedmont Biofuels LLC in Pittsboro, N.C., is now a 4 MMgy BQ-9000-certified producer. After years focused on small reactor design for making fuel out of waste vegetable oil, Piedmont switched gears and went into commercial production in 2005.
 
 Now, they do it all.
 
 "We make, market and sell biodiesel," states Piedmont Biofuels' Web site. "We consult on setting up biodiesel businesses (plants and stations). We provide fuel maker and lab tech training. We teach classes and workshops on biodiesel and straight vegetable oil. We lobby the N.C. legislature, as well as our national representatives on behalf of biodiesel and renewable energy. We have an internship program that allows people to live on site and learn about all facets of our operations." 
 
 Piedmont has a multi-feedstock philosophy. "We have made fuel out of everything from peanut oil to canola oil to sausage waste to poultry fat. We have yet to make fuel from a dead squirrel, but we are working on it."
 
 The plant is currently running waste virgin oils. Waste virgin oil has never been used but is slated to be discarded. For Piedmont, this has included coconut, palm, lemon-infused soy and sunflower. 
 
 Piedmont Biofuels is just one example of the wide variety of business models, philosophies and histories at work to support the biodiesel industry and expand use of the renewable, alternative fuel.

Piedmont Biofuels in Pittsboro, N.C., is BQ-9000-certified and produces 4 MMgy of biodiesel. PHOTO: PIEDMONT BIOFUELS LLC 

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NBB member profile: Piedmont Biofuels models backyard-to-big-scale producer

>Hotels are turning to biodiesel in the greening of their operations. The Hilton Americas-Houston took delivery of its first load of B95, which will be used to power the emergency generator, in July. The hotel also regularly recycles the 14,000 pounds of kitchen oil used annually as part of its environmental efforts that have earned it the silver level Green Seal Environmental Standard for Lodging Properties. A second hotel chain, The Fairmont Hotels & Resorts, now has more than 22 of its locations worldwide converting their waste vegetable oil to biodiesel in a variety of local partnerships. Fairmont's biodiesel initiative is part of its energy and carbon management program. It also is a member of WWF's global Climate Savers Program.

 
 >SRS Engineering Corp. finalized a contract with ReNvision Biofuels Inc. to build a 10 MMgy biodiesel plant in Alberta. SRS will provide complete design and engineering services and the equipment to build the plant. ReNvision is planning a multifeedstock plant using animal fats, canola and camelina. The new biodiesel producer is being aided by a recently adopted national B2 mandate for diesel and heating oil by 2012 and an Alberta provincial government B2 mandate in diesel to be implemented in July of 2010. 
 
 >China Clean Energy Inc. announced in its second quarter financial report that construction of its 30 MMgy Jiangyin plant was expected to be completed by the fourth quarter. The new capacity added to its previous 3 MMgy capacity will make the company China's second largest biodiesel producer. The new plant will also have the capability to produce up to 30,000 tons of specialty chemicals. According to the company Web site, its product categories include polyamide hot-melt adhesives, printing inks, alcohol and benzene-soluble polyamide resins and various fatty acids. 
 
 >Green Fuels Exchange, Des Moines, Iowa, reported its business has done well in spite of the soft market. GFEX offers trading on recycled oils and has developed a verified seller program to guarantee that parties who offer product for sale can guarantee delivery. "Our objective is to expand into biodiesel and renewable identification numbers within the next six to 12 months," Chris Draper, GFEX spokesman said. GFEX performed very well during the first half of the year, he reported, bringing in $800,000 in revenue and exceeding the expectations of market analysts. Some companies are investigating the possibility of offering a biodiesel price index but developing that product could be very difficult, he added.

 
 >Lindsay Corp., Omaha, Neb., has produced an eight-page brochure "Improving Biofuel ROI Through Efficient Irrigation Solutions." The information covers key biofuel crops and their benefits, market growth opportunities and irrigation management recommendations to optimize yield and quality. Soybeans, canola and jatropha are among the biofuel crops discussed. The brochure provides a step-by-step guide to planning a biofuels irrigation project, detailing factors to consider such as water use, soil type, climate and growing system. Lindsay manufactures and markets irrigation equipment. 
 
 >Bryan Willson, co-founder and chief technology officer of Solix Biofuels Inc., was named to the 2009 list for "Scientific American 10: Guiding Science of Humanity" for his work at Colorado State University in designing efficient fuel stoves for developing countries and an affordable conversion kit to dramatically improve the fuel efficiency of two-stroke engines. As CTO of Solix, Willson developed technology for algae production. In July, Solix began inoculating its Coyote Gulch Demonstration Facility located on a two-acre site on the Southern Ute Indian Reservation with expectations of being in full operation by late summer. 
 
 >New York City's Metropolitan Waterfront Alliance celebrated its "City of Water Day" by using approximately 2,000 gallons of biodiesel and ultra low sulfur diesel in five historic boats. The event promoted the use of alternative fuels in the city's fleets and heavy equipment. Brooklyn-based Metro Terminals provided the fuel for the event. The family-owned heating oil, diesel and gasoline terminal is expanding its biodiesel handling capacity at its Brooklyn Waterfront location. 
 
 >Isis, a little-known oilseed under development as a feedstock, is the focus of a recently signed cooperative agreement between two Ukrainian companies, Landkom International PLC and Sunfuel Ukraine LLC. The parties have jointly tested isis in the Ukraine, Europe and South Africa with leading universities and commercial fuel companies. Under the agreement they will be commercializing the new crop, which can be grown on marginal quality or fallow farming land with reduced fertilizer requirements.

 
 >Ardent Energy Group Inc. of Sacramento has entered into an agreement with Belgium's Distribution and Finance S.A., Distrifina for the importation and distribution of jatropha and castor oil as feedstocks for the European biodiesel market. Distrifina has the option of providing financing and equipment for crushing and refining these feedstocks. AEG reported that Distrifina has the infrastructure and expertise that will solve the logistical challenges of distribution, which have prevented the large scale availability of non-edible oilseed in Europe. 
 
 >Dover Chemical Corp. has introduced a new chemical additive for biodiesel to prevent deposits from developing on engine components. "It acts as a detergent to prevent carbon contamination on engines," said Corky Thacker, spokesman for Dover. Polyisobutylene succinic anhydride (PIBSA) is a versatile chemical intermediate that adds functionality, particularly dispersion, to hydrocarbon products used in a wide range of applications. With the increase in biodiesel blending, the company suggests that biodiesel marketers offering fuel packages to distributors can use the additive as a selling point that their fuel will have minimal deposit formaton.
 
 >An explosion and subsequent fire damaged a commercial biodiesel production plant in Chicago on July 17 and injured two workers, according to the U.S. DOE reporting service. Columbus Foods Co. produces approximately 4.5 MMgy from soy oil and canola oil. Chicago Fire Department authorities reported that an investigation into the cause of the explosion is underway.

 
 >Kathy Bryan, president and co-founder of BBI International, died on July 11 in her Salida, Colo., home after a courageous 14-month battle with cancer. Bryan, 63, and her husband Mike co-founded BBI International as a renewable fuels consulting business. She was the impetus behind what became a group of renewable energy magazines beginning with the Energy Independent Newsletter, which later became Ethanol Producer Magazine. Biodiesel Magazine was the second industry magazine launched in 2004, followed by Biomass Magazine three years later. Bryan contributed to the quality and integrity of BBI International's publications and conferences in innumerable ways. Her leadership, guidance, and her vast industry connections were invaluable to the success of the company and the development of the industries she served.
 
 Share your Business Briefs To be included in Business Briefs, send information (including photos, illustrations or logos, if available) to: Business Briefs, Biodiesel Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also fax information to (701) 746-5367, or e-mail it to <a href="mailto:rkotrba@bbiinternational.com">rkotrba@bbiinternational.com</a>. Please include your name and telephone number in each correspondence.

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Hilton Americas-Houston's Mo Khan, director of property operations, left, and Robert Alexander, assistant director of property operations, stand in front of the emergency generator that is ready to run on B95. PHOTO: HILTON AMERICAS-HUSTON

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BusinessBriefs: Companies, Organizations & People in the News

The biodiesel industry has always been tied to politics-whether it's state mandates, federal environmental quotas or even trade protocols-and the connections are very important to projects under development in the United States and Canada. Because of speculation that the Canadian Province of Manitoba might issue a biodiesel blend requirement in 2010, John Falk of Sunwest Biofuels received an inquiry from a major oil company as to whether his company would be able to supply it. "If there's a mandate, there's a demand-but if there's not, there's not," Falk tells Biodiesel Magazine. 

 
 Sunwest is looking to build a modular plant about a mile north of Altona, Manitoba, in the rural municipality of Rhineland. Falk has high hopes that the Manitoba mandate will become a reality. Of course, demand is the driving force behind increased supply and more plants, and several regional developments are encouraging new projects. 
 
 In the U.S. Northeast region, Massachusetts and Pennsylvania are seeing increased activity because of requirements to use certain levels of renewable fuels in home heating and transportation applications. Despite increased demand coming from a flood of new regional mandates and state production incentives, future biodiesel producers still need funding to build supply-and the credit situation is tight. The big story for new renewable energy projects is the American Recovery and Reinvestment Act of 2009, which is said to have millions of dollars available for such enterprises. "There's a tremendous amount of money supposedly available but it is in no way flowing," a future producer says, adding that there are millions of dollars available through the ARRA-but those dollars are hard to snare. "We've found that the government is much more interested in investing in so-called second generation projects that have the potential for huge returns and the promise of energy independence." 
 Others say that a company has to spend thousands on attorneys to even get close to any of this money. "The federal process is extremely arduous and from what we've seen, the stimulus money is geared more toward developing and supporting new technologies," says Hardy Sawall, senior vice president of Innovation Fuels Inc., which is looking to build a new refinery at its existing terminal location in Milwaukee. "Biodiesel is an existing, standard technology, but we haven't seen much support for that." 
 
 Other would-be producers are also skeptical about applying for stimulus money to get their plants built. "We hear chants of 'stimulus money, stimulus money!' ...the government talks a lot but they do nothing," says Surajiet Khanna of Biofuels Advanced Research and Development LLC. "I'm not real big into grants because we could spend a lot of time and money applying for them and end up with nothing," Khanna said. 
 
 "There's not a lot of money out there for technologies that are 'shovel-ready,'" another source said. "It also seems like there is not a lot of money available for small business, which is where most of the employment opportunities in this country come from."
 
 To date, Khanna said BARD has spent $5 million on its biodiesel project, including a down payment on the land and permitting requirements. But, of course, they need more money. "The credit situation is very bad," Khanna said. "So we made the decision to take the company public through a reverse merger." A reverse merger occurs when a private firm sets up a "shell" as a public company then acquires the shell to avoid the usually lengthy and expensive IPO process. "We just need a little boost to get us into the next stage and we're tired of waiting," Khanna said. "We think that people really won't mind spending 10 bucks [worth of shares]."
 
 Although BARD's plan is to build a huge plant, most of these projects are modest in size, ranging between 1 MMgy and 10 MMgy. Most of these are looking at individual and local investment to finance their deals, and are finding it hard to put together several small deals in the $5 million to $10 million range. 
 
 Some companies had things going rather well before the market crash in September, but have basically had to start all over again. "We had two sources of funding, one was a private investor and the other was the State of California, but both of those have pulled out mostly because of the economic crisis," says Atul Deshmani of Whole Energy Fuels Corp., a proposed plant looking to build next to a wastewater treatment facility on the Pacific Coast Highway outside of San Francisco. 
 
 Feedstock Platforms and Process Technologies

 Biodiesel made from virgin oils may not receive the same monetary benefits under the parameters set by the renewable fuels standard, so companies that want to enter the industry are more likely to base their business on feedstock platforms considered to be "fringe" or "futuristic." This means that waste greases and algae are receiving a lot of attention. "What feedstocks we decide to use will depend on the debate surrounding the implementation of RFS2," Sawall says.
 
 Life-cycle analysis of biodiesel's greenhouse gases (GHG) is a new part of RFS2 Sawall refers to, and under the parameters established by the EPA, biodiesel made from waste greases is among the top performing environmental fuels. In addition, the continuing dilemma for the industry is that it buys its raw materials in the ag-commodities market and sells its product on the petroleum side, so when certain things happen in the markets, the larger plant can't weather the storm. This means that companies planning to build biodiesel plants know that they need "multi-feedstock" processing capabilities. 
 
 The term "second generation" is not related only to feedstocks, it's also related to technology, says Kelly King of Pacific Biodiesel Inc., headquartered in Honolulu. "For one, the technology is more sophisticated now because the ASTM standard is stricter, and we are focusing on getting better yields and improving the efficiency of our processing capabilities," she said.
 
 Algae oil has received a lot of attention as a biodiesel feedstock, and several companies tell Biodiesel Magazine that they are planning to use the second generation source in their refining schemes. But in reality, this could be a long way off. "We can't find a single company that wants to sell us algae oil for $500-per-gallon," King says. "For the foreseeable future I think algae oil will have more applications as a food-grade commodity than as a source for fuel production-it's just too expensive and complicated to make."
 
 New Trends
 While in the past locating biodiesel projects near virgin oil feedstock sources was a trend, the situation seems to have shifted over time. More plants now locate near transportation hubs and consumption markets, which is also where a lot of waste greases are produced. GenX Fuels has been producing biodiesel at the pilot scale in Allentown, Penn., for nearly a year, and now it's getting ready to convert the Volken Iron Works building in Wilkesburg, Penn., for industrial-scale biodiesel refining. "This is where all of the steam locomotives in the United States were built for years," says Michael Tucker, owner of GenX Fuels. "So we can house several rail cars there, and we're basically within 12 hours of all the major markets on the East Coast."
 
 Innovation Fuels started operating a terminal in Milwaukee and the company plans to add a biodiesel refinery at the site. Obviously, the logistics of building a biodiesel refinery adjacent to a terminal in a city with a port on the Great Lakes should have its advantages, but for now the project is on hold, Sawall says.
 
 BARD is also planning to build a port location in the Keystone Industrial Park outside of Philadelphia. "It's much easier and cheaper to get feedstocks and ship fuel on the water than it is on road and rail, and it will be much easier for us to access international markets," Khanna says.
 
 Historically the biodiesel production landscape has been built around the agricultural stronghold of the U. S. where a majority of oilseeds are produced, and many of the companies that dominate the industry still reside there. They produce hundreds of millions of gallons annually and have little or no debt, a situation difficult for start-ups needing millions of dollars of credit to compete with, just to get their operations built. "We don't need funding just for construction but for operations too," Falk said. 

 
 "The large scale plants in the middle of the country have had their difficulties," a future producer says. "So destination plants that utilize a low-cost feedstock will be better able to compete." Several companies Biodiesel Magazine spoke with said that they are negotiating with 100 percent off-take partners, so they were not worried about competing with the big producers. BARD says it has a five-year off-take agreement with one of "the largest biodiesel traders," and has also lined up feedstock suppliers, hedging support and customers for soy oil, hulls and glycerin.
 
 The industry went through a period of frenzy similar to the 'dot-com' crash and it's starting to come back to reality. "It was the whole concept that crashed, because these people weren't trying to do something real," King says. "You can't have an exit strategy as part of your business model. Invest, go public and get out. Some people have had business models that were about spreadsheets and not about making fuel."
 
 King also says, "It's not sustainable to build a 100 MMgy plant and import palm oil from Indonesia, and the industry is starting to figure that out. So I think we are starting to see a return to community-based production." 
 
 Government organizations and utilities are giving support, if not hard cash, to biodiesel projects to promote the continued development of the industry. "A California Coastal Commission Permit is one of the hardest permits in the world to get," Deshmani says. "And we got one, because we had to implement the same standard and safety protocols in our plan as the public utility." There are several interesting synergies that can occur at the community scale, Deshmani says. "The waste water treatment plant has a beautiful lab," Deshmani says, adding that Whole Energy will not have to build testing or research facilities to further develop their process. 
 
 "We'll use their waste water to wash our biodiesel and then our waste water goes right back to them," Deshmani tells Biodiesel Magazine. "There are two ways to polish biodiesel, either with a wet or dry wash, and a dry wash is more cost effective." 
 
 In another trend, traditional petroleum companies are spending money on renewables research, and start-ups vie for their attention. "We got a letter from Exxon saying that they were not pursuing any joint ventures, but then we heard that they're investing $600 million [in Synthetic Genomics Inc.]," Khanna said. "We're much more advanced than the company Exxon is investing in…if you don't have an inside connection you don't get any interest from the big companies."
 
 Nicholas Zeman is an associate editor for Biodiesel Magazine. Reach him at (701) 738-4972 or <a href="mailto:nzeman@bbiinternational.com">nzeman@bbiinternational.com</a>.

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Many development sites are in city ports or industrial processing centers but some no-debt kings still find soybean country attractive. PHOTO: SUE RETKA SCHILL, BBI INTERNATIONAL 

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The U.S. coastal regions and population centers are hot spots for biodiesel project development as more companies look to locate their operations near consumption markets. Armed with their own process technologies, medium-sized production plans and creative models, dozens of new players are populating the Biodiesel Magazine proposed plant landscape.

Future Destinations

It's no secret there is serious volatility in commodities markets. The fact that no biodiesel futures contracts are offered in the United States further adds to an extremely perplexing situation for those in sales, purchasing and risk management. Industry insiders also note that the mechanisms in place for pricing biodiesel are not fully compliant with supply and demand fundamentals. 

 
 For one, the price reported by biodiesel marketers is considered the "advertised" price, and is viewed as higher than either the amount a load sold for or a party might be willing to sell it. It's a negotiation tool, as the advertised price is usually not the real price, and anyone can report any price at any time. "The biodiesel industry is very small and very fragmented regarding the number of participants and the different grades of quality," says Will Babler of First Capitol Risk Management LLC in Galena, Ill. "So developing a homogeneous methodology to determine what traders on the buy or sell side are incentivized to report, is very difficult."
 
 Some parties will say that they bought fuel at a certain price-and it's a lie, says Michael Cooper, vice president of Ultra Green Energy Services LLC. "It's a few pennies more or a few pennies less, so there can be some fudging in the numbers, he says. "You have to view these prices like they are negotiable, and you need to be ready and willing to do some dealing."
 
 Of course, biodiesel traders can track prices of pervasive feedstocks along with the price of crude oil and diesel, all of which influence the price of bio. But Chicago rack values aren't the same as they are in Tulsa, Okla., or San Francisco, so there are regional discrepancies that can be confusing for marketers and buyers. "There are different underlying diesel markets, so many different grades of fuel and so many logistic scenarios, and this makes it very difficult to trade biodiesel from one to another," Babler tells Biodiesel Magazine.
 
 Supply and demand economics dictate prices in virtually all markets but with biodiesel policies and mandates involved, particularly the renewable fuel standard, it's sometimes hard to discover a consistent rolling spot price. "I think we will have a better chance once the mandate kicks in because there will be more certainty about what the obligated parties have to consume," Babler says. "Once the industry is big enough, and the mandate is issued, then the petroleum industry will be surer about what it has to buy and what it's willing to pay. I don't know if that is going to happen at 600 MMgy or if it will happen at a billion gallons per year."
 
 There are companies investigating the possibility of offering a biodiesel price index, but developing that product could be very difficult. "Right now it's not clear whether prices are driving the market or if the market is driving prices," says Chris Draper of the Green Fuels Exchange in Des Moines, Iowa. Currently, GFEX offers trading on recycled oils and has developed a successful verified-seller program to guarantee that parties who offer product for sale can guarantee delivery. "Our objective is to expand into biodiesel and renewable identification numbers (RINs) within the next six to 12 months."
 
 Differing Grades, Markets
 To have all of the wholesale biodiesel producers trade under a single index is unlikely to happen any time in the near future. "Would that be based on FAME-0, or Soy Methyl Esters, or some type of generic FAME contract that is a listed derivative?" Babler says. "There are a lot of questions to be answered, and I think that until a particular cash price benchmark becomes financially settled as a swap, it will be hard to have a single product for biodiesel price discovery." 
 

 Transactions happen faster than reporting, so it is unclear what the mechanism behind the reporting is. Movements in the market can also happen in the period between bid and delivery. "That means you have to peg your sale on the base of a hedge related to heating oil," Babler says. "If you sold at heating oil plus 'X,' you don't know what the price will be at delivery unless you hedge it using the futures market." If a buyer purchases a load in Chicago and has to get it to New Jersey, which takes several days, the bottom might fall out of the market and a lot of money could be lost, but a buyer could also negotiate a deal gambling that price will go up. "If you reduce your risk, you also reduce your upside," Cooper says.
 
 "There is a price discovery for biodiesel-it's the price of diesel fuels and home heating oil on the New York Mercantile Exchange," Cooper says. "We're diesel fuel producers and we're home heating oil producers. Yes, we might have a premium product, but people are not willing to pay a premium price for it-and if you know anybody who is, tell them I've got some biodiesel for them. Some producers just have too many expectations about what price they should be getting, and they're just unrealistic. This isn't about history. It's about what works now."
 
 The Chicago Board of Trade, the leading spot for commodity price standards in the United States, has no biodiesel product, meaning it does not track biodiesel deals because the volumes are not high enough for the Board itself to make money. "There is a clear European product on NYMEX that is based on the price reported by Argus," Babler says.
 
 One of the problems for biodiesel is that it is not a fungible product. Fungibility is defined as the interchangeability of things that are identical or uniform. "Biodiesel from one producer is not the same as biodiesel from another producer," Cooper says. There are different feedstocks, different fuel packages with different additization technologies, and biodiesel varies in quality from one refinery to another. That means that it's not fungible, not interchangeable. "There are too many different types of biodiesel to concentrate enough liquidity for a single biodiesel futures contract at the moment," Babler says.
 
 Renewable Energy Group Inc., headquartered in Ames, Iowa, advertises that it is "serving up the highest quality biodiesel available," which is sold in a product line billed as REG-9000. There are three different fuels in this line all with different cloud points and different cetane levels. This system put forth by REG effectively states that the lower the biodiesel's cloud point, the more value it has-despite higher cetane numbers associated with biodiesel possessing higher cloud points. Some producers, however, do not like this situation and see it as creating a class system for biodiesel. Babler though does not feel this way. "I think it's a good thing, and they are trying to rightfully develop a pricing system that is based on specs and not on feedstocks because you have different buyers, different seasonal demand," he says. "It's an effort to concentrate liquidity."
 
 Petroleum Terms
 The New York Mercantile Exchange offers a trading platform for heating oil and diesel fuel, and press time prices for September heating oil futures were hovering between $1.82 per gallon and $1.87 per gallon. The projected price was rising steadily into February 2010. While there are no futures contracts for biodiesel, several different organizations-Platts, Argus, OPIS-collect spot prices daily for traders and risk managers to discover.
 
 The heating oil futures contract trades in units of 42,000 gallons (1,000 barrels) and is based on delivery in New York harbor, the principal cash market trading center. "We translate biodiesel into the terms of heating oil," Cooper says. "I've learned that's the best way to manage my risk after trading for 10 years-translating biodiesel into petroleum terms."
 

 If the economics work for traders to treat biodiesel as an oil product, then the petroleum industry has an easier time dealing with biodiesel on the buy-side. This also makes the financials of handling biodiesel deals easier on its own traders. "Then you do have liquid tools for laying the price off, hedging and transparent price discovery," Babler says. Biodiesel, however, is usually not traded in 42,000 gallon loads but rather in sizes that are determined by railcar and truck capacities: 29,000 gallons, and between 6,000 and 7,000 gallons, respectively.
 
 For instance, a biodiesel trader who's main market is the heating oil sector has to buy at below the price of heat. That is the touchstone. "This is hand-to hand combat," Cooper says. "You watch the market, you pick up the phone and you negotiate a price. This took years of failure on my part to finally learn how to do this, but that is how you learn-by making mistakes. I think our business is set to explode and I'm ready."	
 	
 Nicholas Zeman is an associate editor for Biodiesel Magazine. Reach him at <a href="mailto:nzeman@bbiinternational.com">nzeman@bbiinternational.com</a> or (701) 738-4972.

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There have been complaints that the only way to find the rolling spot price for biodiesel is to check with individual distributors, a tedious process at best. Some say those who lack price discovery expertise lack experience, so as the industry growsand more market players look to purchase the fuel, a legitimate discovery mechanism will be needed.

A Need for Discovery

With implementation of the revised renewable fuels standard delayed from a January 2009 start to January 2010, Big Oil's implementation strategy committees have been given a breather. When it comes to biodiesel, there are a lot of questions to answer. What approach is best to meet the standard? Where does it make the most sense to add blending infrastructure for biodiesel? Will there be a market for higher blends, and adding to the uncertainty, will soy biodiesel qualify as an advanced biofuel or be grandfathered in under the conventional biofuel standard?
 
 With oil industry offices essentially in his backyard, Houston biodiesel producer Jeff Trucksess, executive vice president of Green Earth Fuels LLC, sees the industry taking a wait and see attitude. "The regulatory environment is so uncertain," he says. "It's not clear just how the RFS is going to kick in or how California's low carbon fuel standard is going to kick in. What sort of fuel and feedstocks are going to be favored?" he wonders. "At the same time [the biodiesel industry] is not as mature as ethanol, and consequently the majors' thinking on the subject is not as mature." 
 
 The recent change in ASTM standards to allow up to 5 percent blends of biodiesel in petroleum diesel without notice may actually open an opportunity for a rather quick transition to using biodiesel, Trucksess points out. Studies in the United States and Europe have indicated low-level blends can be successfully handled in pipelines. "You start to see potentially different thinking on the part of the majors, in using up to B5 they won't necessary have to change a whole lot." In that scenario, a refiner could convert a few tanks to biodiesel storage and inject 5 percent bio into the diesel as it enters the pipeline. Such low-level blends would also tend to minimize the issues of biodiesel's varying cold flow properties. "That's a feasible scenario for the next couple of years," he suggests. A B2 blend in the 60 billion gallon a year diesel market in the U.S. would provide a market for 1.2 billion gallons of biodiesel-just over the 1 billion gallons for biomass-based diesel required in the renewable fuels standard. The question arises, though, whether a second scenario of strong, regional demands for B20 or higher blends will require different infrastructure modifications. 
 
 In comparison, the ethanol industry has already seen many of those infrastructure questions answered, thanks to the wide substitution of ethanol for less environmentally-friendly oxygenates in recent years. "One could argue that, as an oxygenate, ethanol is so fully entrenched in the fuel system that the fuel makers wouldn't want it to go away now," says Donald Paul, executive director of the University of Southern California Energy Institute. He's also a former vice president and chief technology officer for Chevron. "They've already made the investments to integrate it," Paul says. 
 
 In his view of how the oil companies see it, infrastructure is just one of many ways where biodiesel differs greatly from ethanol. Ethanol production is considerably greater in the United States and Brazil, and elsewhere. Corn and cane ethanol are both built on large, existing agricultural bases prone to large surpluses. While the biodiesel industry in the U.S. also started under a business model of utilizing surplus, it now appears that growing global demand will keep supplies tight and prices up for all edible oils. 

 
 Feedstock Issues
 Biodiesel producers know high feedstock costs and resulting negative margins have severely affected their business, even with the relatively generous $1 per gallon tax credit. The poor scoring for soy biodiesel in final versions of the U.S. EPA's proposed rule for the renewable fuel standard and California's low carbon fuel standard adds more uncertainty to the feedstock outlook, on top of the long-term price scenarios. That uncertainty is a key reason for the oil industry's wait-and-see attitude according to Paul. "Until it evolves to where there is a higher level of predictability and confidence in the economic model, especially a model that doesn't require very large price supports or subsidies, the large companies are going to wait," Paul says, adding that predictability, tight specifications and standardization are also important for biodiesel to be integrated into the hydrocarbon fuel system. "Particularly with biodiesel since diesel is primarily commercial fuel," he says. "You don't want to have to worry about what is in this fuel if you're running a hundred trucks or running locomotives."
 
 Biodiesel is part of the fuel system now and will continue to be at some level, but from the oil industry's view the future of biodiesel still has too many unknowns, Paul says. "How much effort do you put in the current generation built around soybean oil or chicken fat? Or do you wait for something like algae where the feedstock supply could be scaled up?" he asks. For Big Oil to invest in infrastructure changes, the business model needs to stabilize, he says. "The business model that shows you how to invest, how you're going to make money and how to integrate [biodiesel into the system] is the driver that will ultimately bring the large participants," he tells Biodiesel Magazine. 
 
 A Question of Scale
 Scale is an issue for the oil industry that has built its business model around driving down costs through economies of scale. For biodiesel, the nature of the technology and waste-based feedstocks has nurtured a large number of smaller facilities distributed throughout the country, alongside some more centralized larger plants based on virgin vegetable oil feedstocks. "You don't get to 10 percent [of the overall fuel supply] by having thousands of independent operators," Paul says. "You get to 10 percent by stabilizing the supply and integrating it into the system." 
 
 Trucksess points out that the scale of the biodiesel industry has only begun to ramp up quite recently. "Really, biodiesel is only three years old in its modern form," he says. "We haven't had enough time to create new feedstocks and new drivers that bring down the costs and eliminate the need for tax credits." He points out that Green Earth Fuel's 90 MMgy capacity is four times the total sales of the biodiesel industry just four years ago. 
 
 The questions Big Oil has to ask itself regarding biodiesel-will it ultimately fit into the infrastructure, what feedstocks will ultimately prevail, and is biodiesel scalable?-all point to uncertainties in the business model. "The nature of large oil companies is that the technical risk is something they accept," Paul says. "Oil exploration is one of the most technically risky businesses but they know how to do it. They know how to assess those risks and incorporate them. Business model risks-where you don't know how all these factors are going to add up, where you're going to make money on your investments-those are the risks the majors don't absorb generally." 
 

 A lot of the discussion in the biofuels sector is on reducing technical risk, Paul admits, but that is not enough. "The question ultimately is what are the business model risks, and the political risks around that? Once that gets more stabilized, you'll see more large companies and investors get interested." 
 
 The acceptance of technical risk is illustrated in ExxonMobil's recent announcement of a $600 million investment in algae research. In making the announcement, Emil Jacobs, vice president of the company's research and development, said the potential scalability of algae was a major reason it settled on algae as a research focus. The $600 million over five or six years is relatively small in terms of investments in oil exploration, he said in the news conference, but large in terms of other research efforts. If successful, the research investment would be followed by billions of dollars in infrastructure, he said.
 
 Oil industry investments in the larger, more mature ethanol industry took a major step forward this past year when the nation's largest oil refiner, Valero Energy Corp., bought several bankrupt ethanol plants. Given the current uncertainties in the biodiesel market, no one expects that to happen with distressed biodiesel assets. Yet Big Oil will inevitably get more involved. In a talk earlier in the summer at the Renewable Energy Finance Forum in New York, Paul laid out five reasons why Big Oil will become a factor in the renewable energy market.
 1. Global reach and scale
 2. Strong balance sheets and cash flow
 3. Technical, business and market capabilities
 4. Infrastructure, land and supply chain management
 5. Patience and longevity
 
 "Energy is so big," Paul says. "Changes take time and last for decades. The large energy players will have a role-that's what they do."
 
 
 Susanne Retka Schill is assistant editor of Biodiesel Magazine. Reach her at <a href="mailto:sretkaschill@bbiinternational.com">sretkaschill@bbiinternational.com</a> or (701) 738-4922.

ILLUSTRATION: JACK SITTER, BBI INTERNATIONAL

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The time is coming when Big Oil will have to figure out how biodiesel fits into its plans, but at the moment the oil industry is taking a wait-and-see stance.

The View from Big Oil's Height

Starting a new venture is always risky. Have the markets been projected correctly? Have the potential challenges been anticipated accurately? In a series of profiles of new biodiesel producers, Biodiesel Magazine learned of several unique strategies for success. Some plants hope to time their production starts to tap into incentives or mandates. Others demonstrate new technologies they believe will give an edge over the competition. There are even soy-based biodiesel plants starting up, albeit carefully sized, and engineered for multiple feedstocks. 

 
 Crimson Renewable Energy LP is the largest of the new biodiesel producers profiled in this article. Based in Bakersfield, Calif., the 30 MMgy facility hopes to tap into the market demand expected from the California low carbon fuel standard, which will be phased in over the next decade to reduce the state's transportation carbon footprint by 10 percent. The Crimson plant is the newest in a group of companies owned by Crimson Resource Management Corp., a holding company with oil and gas assets, natural gas refineries, asphalt production, a pipeline group, terminal operations and oilfield services. The 30 MMgy plant resides at the site of sister company Delta Trading's terminal in Bakersfield. 
 
 Given Crimson's oil industry background, it's not surprising that the company developed its biodiesel process in-house, starting with a pilot plant that ran for several months in 2007 as the renovation of a mothballed natural gas plant at the Delta Trading terminal began. Harry Simpson, president and CEO of Crimson Renewable Energy, says the Bakersfield site has several advantages. The location has good rail and truck access, it is already home to two refineries, and it sits in the heart of California's Central Valley diesel market. Simpson expects that at least one of those refiners will begin blending B5 and possibly B20 by the end of the year. Another advantage to Delta Trading's site is that it was already zoned, although the company still had to clear the California permitting hurdles. "California is the strictest place in the world for air quality," Simpson says. 
 
 The plant also includes glycerin refining, which started refining purchased crude glycerin in early summer as the biodiesel plant was being commissioned. Initially refining high-grade technical glycerin (98 to 99-plus percent purity), Crimson expects to pursue United States Pharmacopeia (USP) certification in the near future.
 
 With true multi-feedstock capabilities in mind, engineers designed the plant to store and process feedstocks separately, with individual storage tanks for finished B100s derived from different feedstocks. The fuels are stored in insulated and heated tanks, and can be blended on a load-by-load basis with up to four additives injected as needed. Diesel for B99 blends could be one of those additives. "We also nitrogen blanket our tanks," Simpson says. "By keeping nitrogen on all biodiesel and feedstock, it prevents oxidation and moisture getting in."
 
 Crimson expects to source tallow, white grease and waste vegetable oil from within the state, and rail other feedstocks in when needed. The plant will process some soy biodiesel for blending, depending on customer requirements and winter needs. 
 
 Green Earth Biofuels
 Across the country in Irvine, Ky., Green Earth Biofuels of Kentucky Inc. developed its own process technology that the company is patenting. Construction on the 25 MMgy plant in southeast Kentucky was completed in late May when a two-month commissioning process began. In early August, management was awaiting test results to ensure the fuel meets ASTM standards consistently before declaring the commissioning process complete.
 
 Green Earth Biofuels is not producing a methyl ester, although its renewable diesel will be using the same feedstocks and targeting the same markets as biodiesel. Jeff Sewell, product procurement manager, describes the process as thermal depolymerization using heat and pressure with a standard acid catalyst to obtain 100 percent yields from vegetable oil feedstocks, without producing coproducts or a waste water stream. The process is not energy intensive, Sewell adds, producing a fuel with a positive energy balance of 3.24 comparable to biodiesel. The plant will initially use soybean oil as its feedstock, with plans to expand production to 100 MMgy with other feedstocks.

 
 "Our process allows us to tweak the formula to meet different ASTM specifications," Sewell says. "One is for power generation, and the other is for on-road use." The company expects to market its renewable diesel to two petroleum jobbers, a transit system and power plant. "There's enough demand within a 50 mile radius for 100 million gallons a year" targeting B5 and B20 blends, he says. He adds that Green Earth has obtained a favorable two-year contract price agreement with a soybean oil supplier. 
 
 Arkansas SoyEnergy 
 Soy oil is the intended feedstock at Arkansas SoyEnergy Group LLC in DeWitt, Ark., but shortly after starting up the new plant in March it shut down in order to retool for multi-feedstock processing. "We'd love to do only soybeans-we have a crushing facility here-but if the economics are not there, they're not there," explains Terry McCullars, general manager. The project broke ground on a 7 MMgy biodiesel refinery in February 2008, adjacent to Arkansas SoyEnergy's crush plant completed a year earlier. The refinery was designed by Bionerg Argentina, and Virtuoso Biofuels helped with retooling the process, which included an expansion from 7 MMgy to 10 MMgy. Commissioning was completed in July.
 
 Arkansas SoyEnergy was formed by the Hornbeck brothers, Jeff, Troy and Jon, who have soybean breeding and seed supply businesses in addition to farming. Planning for the project began when the biofuels outlook was stronger than it is today, and when soybeans were $6 or $7 a bushel. "Who knew they would get as high as $16 per bushel ?" McCullars says. "We're hoping we're on the uphill side of things changing." He noted margins have been improving and petroleum pricing stabilizing. 
 
 The crushing facility and biodiesel plant are sized to capitalize on the typical basis advantage for local processing. Basis is the spread between the Chicago and local prices that reflects transportation costs and local demand. With the DeWitt basis generally running 60 to 70 cents per bushel under the Chicago price, Arkansas SoyEnergy should be able to offer farmers a better price than what they'd get trucking their grain to other markets, and still give the plant favorable pricing. "If we can't buy direct from farmers, we'll be buying at the Chicago board prices and paying shipping, possibly paying 50 cents over Chicago," McCullars explains. One of the original ideas to be explored now that the plant is operational is forming a cooperative where farmers would deliver their beans to the plant and receive biodiesel to use on their farms. Soybean farmers are willing to pay a nickel or dime more per gallon for soy biodiesel, McCullars adds, but if it's not made from soy oil then price becomes the determining factor. "Soy producers expect biodiesel to be made from soybeans."
 
 Producers' Choice
 Local farmers are the majority among the 310 local investors in the new Producers' Choice Soy Energy LLC biodiesel plant at Moberly, Mo. Its 10 MMgy biodiesel plant was built as a multi-feedstock facility to use waste feedstocks from area renderers along with soybean oil crushed in its own facility. The plant is sized to match supply needs with the area where the typical basis gives local processors an advantage. The basis at Moberly was running between 60 and 70 cents this summer although at times it has been over $1, according to general manager Dave Zielke. "We won't use the crush facility to subsidize biodiesel," he says. The intention is to price the soybean oil at the crush plant, and when the economics aren't there for biodiesel production, sell the oil. 
 
 Producers' Choice expects to market its biodiesel in Missouri where a 30 cent per gallon incentive will cover every gallon produced at the plant for five years, Zielke says. In addition, nearby Illinois has a B2 mandate on publicly owned diesel vehicles where the fuel is available, as well as sales and use tax exemptions for biodiesel blends.
 

 The Moberly facility was built by Process Concepts Inc. using process technology from SRS Engineering Corp. and deploys a new technology from Cavitation Technologies Inc. George Hawranik, founder and chief engineer of SRS Engineering, was on site in late July to begin the commissioning process, systematically flooding the miles of piping to test fittings and fix any leaks. Utilizing SRS technology for automated, continuous flow pretreatment of high FFA feedstocks has saved the plant money by reducing the tankage requirements, Hawranik says. The four-step process sends the product through acid esterification twice, with methanol and water removed at both stages for recycling before the product moves on to the transesterification process. "We're trying to restrict the use of high-cost catalysts," he says. "Our focus is on reducing the cost of production." This is the first commercial installation of Cavitation Technologies' process, which uses elevated pressures to give a more complete reaction in a shorter time CTI describes its modular reactor as a continuous flow, hydrodynamic, Plasma 2000 nano-technology-based reactor. 
 
 Ever Cat Fuels
 Commercialization of a new technology is at the heart of the 3 MMgy biodiesel plant completed at Isanti, Minn., this summer. Ever Cat Fuels LLC was formed by the principles in McNeff Research Consultants, holders of the intellectual property for the Mcgyan process, named after its developers. A 2,000-square-foot area holds two reactors, each measuring 6 feet long by 6 inches wide. The fixed bed reactor uses a metal oxide catalyst, which McNeff director of marketing Dave Wendorf says "allows us to make biodiesel in seconds." A wide range of feedstocks can be used, with pretreatment required for some feedstocks to remove insolubles. The feedstock must be in a liquid state to flow through the reactor where esterification and transesterification occurs simultaneously at elevated temperatures and pressures. "The actual temperature and pressure depend on how fast you want the reaction to take place, and the feedstock," Wendorf says. The fuel goes through a polishing state at the back end, although no chemicals or water washing are required. "We have no waste stream," he adds. "No glycerin is produced."
 
 Ground breaking on the commercial-scale plant took place in February 2008 with the building and equipment installation completed by July, after which system testing began. Wendorf is confident that the commercial-scale reactors coming on line this summer will work as well as the slightly smaller reactors in the pilot system. In two years of testing at the pilot scale, the Mcgyan process converted a wide range of feedstocks to biodiesel meeting ASTM specifications. He reports the company has a number of potential licensees looking at installing 10 MMgy to 30 MMgy capacities, and the company is currently engineering a reactor with production capacity at 10 MMgy.
 
 Susanne Retka Schill is assistant editor of Biodiesel Magazine. Reach her at <a href="mailto:sretkaschill@bbiinternational.com">sretkaschill@bbiinternational.com</a> or (701) 738-4922.

Crimson Renewable opened its plant at Bakersfield, Calif., in July. PHOTO: CRIMSON RENEWABLES

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Producers Choice Soy Energy at Moberly, Mo. is utilizing new cavitation process technology. PHOTO: PRODUCERS CHOICE

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Biodiesel Magazine speaks to new producers about their systems and strategies for being successful in the biodiesel industry.

New Systems and Strategies

How inclusive can the word "biodiesel" be? Clearly, those who are reading this know that biodiesel specifically refers to fatty acid methyl (or in rare cases ethyl) esters produced through transesterification. 
 
 A couple of years ago, when processes such as thermal depolymerization and hydroprocessing of renewable feedstocks were coming onto the alternative diesel fuel scene, names other than "biodiesel" became synonymous with the fuels derived from those particular processes. 
 
 Right or wrong...
 
 To view the entire F.A.M.E. Forum biodiesel blog entry and archived blogs, visit <a href="http://www.biodieselmagazine.com/fameforum">www.biodieselmagazine.com/fameforum</a>.

F.A.M.E. FORUM biodiesel blog: What should "biodiesel" mean?

Posted August 24, 2009

 
 A Scottish consortium has bought out the original investors in biodiesel producer <a href="http://www.argentenergy.com/ ">Argent Energy Plc, Motherwell, Scotland</a>. The consortium, which includes Souter Invesments and existing managers, bought the plant from a group of investors led by Cinven Ltd. who have backed the project since its inception in 2001. 
 
 Argent Energy pioneered the large-scale commercial production of biodiesel in the United Kingdom when it started production in 2005. "Since we started production we have delivered over 170 million liters (45 million gallons) of biodiesel and our plant is currently running close to full capacity," said Jim Walker, Argent Energy managing director. With a capacity of 13.5 MMgy, the plant recycles used cooking oil and tallow as feedstocks for biodiesel production. A new facility alongside the Motherwell plant is under construction to prepare tallow and used cooking oil for the biodiesel process. "This is nearing completion and will expand and improve our locally sourced raw material supply and create around 15 new jobs," Walker added.
 
 Walker and finance director Jim Boyd are both now shareholders in business along with the company founder Andy Hunter who remains as chairman. "Along with our new investors we look forward to developing new opportunities in the waste to energy sector," Walker said.
 
 Argent's waste-based biodiesel meets the highest sustainability criteria in the UK's Renewable Transport Fuels Obligation scheme. Currently UK fuel suppliers are required to report the sustainability and GHG benefits of the biofuels they sell to the UK Renewable Fuels Agency. The government has signaled that from April 2010 it aims to qualify biofuels under the RTFO according to their carbon savings and from 2011 they will only qualify biofuels made from feedstocks that meet appropriate sustainability standards. The RTFO currently requires 3.25 percent of fuel sold at UK gas stations to come from renewable sources, with the percentage rising to 5 percent by 2014. A European Union target of 10 percent renewable content is to take effect by 2020.

Argent Energy produces biodiesel from tallow and used cooking oil at Motherwell, Scotland. PHOTO/Argent Energy

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Scottish group buys Argent Energy

Posted August 24, 2009
 
 Early tests by <a href="http://www.cqu.edu.au/ ">Australia's CQUniversity</a> researchers show promise for a new biodiesel feedstock – the native Australian Beauty Leaf Tree. The wild tree grows well throughout coastal areas of tropical Australia on salty, drought-affected, acidic and waterlogged lands and is valued for medicinal properties in the oil, attractive flowers and wood quality.

 
 PhD student Subhash Hathurusingha and associate professor Najapa Ashwath estimate Calophylumm inophyllum can produce up to 5,000 liters of oil per hectare per year (534 gallons per acre) from its abundant fruits, the seeds of which contain up to 60 percent non-edible oil. The Australians report the Beauty Leaf Tree fruits like macadamia and can be managed like the nut tree. The wild tree lives up to 200 years, producing fruit twice each year. 
 
 The researchers have been collaborating with a mechanical engineer in Sri Lanka to design a seed oil expeller and automated biodiesel reactor which uses a 4-stage transesterification process to convert the highly viscous calophyllum oil into biodiesel. Initial tests show the power output and fuel efficiency of calophyllum biodiesel is comparable to conventional diesel.
 
 CQUniversity is based in Rockhampton, Australia, in central Queensland, with learning centers on the Sunshine Coast, the Gold Coast as well as Brisbane, Sydney, Melbourne and a business college in Singapore.

Australians evaluate native oil-bearing tree

Posted August 24, 2009
 
 The U.S. national average price of diesel fuel rose 1.6 cents per gallon from $2.652 per gallon Aug. 17 to $2.668 per gallon Aug. 24, pushing diesel prices up to their highest point so far in 2009, according to data provided by the Energy Information Administration. 
 
 This marks the fifth week in a row for rising diesel prices, which biodiesel producers and marketers should make note of. The lower the price of diesel fuel, the tougher it is for biodiesel to remain competitively priced. 
 
 The price of diesel fuel is still down markedly from one year ago at this time, when it averaged $4.145 per gallon. To date, the highest U.S. national average diesel fuel price was recorded in July 2008, when diesel fuel topped out at $4.764 per gallon.

Diesel prices rise for the fifth straight week

Posted August 25, 2009

 
 Cummins Filtration, a division of Cummins Inc. (NYSE: CMI), today announced that it is consolidating a significant portion of its North American filter assembly operations into its facility in San Luis Potosi, Mexico, over the next several months in order to keep the business competitive in this region. 
 
 Under the consolidation, filter assembly operations at the Cummins Filtration plant in Lake Mills, Iowa, will be moved to San Luis Potosi, beginning in November. The Company also is considering moving additional assembly work from its Filtration plant in Cookeville, Tennessee, but a final decision has not yet been made. 
 
 As a result of the consolidation, the Cummins workforce in Lake Mills will be reduced by approximately 400 workers between November 2009 and March 2010. Other operations, which employ approximately 110 people, will remain at the Lake Mills plant. 
 
 The consolidation, which involves assembly of oil and fuel filters, is expected to result in significant annual savings to Cummins Filtration after the costs associated with the action are recouped. The move will be seamless to Cummins Filtration customers. 
 
 "The filtration industry has become increasingly price sensitive in the past several years, and the recent reduction in demand has heightened the need for us to take decisive action to make our business more cost competitive, both for the present and well into the future," said Rich Freeland, President of the Components business, which includes Cummins Filtration. 
 
 "We have a number of under-used filtration plants in North America and, after considering a full range of factors, it was determined that consolidating much of our filter assembly in San Luis Potosi, which is our most modern and cost-effective facility, offers the business the best chance for long-term success," added Freeland. 
 
 Cummins Filtration currently employs approximately 330 people in San Luis Potosi and assembles the same type of products as those that will be moved to the plant in this consolidation. The Cummins Filtration operation is part of a larger Cummins Inc. manufacturing campus in San Luis Potosi that also includes engine and power generation equipment production. 
 
 Cummins has had a wholly-owned manufacturing presence in San Luis Potosi since the early 1980s and employs approximately 2,000 people in the city. Cummins Filtration expects to add additional jobs in San Luis Potosi over the next 10 months as a result of the consolidation. 
 

 Cummins Filtration is the largest of four businesses that comprise the Cummins Components group. The Components group has been among the hardest hit of Cummins Inc.'s business segments in recent months, as the recession has resulted in a sharp drop in global demand for diesel engines and related components over the last three quarters. 
 
 Components sales were down 41 percent in the second quarter of this year, compared to the same period in 2008, and the segment reported a $10 million loss before interest and taxes during the quarter. Cummins Filtration sales declined 37 percent from the same period in 2008. 
 
 "The current recession has led to the steepest drop in sales in the 52-year history of Cummins Filtration," said Cummins Filtration President Joseph Saoud. "Sales have fallen more than 30 percent since November 2008, and we do not expect any meaningful recovery in demand until 2011. 
 
 "This was an extremely difficult decision and we realize the job reductions in Lake Mills will have a significant impact on our employees and the community. We had hoped to avoid this kind of job loss, but after exhausting all our initial options for reducing costs, it is clear that further significant action is necessary to remain competitive," Saoud said. 
 
 Cummins is committed to assisting the Lake Mills community during the transition. In addition to offering severance and outplacement services, the Company will help affected workers in receiving Trade Adjustment Assistance from the federal government and will continue to support a number of community organizations in the Lake Mills area.
 
 SOURCE: CUMMINS INC.

Cummins cuts 400 Iowa jobs, consolidates in Mexico

Posted August 25, 2009
 
 Commissioning is complete at a retrofitted biodiesel plant at Houston, Miss., recently purchased by Mississippi Investment Petroleum Co. LLC. MIPCO purchased the plant from Tri-State Petroleum Products LLC, retrofitting the plant with its own reactor designed to process poultry fat and waste vegetable oil. Jon Lunsford, CEO, said they were awaiting confirmation that the fuel meets ASTM standards before starting production at the 8 MMgy plant.
 
 The Houston, Miss., is actually the second project launched by MIPCO. Ground work had begun at the first project planned at Aberdeen, Miss., Lunsford said, when the Aberdeen mayor requested the project be put on hold while the city applied for a grant to help with road access in the industrial area. "What was supposed to be a 60 day delay turned into 120-days," Lunsford said. Construction on the 10 MMgy facility is set to begin once final permits are in place, with completion anticipated by the end of the year. 

 
 MIPCO is in final negotiations on a third facility, a shuttered biodiesel plant at Nettleton, Miss. Lunsford said the deal should be completed within the month and the plant operational within 60 days after closing. MIPCO hopes to achieve a 24 MMgy capacity at Nettleton, he added.
 
 Lunsford and his partner Mike Cook are new to the biodiesel industry. Lunsforth is based in Atlanta, where he has worked in the computer industry for 20 years. Cook is based in Madison, Miss., where he works in the medical equipment industry. "I was interested in renewable energy and with my partner in Mississippi got involved with others in the biodiesel industry," Lunsford said.

Commissioning complete at first of three Mississippi plants

Posted August 25, 2009
 
 Using volatile hydrogen gas to convert animal fats and other waste materials into renewable diesel can be intense-even dangerous-so a reliable process control system is essential to an operation's overall safety and success.
 
 Dynamic Fuels LLC, a 75 MMgy renewable diesel plant currently under construction in Geismar, La., is a 50-50 joint venture between Tyson Foods Inc. and Syntroleum Corp. that will use automation and process control technology designed by Emerson Process Management of Austin, Texas. "This is a hydrotreating plant, which involves high temperatures, high pressures and catalytic reactors, in addition to handling hydrogen gas," said Jeff Bigger, president of Syntroleum. "So process controls are very important."
 
 Emerson's PlantWeb digital plant architecture, which will be integrated into the Dynamic Fuels facility, networks an automation system and predictive maintenance software with smart devices installed throughout the operation, including control valves, flow meters and temperature transmitters. But for Emerson this is not unfamiliar territory-the company has worked with Syntroleum since 2000 when they outfitted a pilot syngas plant. "We have a long relationship with them," Bigger told Biodiesel Magazine. "They have a very robust system, they're very cost competitive and have a design that can be exported to other locations. That's one of the things we get with this system-it's scalable."
 
 The $138 million project is scheduled to begin operations in 2010, and is currently about 54 percent mechanically complete. "There is a huge amount of equipment moving around on site and we still plan to be finished by the end of the year," Bigger said. 
 

 Tyson will supply the feedstocks for the production of renewable diesel, which will either come from its own equity or will be purchased from third parties in the local area. These lower quality animal fats and greases will be converted into "ultra-clean" renewable diesel that does not involve petroleum in the process. This is unlike the now defunct partnership between Tyson and ConocoPhillips that would have involved coprocessing a small amount of fats with crude oil at a ConocoPhillips facility. "This is a brand new free-standing plant that does not involve any coprocessing with petroleum, but the exclusive hydrogenation of animal fats into renewable diesel," Bigger said. 
 
 Syntroleum currently licenses its Fischer Tropsch based technology to a Chinese company in a landmark sale that boosted investor confidence in its core product. Syntroleum stock is currently trading at $2.84-per-share, up nearly 430 percent from its initial public offering price.

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Dynamic Fuels selects Emerson as process control provider

Posted August 26, 2009
 
 The European construction firm that has built many plants on four continents, BioDiesel International AG headquartered in Grambach, Austria, is seeing financial interest growing in new projects again after an extended credit crunch since the global recession started. Several factors are spurring new construction and investor confidence, including greater yields, the ability to meet stricter quality standards and ever increasing feedstock flexibility, said Oberzaucher Bernd, BDI marketing and communications manager. Bernd answered Biodiesel Magazine's questions after the company posted its financial results for the first half of 2009 earlier this month.
 
 Q: How are your construction sales so successful when it seems that times are so tough for actual biodiesel producers? 
 
 A: Real multi-feedstock technology for waste materials like yellow grease, brown grease, animal fat, fatty acids with full conversion of FFA into biodiesel - proven by 24 multi-feedstock plants worldwide.

 
 Q: What market conditions are spurring new construction, and what opportunities are there for continued growth despite high veg oil prices, low crude and increasing competition from Asia and South America? 
 
 A: BDI is "spurring" [the construction of] new biodiesel plants with multi-feedstock technology. This includes improving biodiesel quality to fulfill stricter standards, increasing of feedstock flexibility (processing of high FFA feedstock) reaching higher yield. Other features involve upgrading process automation, reducing operating material, energy consumption and waste-enhancing plant safety. Adapting to new regulations is also very important.
 
 Q: What "after-sales" upgrades are you seeing existing plants being particularly interested in? 
 
 A: Adaption to stricter biodiesel quality requirements or even fulfilling the current existing ones. 
 

 Q: How many biodiesel plants has BDI built?
 
 A: We have built 30 BDI plants worldwide in 4 continents – Europe, North America, Asia, and Australia. 
 
 Q: Is financing for new plants starting to open up?
 
 A: We register increasing interest from the finance market again. 
 
 Q: How hard has it been for your customers to fund their projects? 

 
 A: When key criteria for a successful biodiesel project are fulfilled, funding is easier. Key criteria are: secured feedstock supply and off-take market, proven technology [which includes] guaranteed capacity, yield and the ability to adapt to upcoming stricter standards. 
 
 BDI reported sales in the first six months of 2009 were actually down nearly €20 million from 2008, but it recently received a €31 million order to build a biodiesel plant in Amsterdam. Therefore, total orders on hand amounted to €47.5 million. The company said it is "delighted" that the European Parliament "now specifies that biofuels produced from waste and residual materials are rated twice as high as other biofuels as far as CO2 assessment is concerned."

BDI reports financial interest in biodiesel plant construction on the rise

Posted August 28, 2009
 
 The American Soybean Association is encouraging all U.S. soybean producers, and their family members, neighbors and friends, to voice concerns with the U.S. EPA's proposed rule on the implementation of the expanded Renewable Fuel Standard (RFS-2). With the future of the U.S. biodiesel industry at stake, ASA is issuing a national Call-to-Action for grassroots activism regarding the proposed rule.
 
 "The EPA's proposed rule on RFS-2 implementation is significantly flawed and would do unnecessary harm to the competitive position of the U.S. soy biodiesel industry," said ASA President Johnny Dodson, a soybean producer from Halls, Tenn. "A loss of the domestic biodiesel market would significantly decrease prices paid to U.S. farmers for their soybeans."
 
 For soybean farmers, the vital flaws and concerns with the RFS-2 proposed rule include flawed and immature assumptions and methodology utilized to measure the indirect land use impacts of U.S. soy biodiesel production; unnecessary and onerous feedstock certification requirements; a methodology that contains a major error pertaining to the direct emission calculations for nitrogen in soybean production; a lack of accounting for glycerine as a co-product; inaccurate assessment of the energy balance of biodiesel; a proposed pathway of using a 52-48 feedstock ratio of biodiesel feedstocks that is not workable in practice; a lack of accounting for improved agriculture yields and efficiency; and a baseline analysis that compares estimated, future direct and indirect GHG emissions for biodiesel to only direct emissions for petroleum.
 

 "Soybean farmers have a great interest in the implementation of the RFS-2," Dodson said. "Unless the flaws in EPA's proposed rule are corrected, soy-based biodiesel effectively will be excluded from the meeting the renewable energy targets established under RFS-2. Soybean farmers would lose a source of demand for soybean oil, biodiesel manufacturers would be left without sufficient feedstock supply, jobs would be lost, and our nation would not decrease its dependence on imported oil. None of these outcomes are what Congress intended. That's why ASA is providing detailed comments to the EPA, and why ASA is asking farmers and the agricultural community to contact EPA as well."
 
 ASA is providing an easy to use online form where people can read the letter, add personal contact information, and submit comments with the click of a button. Family members, friends and neighbors are also encouraged to use this form.
 
 Go to <a href="http://www.soygrowers.com/policy/RFS2.htm">http://www.soygrowers.com/policy/RFS2.htm</a> to access the online form, which includes the letter and links to additional background information. 
 
 SOURCE: AMERICAN SOYBEAN ASSOCIATION

ASA urges members to comment on RFS2

Posted August 28, 2009
 
 The Alternative Fuel Trade Alliance today welcomed the Department of Energy's announcement of a grant up to $1.6 million to raise public awareness and foster understanding of alternative fuels and advanced vehicle technologies. The grant will provide support for a targeted educational plan aimed at Clean Cities Coordinators and related stakeholders.
 
 The Alliance, which includes the Renewable Fuels Association, the National Biodiesel Foundation, the Propane Education & Research Council, the Clean Vehicle Education Foundation and ASG Renaissance, stated, "We are looking forward to working with the Department of Energy to increase the understanding of the importance of cleaner alternative fuels and vehicles to our national effort to reduce oil dependence and cut carbon emissions. It is vital to educate and train Clean Cities Coordinators who are and will be at the forefront of communicating what our fuels and vehicle technologies mean as engines of economic growth and environmental sustainability."

 
 Bob Dinneen, President and CEO of the Renewable Fuels Association, commented, "This DOE grant will supplement our individual and joint efforts to work with and train coordinators, stakeholders, and others at the national and regional level to enhance their knowledge and expertise on the latest developments and applications for alternative fuels and advanced vehicle technologies which include ethanol, biodiesel, propane, and natural gas fuels as well as hybrid/electric technologies and idle reduction strategies to improve fuel economy."
 
 Joe Jobe, CEO of the National Biodiesel Board, said "This program unites the mainstream alternative fuel organizations in working collaboratively towards a common goal: educating America on all aspects of alternative fuels, and increasing their use. This will benefit our air quality, our energy independence and our economy."
 
 According to the Alliance proposal, the grant funds will also be used to:
 
 - Train coordinators as high-level public spokespeople; 
 - Increase awareness of sustainability as it pertains to the stated technologies; 
 - Increase the number of states that enforce fuel quality standards; 
 - Train key stakeholders on fire safety issues; 
 - Increase OEM technician/mechanic training and advanced technology acceptance; 
 - Provide a forum for students interested in alternative fuels on college campuses nationwide; and 
 - Increase the availability and consumption of domestic alternative fuels.
 
 The Alliance partners proposed to conduct more than 45 workshops, author a minimum of 20 educational pieces, and participate in a minimum of 64 collective independent stakeholder events, as well as manage two conferences and four press events to increase knowledge about alternative fuels and advanced vehicle technologies.

Alternative Fuel Trade Alliance to receive $1.6 million from DOE

Posted August 31, 2009

 
 State and local governments in Illinois will be boosting their biodiesel use as the result of legislation recently signed into law by Gov. Pat Quinn. The new law increases the biodiesel blend required for use by diesel-powered vehicles owned by the state or local governments when refueling at a bulk central fueling facility from two percent to five percent.
 
 The Illinois Soybean Association applauded the legislative leaders who supported the pro-biodiesel legislation. "Illinois is a model for how states can stimulate their economies by opening doors for greater biodiesel use and production," said Ron Moore, chairperson.
 
 Illinois passed an incentive in 2003 that provides a partial sales tax exemption of 20 percent on biodiesel blends from B1 to B10. Blends above B10 receive a total exemption from the state sales tax of 6.25 percent, effectively creating an Illinois-specific market for B11. Generally, diesel sales in Illinois total about 1.5 billion gallons per year.

Illinois fleet mandate bumped from B2 to B5

Posted September 1, 2009
 
 <a href="http://cgse.epfl.ch/page65660.html">The Roundtable for Sustainable Biofuels</a> is considering setting aside the issues surrounding indirect impacts for future consultation with experts as it continues to make progress towards devising an internationally-recognized system for certifying sustainable biofuels. RSB is looking for organizations to test the new standards in pilot projects, as well as recruiting membership in one of its 11 sector-specific chambers.
 
 In its late August newsletter, RSB said that while indirect impacts, such as commodity prices and indirect land use change are extremely important, "it is difficult to address them through a standard that operates at the project level. Experts will thus advise us on how best to include these issues into the standard in the future." That and other modifications to Version Zero are expected to be completed for publication by early 2010.
 
 In addition to analyzing comments to Version Zero and crafting Version One of the RSB principles and criteria, the organization has begun to move from a steering committee structure, to a formal governance structure. With a goal of reaching a balance among different stakeholders in biofuels worldwide, RSB members are asked to join one of 11 chambers with each chamber electing two representatives to the governing steering board, one from the global north and one from the global south (representing developing countries). 
 

 A number of familiar names appear in the list of over 100 participants from 27 countries that had joined by mid-summer. The National Biodiesel Board, Canadian Renewable Fuels Association, European Biodiesel Board, Archer Daniels Midland Co., BP Biofuels UK Ltd., Poet Inc. are named in the chamber of industrial biofuel producers, the chamber with the largest number of members to date at 25 members. The United Soybean Board, the National Corn Growers Assoc. and Canola Council of Canada are among members in the chamber for farmers and growers of biofuel feedstocks. Aviation is represented in the chamber for retailers, blenders and transportation industry with Boeing, Delta Airlines and the International Air Transport Association. 
 
 Other chambers include banks and investors, rights-based nongovernmental organizations, rural development and food security organizations, environment and conservation organizations, climate change and policy organizations, trade unions, smallholder farmer organization and indigenous people's organizations. The eleventh chamber includes intergovernmental organizations, consultants, certification agencies, standard-setters and government agencies. The Sustainable Biodiesel Alliance, National Renewable Energy Laboratory and University of California Berkeley are among the members of the eleventh chamber. For a complete list of members, and links to join, <a href="http://cgse.epfl.ch/page77270.html ">visit the RSB Web site.</a> 
 
 As the organization moves towards the new governing structure, the chairmanship recently changed from the head of WWF-Switzerland (World Wildlife Federation) to Barbara Bramble, senior program advisor for international affairs at the National Wildlife Federation. Richard Sykes, executive secretary of the International Petroleum Industry Environmental Conservation Association, serves as vice chairman. Bramble reported in the August RSB newsletter thatseveral board members met with the European Union transportation directorate in July, who encourage the RSB to apply to be recognized for the EU Renewable Energy Directive. "The RSB may well be the first voluntary cerfication system to be so approved, and if successful, would give us a leading role in working out international rules for 'better biofuels' production," she said.

RSB puts indirect effects on hold as process moves forward

Posted September 2, 2009
 
 As more public and commercial fleet managers take steps to green their operations, Ford Motor Co. has responded by making its 2011 line of F-Series Super Duty diesel pickup trucks compatible with biodiesel blends up to B20. 
 
 "We have a fleet advisory board and we go through a very specific process of communication with our customers, and we are always asking them what they are looking for," said Ford spokesperson Anne Marie Gattari. "Biodiesel compatibility kept coming up over and over again and it speaks to fuel economy, it speaks to an environmental solution, and it allows an opportunity for us to advance our technology."
 
 For vehicles currently on the road, Ford, like most all OEMs, has approved biodiesel blends up to B5 so increasing the methyl ester compatibility of its models, regarding emissions compliance, engine components and other specs, required some considerable modifications. "The new 6.7-liter Power Stroke V-8 turbocharged diesel will employ an after treatment system to help comply with 2010 federal regulations to reduce nitrogen-oxide levels in diesel emissions by more than 80 percent compared with the previous standard," the company stated. 
 
 The Ford aftertreatment system for its new clean diesel technology involves a three-stage process. First the exhaust stream enters a diesel oxidation catalyst, which converts hydrocarbons into water and carbon dioxide. NOx is then scrubbed from the emissions after receiving an injection of diesel exhaust fluid and then passing through a selective catalytic reduction chamber, turning the gas into water and inert nitrogen. Lastly, a diesel particulate filter traps any remaining soot, periodically burned off in a process known as regeneration. "The regeneration process sees temperatures in excess of 600 degrees Celsius to burn away soot," Ford stated. 

 
 The volume of models-and fuel sales-represented by Ford's first-place position in the heavy-duty truck market for the past 32 years, and its recent announcement of B20 compatibility, was met with applause by the National Biodiesel Board. 
 
 "Our diesel customer accounts for the majority of our Super Duty sales," Gattari said. "And fleet customers, which often buy hundreds of models at a time, represent the largest percentage of our diesel sales-they wanted biodiesel." Approximately 65 percent of the company's Super Duty sales are diesels. 
 
 "Clearly Ford sees that biodiesel blends will be an important part of our domestic fuel supply, or they wouldn't have invested the resources into approving B20," said Joe Jobe, NBB CEO. "This is an example of an automaker giving consumers more power to be green. A clean diesel engine with a green fueling choice."

Ford's 2011 Super Duty clean diesel engine has been approved to use biodiesel blends up to B20. PHOTO: FORD MOTOR CO.

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Ford announces approval of B20 in Super Duty trucks

Posted September 1, 2009
 
 U.S. Sen. Chuck Grassley (R-Iowa) plans to host two U.S. EPA officials at the 30-MMgy Central Iowa Energy biodiesel plant in Newton, Iowa, this Thursday, Sept. 3. EPA assistant administrator of the Office of Air and Radiation, Gina McCarthy, and EPA director of the Office of Transportation and Air Quality, Margo Oge, were invited by Grassley to visit several Iowan destinations including a family farm, agricultural businesses and the Newton biodiesel plant. 
 
 The purpose of Grassley's invitation was to highlight how EPA policies and regulations impact his constituents in Iowa. Jeff Stroburg, CEO and chairman of Renewable Energy Group Inc., the plant's managing company, and others in the business will discuss the proposed RFS2 ruling with the senator and two EPA officials. 
 
 Many in the industry are calling on EPA to install interim rules to trigger the biomass-based diesel volume requirements sooner rather than later, and to reconsider how the agency negatively views soy-based biodiesel in its faulty indirect land use assumptions. Informal interviews with Grassley will be available. The afternoon will also include a tour of the biodiesel refinery. 
 
 The event is scheduled for 3:00pm on Thursday, Sept. 3, and will be held at 3426 E. 28th St. N., Newton, Iowa, 50208, at the Central Iowa Energy facility. For more information contact Alicia Clancy with REG at (515) 239-8118 or <a href="alicia.clancy@regfuel.com">alicia.clancy@regfuel.com</a>.

Sen. Grassley, two EPA officials, to talk biodiesel at Iowa plant Thursday

Posted September 2, 2009

 
 The latest system for cold soak filtration testing has hit the market, part of a trend over recent months that's seen several companies offering solutions for biodiesel producers to meet upcoming enforcement of new ASTM guidelines. 
 
 Cognis Corp. announced that it has developed two new analysis capabilities for the Quality Trait Analysis (QTA) System for Biodiesel. "While already providing results in two minutes for 14 properties of biodiesel, the addition of the oxidation stability and cold soak filtration tests to the QTA System enables biodiesel producers and buyers to quickly assess the quality of their product," the company stated. 
 
 This helps to reduce inventory carrying costs incurred while waiting on the traditional method of analysis at the same time, improving the throughput of the production facility or distribution terminal. "We are seeing a lot of companies offer their cold soak tests because they see an opportunity to help producers meet new ASTM guidelines," said Raj Mosali of Ohio's Jatrodiesel. 
 
 He added that distillation columns are the best way to meet cold soak requirements and that Jatrodiesel has developed its own testing procedures, and will not be looking to external sources to meet its testing needs. Other opinions were that distillation is very expensive, is not a guaranteed safeguard against sterol fall-through and removes natural antioxidants from the fuel. "It's so expensive and you have to use an oxidative stability additive, so I see distillation as self-defeating," said one producer. 
 
 The problem in the field, according to Mosali, occurs when biodiesel is not blended promptly after leaving a refinery and experiences low temperatures, even if they are above cloud point. "What happens is that the fuel is heated back up before blending and then sterols fall through," he said. Then that material is blended into the diesel fuel and it can contribute to filter plugging.
 
 Megan Nitz, lab director for Prairie Pride Inc., in Deerfield, Mo., said she needed to see repeatability in the test phases of new cold soak products, the sample size and the result range before selecting a cold soak testing platform to meet the needs of her company's facility. 
 
 "The addition of oxidation stability and cold soak filtration to the slate of tests required on each batch of biodiesel significantly increased the analysis time, by as much as 3 days," said Barbara Stefl, Cognis global business director. "With the screening capability of the QTA System for these tests, producers and buyers of biodiesel can have confidence in the quality of the product before the long method is complete."
 
 Since it 2006 launch, the QTA System has conducted over 150 million biodiesel tests for its customers, has participated quarterly in the ASTM Interlaboratory Crosscheck program and recently, has successfully completed an AOCS sponsored round robin of its base capabilities as per the ASTM D6708 requirements.
 

 "The beta versions of oxidation stability and cold soak filtration will be available to existing customers immediately for evaluation," Cognis stated. "The commercial versions will be released during the fourth quarter of 2009."

Cognis launches new cold soak, oxidative stability tests

Posted September 2, 2009
 
 To this business, the feeling of "biodiesel against the world" is not new. But add in the dismal state of finance and the lingering recession, and uncertainty in this industry abounds. I'm asked all of the time, can you tell me something positive about the outlook for biodiesel? My response is usually, how much time do you have? Of course I can. I believe in it, even when others have thrown in the towel far too prematurely. 
 
 I'm a big boxing fan, and it really upsets me when I'm watching a fight and then, all of a sudden, a fighter gets stunned by an unseen punch, his legs get a little rubbery and the referee stops the match even though the shaken boxer never lost the Will to fight. It was a premature stoppage. His hands were up. He was dodging punches and throwing back. He wasn't given a fair chance to come out of it. A true fighter possesses the special drive to pull through either brief moments or prolonged bouts of uncertainty, and never takes a knee or quits on his stool in the corner. Fighters who do this should find another profession. I'm not real big on sports analogies, but the biodiesel industry is that pure-hearted fighter with the Will to go on despite what everyone else believes. ... 
 
 To view the rest of this blog entry and archived F.A.M.E. Forum entries, visit <a href="http://www.biodieselmagazine.com/fameforum">www.biodieselmagazine.com/fameforum</a>.

F.A.M.E. Forum biodiesel blog: Responding to those who see no future for biodiesel

Posted September 8, 2009
 
 In late August, India's Ministry of Petroleum and Natural Gas issued a circular "which virtually bans the sale of biodiesel by producers," the Times of India reported. Sanjeev Gupta, managing director of 50 MMgy Universal Biofuels in the Indian port city of Kakinada was not impressed. "This is not to be taken seriously," Gupta said. "Biodiesel is selling." He further observed that the circular seemed like an intimidation tactic from the state's petrol and gas industries, especially since the petroleum ministry did not have the authority to publish such a statement. 

 
 Gupta didn't seem alarmed or nervous about the document in a telephone conversation with Biodiesel Magazine Tuesday morning, and was actually optimistic about the company's prospects following a recent $3 million shipment from its Kakinada port facilty to its "first large European customer." 
 
 Universal makes biodiesel from palm oil. Prices have been very low for the controversial commodity over the past few weeks-especially with reports of a record U.S. soy crop-and the margins created a consignment opportunity. "This was successfully done," Gupta said. "It's just the beginning." Sales of palm methyl ester from Asia to Europe have seen some action lately because of soft prices. South Korea, Malaysia, and India have all seen deals in recent weeks.
 
 Meanwhile, the situation with the petroleum ministry is improving. "There is a very high-powered committee that oversees the national biofuels policy, attended by the Cabinet Secretary who is the number one bureaucrat in India-so any changes regarding biodiesel have to have complete approval from the government," said Sandeep Chaturvedi, president of the Biodiesel Association of India, headquartered in Mumbai. 
 
 India has promoted the production and use of biodiesel by removing import duties, ending the excise tax on B100 and even giving benefits to blended fuels. In addition, the country has an aggressive jatropha cultivation program, Chaturvedi said, and is creating jobs for the world's second largest population, 25 percent of which live below the poverty line. "It will be a few more years until we see results from jatropha, so we are keeping going with used cooking and industrial oils," he said. "India has a capacity for biodiesel production that is nearly 3,000 tons per day, but we are only operating at about 10 percent of that volume."
 
 The government's biodiesel promotion is part of a plan to respond to a rapidly growing economy that imports 70 percent of its energy. Therefore, India's petroleum companies want to monopolize the marketing of biodiesel now, Chaturvedi said. "Petroleum is a big lobby and they've been historically connected with the ruling parties in France, Germany, the United States. Biodiesel is a small business and we want to stay out of the sights of these sharks."

India's biodiesel industry wants no connection with petroleum after policy scare

Posted September 8, 2009

 
 Construction is nearing completion on an expansion of Global Alternative Fuels LLC at El Paso, Texas, tripling its capacity to 15 MMgy. Global Alternative expects to begin commissioning in early October, bringing the expansion online in November, one month shy of its first anniversary in December. A multi-feedstock plant, Dean Rigg, chief financial officer, said it can use "yellow grease to tallow to soy-depending on pricing." Plans are being made to boost it another 10 MMgy in a couple of years, he added.
 
 <a href="http://srsbiodiesel.com/Home.aspx">SRS Engineering Corp.,</a> Murrieta, Calif., has been contracted to complete the expansion. The company was initially working to build a methanol recovery system and a feedstock pretreatment system for the plant, when its role was expanded to include the two-stage expansion. "Working with the team at Global Alternative Fuels for a second time is a great honor," said Clayton Hawranik, president and CEO of SRS Engineering. "We always appreciate the opportunity to work with clients a second time and take it as a huge compliment to our staff and our state-of-the- art technology. We are looking forward to assisting GAF in creating a strong profitable biodiesel plant."

El Paso plant expands to 15 MMgy

Posted September 8, 2009
 
 Jarmin Kaltsas was making biodiesel for heating a Maine greenhouse when his grandfather told his cousin Dean Sgouros to go see his project. "I was impressed," Sgouros recalled, and the two were soon planning a biodiesel plant. Three years later, the cousins' company, <a href="http://www.mainebio-fuel.com ">Maine Bio-Fuel Inc.</a>, is in production with a 1.5 MMgy batch process at Portland, Maine. Kaltsas is president and Sgouros is vice-president of sales and marketing.
 
 "The system was designed by Jarmin and me," Sgouros said. "We bootstrapped it. The cost is usually around $1 per gallon to build a plant; we built this plant for about half that price using surplus equipment." Sized to match the regional supply of waste vegetable oil, the plant includes a two-stage process with esterification and transesterification and a dry-wash system. "We wanted to create a zero carbon footprint project," Sgouros added. Waste vegetable oil is used to power the process, supplemented with biodiesel that helps to keep the burner clean. By the middle of next year, the cousins hope to be generating their own electricity as well with biodiesel, supplying excess power to the industrial park where the plant is located. "We'd like to make the State of Maine an example of a self-sustaining plant," he said.
 
 The pair anticipates marketing their biodiesel for both transportation fuel and the home-heating market. The plant sits 80 miles north of Massachusetts where a B1 mandate for home heating oil was to take effect in mid-2010. Given the scoring of biodiesel in the proposed rule for the renewable fuels standard, Massachusetts is delaying compliance with that law until the final rule clarifies the situation, Sgouros said. However, he anticipates waste-based biodiesel will have an advantage in that market. 
 

 Sgouros also intends to return to another market cultivated when they first started their project. For a time, the cousins operated a small biodiesel plant at a nearby ski resort making fuel to power equipment at Sugarloaf Mountain. The pair dropped that project to focus on getting their biodiesel plant built, although the ski resort continued to use biodiesel. "I'll be going back to them," he said. "We got them started using biodiesel."
 
 Maine Bio-Fuel is the state's second biodiesel producer.<a href="http://www.greenbeanbiofuel.com"> Bean's Commercial Grease Inc.</a> operates a 1 MMgy plant using waste vegetable oil at Vassalboro, Maine.

Maine's second biodiesel producer comes online

Posted September 9, 2009
 
 <a href="http://www.lakeeriebiofuels.com/">Lake Erie Biofuels LLC</a> has a new name: HERO BX. "HERO BX</a> stands for high-quality biodiesel and that is what we produce everyday using multiple feedstocks," said HERO BX CEO, Leonard Kosar. "In the future, we will utilize our proprietary blending technology to determine what the most efficient and cost competitive second and third generation feedstocks are and add them to our feedstock portfolio. We are not only a biodiesel company, we are a fuel technology company." The company predicts that its use of camelina oil as a feedstock is two years away and algae five years away. "HERO BX is producing superior biodiesel today using first generation feedstocks from waste oil to catfish oil, to vegetable oil, and tomorrow we will add to our feedstock portfolio the most efficient and cost competitive second and third generation feedstocks such as camelina and algae."

 
 Currently producing 45 MMgy at the Erie, Pa. plant, the company plans to expand as it continues to grow its global presence in the biodiesel industry. "We believe in biodiesel and its role for our country in increasing our energy independence and improving our environment," said HERO BX founder Samuel P. "Pat" Black, III. "Therefore, HERO BX will be on the leading edge of an energy revolution that will bring renewable fuels, such as biodiesel, to the American people and to people around the world."
 
 The HERO BX leaders cited President Barack Obama's statement, "The American people are ready to be part of a mission," in describing their mission as a biodiesel producer, technology leader and consumer educator. The company is supporting the new award winning documentary "FUEL" starring and directed by Josh Tickell. The film, launching nationwide on September 18, 2009, engages the viewer in the story of biodiesel and its important role in the world's move to sustainable fuels. 
 
 "Today, the industry is only 10 percent up the technology chain. We haven't even begun to get to algae as a scalable feedstock. With HERO BX's vision, know-how and cutting-edge technology, we're going to be a leader in ensuring the biodiesel industry moves up the technology chain and meets the world's growing demand for biodiesel," said Kosar.
 
 SOURCE: HERO BX

Lake Erie Biofuels becomes HERO BX

Posted September 9, 2009
 
 The American Soybean Association has made it easy for farmers attending a couple of the big farm shows to comment on the U.S. EPA's proposed rule to implement the revised renewable fuels standard (RFS2). Computers were set up for farmers to email comments on the spot at the Farm Progress Show last week, Sept. 1-3 at Decatur, Ill. The ASA leadership, including President Johnny Dodson and First Vice President Rob Joslin, as well as Vice Presidents Randy Mann, Joe Steiner and Alan Kemper were on hand to encourage comments. Members were well-informed about the proposed rule, an ASA spokeman reported, and were glad for the chance to add their comments.
 
 Dodson and executive committee member Steve Wellman will also be available at Husker Harvest Days next week, Sept. 15-17, at Grand Island, Neb. where computers will be available for producers to submit their comments on the spot. 
 
 "The EPA's proposed rule on RFS2 implementation is significantly flawed and would do unnecessary harm to the competitive position of the U.S. soy biodiesel industry," said Dodson, a soybean producer from Halls, Tenn. "A loss of the domestic biodiesel market would significantly decrease prices paid to U.S. farmers for their soybeans."
 

 According to the ASA, the vital flaws and concerns with the RFS2 proposed rule include flawed and immature assumptions and methodology utilized to measure the indirect land use impacts of U.S. soy biodiesel production; unnecessary and onerous feedstock certification requirements; a methodology that contains a major error pertaining to the direct emission calculations for nitrogen in soybean production; a lack of accounting for glycerin as a coproduct; inaccurate assessment of the energy balance of biodiesel; a proposed pathway of using a 52-48 feedstock ratio of virgin to waste biodiesel feedstocks that is not workable in practice; a lack of accounting for improved agriculture yields and efficiency; and a baseline analysis that compares estimated, future direct and indirect GHG emissions for biodiesel to only direct emissions for petroleum. 
 
 "Soybean farmers have a great interest in the implementation of the RFS2," Dodson said. "Unless the flaws in EPA's proposed rule are corrected, soy-based biodiesel effectively will be excluded from the meeting the renewable energy targets established under RFS2. Soybean farmers would lose a source of demand for soybean oil, biodiesel manufacturers would be left without sufficient feedstock supply, jobs would be lost, and our nation would not decrease its dependence on imported oil. None of these outcomes are what Congress intended. That's why ASA is providing detailed comments to the EPA, and why ASA is asking farmers and the agricultural community to contact EPA as well." 
 
 ASA has issued two Action Alerts to its 22,000 producer members directing them to the organization's Web site, <a href="http://www.SoyGrowers.com">www.SoyGrowers.com</a>, where there is a link to the ASA online comment form.

ASA takes computers to farm shows, encouraging comments on RFS2 rule

Posted September 9, 2009
 
 Audi's second clean-diesel offering in a year, the A3 TDI, will hit the streets before Christmas. The company released prices for the new sedan in September preceding a commercial television campaign scheduled to begin shortly, said Bradley Stertz, spokesman for Audi. The suggested retail price is $29,950.
 
 Upon the close of the popular "cash for clunkers" program, which was part of the American Recovery and Reinvestment Act of 2009, Audi reported its second best August sales ever, selling 8,057 vehicles. "It still gave us a bump up, but was less than 10 percent of our sales for the month," Stertz told Biodiesel Magazine. "It actually proved to be a stronger program than we thought going in, but was not a huge impact compared to gains some other manufacturers had. It didn't drag our sales ahead, while some others might suffer a bit of a hangover in September." 
 
 Several clean diesel models had been approved by "cash for clunkers" administrators, but Audi's Q7 TDI was too expensive to qualify. Nevertheless, TDI models still accounted for more than 30 percent of the model's sales figures in July. The number was down to between 18 percent and 20 percent the following month as the company was phasing out 2009 vehicles and preparing to launch the 2010 line early in September. 

 
 The 2010 A3 TDI "delivers the highest highway fuel economy in the luxury car category" at 42 miles per gallon, Audi stated, and is 50-state certified by the U.S. EPA. Audi approves biodiesel blends up to B5 and it hopes to increase that number in the future, Stertz said, responding to a question on whether interest in renewable fuels is a sales driver for the new clean diesel passenger vehicle. 
 
 "We think biodiesel is a great next step and Audi's been urging the government to ensure that biodiesel is more consistent," Stertz said. "When you pull up to a gas station you really never know what you're going to get, so we haven't endorsed more than a B5 blend at this point."

The new AUDI A3 TDI sedan, seen here with the Q7 TDI SUV, is the latest vehicle in Audi's clean diesel production line. PHOTO: AUDI

1787-1294331913.jpg

Audi sets price for A3 TDI clean diesel, reports sales figures

Posted September 9, 2009
 
 Despite the increased use of tallow, rendered fats and recycled greases as feedstocks in biodiesel production, the United Soybean Board has found that soybean oil remains the dominant raw material used by U.S. methyl ester manufacturers. "This demand added up to 25 cents in support of the per bushel price for soybeans," the USB stated in a release issued earlier today. 
 
 The Food Agricultural Policy Research Institute at the University of Missouri says soybean oil will be used as the feedstock for approximately 54 percent of the biodiesel produced in marketing years 2009-13, contradicting many opinions that the industry is not sustainable when backed by beans as the dominant input. 
 
 USB also warned that "a proposed regulation by the Environmental Protection Agency that limits the use of vegetable oils for meeting the draft federal Renewable Fuel Standard" could cause soybean oil's role in the biodiesel industry to decrease by 1.5 billion pounds by 2013, according to the study conducted by Centrec Consulting Group LLC, based in Savoy, Ill. 
 
 Biodiesel production has been virtually cut in half in 2009 compared to the 750 MMgy produced last year, said John Dodson, president of the American Soybean Association. "We are concerned that we have lost a considerable share of the market," Dodson said. "But demand for fuel in general has been way down because of the recession, so it's not just biodiesel. I expect we'll see demand picking up again."
 
 The USB study indicated that demand for soybean oil was outpacing demand for meal, causing a surplus and subsequent price drop for the animal feed. "I don't think that's an accurate statement," Dodson says. "We have a large inventory of unused soybean oil and demand for meal has continued to grow."
 

 Two summaries of the checkoff-funded study, "Soybeans & Biodiesel: Key Price Relationships," and "Economic Impacts of Biodiesel Production on the Soybean Sector," can be viewed on the soybean checkoff Web site at <a href="http://www.unitedsoybean.org">www.unitedsoybean.org</a>.

USB study: farmers received $2.5 billion over the last four years

Posted September 11, 2009
 
 Manitoba is continuing its role as a leader in the development and support of biofuels by becoming the first province to implement mandated biodiesel, Science, Technology, Energy and Mines Minister Jim Rondeau announced Sept. 10.
 
 "Today's announcement of a biodiesel mandate once again reinforces Manitoba's reputation as an innovator when it comes to the development of the biofuels industry," said Rondeau. "Biodiesel will benefit Manitoba's agricultural communities while reducing greenhouse gas emissions by 56,000 tonnes, the equivalent of taking 11,000 cars off the road annually."
 
 "This announcement is great news for our industry," said Royce Rostecki, owner and president of Speedway International Inc., a producer of biofuels. "With the new mandate and incentive, Manitoba is going to become a force in fuel production, no longer relying solely on imported fuels."
 
 Beginning Nov. 1, Manitoba will set a mandate that requires, on average, two per cent biodiesel in all diesel fuel sold in a year, Rondeau said. This will give fuel suppliers the flexibility to deal with cold weather conditions in Manitoba. It is anticipated that five per cent biodiesel blends will be used on a seasonal basis during the warmer months to meet the mandate requirements. The minister added Manitoba will also consider a higher mandate once there is a Canadian fuel standard in place for biodiesel blends above five per cent.
 
 The minister also said Manitoba intends to provide greater support for local biodiesel and economic development opportunities by replacing the current fuel tax exemption with a 14 cent per litre, five-year production grant for both on- and off-road biodiesel produced in Manitoba in the spring of 2010 to help keep Manitoba competitive with incentives offered in other North American jurisdictions.
 
 Manitoba is committed to ensuring fuel quality for consumers, Rondeau said. This announcement builds on a previously announced regulation requiring the licensing of biodiesel manufacturers and the adoption of fuel-quality standards which will help ensure the integrity of the fuel supply.

 
 There are two other biodiesel plants presently under construction in Manitoba. One is located in Arborg and the other in Beausejour.
 
 SOURCE: Manitoba Department of Science, Technology, Energy and Mines

Manitoba biodiesel mandate kicks in Nov. 1

Posted September 14, 2009
 
 The nation's largest independent renderer, <a href="http://www.darlingii.com/">Darling International Inc.</a> has teamed up with <a href="http://www.valero.com/default.aspx">Valero Energy Corp</a>. to apply for a U.S. DOE loan guarantee to build a facility capable of producing over 10,000 barrels per day (135 MMgy) of renewable diesel on a site next to Valero's St. Charles oil refinery near Norco, La.
 
 The two are planning a joint venture to build the proposed facility to convert waste animal fats and waste vegetable oil into renewable diesel. Darling and Valero applied for a loan guarantee from the U.S. DOE $8.5 billion fund for loan guarantees for innovative technologies for energy efficiency, renewable energy and advanced transmission and distribution. Brad Phillips, treasurer of Darling International, said they expect to be competing with numerous applications from solar, geothermal and other new technologies for the loan guarantees. The companies should learn by mid-November if they've made the first cut, with the final awards not due to be announced until early 2010.
 
 "We have long considered various paths that would allow Darling to participate in the country's growing interest in using renewable fuels," Darling CEO and chairman Randall Stuewe said. "We believe that the combination of Darling's ability to provide low-cost carbon-friendly feedstocks and Valero's experience as North America's largest independent petroleum refiner and marketer has the potential to create a sustainable bio-fuel facility geared toward meeting America's growing renewable energy demands." 

 
 Valero is the nation's largest oil refiner that entered the biofuels market this past year with the purchase of seven ethanol plants in the Midwest from bankrupt VeraSun Energy Corp. giving it a combined ethanol capacity of 780 MMgy.
 
 Darling will be making its first venture into the biofuels arena, although it has long been a supplier of tallow and yellow grease to the biodiesel industry. The company estimates it handles around 30 percent of the nations' waste fats and oils among independent renderers, and about 15 percent when the captive renderers such as Cargill Inc., Tyson Foods Inc. and Smithfield Foods Inc. "Many times in the last few years we've turned down offers for long term contracts with biodiesel producers," Phillips said. For some time the company has been studying the biofuels arena and "looking for the right partner," he said. The company is not announcing the technology provider at this time, although Phillips said it will be the type of hydrotreating process that the oil refinery industry is familiar with that has been down-sized into a smaller 10,000 barrel-per-day size.

Darling, Valero apply for DOE loan guarantee 

Posted September 15, 2009
 
 The 63rd International Auto Show in Frankfurt, Germany, started Sept. 15 with several interesting diesel debuts from BMW AG, said Dirk Arnold, BMW product communications manager. 
 
 BMW only has two diesel models offered in the U.S.-the X5 xdrive35d and 335d models-but the automaker has a wide portfolio of compression motors available in Europe. Earlier this year, BMW announced the introduction of a 3.0 liter twin turbo diesel engine and is introducing the 740d in Frankfurt for sale in 2010, along with the 320d Efficient Dynamics Edition, which emits only 109 grams of carbon dioxide per kilometer. "We have several new diesel offerings in Europe, where they are selling quite well," Arnold said. 
 
 The BMW Alpina line is showing the D3 Bi-Turbo in Frankfurt, featuring a 2.0 liter, four-cylinder turbo-charged diesel engine with an aluminum block, even though less than 2,000 of these cars are made annually. 
 
 Receiving a lot of attention is the Vision Efficient Dynamics concept car. This futuristic vehicle is a diesel hybrid plug-in, but costs a fortune to make. The powertrain provides acceleration to 100 kilometers per hour in 4.8 seconds, and its average fuel consumption is near 62.6 miles per gallon, BMW reported. "This is a very far look into the future," Arnold said. "Maybe this would be possible for production with some completely new diesel engine or other new technology, but for the next five years the advantage of combining diesel and electric systems is relatively low compared to the tremendous cost." 
 
 One of BMW's brands, the popular sports hatchback Mini, is entering the diesel market with a new model being presented in Frankfurt. "The broad range of new models is being rounded off by the world debut of the Mini One D, a new entry-level diesel consistently upgrading the Mini portfolio of particularly economical and efficient models," BMW said. 
 

 "Engineers have been working continuously with the technical aspects of biodiesel, and blends of seven percent to 12 percent work in our motors with no problem at all," Arnold told Biodiesel Magazine on the opening morning of the show. 
 
 The German Association of the Automotive Industry (VDA) hosts the Frankfurt Auto Show and said it expects nearly 750,000 visitors at the event. This year, VDA focus is on recovery from the financial crisis and environmental sustainability, including the production of clean diesels. "These are just some of the new models that will already be on our roads in the coming months," said Matthias Wissmann, VDA president. "And most of them feature surprisingly low fuel consumption and amazingly low CO2 emissions."

BMW presents new diesels at Frankfurt Auto Show

Posted September 16, 2009
 
 An Ohio partnership has declared U.S. Route 33 from Columbus, Ohio, to the Ohio River a Biofuels Corridor. Non-profits Rural Action Inc. and Clean Fuels Ohio along with Hocking College Energy Institute are promoting the use of biodiesel along the highway corridor. The objective is to have at least six retail biodiesel fueling points and buses from at least three school districts using biodiesel along the four-county route. Part of the initiative to inform potential suppliers and users that Ohio has grant money available for both biodiesel dispensing stations at the retail level and for the incremental cost difference between petroleum diesel and biodiesel for K-12 school buses.
 
 Rural Action volunteer Robin Kinney said he has been meeting with business, school districts and government agencies that could dispense or use biodiesel, inviting them to attend an Oct. 23 workshop to learn more about biodiesel use and the details of available grants. "What I'm finding with retailers is that so many are corporate owned. Making calls to corporate offices can be a challenge," Kinney said. In one visit to the offices of a grocery store chain with fuel pumps, he said a manager in the meeting spoke up to say all of his vehicles were diesel and he used biodiesel whenever possible. That spontaneous endorsement seemed to motivate the staff to work through the corporate hurdles. "I'm hoping Kroegers will be part of the corridor," he said. In visiting with school districts, he added, some are already using B20 as part of the state program. With several biodiesel producers in Ohio, Kinney added, "Some school districts are telling me that they're buying biodiesel cheaper than diesel."
 
 "We see this as a big advantage for biodiesel producers and farmers," Kinney explained. "That's why we consider it sustainable." <a href="http://www.ruralaction.org ">Rural Action</a> seeks to build model sustainable development projects in its mission to foster social, economic and environmental justice in Appalachian Ohio. <a href="http://www.cleanfuelsohio.org">Clean Fuels Ohio</a> is a statewide non-profit dedicated to promoting the use of cleaner domestic fuels and efficient vehicles. <a href="http://www.hocking.edu/energy-institute">Hocking College Energy Institute</a> is a state college with technician training programs in several alternative energy technologies.

Biofuels corridor promoted for Ohio Route 33

Posted September 16, 2009

 
 <a href="http://www.evercatfuels.com/Default.asp">Ever Cat Fuels LLC </a>announced its plant in Isanti, Minn., is officially in operation as of Sept. 11. "We believe this is a major step towards energy independence in the United States," said Clayton McNeff, chief science officer. "This commencement of plant operations on Sept. 11, eight years after the horrific attacks on America perpetrated by terrorists, is especially meaningful as we honor those whom were lost on that dark day in history." 
 
 The opening of the 3 MMgy plant marks the commercialization of a new biodiesel technology dubbed the Mcgyan process after its founders. Using no water or chemicals and producing no waste products, the conversion takes seconds in two reactors that are 6 feet tall by 6 inches in diameter. 
 
 A grand opening is scheduled for Sept. 28. In its announcement, Ever Cat Fuels said it plans to further expand the facility to 33 MMgy in the next three years.

September 2009

Business Briefs

BusinessBriefs: Companies, Organizations & People in the News

Columns

The Power of One

Two Conflicting Messages

Featured

Future Destinations

A Need for Discovery

The View from Big Oil's Height

New Systems and Strategies

September 2009.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Business Briefs

BusinessBriefs: Companies, Organizations & People in the News

Columns

The Power of One

Two Conflicting Messages

Featured

Future Destinations

A Need for Discovery

The View from Big Oil's Height

New Systems and Strategies

September 2009