N.D. continues expansive biofuel infrastructure build-out

By Kris Bevill | June 08, 2011

North Dakota is poised to continue its impressive expansion of biofuels infrastructure with the continuation of a program to encourage the installation of retail ethanol and biodiesel fuel pumps.

Originally established in 2009, the state’s Biofuels Blender Pump Program offers rebates to retailers who install ethanol blender pumps and/or biodiesel pumps. The initial program was allotted $2 million, half state funds and half federal, to provide retailers $5,000 for each biofuel pump installed, capping at $40,000 per retail site. (See EPM’s previous article, “Blending to the Top,” for a history of the program.)    The program was scheduled to expire in May, but earlier this year the state legislature approved a carryover of $740,000 in state funds and extended the program through April 2013.

The newly extended program includes slight modifications designed to better assist retailers in the installation of biofuel systems. Retailers may still receive $5,000 per pump installed, but the cap per site has been reduced to $20,000. However, the state is now also offering to cover half of the cost of installing underground storage tanks and piping systems, up to $14,000 per site. The original program did not allow funding to be used for those purposes. Andrea Holl Pfennig, the state administrator for the blender pump program, said legislators included this modification in order to provide the best assistance possible where it is most needed. “There was a concern that some of the stations were not able to participate because their tanks and piping needed to be updated, and that can be a very significant cost,” she said. “A lot of stations can easily be looking at $100,000. This is just a small way to help them with that.”

The North Dakota Corn Council is also chipping in to help the state expand its infrastructure. The council played a significant role in establishing the initial program in 2009 and agreed to contribute an additional $2,500 to retailers for each pump installed. It also modified its rebate program beginning in May. The council will continue to provide $2,500 per pump for up to four ethanol blender pumps at each retail site but for the ambitious retailer who decides to install even more pumps at a location, the council will now provide $5,000 per pump for pumps five through eight. Pfennig said grant money from the USDA’s Rural Energy for America Program could also be applied on top of the state assistance, which would further reduce retailers’ costs.

It’s been less than two years since North Dakota’s incentive program was launched, but the state has already experienced expansive growth in biofuels infrastructure and as a direct result has also seen a tremendous upward trend in ethanol sales. Prior to the program’s launch in 2009, no blender pumps were located within the state. It now has more blender pumps than any other state in the country. As of early June, Pfennig said the state has provided reimbursements for 137 ethanol pumps and 11 biodiesel pumps. Another 116 ethanol pump and eight biodiesel pump applications were pending. Data compiled by the American Lung Association showed first quarter ethanol sales in North Dakota totaling 261,516 gallons, nearly equal to the entire year’s ethanol sales in 2009. Tom Lilja, executive director of the North Dakota Corn Council, said the statistics prove the absolute necessity for biofuels infrastructure to be expanded. “It really is all about the infrastructure,” he said. “If you don’t have the pumps, you’re not going to get the results.”

Pfennig said the initial goal of the blender pump program was to install 400 biofuel pumps throughout the state. It’s difficult to predict the number of pumps that could be installed as a result of the extended program because state officials aren’t sure how many applications they’ll receive for storage tank assistance, she said. Money for the program is not earmarked for either application, so the state will continue to review and approve applications for pumps and/or storage tanks on a first-come, first-serve basis. “The overall goal is to increase the use of biofuels, so we definitely want to get as many pumps as we can,” Pfennig said.