Bringing in the biomass for cellulosic ethanol

Building a supply chain from scratch demands attention to detail and high agricultural IQ. This article appears in the October issue of EPM.
By Susanne Retka Schill | September 14, 2015

A multitude of questions surround the challenge of bringing in the mountains of biomass needed to feed a commercial-scale cellulosic ethanol plant: Are crop residues a reliable resource? Will farming communities support the development of this new supply chain? Will farmers make long-term commitments? Pacific Ag and Genera Energy Inc., both with roots outside the Corn Belt, bring different perspectives to these questions.

Pacific Ag has two decades of experience harvesting forages and crop residues in the Pacific Northwest, exporting to Japan and Korea. The company describes itself as a service provider, aiding farmers with residue management while providing consistent feedstock quality and supply to customers.

Genera Energy’s roots are in the Tennessee state government and university initiative to create a comprehensive and integrated switchgrass-to-ethanol biofuels project that resulted in partnering with DuPont to build a demonstration facility in Vonore, Tennessee. Genera Energy spun out from those early efforts, launching in 2012 to pursue commercial biomass supply business opportunities. While working on equipment optimization and logistics strategies, Genera Energy has also focused on supply-chain modeling aimed towards just-in-time supplies of both energy crops and residues.

Genera Energy’s chief operating officer Keith Brazzell cautions that, for many, being dependent upon a single feedstock could be a trap—be it corn stover or miscanthus. “It’s one thing if you’re in the middle of Iowa and thousands of acres of corn and if somebody’s corn doesn’t come in, you can get somebody else’s,” he says. Furthermore, relying upon crop residues requires large storage yards for a year’s worth of stover or straw. “We’ve spent a lot of time on what crop mixes work out for just-in-time supply,” he says, adding there is a place for some inventory. Generally, baling grain crop residue requires a compressed harvest window to meet the farmer’s need for fall field work. Looking at other crops provides multiple harvest windows throughout a season. A biomass sorghum might be harvestable in July and could stand for several weeks, Brazzell says. Switchgrass that goes into dormancy in the fall has a long harvest window while the spring harvest of winter cover crops could fill another time frame. Energy crops can also greatly reduce the number of acres needed to supply a biorefinery. While corn stover is reportedly yielding between 1.5 to 2.5 tons per acre, Brazzell points out, grass can yield 8 tons and a biomass sorghum even more at 10 or 12 tons per acre. Winter cover crops could supplement as well, with biomass yields around 3 tons per acre, he says.

Genera Energy has been working on modeling the mix of crops and related factors to meet the feedstock needs of a biorefinery. The database being built will be useful for contingency planning and adjusting to changing conditions. “One of the worst things you can do is build a 20 or 30 million gallon plant, and run out of biomass,” Brazzell says.

While working with a mix of feedstocks addresses the risks associated with relying upon a single residue, the time and cost associated with establishing perennial energy crops raises another issue—the need for long-term contracts. “Once you invest in the establishment of a perennial crop, you cannot afford to have that land go away three years later because somebody sells it out from under you,” Brazzell says. Most farmers are in their upper 50s and many are 70 years or older, he points out. “You have to think long-term leases and what happens as it passes from one generation to the next.” In interviewing landowners, they have found while some are not willing to enter into five- or 10-year leases, others are. “It’s harder to get a row-crop farmer to tie up his land long term, and that’s not best utilization anyway. His land might be better for biomass sorghum,” he adds. Perennial crops are more appropriate for underutilized land, perhaps reclamation acres, land coming out of conservation or unused pastureland.

Pacific Ag takes a different approach. While the company strives to build long-term relationships with farmers, Harrison Pettit, vice president corporate development, says they don’t ask for long-term agreements. “Our belief is that growers need to feel that they are not locked in, or backed into a corner,” he says. “Conditions change. It’s better that growers have the psychological parachute.”

Managing Residue
Pacific Ag has built its business around providing residue management services for growers. A large part of bigger yields in wheat and corn crops has come through higher plant populations, Pettit points out. “That means as grain yields grow, so does the amount of residue per acre.” Managing the residue by removing some of it eliminates the need for multiple field passes to incorporate the residue, saving fuel, time and equipment. Removing some residue can also mean easier planting and better emergence for the next crop, improving yields the following year.  “And we’re paying them something,” Pettit adds.

For a business based on offering residue management services, Pacific Ag had a challenge on its hands when it took on the contract to supply Abengoa’s cellulosic ethanol plant in southwest Kansas—the region was in the middle of a multiyear drought. “It was a matter of being very selective on which fields were harvested at all,” explains Pacific Ag’s vice president of supply Steve Van Mouwerik. “And all of them were harvested much more lightly, because it really is all about what you leave and not what you take.” Starting in the teeth of the drought meant starting slowly and spending the time with growers, he continues, “giving them an opportunity to decide for themselves if they like what you’re doing, the timing of what you’re doing and how it fits with their cropping schedule. It’s going to be different for someone who plants corn-on-corn versus someone who is rotating between corn and wheat or corn and soybeans or milo.” This year, the area is experiencing more than double the normal rainfall, and with it, no shortage of residue. After experiencing both extremes, he adds with a chuckle, “We’re looking for five normal years.” 

Areas like southwest Kansas, in or near cattle country, are familiar with baling straw and stover for feedlots, and it’s a good base to build upon, says Van Mouwerik, but there are big differences. The legacy model, which people are used to, alternates between harvesting little or nothing and, the next year, harvesting everything possible due to high demand for forage supplies. “When you have consistency of demand, you can really settle down to growers seeing a consistency of residue management.”

One lesson learned in building the supply shed for the Hugoton, Kansas, project is that the ideal 20- or 30-mile supply radius around a biorefinery can’t be the initial target. “What you really are mapping, when you first go in, are the early adopters, the innovators in the community,” Van Mouwerik says. “You went where the people who wanted to try something new were located and what you did with them was watched by the neighbors.” The following year, the innovator would be adding fields and the neighbor would give it a try. “We learned the speed of success was really relying on how we could create experiences that could be viewed and talked about. That provides you with your growth curve and supply.” 

Payments to growers do not reflect the distance from the biorefinery, he adds, reflecting the fact there are other markets for the residues, typically dairies and feedlots. As the supply fills in closer to the plant and demand becomes more consistent and the market matures, he adds, a distance-based discount evolves. Growers also begin to quantify the benefits of residue management. In the two decades of working in the Pacific Northwest with grass seed growers, harvesting and shipping the residue to Japanese markets, he watched the market mature. “When growers saw it wasn’t going to be hot and cold, they settled down. The pricing came to reflect the avoided costs that they had in their entire farming operation, the distance it was from a point of demand, and the benefits that they were enjoying. It takes time to mature those dynamics in the stubble fee or the biomass feedstock markets.”

Another big difference from the legacy forage and bedding markets is in quality. The traditional markets have much higher tolerances, and there’s a “go-along and get-along” framework that defines that activity, Van Mouwerik says. Equipment operators recruited from the traditional baling operations quickly learn the ropes of meeting higher quality demands. Good communication is needed to meet the growers’ needs, while helping them understand the end user’s needs.

Moisture levels are well understood, and not much different for biorefineries than other markets. Ash content is a greater concern for biorefineries, however. “We have operating rules of thumb, so that [equipment operators] run their equipment and heights and speeds on fields with different types of soil such that they’re minimizing the amount of ash that’s in the bale,” Mouwerik explains. 

National Footprint
In expanding its residue management business from the Pacific Northwest into the High Plains, Pacific Ag is pursuing a national footprint. “The fall corn harvest is the big harvest season,” Van Mouwerik says, “but you need to find complementary harvest windows and products that will keep equipment and human resources operating.” The Pacific Ag team has followed the custom combine crews north, even into North Dakota, to supply dairies, feedlots, mushroom operations and other emerging markets. The company is finding that as end users realize they can count on consistent supply and quality, more markets develop. Plus, it gives market options for varying conditions. For example, moisture-damaged wheat straw that won’t meet specifications for an ethanol plant might work well for a mushroom customer, he says. “It makes it more resilient and lower cost for everyone when you have a number of markets pulling their quality out of the pile,” he says.

“Six years ago, when we began this, we saw how to connect the dots, but we had to go prove it to ourselves and it’s proving true.” End users of residue have struggled with a fragmented supply base and inconsistency. “We see there’s strong demand for the kind of quality control and logistics, reporting and reliability of supply that isn’t so hyper local that it’s hard to have clear supply profiles,” he says.  And, in working with end users, Pacific Ag provides the agricultural IQ to help them understand and adapt to growers’ needs.

Similarly, says Van Mouwerik, “As growers experience residue management provided on a consistent basis that is only made possible by steady demand from cellulosic ethanol plants like DuPont and Abengoa and Poet, they will begin finding opportunities in their operations that will help them achieve lower costs, new cropping opportunities.”

He cautions against being too hasty to judge the emerging biomass supply chain. “What we’ve signed up for is to go on a journey where we all learn how to take advantage of a completely underutilized slice of a crop or family of crops,” he says. There will be opportunities when growers and users learn how the new crop mixes will complement each other, and their operations. “We’re going to learn a lot together in the next five or 10 years.”
Author: Susanne Retka Schill
Senior Editor, Ethanol Producer Magazine