SIRE navigates ‘uncharted territory’ of COVID-19, falling prices

By Erin Voegele | March 18, 2020

The COVID-19 pandemic is not only causing illness around the globe, it is also spurring unprecedented business and economic disruptions. For those in the ethanol industry, the pandemic is the latest factor bringing additional uncertainty to a year already plagued with problems associated with low margins, weather-related feedstock production issues, a trade war and lost demand due to the U.S. EPA’s misuse of small refinery exemptions (SREs).

The pandemic is also lowering demand for liquid fuels and helping fuel an oil war that saw Brent crude fall to $24.88 per barrel on March 18, a nearly 20-year low. Ethanol prices are also falling to historic lows, with prices reaching to as low as 94 cents earlier this week.  

To help limit the spread of COVID-19, federal, local and state governments have taken steps to shut down schools and other intuitions and are asking people to practice social distancing and work remotely where possible.

Mike Jerke, president and CEO of Southwest Iowa Renewable Energy, spoke with Ethanol Producer Magazine on March 18 to discuss ways in which his company is working to help flatten the curve of the COVID-19 outbreak while protecting employees and ensuring plant operations can continue.

SIRE, a 130 MMgy ethanol plant located in Council Bluffs, Iowa, has been in the national spotlight in recent years, most notably when President Trump visited the facility in June 2019 to celebrate the approval of year-round E15 sales.

Jerke said SIRE began putting together a task force focused on COVID-19 on March 9. A case of the virus was reported over the previous weekend in Fremont, Nebraska, a community approximately 45 miles west of Council Bluffs. On March 8 local officials announced Fremont schools would be closed for two weeks. “That really caught our attention,” Jerke said. “Granted, that’s not our immediate community, but it’s pretty darn close.” SIRE began considering how its employees would be impacted if similar closures were made in Council Bluffs and surrounding communities.

Staff meetings had already been scheduled for the week of March 9. Following the task force meeting, the company put together a few slides on the coronavirus, including information referring employees to the Center for Disease Control website. Jerke said the slides also talked about the “very evolving plans” the company was making relative to what additional measures it needed to take. “We increased our cleaning regimens with the outside group that comes into our facilities,” he said. “We added additional hand sanitizer stations throughout the plant and the admin office, and we started to think about the minimization of contact—specifically for our operations folks and visitors or people outside our company.”

Jerke noted there is a clearer path to social distancing for those who work in administration positions, as many can work remotely. “In the manufacturing setting, we need the people to be here in order to do the work,” he said. “So, we changed our procedures for visitor access and are trying to isolate our operations team from direct contact with visitors.” That includes contractors that work onsite at the ethanol plant, Jerke said, but noted various hot work permits and lockout tagout procedures still have to be performed.

Regarding school closures, Jerke said SIRE has asked anyone who has been impacted with children at home to let the company know so they can help find necessary solutions. “Starting today, the admin group has gone to a week here, a week away work schedule,” Jerke said. As a result, admin staff will rotate in an out of the office, with 50 percent of the admin workforce working offsite at any given time.

“Our major concern is a positive [COVID-19] case amongst our team members and then dealing with the required 14-day quarantine for those that might be [exposed],” Jerke said, explaining that a single positive COVID-19 test result would likely impact the entire shift associated with that employee. “The plant manager has a complete roster of everybody that works for the company and has been going through to identify skill sets and how different people could be slotted into different places as needed,” Jerke said.

“It’s becoming a worn phrase, but truly, we are in uncharted territory here,” Jerke added. “I can remember 9/11 and the impact that caused and the significant ripple through the economy.” From an economic perspective, Jerke said “it looks like [the pandemic] is going to make that pale in comparison.”

Jerke also discussed the margin collapse that is plaguing the industry. “The margin collapse, which is continuing today, has the whole industry’s attention and people are governing themselves accordingly,” he said. “We’ve put a plan in place and we’re currently operating at reduced rates. I’ll leave it at that, but am anticipating additional measures as we see this unfold.”

If Congress moves to soften the economic blow of COVID-19 to the energy sector, Jerke said they ought to consider extending the same type of relief to those in the biofuels industry. He also highlighted the current importance of industry advocates. “We are very grateful for the advocates that we have in the various associations, as well as our elected officials,” Jerke said. “They continue to remotely engage on our behalf, because right now what is going on is requiring all of our focus at the plant level.”

While SIRE continues to work through the same issues that are impacting everyone in the ethanol industry, Jerke said the company is also “clearly concerned about our friends and neighbors in the community and what the impact of this is having on people in general. It looks like it’s going to be a slog and it’s heartening to see people pulling together to work through this thing.”

Ethanol Producer Magazine is working to provide our readers with ongoing, relevant coverage of the impacts the COVID-19 pandemic is having on the biofuels industry. If you have a story you’d like to share, please email Erin Voegele at evoegele@bbiinternational.com.