"Industry consolidation" is a buzz phrase we're all becoming quite familiar with. 
 	
 For the better half of the last decade - but largely emerging in the last two years - talk of ethanol industry consolidation has made its way into ethanol conferences, workshops and boardroom meetings across the nation. We've heard the presidents and CEOs of the industry's best known companies say things such as, "We must become less fractionated. . . We have to consolidate if we want to expand."
 	
 Just last summer, for example, Ron Miller, president of the recently sold-off Williams Bio-Energy, told EPM, "To make (the industry grow to a point where ethanol accounts for three to four percent of the nation's fuel supply), I think we need more consolidation. . . Right now, we basically have eight major oil companies in the gasoline business - these companies don't want to deal with two dozen ethanol suppliers. They can, but they would prefer not to. . . So I think we will continue to see more farmer-owned ethanol plants consolidating in order to sell their products through channels in the most efficient and profitable manner they can." 
 	
 On the surface, statements like these seem rather self-explanatory: team up, pool resources, and the industry will become stronger. One industry leader simply defined consolidation as independent plants forming alliances to market products and services. 
 	
 Sounds like a definition out of Webster's New World Dictionary, but is it really that simple, or is there a flip-side to the concept - and implementation - of industry consolidation. What's at stake, and who benefits? 
 	
 These questions may be difficult to answer today. After all, the industry is just beginning to consolidate, and it's hard to say how far it will go? But one thing's for sure - it is happening, and there will be consequential effects. 
 
 Synergies Increase Efficiencies, Market Share

 "The trend towards consolidation in the ethanol industry began in the mid-1990s coinciding with the onset of the smaller-scale, farmer-owned, dry mill ethanol plants," said Bill Lee, general manager of Chippewa Valley Ethanol Co. (CVEC) and a co-founder of Renewable Products Marketing Group (RPMG), a coalition of Minnesota ethanol producers that have banded together to sell ethanol. 
 	
 Lee continued, "Most of the operating farmer-owned plants have aligned themselves with one of three marketing blocks. These three marketing blocks represent the number two, three and four volume marketers of fuel ethanol respectively." 
 	
 Lee said many of the forces that have created today's level of consolidation in fuel ethanol marketing are the same that have driven consolidation in other capital-intensive industries, including the oil refining industry. The primary drivers are creation of synergies to increase efficiencies and the quest for market share, he said. 
 	
 One ethanol industry-specific factor in marketing consolidation, Lee explaind, has been the powerful influence of equity participation by ethanol marketers in the (equity) selection process. "With the proliferation of new plant capacity and expected lowering of margins, marketers appear to be less willing to make this type of investment now than in the previous two years," Lee told EPM, adding, "In some cases, the lenders have also influenced new farmer-owned boards to select a particular marketer to reduce perceived risk." 
 
 Not Just Ethanol & DDGS
 Consolidation is not confined to just product marketing. 
 	
 More and more, ethanol industry leaders are advocating the consolidation of plant management, services, maintenance, supplies, risk management, chemical and enzyme buying, and just about every other facet of the business. 
 	
 "Consolidation will continue in all those areas (listed above)," Lee said. "Although, all opportunities are not equal in terms of benefit or applicability. I believe that product marketing consolidation should - and will - continue as the market and the total number of producers grows. Plants within marketing groups will continue to realize financial benefit from pooling their chemical procurement and reducing maintenance costs by sharing parts." 
 	

 For many plants, management of the facility and risk management are, of course, areas where the owners desire to maintain local control. 
 	
 "I believe these will be areas that never fully consolidate," Lee said. "Although, an extended environment of tight margins will push more plants this way." 
 
 Is it a Risk to the Farmer-led Movement? 
 With the emergence of the so-called "strategic alliances" in the ethanol industry, comes the inevitable consolidation of larger marketing blocks. Ethanol industry leaders acknowledge that such alliances may be a way for smaller groups to function as a larger entity while retaining critical cultural or governance features of the small group. "This may be an attractive alternative for consolidation although groups may find it a difficult balancing act to achieve both objectives," Lee said. 
 	
 Dave Vander Griend, CEO of ICM, Inc., a leading ethanol production process-technoolgy provider and plant builder, said, "Strength is always in numbers. . . The buying and selling power of the alliance will generally out perform the individual facility. Having said that ownership of the facilities can and should remain with the investors that have made the financial commitment to the project."
 But can all this consolidation threaten the farmer-led movement that ethanol is so well known for? 
 	
 "That depends," Lee told EPM. "The ethanol industry's farmer-owners are painfully aware of the many examples of producer cooperatives that achieved initial success only to grow into self-perpetuating 'corporate' entities that over time forgot who the owners were. In this sense, 'corporatization' (a term EPM used in the interview) means a weakening of owner governance - not a desirable development." 
 	
 Vander Griend added, "This industry, as any other, will continue to become more competitive as more capacity comes on line. Low cost producers will be the survivors for the long run and the independent plants that go it alone will be at a disadvantage. . . Farmers have joined together to add value to their grain and, likewise, ethanol plants will need to join together to add value to their products."
 	
 In terms of creating "threat to the farmer," Lee said, the biggest threat is a lack of options. 
 	

 "In terms of product marketing decisions, farmer-owned ethanol plants have choices right now," he said. "They may choose to align with a turn-key management/marketing service provider, a fee-for-service-based marketer or a cooperative-based marketer where the plant is an equity holder in the marketing company. Each plant must decide which approach to take based on its need for control and involvement and its appetite for risk." 
 	
 However, Lee said, the term "corporatization" isn't always a bad thing.
 	
 "This term could also mean an improvement to the technical and business competencies of a group of plants (sharing of higher skilled specialists), development of improved industry standards, performance benchmarking or one of many other positive developments," he said. "Such 'corporatization' would help to accelerate our young industry along the maturation curve." 
 
 Petroleum Industry's Role 
 Another topic of consideration is the role that oil companies will continue to play in the ethanol industry's consolidation trend. 
 	
 In balance, industry consolidation should benefit the ethanol industry's primary customers - the petroleum and gasoline refining industry. But to what extent? 
 	
 "I believe that the petroleum industry would benefit in the long run by a stable ethanol industry that can supply the need for their fuel blending program," Vander Griend said. "Price and Supply volatility is detrimental to both sides and will not help develop the trust needed to grow the market to match the supply. ICM is working on a program that will provide the proper balance of plant independence and industry interdependence that will help this industry compete in the marketplace."
 	
 Lee added, "On the surface, 70 separate ethanol marketers would appear to offer the most shopping alternatives for the customer. In practice, however, this would be cumbersome and inefficient." 
 	
 According to most ethanol marketers, oil companies would like to work with just a few select ethanol suppliers. They need these suppliers to be large enough to meet their needs for reliability and volume. 

 	
 "They need competitive pricing which larger marketers can help provide," Lee said. "They also need suppliers who have the delivery and logistical flexibility to meet their needs in a rapidly changing regulatory environment. . . In my opinion, these needs can only be effectively met by consolidated ethanol marketing organizations." EP

Strategic alliances seem to be prevailing in every facet of ethanol production and marketing. Who does it benefit? What might it threaten?

How is Consolidation Shaping the Industry?

The story of Utica Energy, LLC - formerly known as Algoma Ethanol - is a three-year chronicle of an embattled ethanol project that persevered, and discovered acceptance in a small Wisconsin town. It's the story an ethanol project that overcame construction delays and triumphed over legal battles, only to be built on schedule, and nearly on par with new ethanol plant construction records. 
 	
 Most importantly, though, the story of Utica Energy is an account of persistence that future producers can use as a source of guidance and encouragement. 
 	
 But before that, beyond the politics and legal wrangling, lies a wonderfully designed ethanol plant, a small 20-mmgy corn dry mill, that is producing at nameplate capacity and set up for expansion when demand - and better prices - come calling.
 	
 The plant, located in Winnebago County near Oshkosh, is the third ethanol plant online in Wisconsin, and the 73rd operating ethanol plant in the United States. The plant will eat eight million bushels of corn and, in addition to ethanol, produce 175,000 tons of distillers wet grains annually. 
 	
 The plant, which came online in early May, was built by Agra Construction out of Merrill, Wisconsin, utilizing a process design from Delta-T Corp., of Williamsburg, Virginia. Utica Energy is using Eco-Energy, Inc., of Franklin, Tennessee, to market its ethanol. 
 	
 "We are very pleased with the smooth start-up of the plant," said Paul Olsen, president of Utica Energy. "The local dairies and livestock feeders are extremely pleased with the new source of high-protein wet distillers grains. And we are pleased to provide a new high-value market for local corn farmers. The ethanol plant is just the start of several value-added ventures that will benefit the local agriculture economy (in Wisconsin)."	
 	
 As Utica Energy reached nameplate capacity last month, Renewable Fuels Association President Bob Dinneen congratulated investors that made the project come to life. "We congratulate Utica Energy on the startup of another state-of-the-art ethanol plant in Wisconsin," he said. "Wisconsin is a large consumer of ethanol-blended gasoline. Producing more ethanol in-state equates to more local jobs and less money headed out of state. Further, the livestock industry in Wisconsin dovetails perfectly with an ethanol plant's high-value feed coproducts. Being able to sell wet distillers grains locally will give Utica Energy a competitive advantage."
 
 New Home, New Name

 Amid the praise Utica Energy has received during its startup, it is hard to believe that it all didn't happen easily. To the contrary, it was an extraordinarily hard-fought battle won in small, incremental stages. 
 	
 In 2001, Olsen and a small group of investors tried to site the plant in the township of Algoma, near a grain storage facility owned by Olsen. However, the township's zoning officials would not grant the investors a permit to build and the project was moved a mile and a half away to its current site near Utica, where Olsen predicted, and found, more support. Then, after getting permission to build at the current site, a misguided, but persistent, coalition calling themselves "Stop the Ethanol Plant Now" sued the local zoning boards for their role in approving the project. 
 	
 "The group investigated how the Utica board passed the permitting and claimed it was not done properly," said Bob DeBlois, the plant's production manager. "They said spot zoning protocol was not followed."
 	
 The debate ended up in court, where a district judge agreed with the protestors and deemed the permitting decision "null and void," according to DeBlois. The plant, which was already under construction, came to a stand still. Quickly, however, the state's court of appeals gave the project permission to keep building and the plant was, once again, on track. On April 18, 2003, the state court overturned the judge's decision and the protestors publicly called it quits. 
 	
 The project's original name, Algoma Ethanol, LLC, was legally changed to Utica Energy, LLC on May 7. According to DeBlois, it simply did not make sense - logically or politically - to keep the name "Algoma Ethanol" after everything the project had been through.
 
 Leadership & Vision 
 Utica Energy is owned primarily by Paul and David Olson, brothers from the Watoma, Wisconsin, area who own several grain facilities around the state and subsequently handle grain procurement for the plant through their company, Olsen Mills. 
 	
 A second set of brothers, Jim and Bob Propratz, are also highly invested in the project, along with several investors with lesser stakes in the project. The project was initially organized by Paul Olsen in 2000 as ethanol production was just being introduced in Wisconsin.
 	

 Two years after conceiving the plan, through some turmoil and protest, the project continued to advance and in May of 2002, partnered with process-technology provider Delta-T Corp., and a local outfit, Agra Construction, to build the plant. 
 	
 Although Agra Construction is not yet well known as an ethanol plant builder, the contractor is well respected in Wisconsin and has a good track record, DeBlois said. 
 	
 Tim Gruling, senior project coordinator with Agra Construction, said the company has worked on several ag-processing projects in the past and had been a sub-contractor on the ACE Ethanol, LLC ethanol plant near Stanley, Wisconsin. 
 	
 "That's where we got our feet wet," Gruling said. 
 	
 According to everyone involved with the project, Agra Construction handled the project very well, and once construction delays had ended, "things got rolling very smoothly," DeBlois said.
 During peak days of building, Gruling said, Agra Construction was managing about 130 people on site. "We use as many local contractors as possible," he said, adding, "About 98 percent of the people working on the plant were (from the area)." 
 
 Delta-T Process Technology 
 Wayne Wajciechowski, senior project manager for Delta-T, said Agra Construction stuck to an "aggressive" timeline and made excellent progress under tough circumstances. 
 	
 "If it hadn't been for certain obstacles," he said, "they would have broken some records. It was an excellent project and one of the quickest startups I have ever seen. Very smooth. . . A great team effort."
 	

 Delta-T, which built and expanded Chippewa Valley Ethanol Co. (CVEC), in Benson, Minnesota, and other plants, designs many of its ethanol plants more spaciously than some builders - upon request of the client - in order to allow for easy expansion. Utica Energy could, and likely will, be expanded to 40-mmgy relatively easily if the investors chose to do so. The expansion would take up to a year to complete. 
 	
 During the actual construction of the plant, Delta-T's engineers made visits to the site to oversee design and construction, and also to address questions the builders might have had during various stages of the project. As the facility came closer to startup, Delta-T's presence at the facility grew. 
 	
 "We have a responsibility to start the plant up," Wajciechowski said. "We send a team out that walks the plant down (checks every line very closely) and trains the newly hired operators." 
 	
 Later, the plant's operators-in-training "stand by" while Delta-T's engineers bring the plant online and, gradually, turn the controls over to the new employees. Through modern internet technology, Delta-T can monitor - and even control - the plant from Virginia if they needed to. 
 	
 Recently, Paul Olsen told a Wisconsin newspaper that there is "proprietary" engineering inside the plant and, therefore, public tours would be limited. When asked about Olsen's statements this month, Wajciechowski said it is Delta-T's position to let the owners of ethanol plants that use its process technology dictate terms of public access to the facility. 
 	
 "However," he said. "This is our core business and we are not completely open with it . . . not as much as one might think. There are ways our engineers do things that might be obvious to (our competitors). Delta-T has a unique process technology that is constantly evolving."
 
 The Products
 As stated earlier in the article, the plant is designed to produce 20-mmgy, all of which is currently being trucked to market - mostly Milwaukee and, to a lesser extent, Chicago. 
 	

 "We do not have a rail spur, but we are considering one," DeBlois told EPM. "We are also considering using a rail depot - a storage area where we can truck ethanol to where it can be shipped out by rail." 
 	
 The facility produces 500 wet tons of distillers grains per day. Wet, because the plant does not have dryers, which drastically reduces potential sources of emissions and odors the plant would produce, as well as the costs of emissions control devices.
 	
 "That's just one thing we've done to satisfy the community," DeBlois said. "We're located three miles away from town and we have no stacks at all. The plant has virtually no emissions." 
 	
 So far, DeBlois said, selling wet distillers grains has worked out well for Utica Energy. "We have good dairy in the area and we really haven't had to do a lot of selling - the markets are very good," he explained. 
 	
 Utica Energy delivers to cattle operations within 100 miles of the plant and has added special preservatives to the wet feed which helps it keep for up to two weeks. 
 	
 Utica Energy will also soon be capturing and compressing the plant's carbon dioxide, which is expcted to be a fairly successful venture because there is only one other carbon dioxide manufacturer in Wisconsin - ACE Ethanol, LLC. 
 	
 The carbon dioxide plant should be online by mid-June, and the product will be marketed through United Industrial Gases (UIG). 
 
 Water Testing 'Well' Worth the Effort
 In addition to eliminating stack emissions from the plant by not drying distillers grains, Utica Energy needed to earn the community's trust by ensuring them that the township's water supply would not be depleted by the ethanol plant. 

 	
 "The water in town comes from two aquifers - an upper and lower aquifer to be more specific," DeBlois said. "The lower aquifer is separated from the top by about 150 feet of limestone. And that's the one (the lower) we agreed to use." 
 	
 DeBlois continued, "The town was worried that we would maybe pump the upper wells dry, so we went 510 feet deep - hard cased - and pumped out of the bottom aquifer. We tested from two other wells, from both the top and bottom, and determined that no water was being depleted from the top well. We also monitored (private) wells to see if they would be depleted; and they were not. This whole issue with water and testing was very important to appease the local people and the (Department of Natural Resources). It was a key test for us."
 	
 With literally no justification for water or stack emissions concerns, protestors no longer had a leg to stand on, DeBlois said. "We took their two main arguing points and eliminated them."
 
 Words of Advice
 "People don't always know the facts," DeBlois told EPM. "Education is important. You have to be equipped and prepared to educate opponents and battle misinformation." 
 	
 DeBlois also said it is important to hire experts up front to help create a road map to success. For example, Utica Energy produced a public information booklet and distributed them at the public library and other public places when the plant was in the planning stages. 
 	
 "You've got to have good sales people. . . And the more information you have the better. . . Come up with good facts, make a rendering of the plant available, provide as many details as you can and correct bad information as quickly as possible. If you do those things, you'll have a better chance of success early on." EP

The once besieged ethanol project in Wisconsin overcame opposition, won over a community and stuck to the vision of its leaders. Today, the 20-mmgy plant has found a home - and a new identity - in the township of Utica.

Power of Perseverance The Success Story of Utica Energy, LLC

As most in the ethanol industry know, the purchase of High Plains Corporation by Abengoa was finalized about a year ago. Last month, High Plains Corporation announced that it had officially changed its name to Abengoa Bioenergy Corporation. 
 	
 In the future, the company will use the name Abengoa Bioenergy Corporation when referring to all facilities previously owned by High Plains. This change is a natural extension of the internationally recognized Abengoa corporate name, known for "operational excellence, innovation, and flexibility," a spokesperson for the company said. 
 	
 This name change is also reflected in the corporation's newly formed research and development subsidiary, Abengoa Bioenergy R&D, Inc. This subsidiary will be primarily responsible for the administration of the exciting initiative that was announced in the late fall of 2002. In October, the U.S. Department of Energy (DOE) officially announced that it had granted High Plains Corporation funding for half of the cost of our research and development project worth $35.4 million. This award is being used to develop both new and improved biomass-derived process technologies.
 	
 The traffic to High Plains' former website, www.highplainscorp.com, is being forwarded to www.abengoabioenergy.com. EP

The name change is a 'natural extension of the internationally recognized Abengoa corporate name, known for excellence, innovation and flexibility.'

High Plains Officially Becomes Abengoa Bioenergy

The Central Texas Ag Development board of directors met in Austin on May 19th to select a company to perform a feasibility study for an ethanol plant to be located in Central Texas. After months of reviewing applicants from around the nation, BBI International from Colorado was chosen. Board president Kit Worley, of Milam County, said, "The members unanimously selected BBI for the feasibility study. Because of this company's experience and performance record along with high recommendations, we felt they were the one to go with and feel confident they will do a good job for us." The study should be completed in July. 
 	
 In August of last year, CTAD was awarded a USDA matching grant for this study. If the study is favorable for an ethanol plant located in central Texas, this will offer farmers and ranchers some very much needed help for their struggling markets. The ethanol industry creates both direct jobs at ethanol production 
 	

 Central Texas Ag Development is a grassroots organization comprised of farmers and ranchers from a ten county area that was formed a year ago for the purpose of furthering the use and development of agricultural products in the Central Texas area. The eleven member board was selected by its members. Donations from farmers and ranchers, as well as other concerned individuals, has provided the funds, along with the matching USDA grant, to perform the feasibility study for the ethanol plant. EP

After months of reviewing applicants from around the nation, Colorado-based BBI International is chosen.

Central Texas Ethanol Project Moves Forward with Feasibility Study

The permitting process necessary to allow construction to begin on the Central Illinois Energy (CIE) ethanol production plant continues to "move forward," according to CIE General Manager Mike Smith. 
 	
 The 30-mmgy plant will be built three-and-a-half-miles south of Canton in Fulton County, Illinois. Site preparation work for the $69-million facility has been underway for several weeks.
 	
 Smith said the Illinois EPA's mandated public comment period for the required air permit ended May 9. He said to his knowledge no negative comments had been filed with the IL-EPA during the comment period and the permit would be issued yet this month. Smith was pleased the permit was approved in only eight months since it usually takes nine to twelve months.
 	
 Other permits, Smith added, have also been approved or are moving towards approval. They include storm water runoff and water discharge permits. When those permits are in hand, Smith says, CIE is in a position to continue to the final stages of term financing approval and begin construction in earnest. Besides the site preparation work taking place, engineering work and contract evaluation is moving forward.
 	
 CIE officials expect to begin ethanol production in the summer of 2004. Smith points out they are working to maintain that schedule. However, at the same time, they will ensure funds are not prematurely spent or are put at risk.
 	
 CIE will use 11.3 million bushels of corn annually and employ about 50 persons with an accompanying steam cogeneration plant. 
 	
 For more information about Central Illinois Energy, Smith can be reached at 309-668-3299. His e-mail address is msmith@centralillinoisenergy.com. And on the Internet go to www.centralillinoisenergy.com. EP

The 30-mmgy plant is expected to break ground soon and be completed by 2004.

Central Illinois Project Moves Forward, Site Being Prepared

TULSA, Okla. - Williams announced late last month that it has closed three previously announced transactions involving sales of assets and a power contract - including its ethanol interests - for approximately $663 million. 
 	
 "These events show how we are executing on our business plan in a big way. Asset sales are shaping a new Williams that is financially healthier and commercially focused on selected businesses and markets where we can be a leader in the natural gas arena," said Steve Malcolm, chairman, president and chief executive officer of the corporation. 
 	
 The sales completed in May, in addition to other assets, involved Williams' equity interest in Williams Bio-Energy, LLC to a new company formed by Morgan Stanley Capital Partners. Following adjustments to the $75 million purchase price pursuant to the purchase and sale agreement, Williams received $59 million in cash. The sale included ethanol production plants in Pekin, Ill., and Aurora, Neb., and the company's ethanol marketing division. Morgan Stanley Capital Partners has renamed the company Aventine Renewable Energy, Inc., after the Roman goddess of grain. EP

The company has announced that its ethanol interests are ‘closed.'

Williams Completes Three Transactions: Receives Cash Proceeds of $575 Million in May

Broin Companies and the farmer-owners of Sioux River Ethanol, LLC celebrated the beginning of construction on their ethanol plant near Hudson, South Dakota, May 28. 

 	
 Sioux River Ethanol will process nearly 16 million bushels of corn into 45 million gallons of ethanol and 135,000 tons of Dakota Gold Plus distillers dried grains with solubles (DDGS) annually. The plant is expected to employ approximately 40 people.
 	
 The plant is being designed and built by Broin Companies of Sioux Falls, South Dakota. "Sioux River has created a new market for regional based corn supplies; it is providing new highly technical jobs and will contribute millions of dollars to the local economy through its operations," stated Jeff Broin, CEO of Broin Companies. 
 
 "We congratulate the farmer-owners of Sioux River Ethanol as they begin construction on what will be South Dakota's eleventh ethanol plant," said Bob Dinneen, president of the Renewable Fuels Association. "South Dakota has aggressively expanded its ethanol industry over the past few years. The positive economic results can be seen up and down Main Streets in communities near the plants." EP

South Dakota has nine ethanol plants and two under construction.

Sioux River Ethanol, LLC Breaks Ground

Late last month legislators in Oklahoma and Texas paved the way for ethanol production by sending legislation to each of the state governors that provide incentives for new ethanol production in the states. 
 	
 Passing the Oklahoma House and Senate, SB 429 needs only the signature of Okla. Governor Brad Henry to become law. The Oklahoma legislation would grant producers in that state a $.20 per gallon excise tax exemption. Due to Oklahoma stutute, which provides legislation passed with immediate funding, the program will take instant effect.
 	
 "This legislation represents many years of hard work in developing an ethanol industry for the state of Oklahoma," said Mason Mungle, government relations coordinator for the Oklahoma Farmers Union. "Our intent is to increase the Sorghum acres grown in the state and take a close look at hulless barley."
 	 
 Texas legislation, SB 275, is also awaiting a signature from the Governor, but will not be implemented until fiscal year 2005. The legislation provides a $.20 per gallon producer payment (up to 18 mmgy) for production of ethanol or biodiesel. Much like the successful program in Minnesota, the ethanol/biodiesel production incentives in Texas will sunset for each facility on their 10th anniversary. 
 	
 "With passage of the Governor's Economic Develop-ment Bill, SB 275, Texas wins! Texas' ethanol incentive program will be similar to the Minnesota project, but with a twist. The possibility for an ethanol plant to be constructed in the state is ever increasing and the opportunity for further growth and economic development in our rural areas is promising. Though funding isn't available until 2005, the program established under SB 275 demonstrates that Texas is taking a serious look at alternative fuels and is doing its part in working to provide a successful alternative to current additives," said State Representative David Swinford.
 	
 Feasibility studies for ethanol production are underway in both states. Currently, Texas has five studies that have either been complete or will be completed soon. A feasibility study has also been completed in the state of Oklahoma. EP

Feasibility studies for ethanol production are   underway in both Oklahoma and Texas.

Southern States Pass Ethanol Legislation

With the exception of grain procurement, ethanol producers face no cost greater than energy - natural gas and electricity - the feedstocks of fire, heat, steam and light. 

 	
 The price of power, natural gas especially, directly impacts a plant's bottom line and is, therefore, an important consideration of site selection. As one industry analyst told EPM, a great location for an ethanol plant "can turn sour quickly" if energy contracts are not properly negotiated on the front-end of construction. That, precisely, is why many future producers prudently negotiate "terms of contract" with natural gas providers and electric utilities before choosing a location to build. 
 	
 "It creates competition between utilities and gives a (future producer) leverage," said Todd Overgard, an electricity management specialist with Minneapolis-based U.S. Energy Services, Inc., a 40-person company that has negotiated energy contracts for over 45 ethanol plants in the United States. "We like to see our clients looking at multiple sites when the negotiating begins."
 	
 Energy management firms, such as U.S. Energy Services, help ethanol producers control natural gas and electric costs by developing energy infrastructure solutions, ideally before a facility is sited. Each plant has unique physical and financial energy needs that are typically managed on an ongoing - often permanent - basis. Many small and medium-size ethanol plants rely wholly on outside energy management companies to take care of energy negotiating, delivery and logistics, while America's largest produces, such as Archer Daniels Midland Co. (ADM) and Cargill, manage energy matters in-house.
 	
 The complex world of energy production, management and distribution can be broken down into amazingly simple divisions of power in a modern ethanol plant, where 80 percent of energy costs go toward natural gas. Simply speaking, natural gas is used to heat boiler water into steam and also to fire rotary drum dryers. Likewise, electricity is used to run scores of high-efficiency motors, create light and sometimes heat. 
 	
 The energy needed to produce ethanol, twice-proven by USDA economists to yield a net energy gain, is no longer in question. Still, American ethanol producers, large and small, are continually trying to minimize electricity and natural gas usage, not to appease environmentalists but to increase bottom line profits. 
 Gradually, it's been working. 
 	
 Production efficiencies have significantly improved, but there's still no escaping the high price and often limited availability of energy. There are, however, effective ways to negotiate and manage energy contracts while also curb price volatility. Here's what the experts told EPM. 
 
 Site Selection/Natural Gas
 First, an ethanol plant should be sited in proximity to vital sources of energy (e.g., natural gas pipelines). But that's merely the first criteria. 

 	
 In terms of natural gas, cost, terms of contract, pipeline size, capacity, average pipeline pressure, disruption charges, interruptible or non-interruptible service and frequency of interruption must be taken into account. 
 	
 "In the simplest of terms, we're asking, 'Is there a physical connection from where the natural gas is being produced to where it is being consumed,'" says U.S. Energy Services natural gas specialist Casey Whelan. "And how firm is the supply going to be?"
 	
 Assuming a pipeline is nearby, Whelan said, the next step is to find out if the pipeline carrier can provide the capacity needed by the proposed facility. In terms of most 40-mmgy ethanol plants being built today, at least 4,000 MCF (MFC equals one thousand cubic feet) a day is needed. Not all carriers can consistently meet that demand. 
 	
 "Keep in mind that sometimes the nearest pipeline may not have ample capacity to supply the needed volumes," Whelan said. "VeraSun Energy (a 100-mmgy ethanol plant under construction near Brookings S.D.), for example, is having a 26-mile pipeline built to reach the Northern Border Pipeline (a common carrier on the Interstate Pipeline system), even though another pipeline was closer. The nearer pipeline did not have enough capacity - the diameter of the pipe was simply too small."
 	
 Pipeline construction financing can be built into a long-term contract or paid for up front. Utilities typically require greater returns on financing than a traditional lender, Whelan said. An energy management company will typically evaluate the pipeline construction and help manage the timeline of the project as aggressively as possible. Planning and engineering included, pipeline construction - of the size and scope that is taking place in Brookings - could take 12 to 18 months, but the actual construction could be completed in 90 to 120 days. Intra-state pipelines, those that do not cross state lines, do not require as much permitting and are generally less time-intensive to build. 
 	
 America's Interstate Pipeline system is regulated by the Federal Energy Regulatory Commission. There are about 100 natural gas pipeline "common carriers" in the United States. The production and delivery of natural gas can be broken down into three phases: production, futures markets (commodity trading) and distribution (sometimes to local utilities). In late May, natural gas was selling for about $6 ("a little on the high side") per MCF. 
 	
 A typical 40-mmgy ethanol plant using approximately 35,000 British thermal units (Btu) to produce a gallon of ethanol and dry the related distillers grains, is spending about 21 cents per gallon of finished ethanol on natural gas, or $8.4 million a year. Many industry consultants use 37,000 or 38,000 Btu per gallon to estimate costs conservatively, but ethanol plant engineering firms are reportedly making production guarantees of 34,000 Btu per gallon or lower, according to U.S. Energy Services. Roughly two-thirds of natural gas energy is required to produce process steam and one-third is required to produce fire in the dryers. Plants using electric ring dryers could expect less natural gas costs and more electric costs. 
 	
 When working with a future producer on site selection, U.S. Energy Services will first develop a comparative cost analysis for each considered location, followed by an analysis of distribution and reliability of service. "We're always looking for firm service," Whelan told EPM. 
 	

 Once the plant is online and receiving a steady stream of natural gas, energy management firms will perform daily and weekly logistics communication duties with the carrier or utility, telling them how much gas to send, where to send it, etc. "It's very routine administrative work for us," Whelan said. "And from our point of view, it doesn't make a lot of sense for ethanol producers to do it themselves."
 
 Site Selection / Electricity
 As already noted, leverage is gained by future producers who consider more than one site for ethanol plant construction. 
 	
 "Sometimes it's a matter of moving to another town or county, and sometimes the solution is as simple as moving across a highway," Overgard said. "Whatever you can do to create competition between utilities." 
 	
 In most states, future producers have no options when it comes to choosing a utility. State law allows a particular utility to control an area of the state and there's no way around it. However, a number of states (South Dakota and Minnesota included) give large industrial customers one-time elections to choose a utility. "In those cases, we can put the projects out for proposals and are able to be more selective in our process of helping the producer find a site," Overgard said. "It's a real advantage."
 	
 In any case, Overgard said, "picking a utility provider is like getting married . . . make sure you spend time with them up front." 
 	
 Electricity costs are typically around 25 percent of a plant's total energy costs - or about $1.5 million per year for a 40-mmgy facility. Electricity powers motors, pumps, fans, air compressors, cooling towers, lighting, heaters and others equipment in a plant. 
 	
 Process-design companies are discovering new efficiencies that are decreasing the electricity usage at ethanol plants. "I've seen plants producing 50 million gallons a year and using the electricity they predicted to use at 40 million gallons," Overgard said. "That, in my opinion, is the result of engineers finding small ways to make plants run smarter."
 	
 He continued, "Do not assume that just because you are building an ethanol plant in a state that is deregulated that you can plop an ethanol plant wherever you want and get a good deal regardless. Always consider the costs, review the transmission system and look at the possible constraints the system could come up against. Power does not flow like it used to, and a 40 million gallon ethanol plant (eating up 35 million kilowatt hours a year) is a significant addition to anyone's system. . . The earlier (an energy management company) gets involved, the easier it is to fix and avoid potential problems."

 	 
 Variations 
 Heat in the form of steam is needed for the ethanol conversion process. In a standard ethanol plant setup, boilers create steam for multiple aspects of production, including distillation and evaporation. Steam is also used for environmental heating as well as specialty uses like "steam snuffing" of fires in the rotary drum dryers. Many new and expanded ethanol plants are installing thermal oxidizers (TO's) or regenerative thermal oxidizers (RTO's), waste heat boilers, heat exchangers, and other systems that can alter the energy needs of an ethanol plant and should be taken into consideration. 
 	
 EPM will be taking a closer examination of the energy requirements of these various systems in an upcoming issue. 
 
 Backup & Cogeneration
 Most ethanol plants have backup sources of energy, sometimes diesel generators and often propane tanks. 
 	
 Propane was formerly a common backup energy source for most ethanol plants that used natural gas; when natural gas was in low supply, propane could get the plant through a few days without shutting the facility down. However, today's 40 and 50-mmgy dry mills no longer can be viably powered by propane for any considerable length of time. 
 	
 "A 45-mmgy ethanol plant would use about 44,000 gallons of propane a day - that's five transport trucks," said Dan Schroeder, of U.S. Energy Services. "You aren't going to find it (five truckloads of propane) on the coldest day in January. They can't supply it locally and it's probably too expensive anyway." 

 	
 Certain emissions may also be slightly higher with propane, and according to BBI International's Ethanol Plant Development Handbook, 4th Edition, propane is about 30 percent more expensive than natural gas. While some would suggest the percentage is higher, the availability of longer-term contracts with propane suppliers tends to keep the differential in that range. Nevertheless, operating a plant on 100 percent propane would impose a substantial economic penalty. 
 	
 Cogeneration is an attractive option to ethanol producers looking for niche opportunities to cut energy spending and share infrastructure building costs. 
 	
 For example, U.S. Energy Partners, in Russell, Kan., benefits from collocating with a small power plant in the town's industrial park. The energy center is powered by two 7.5 megawatt industrial gas turbines, each producing enough steam to meet about 25 percent of the ethanol plant's steam requiements (50 percent when running simultaneously). The Taurus 70 model turbines, which are manufactured by San Diego-based Solar Turbines, a Caterpillar Company, are said to be twice as efficient as the standard reciprocating engines used in some power plants. The turbines run on natural gas, but can also use diesel fuel, according to Adam Robinson, a Solar Turbines representative. About one-third of the power generated from the natural gas is used to power the shaft turbines, the other two-thirds is essentially exhaust. However, U.S. Energy Partners captures 50 percent of the turbine exhaust (1/3 of the original natural gas energy) in the form of steam. 
 	
 "Therefore, we capture two-thirds - not one-third - of the potential energy here," said U.S. Energy Partners chief developer Dave Vander Griend, CEO of ICM, Inc. "And we utilize waste heat (using the Heat Recovery Steam Generator) from the turbines to dry (distillers grains). It represents about 25 percent of the heat required to dry the coproduct.
 	
 Near Big Stone City, S.D., another interesting energy partnership exists between Northern Lights Ethanol, LLC, and the Big Stone Power Plant. The power plant will eventually provide enough continuous steam for Northern Lights to fulfill two-thirds of its total energy needs. The power plant will pipe 100,000 pounds of steam an hour to Northern Lights. The steam is purchased at a price cheaper than what could be produced by their own natural gas boilers, which are in use now but will be mothballed after the power plant steam becomes available. The boilers will be kept in place as back-up power, should the plant ever need them again. 
 	
 The Big Stone Power Plant, jointly owned by Otter Tail Power Company, Northwestern Public Service and Montana-Dakota Utilities, produces 3.5 million pounds of steam an hour, meaning the 100,000 pounds per hour piped to Northern Lights represents only three percent of the power plant's total output. 
 	
 Additionally, the land where the ethanol plant is located is owned by the power plant and leased to Northern Lights at a favorable rate. All together, these benefits add up to lower capital and operating costs that result in a low-risk, high-return operation.
 
 Negotiating Long-term Contracts

 In terms of both natural gas and electricity, ". . . Always negotiate long-term contracts (around 10 years) if you can," said Whelan. "The longer the better."
 	
 When a future producer is negotiating with a utility to have electricity infrastructure built (high-voltage 69,000-volt power lines and a substation on site), the utility will generally "foot the bill" for the new lines. 
 	
 "They will typically pay for transmission line improvement," Overgard said. But producers sometimes end up paying for the substation, which can cost as much as $1 million, depending on site and layout of the plant. 
 	
 Prepare for Fluctuations 
 Natural gas is an unpredictable beast. 
 	
 "You think you can predict prices, but you really can't," Whelan said. "It doesn't always appear to make sense, but you can count on the cycle repeating itself." 	
 	
 Whelan said natural gas prices can swing from $2 to $10 in a two-year year cycle. "It's an inelastic commodity," he said. "Prices go up rapidly in times of extreme demand."
 	
 Why? Like oil, production slows when supply goes up and prices are low. 
 	
 Natural gas drilling is accomplished through pressure-driven wells that produce the most product - during the highest pressure delivery - on the first days of output. As each day and week goes by, the well becomes less productive. And because hundreds of wells are often drilled simultaneously (in times of rising prices), the wells also tend to loose pressure at the same time. 

 	
 "It's a reoccurring cycle," Whelan said. "When prices are low, there are fewer rigs drilling (as little as 500 in North America) and when prices rise, there is a rush to get more rigs in the field (over 1,000)."
 	
 There are, however, ways to curb volatility. 
 	
 Negotiating the terms and conditions of services with a provider to include "maximum entitlement" language is one effective tool used by some producers to keep prices somewhat level throughout the year. For example, contracting for 4,000 MCF per day. Many producers are on a "price management plan" that establishes a risk profile for a specific facility and creates pricing objectives - and utilizes hedging - to avoid high prices. 
 	
 "These plans are very favorable when natural gas prices are high," Whelan said. "But when prices are at $2, the producer is going to be paying more than (the going market) - it's a balanced approach."
 	
 U.S. Energy Services aligns its clients with natural gas providers that are "in the business" of drilling and handling gas. 
 	
 "We try to avoid companies that (buy and sell) natural gas on paper and have no real physical connection with the product," he said. 
 	
 Likewise, natural gas producers enjoy selling fuel to ethanol plants because they know where the product is going. "To them, that's much more attractive than selling to another company that is looking to (resell the product)."
 
 Reliability & Volatility 

 When it comes to natural gas considerations for startups, the two most important factors are reliability of supply (with expansion in mind) and contolling price volatility. 
 	
 "A lot of ethanol plants plan for their natural gas needs for the first phase of a project, but fail to take their expansion needs into account," Whelan said. "A 20 or 22 million gallon ethanol plant may be able to get a firm supply of natural gas, but at 44 or 45 million gallons, the supply might not be there." 
 	
 Most experienced ethanol industry engineering firms, consultants and developers "understand the reliability issue" and "select sites accordingly," Whelan said. While "less experienced" firms have been known to plan poorly. For example, one ethanol plant in South Dakota had supply problems with natural gas and was running on 100 percent propane for several months. It was a costly mistake that probably could have been avoided. 
 	
 "The builders and engineers we work with - and we work with all the leaders, Broin, Delta-T, Fagen, ICM and Lurgi and others - pay close attention to the reliability of the natural gas supply chain," Whelan said. 
 
 Gaining Respect
 The companies that drill for, produce and deliver natural gas are developing an appreciation for the growing ethanol industry. Ethanol producers are big players in the Midwest natural gas market, and they are increasingly getting the regard they deserve. In fact, it's not unusual for natural gas company executives to meet with ethanol producers. 
 	
 "We have brought in several (natural gas executives), from Houston, Calgary and Denver, to meet with our ethanol clients. They have shown a real interest in the industry and, in my view, have made a concerted effort to understand the needs of ethanol producers," Schroeder said, adding, "There is, however, an issue with credit and security that is prevalent as well. The standard of credit, overall, is rising a great deal and (natural gas companies) are getting a lot tighter. So while they are beginning to understand and appreciate the ethanol industry, there is also an ongoing process of establishing credit and educating both sides through face to face meetings." EP

Energy management firms often help ethanol producers control natural gas and electric costs by handling energy negotiations before site selection. Each ethanol plant has unique physical and financial energy needs that are typically managed on an ongoing - often permanent - basis. Is your project handling energy negotiations properly?

Energy Factor: Natural Gas & Electricity Considerations for Startups

The vibrant city of Sioux Falls, S.D., in the center of one of the fastest growing ethanol producing regions in the nation, has been called "the perfect place" for this month's 19th Annual International Fuel Ethanol Workshop & Trade Show (FEW). The historic city is home to the American Coalition for Ethanol (ACE) and headquarters of ethanol magnate Broin Companies and other ethanol industry service providers, making it a virtual hub of ethanol-related activity, leadership and success. The state itself, with its dedicated ethanol producers and committed political supporters - on a state level and in Washington D.C. - deserves high praise for establishing South Dakota as a true ethanol industry powerhouse. 
 

 High Consumer Acceptance of Ethanol 
 Complimentary to the state's ethanol plants and dedicated corn growers, high consumer acceptance of ethanol-blended gasoline and community support of new production facilities has fueled the growth of South Dakota's ethanol industry. 
 	
 Although South Dakota does not mandate the sale of ethanol, nearly all gasoline retailers offer consumers the choice to purchase gasoline containing 10 percent ethanol-blended gas. In addition, a growing number of stations across the state also offer consumers E-85, specially designed flex fuel vehicles. Beyond gasoline outlets selling ethanol, South Dakota is achieving success with the planning and development of ethanol plants in various parts of the state. 
 	
 In 1999, South Dakota produced 16 million gallons of ethanol. By 2004, South Dakota will be producing nearly 400 million gallons of ethanol annually.
 	
 The state's ethanol industry provides 400 direct jobs at plants in South Dakota while providing thousands of indirect jobs in rural areas of the state, helping to strengthen rural economies and raising corn prices. Because most ethanol plants are farmer-owned cooperatives, ethanol increases rural income because dividends and profits stay in South Dakota. In fact, over 8,000 farm families have invested in ethanol production in the state. 
 
 Ethanol Plants in South Dakota
 Currently, South Dakota has nine ethanol plants online, producing more than 255 million gallons a year, and two others under construction, representing another 140 million gallons a year. 
 	
 The state's ethanol production facilities include Broin Enterprises, near the town of Scotland, which produces 8-mmgy from corn and reportedly serves as Broin Companies' research and testing lab. 
 	 
 Broin Management, a division of Broin Companies, also runs Dakota Ethanol, a 45-mmgy corn-to-ethanol dry mill near the town of Wentworth; Northern Lights Ethanol, just outside of Big Stone City, which produces 40-mmgy from corn; the 40-mmgy Great Plains Ethanol plant near the community of Chancellor; and its newest plant, James Valley Ethanol, west of Gorton, which is already on track to produce 45-mmgy, also from corn. 

 	
 Glacial Lakes Energy, just outside of Watertown, produces 40-mmgy from corn and was built by Fagen, Inc., using an ICM, Inc. process design. 
 	
 Heartland Grain Fuels operates ethanol plants near Aberdeen (8-mmgy) and near Huron (14-mmgy), while Tri-State Ethanol Company, near Rosholt, produces 15-mmgy. 
 	
 Meanwhile, Fagen and ICM have teamed up again to build the mammoth-sized VeraSun Energy, a whopping 100-mmgy corn-to-ethanol dry mill near Aurora. Broin Companies also broke ground at the end of last month on Sioux River Ethanol, a 40-mmgy plant being built in Hudson. 
 	
 South Dakota Production Incentives
 Part of the reason ethanol producers have achieved a large degree of success in South Dakota can, of course, be attributed to the creation of the state's ethanol producer incentive fund, which sustains ethanol's development in the state. Currently, licensed ethanol producers may receive a production incentive payment (based on available funding) of 20 cents per gallon for ethyl alcohol that is fully distilled and produced in South Dakota. To be eligible for this payment, the ethyl alcohol must be 99 percent pure, derived from cereal grains, and denatured and subsequently blended with gasoline.
 	
 Annual production incentive payments for any facility may not exceed $1 million. No facility may receive any production incentive payments in an amount greater than $10 million dollars during the lifetime of the plant.
 	
 Corn Grower-led Industry
 As everyone knows, farmers - corn growers specifically - have led the development of ethanol production in South Dakota. Likewise, the South Dakota Corn Growers Association (SDCGA), as well as the South Dakota Corn Utilization Council (SDCUC) have played no small part in bringing the industry to where it is today. The state's growers work continuously to promote corn and improve corn profitability through influencing public policy and legislative issues. While the concerns and programs of the SDCGA encompass a myriad of issues, the organization is dedicated to focusing attention and its resources on the areas the most vitally affect corn producers at the state and national levels, such as ethanol production. 	
 	

 One way that the SDCUC helps to educate consumers about the many uses of corn is by attending trade shows and state fairs. Other ways that the SDCUC tries to keep in contact with their consumers is by running television, radio, and newspaper ads explaining the advantages South Dakota has in developing value-added agriculture, and printing brochures that explain about corn related products and their new uses.
 	
 The SDCUC's goal is to work hard to develop new markets in South Dakota to utilize the corn commodity. The SDCUC has been instrumental in developing and encouraging producer-invested ethanol facilities and value-added funds used to help facilitate ethanol development in rural communities. 
 
 Ethanol in Aviation
 Ethanol is starting to play a growing role in the aviation industry, and South Dakota researchers and pilots are on the leading edge of it. South Dakota State University and Great Plains Fuel Development, of Brookings, and ACE have been instrumental in leading this effort, along with UND Aerospace (University of North Dakota), the North Dakota Corn Growers Association, and UND's Energy & Environmental Research Center (EERC).
 	
 There are a variety of experimental and certified aircrafts that are flying on ethanol-blended fuel. Aviation-grade E-85 has been certified in a couple of aviation engines and airframes. The Vanguard Squadron has performed at numerous air shows and events flying on ethanol. It actually takes very little to convert an airplane engine to run on aviation-grade E-85, supporters say. 
 	
 The conversion, which essentially turns the aircraft into a flex-fuel plane, gives it the ability to run on either aviation-grade E-85 or 100 LL avgas. Ethanol makes a great aviation fuel because it is low in vapor-pressure and high in octane. 
 	
 ACE and the University of North Dakota, which has one of the largest aviation flight training schools in the United States, hosted an Ethanol-in-Aviation Conference last May at the University of North Dakota. 
 
 American Coalition for Ethanol 

 Hardly enough can be said to about the good work ACE is doing for ethanol development in South Dakota and throughout the Midwest. Many South Dakota ethanol producers, industry suppliers and service providers are members of ACE and support the mission of the organization. 
 	
 ACE is a non-profit membership association devoted to promoting the increased production and use of ethanol. The "grass-roots" organization has helped bring South Dakota to the forefront of the national ethanol production scene with ethanol-related seminars around the Midwest and, just recently, in California. Each summer, ACE holds its growingly popular Midwest conference and trade show. This year's event will be held in. . . you guessed it, Sioux Falls. We told you this city was a perfect place for a meeting. 
 
 Broin Companies Headquarters 
 Also headquartered in Sioux Falls is the Broin Companies, one of the nation's leading ethanol plant builders, technology and service providers. 
 	
 Under the leadership of CEO Jeff Broin, the corporation has a vision to "set the standards" for the ethanol industry. Its companies - Broin & Associates, Ethanol Products, Dakota Gold and Broin Management - provide turn-key design, engineering, construction, management, and marketing services for its capital partners. 
 	
 Since 1991, Broin & Associates, Inc. has established itself as a leading provider of comprehensive, turn-key dry mill ethanol plant engineering and construction packages. Broin Management, LLC provides complete management services for ethanol plants designed and constructed by Broin & Associates, Inc. Ethanol Products marketer Bob Scott (also the President of ACE) focuses on providing knowledgeable service, while maximizing a facility's return on every gallon of ethanol produced. Dakota Commodities is the exclusive marketer of Dakota Gold® premium brand Distillers Dried Grain with Solubles. Produced exclusively at Broin Companies' ethanol facilities, Dakota Gold® is a certified all-corn DDGS. 
 	
 BBI International and Ethanol Producer Magazine hope each of the 1,100 people expected to attend this year's FEW get the most out of their stay in Sioux Falls and become better acquainted with the companies and organizations that call South Dakota home. It's a wonderful city in a beautiful state. Enjoy. EP

Sioux Falls, South Dakota, is offering an ideal venue for the 2003 Fuel Ethanol Workshop & Trade Show. Take a closer look at the state's dynamic ethanol production success.

The Center of Everything Ethanol

EPM: Briefly, what is the history behind "active dry yeasts" for fuel ethanol (or beverage alcohol) production? 

 
 Ingledew: The production of active dry yeasts (ADY) for alcoholic beverage manufacture began in the 1940s but came into its own in the 1960s as an attempt to produce a dry product with high viability and a long shelf life that could be used to inoculate grape juices during the short six to seven week period of intense wine fermentations in California. Knowledge of yeast and perfection of the drying technologies for active dried yeast now allow commercialization of specific yeast strains with attributes appealing to specific industries. Use of active dried yeasts has now spread from the baking and wine industries to the distilling industry, the fuel ethanol industry and even into brewing (and not just for beer kits). 
 
 Today, yeasts are available to ethanol producers that have characteristics well suited to producing high levels of alcohol while withstanding the particular stresses associated with fuel ethanol fermentations, such as acidity and temperature. Ethanol plants today can operate with a high quality yeast and save on the costly investments in microbiology and capital equipment needed to culture, prepare, scale up, process and harvest a suitable yeast.
 
 EPM: How is active dried yeast processed, packaged and stored? 
 
 Ingledew: Processing of active dried yeast includes harvesting, compression of the paste through extruders, and drying to about five percent moisture under the controlled conditions needed to maintain viability. Emulsifiers are added to provide best dispersal of yeast in mash after inoculation. The pellets are packaged - often under inert gas or in a vacuum. It has a shelf life over one year and losses of activity of one percent per month are common. Refrigeration under inert gas is recommended for best storage, and a regime for rehydration (38°C for 20 minutes) is recommended for best recovery. Purchases large enough for only one or two months at a time are recommended.
 
 EPM: What advantages would a producer have from purchasing active dry yeasts?

 
 Ingledew: Use of active dry yeasts or compressed fresh yeasts (if located near a yeast plant) is now the norm in distilleries. In the recent article "Propagation of Yeast in a Distillery: Is it Worth the Risk? Why I Don't Believe So," printed in the January, 2003, issue of Ethanol Producer Magazine, I stressed the advantages in their use over methods of propagating yeast in-house. 
 
 
 EPM: In terms of effectiveness, what should ethanol producers be trying to achieve for with active dry yeasts?
 
 Bellissimi: A goal of approximately 22 billion viable yeasts per gram was the standard in the industry until 2001-2002. Today, some ADY preparations contain as many as 30 billion viable cells per gram and one high-temperature yeast is so small that the numbers are even higher. Then, it was quite typical to inoculate fermentors at 2.2 pounds per 1,000 (U.S.) gallons to obtain a reproducible inoculation rate of about six million viable yeasts per millimeter of mash or must. Active dried yeast are grown under strong aerobic conditions with the computer-controlled addition of sugar (molasses) such that they grow aerobically where the yield of yeast from substrate is 0.5 (0.5 grams of yeast per gram of substrate used). Because they are grown aerobically, they can often be used for a single batch fermentation (one cycle) with little need or regard for further aeration. 
 
 EPM: What about contamination? 
 
 Bellissimi: All active dried yeast contain small (when compared to the numbers of viable yeast) numbers of bacterial and wild yeasts. In fact it is impossible for yeast companies to produce such large batches of propagated yeasts without contamination (infection). Fear of increasing the numbers of such contaminants is one of the strongest arguments against continuous (re)propagation of yeasts in distilleries. 

 
 EPM: What can producers expect from these so-called "new yeasts?"
 
 Ingledew: For many years, the yeasts available to the fuel ethanol industry have included bakers' strains, some distillery strains and even brewing strains; and all of these yeasts will produce alcohol from molasses or enzyme-modified, starch-based crops in a reproducible fashion. However, today, the industry is not satisfied with alcohol concentrations of 8-10 percent, with low ethanol tolerance or with slow fermentations at less than 35°C (95°F). Yeast suppliers have responded with what we have termed the "new yeasts." How are they different? How do they perform? How do they compare? What should you know about them? Here at the University of Saskatchewan, we have an ongoing study that will, with time, answer many of these questions. 
 
 Here's a brief preview: 
 Many new yeasts are specially selected strains for fuel ethanol production. Some claim to be more temperature tolerant, with higher yields and higher viable cell counts during fermentation than was seen with the former strains. Some may be more tolerant to ethanol or to carbohydrates. At least one of them we know has been used in plants that produce alcohol at much higher concentrations than what the industry average has been and one company claims 17 -19 percent ethanol in 40 to 48 hours. Some may produce less foam, or reduced glycerol. Stuck fermentations may be reduced. We know that some of these strains are yeasts that produce smaller cells. As a result, it is not uncommon to see active dried yeast which are well above the previous norm of 22 billion per gram - in fact some are over 50 billion viable cells per gram. This may not mean that the amount of viable biomass per gram is any different than the yeasts provided in the past, because the new yeast cells are smaller than cells found in normal active dried yeast. The proof of the claims made by the suppliers will surely be provided with time, as it becomes known whether a new yeast produces alcohol at faster rates, to lower gravities, with higher yields or higher alcohol concentrations. 
 
 It appears that one or more of these new yeasts may be unusually thermo-tolerant; experiences in the industry with these strains are building. If so, savings in energy will accrue in cooling fermentors. Does this allow higher alcohol concentrations when strains are thermo-tolerant? Our laboratory is conducting studies to determine whether claims on the benefits of the new yeasts can be substantiated, and hopefully to provide new information on how to get the best performance from the new strains available.
 
 EPM: Will it be difficult for producers to stay abreast of new yeasts developments - and purchasing decisions - as the science evolves?

 
 Ingledew: For now, the choice in purchasing these yeasts is up to each individual producer. Early data indicates some advantages in their use. When research is complete, the differences between some of these varieties will become known. Eventually, you will have to determine if the differences are so great that you will have to analyze incoming yeasts as part of your company's quality control program in order to understand their use. Remember also that yeasts available prior to the introduction of the new strains of ADY have already been shown to produce up to 23.8 percent alcohol v/v under lab conditions using very high gravity (VHG) conditions in batch fermentation. These yeasts were the standard in an industry where alcohol concentrations over 16 percent are becoming common. What should producers expect form these new yeasts? Time will tell. But the future will be exciting! EP

A discussion with W. M. (Mike) Ingledew and Eleonora Bellissimi, University of Saskatchewan, Department of Applied Microbiology and Food Science.

Active Dry, High-Alcohol Yeasts: The New Yeasts on the Block

RIO DE JANEIRO - Brazilian company Sondotecnica S.A. is to establish an fuel ethanol plant in Portugal, with an eye on the EU ethanol-blended gasoline markets that will be obligatory from 2005. There is to be a heavy investment in the plant, which is expected to produce 400 million liters of ethanol annually. The feedstock possibilities are still being studied.

May 19 Brazilian Co. to Establish Ethanol Plant in Portugal

INDIANAPOLIS - Driver Paul Dana and the No. 24 Ethanol/Team ISI crew participated in a historic event over the May 17-18 weekend by participating in the inaugural Freedom 100 at the Indianapolis Motor Speedway. Round Three of the 12-race Indy Racing League Infiniti Pro Series marked the first time most of the drivers had ever competed at Indy. Dana qualified 10th and finished 7th in the 40-lap event. "It was an amazing feeling to be racing at the Speedway," Dana said. "We were hoping for a stronger result but I can't complain too much. I learned a lot about drafting and the turbulence you experience in a big pack at these speeds, so it was a big day in my learning curve."

May 19 Ehtanol Race Team Finishes Seventh at Indy

DATELINE: FRUITLAND, Idaho - Payette County commissioners have refused to modify the county's comprehensive plan in order to accommodate a proposed $25 million ethanol plant, but advocates, including one commissioner, are not abandoning the project. "This won't slow us down any," said one commissioner. "We've had other offers from other communities," he said. "We'll look at those to see where we can go." The Payette project, a proposed 20-mmgy plant, is one of four plants being contemplated in Idaho. Facilities worth up to $50 million have also been proposed for Burley, Pocatello and Idaho Falls.

May 25 Commision Sidetracks Idaho Plant

Opponents of an ethanol subsidy plan approved by the N.D. legislature this spring are seeking to put it to a vote. A group led by two men from the western part of the state submitted a petition to Secretary of State Al Jaeger, who has until May 27 to review it. The bill, signed by Gov. John Hoeven, would take effect July 1. It provides $1.28 million over the next two years in subsidy payments for new North Dakota ethanol plants, and $1.8 million for existing plants in Walhalla and Grafton. The subsidies would be financed by using 40 percent of registration fees on farm vehicles, and by lowering a farm tax refund for fuel used off the road. Muecke said that is one reason for the referral. "We're supposed to grow the corn for it, and the same time, we're supposed to foot the bill for it, too," he said.

May 16 Opponents of N.D. Ethanol Subsidies Seek to Refer Legislation

The Renewable Fuels Association (RFA) congratulates the farmer-owners of Sioux River Ethanol, LLC for beginning construction on their ethanol plant near Hudson, South Dakota. See full story on page 12.

May 28 Sioux River Ethanol, LLC Begins Construction on Plant

The RFA congratulated Utica Energy, LLC for beginning production at its ethanol plant near Oshkosh, Wisconsin. See plant profile on page 33.

May 22 Utica Energy, LLC Begins Production in Wisconsin

The RFA along with other agriculture and renewable fuel groups welcomed the formation of a new Senate Biofuels Caucus. The Caucus, led by Senators Norm Coleman, R-Minn., Tom Harkin, D-Iowa, Blanche Lincoln, D-Ark., and Jim Talent, R-Mo., was created to promote the use and development of renewable fuels.
 	
 "Increasing the production and use of ethanol and biodiesel will directly increase fuel supplies, and reduce our dependence on foreign oil. In addition, renewable fuels promote rural economic development while ensuring cleaner air and a cleaner environment. We are very pleased to announce the Senate Biofuels Caucus and we look forward to working with stakeholders from across the countryside and senators in both parties to create economic growth and jobs in the nation's agriculture sector through the promotion of renewable fuels," the senators said in a joint statement.

 	
 Bob Dinneen, Renewable Fuels Association president stated: "Forming the Senate Biofuels Caucus makes great sense because renewable fuels are going to play a major role in the energy policy of our country for years to come. We appreciate the willingness of Sens. Talent, Harkin, Coleman, and Lincoln for dedicating their time and energy to getting the Caucus off the ground."

May 22 Ag and Renewable Fuels Groups Welcome New Bipartisan Senate Biofuels Caucus

The RFA applauded the Connecticut state House for passing legislation that moves the state's MTBE ban from October 1 to January 1, 2004, in line with the MTBE ban in New York. The bill passed by a vote of 138 to 5. The bill was previously passed by the state Senate and now awaits the signature of Governor John Rowland. 
 	
 The RFA, which urged this action in a March 3rd letter to the Legislature, noted that synchronizing both states' MTBE bans on January 1, 2004 will ensure ample gasoline supplies without needlessly putting drinking water supplies at further risk.

May 22 Ethanol Industry Applauds Move by Connecticut House to Coordinate MTBE Ban with New York

The RFA announced that the U.S. ethanol industry set an all-time monthly production record in April of 179,000 barrels per day (b/d), according to data released by the U.S. Energy Information Administration (EIA).  The previous all-time record was 177,000 b/d in January.  Production was up 42 percent compared to last April when 126,000 b/d of ethanol were produced.highway trust fund (HTF) as regular gasoline. EP

May 21 U.S. Ethanol Industry Produces All-Time Monthly Record in April

I use baseball analogies a lot. Part of it is that I am a long-suffering Red Sox fan and I find it therapeutic. But the other reason is that everything I ever really needed to know about Washington I learned in Little League. While my Little League teams, like the Red Sox, were never very good, I did learn the only way to win is to play as a team. 
 	
 In the game of politics, there are no limits to the number of teammates one can have. The most successful teams are the ones with the most players. If we are successful in our effort to secure a robust renewable fuels standard (RFS) in the energy bill, clarify the small producer tax credit for farmer-owned cooperatives, and resolve the Highway Trust Fund issue, it will be because of the unprecedented coalition we have built over the past few years to promote the increased production and use of fuel ethanol. 
 	
 The coalition begins with ethanol producers and farmers seeking value-added markets for grain. The Renewable Fuels Association, National Corn Growers Association, American Farm Bureau Federation, National Farmers Union, American Coalition for Ethanol, Ethanol Producers and Consumers, and countless others have done yeoman's work getting the message about ethanol's economic benefits to all corners of the country.
 	
 But we added more teammates. By working with the National Biodiesel Board and the American Soybean Association to assure the inclusion of biodiesel in the RFS, we have expanded our political base. With the increased production of ethanol from grain sorghum, the National Grain Sorghum Producers joined our team and generated support for ethanol in non-corn states.
 	
 The RFS team extends beyond the grain belt to the oil patch and the coasts where increased farm income may not be important, but flexibility in gasoline production and eliminating the use of MTBE certainly are. Thus, the American Petroleum Institute (API) and environmental groups such as Northeast States for Coordinated Air Use Management (NESCAUM), American Lung Association, Union of Concerned Scientists, Renewable Energy Action Project (REAP), Energy and Environmental Study Institute, and several others now are part of our team as well. 
 	
 Make no mistake; the support we have gotten from API and the environmental community has changed the political landscape. But to keep our team together, we will need to keep the three legs of the RFS legislative stool together - elimination of the federal RFG oxygen requirement, phase out of MTBE, and a 5 billion gallon RFS. 
 	
 Recently, we've drafted support from highway advocates as our resolution to their Highway Trust Fund concerns was such a hit. Finally, consumer groups such as US Action are now pitching for the RFS as a means of reducing gasoline costs.
 	

 Sometimes I look at the team we have and I know what it must be like to play for the Yankees. Then I return to my senses and get back to work because another lesson I learned as a Little Leaguer was: "It ain't over til it's over!"
 
 
 
 
 Bob Dinneen
 President and CEO,
 Renewable Fuels Association

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A View form the Hill

Many of our readers have asked us about the emergence of a second industry magazine, Ethanol Today, now being published by the American Coalition for Ethanol (ACE). Comments we are hearing range from, "Isn't the ethanol industry too small for two publications?". . . to, "Competition is sometimes good." 
 	
 Quite honestly, we too questioned the startup of another magazine, especially one published by a non-profit association in direct competition with private industry. Nevertheless, support of Ethanol Producer Magazine has never been stronger and our mission has never been more apparent. 
 	
 I'm proud to tell you that, today, we remain members of both ACE and, of course, the Renewable Fuels Association, and believe it is necessary to support both organizations. 
 	
 In fact, we met with the folks from ACE during the National Ethanol Conference in Phoenix to discuss the nature of their new publication before it was launched. Ethanol Today, they said, would focus on public policy rather than ethanol production issues, which has been the hallmark of Ethanol Producer Magazine, and the Energy Independent newsletter before it, for more than eight years.
 	
 Perhaps competition is a good thing. But in my opinion, Ethanol Today is much too closely modeled after Ethanol Producer Magazine. Yet, I understand that ACE has an obligation to communicate and promote its mission and develop revenue-generating opportunities wherever it can.
 	

 Honestly, I don't know how this situation will play out. But I can tell you this: As the ethanol industry continues to grow, Ethanol Producer Magazine will become increasingly focused on production, marketing, plant maintenance, safety, R&D, new plant construction and engineering - the industry's core technical issues. Far from retreating in the face of competition, we are expanding our operations and broadening our sights. 
 	
 As for ACE, they're doing terrific work for the industry, from the grass-roots level up, and Ethanol Today will only enhance the association's reach and presence. In that respect, I wish them success. They should, however, develop a unique purpose for their magazine. 
 	
 As Ethanol Producer Magazine moves forward, I wholeheartedly thank all those who support us and believe in our mission. We could not do it without you. 
 
 Mike Bryan
 President, BBI International
 mike@bbiethanol.com

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And you ask. . . ‘How about that other magazine?'

The Way I See IT

Members of the Groton (S.D.) City Council want to meet with Brown County (S.D.) officials to clear up confusion about the possible annexation of land west of the community that would include James Valley Ethanol. Anita Lowary, Groton city finance officer, said city leaders want to visit with the county before taking any final action. On May 19, the Groton council approved an intent to annex 450 feet on both sides of U.S. Highway 12, between the city and James Valley Ethanol. The stretch is about a mile and three-quarters long, Lowary said. City officials want to extend utilities to the west so they can capitalize on possible commercial development between the city and the ethanol plant.

May 28 Groton Officials Seek More Input

ASHTON, Iowa - Broin Companies of Sioux Falls is building a plant near Ashton, about 60 miles northeast of Sioux City. The company, which operates the James Valley Ethanol Plant near Groton, expects to complete construction by fall 2004. It is expected to create 40 jobs.

May 22 Broin to Build Another Plant in Iowa

Glacial Lakes Energy, LLC (GLE) a 45-mmgy ethanol plant in Watertown, S.D has partnered with the Thunder Road amusement park of Watertown to convert all the go-carts to E-85 ethanol blend which will be supplied by GLE. Amusement goers to Thunder Road will be able to take a spin in the Glacial Lakes Energy go-cart named "E-85" which is the fastest on the track.  Each car is distinctly marked "corn powered--made in Watertown, S.D."  Not to mention the race track billboard that also promotes GLE and ethanol. Tom Branhan, GLE general manager stated "This is the first application in the nation where go carts have been converted to run on E-86 ethanol fuel".

May 22 GLE Finds Fin Way to Promote Ehtanol

The Cartavio sugar company will begin exporting ethanol to the U.S. within two months. Other sugar refiners, such as San Jacinto and Laredo, are expected to follow suit shortly, says Mr. William Arteaga, general manager of APPAR (Asociacion Peruana de Productores de Azucar), who added that the sustained production of sugar in Peru in recent years has generated an excess of 100,000 million tons, some of which is being exported or used in the production of ethanol.

May 20 Peru Co. to Begin Ehtanol Exports to U.S.

An ostensibly basic series of e-diesel flame arrestor tests conducted this spring could eventually help the experimental fuel attain engine manufacturer warranty acceptance, some proponents believe. 
 	
 Researchers have discovered that simple metal devices - commercially manufactured flame arrestors made of either wire mesh or coiled steel placed in the fill neck of an e-diesel vehicle tank - can effectively prevent ignition of the fuel caused by a spark or flame near the mouth of the fill neck. Notably, the study also verified what researchers have known for years: E-diesel has a low flash point, high vapor flammability, and is comparatively unstable to standard No. 2 diesel.
 	

 Nevertheless, the success of flame arrestors has researchers beginning to believe there are viable solutions to e-diesel's volatility problems. 
 	
 "Look, we've always known the implications of having a potentially dangerous situation with e-diesel being a flammable fuel," said Bob McCormick, senior engineer in the Center for Transportation Systems-Fuels Development Group at the National Renewable Fuels Laboratory in Golden, Colo. "Now, we've demonstrated that flame arrestors are effective (in preventing the flame from reaching the engine)."
 	
 The tests, funded by NREL in collaboration with the Department of Energy and the State of Illinois, were performed by the San Antonio-based Southwest Research Institute. The results will be published later this month.
 
 Arrest the flame, stop the problem 
 Prevention of tank ignition is critical for ethanol-diesel blends because the tank vapor space can be a flammable mixture of fuel and air under most normal conditions. Because e-diesel has a low flash point and high tank vapor flammability, it cannot be reliably and safely used like conventional diesel fuel. Currently, engine manufacturers will not warrant their engines for use with ethanol-diesel blends because of concerns about safety and liability. 
 	
 Of course, the volatility of ethanol-diesel blends is only a problem if the fuel ignites. Seize the flame before it reaches the tank, and the problem is eliminated, researchers say. 
 	
 "What's key here," McCormick told EPM, "is this study found that an inexpensive retrofit allows ethanol-diesel blends to be used in normal fuel tanks. And that's a very important development for this fuel." 
 	
 The tests were conducted on diesel/e-diesel tanks - vehicle tanks specifically - including a bus tank, a combine harvester tank, a pickup tank and a cylinder saddle tank used for large trucks - but was indicative of storage tank reactions as well, McCormick said. Standard diesel tanks do not need flame arrestors because diesel fuel is very stable and has very low vapor pressure. On the other hand, unleaded gasoline has such high vapor pressure that it pushes all the oxygen out of the vehicle tank, effectively reducing flammability to safe levels. Because gasoline vapor pressure is so high that it has a reverse effect on the flammability of the product in a tank, gasoline tanks, too, do not need flame arrestors. "When gasoline is in a vehicle tank, it is essentially too 'rich' to ignite," McCormick said.
 	
 The testing team used a standard formula of 15 percent ethanol blended with 80 to 83 percent No. 2 diesel with an emulsifier (a proprietary additive package added to the mix for blend stability). E-diesel is made by splash-blending conventional diesel, fuel-grade ethanol and additives together. No special blending protocol or temperature controls are required. The production and use of e-diesel is being explored in the United States because tests have shown that it may reduce certain components of exhaust emissions, especially particulate matter, compared to standard No. 2 diesel. The Unites States has a five billion gallon per year diesel market that represents a potential new use for several hundred million gallons of ethanol. Detailed production specifications are currently under development. Producers say e-diesel has a relatively low production cost compared to biodiesel, a much more established alternative diesel fuel that contain blends of vegetable oils, animal fats recycled cooking greases, or combinations thereof, mixed with No. 2 diesel. 

 
 Effective without slowing refueling 
 Various flame arrestors were examined in the tests. Each was a variation of two types: a wire mesh screen or a coiled, corrugated metal. McCormick said both are commercially available. Testing was carried out to, first, establish a need for the devices and, second, to ascertain which flame arrestors work and which do not. Cost was also a primary consideration. 
 	
 "Not only do they have to (arrest the flame)," McCormick said, "But they have to work well without restricting the flow of fuel into the tank. It can't slow down refueling. A normal tank takes in approximately five gallons a minute. The researchers took that into account." 
 	
 Demonstrations of flame arrestors did, in fact, show that they significantly mitigated the risk associated with using e-diesel, McCormick explained. The device works by effectively changing the geometry of the fuel tank neck. "The flame can no longer propagate." 
 
 How the tests were carried out -The research team prepared multiple types of diesel fuel tanks: a bus tank, a combine harvester tank, a pickup tank and cylinder saddle tank used for large trucks. (The cylinder tank actually has no fill neck - it's just a hole in the side of the tank - so they found that the arrestors did not work well in that case - so they welded a metal tube onto the tank that served as a fill neck and the arrestor worked efficiently). 
 
 -After choosing the appropriate tanks, the team cut a small hole in the side of each one to vent any possible explosions. They did this in order to save the tank from being destroyed. 
 
 -The team covered the holes with cellophane before testing. 
 
 -Next, they heated the tank to about 75 degrees Fahrenheit and used an electric igniting device to cause a spark at the mouth of the fill neck. 

 
 -If the flame arrestor worked, there would be no ignition - and no explosion. If the flame arrestor did not work, the fuel would ignite, and explosion would blast the cellophane from the side of the tank. (see explosion photo)
 
 A viable solution found
 "Foremost, the tests show that we do, in fact, need to use flame arrestors with ethanol-diesel blends," McCormick said. "The point was to establish a need and to come up with a practical design that worked well to prevent the ignition of the fuel and one that is cost effective. It appears that was accomplished." 
 	
 As it turned out, McCormick said, the wire mesh screens did work quite effectively but deteriorated and had to be replaced after a short time in use.
 "They basically fell apart," he said. "However, they were very inexpensive. . . a matter of pennies each." 
 	
 The corrugated metal arrestors, on the hand, were very durable - strong, long lasting and effective - but carry a cost of $10 to $20 apiece. "Still well within our range of affordability," McCormick said. 
 	
 How long did the testing take? 
 	
 "About a month," McCormick told EPM. "This particular research contactor (Southwest Research Institute) is able to move very quickly on these types of tests. They have an enormous amount of resources and a huge campus. NREL is a government lab. . . Do you have any idea how long it would take us, on our own, to get approval to blow up vehicle fuel tanks?"
 
 Where can the final report be found?

 "We have a draft report (from Southwest Research) now and are awaiting the final version," McCormick said in late May. "We should have the final draft in our hands by (early June).
 	
 "The report will be published by the end of the month. "We typically just post these studies online, but I am considering printing a number of hard copies for distribution for this one. . . it's an important report for the ethanol industry and for those interested in e-diesel developments."
 
 Other implications 
 "There has always been this looming safety issue with e-diesel," McCormick said. "When you're dealing with something that, if not correctly studied, could potentially lead to someone getting seriously injured, the testing is always extremely important. In that regard, I think these test were an important step forward. But it's going to take more research and testing in order to really know how to use e-diesel properly and safely." EP

Researchers find that simple metal devices, placed in the fill neck of an e-diesel vehicle tank, can effectively prevent ignition of the fuel caused by a spark or flame near the mouth of the fill neck. Is it enough for OEM approval?

Will flame arrestors get e-diesel out of the hot seat?

Understanding and evaluating "non-contact" cooling water is crucial to the successful siting of any ethanol plant. The constituents in "raw water" influence the quantity and quality of the discharge, capital equipment requirements and ongoing operating expense. Thus the evaluation of the "raw water source" should be taken seriously and treated in a scientific manner. The differences in water quality can dramatically affect the feasibility of a project.
 	
 The following examples are taken from three projects. Each project presented its own set of unique challenges. In these examples, the sites were eventually discarded due to water related issues. 
 	
 When evaluating raw water, the entire makeup of the water must be evaluated. Very rarely is there a single element in a water source that renders it unusable. The following examples are real analyses processed during site selection work U.S. Water Services participated in. All raw water analysis are listed as CaCO3 equivalents. 
 
 
 Site1
 This site would appear to have very good water quality. Low conductivity, iron, sulfates, nitrates and hardness. 
 

 This water source did not create a problem within the plant in terms of managing scale and corrosion in the cooling tower. However, it created problems when discharged. When this water is concentrated in the cooling tower and then discharged, the conductivity would exceed 1,800 umhos. The point selected to discharge the water had a state mandated limit of 1,000 umhos. In order to discharge the water and keep the concentration below 1,000 umhos, the total volume of water required for operating the cooling tower would have increased four-fold. 
 	
 If the water in the tower can not be "cycled up" during normal operations, the only other option is to increase the amount of water through reduced cycles of concentration. The state would not permit the project to draw that much water from the aquifer even if the well would have supported the increased demand.
 	
 Additionally, the chemical cost for treating the increased volume of water added substantially to the operating expense of the plant. Selecting and building an ethanol plant on this site would have contributed to an additional capital expense in excess of $500,000 for running discharge piping to a receiving source with enough flow to sufficiently dilute the discharge to stay within the mandated conductivity limits. The ongoing operating expense would have added $125,000 per year as well. 
 
 
 Site2
 This water supply has five negative aspects to it: High conductivity, high total and calcium hardness, high sulfates and borderline soluble iron. 
 	
 The discharge of this water to the receiving source was not the issue. The receiving stream had sufficient flow to dilute the conductivity limit the state had set but the combination of high sulfates and high hardness created issues with scale and corrosion protection in the cooling tower and "RO system." In order to supply the plant with the necessary quality of water, the majority of the water would have to be processed either through a "multimedia filter" or an RO system, in order to remove some of the negative elements. 
 	
 The final evaluation required an RO eight times the original size estimate. The additional capital required was in excess of $400,000. There was actually a decrease in operating chemical expense because the high quality RO water would be used in the tower, but the payback for the reduced chemical could not justify the upfront capital. 
 
 
 Site3

 This water source had high conductivity, and in this case, that one aspect was enough to create problems. 
 	
 The state mandated a discharge limitation of 2,000 umhos. The plant did not have the luxury of sending their discharge to a flowing stream to gain the benefit of dilution. In this case, the plant would have been in violation of state discharge limits if they did nothing more than pump the water out of the well and discharge it on the ground. In order to utilize this source of water, the project would have had to build a municipal style waste water treatment facility. The up front capital would have added millions to the project cost as well as hundreds of thousands of dollars to the annual operating expense of the plant. 
 
 
 Conclusion
 In all three of these cases, the water created significant enough issues that the site was not chosen. Water is only one aspect of the site selection process but it can add significant cost to the long-term operating cost of the plant. That information needs to be included in the site selection process or the consequences can be adverse.
 	
 For more information about site selection criteria as it pertains to non-contact water discharge, contact<a href="mailto: Mlocascio@uswaterservices.com"> Mlocascio@uswaterservices.com</a>. EP

The Cost of Bad Water

If longevity and dedication to a singular mission count for anything, Lucy Norton deserves shining accolades for promoting value-added agriculture in Iowa for more than 25 years. 
 	
 Norton, marketing director for the Iowa Corn Promotion Board (ICPB) and Iowa Corn Growers Association (ICGA), as well as executive director of the recently formed Iowa Renewable Fuels Association (IRFA), has been with the ICGA/ICPB since 1979. By today's standards, her prolonged tenure with the association is uncommon and inspiring. It's a professional feat she credits to the ever-changing nature of value-added agriculture in Iowa.
 	
 "Since the start of my career, this industry has been continually changing. There is something new around every corner - a new opportunity, a new challenge - always something," Norton said. "And I would have to say that my longstanding interest in promoting ethanol and value-added agriculture has also sustained the appeal of the job. . . Whether it was the development of new ethanol plants, new uses for corn, livestock feed or ethanol coproducts. . . there's always been some new energy to keep us going."

 	
 The ICGA/ICPB's 13-person staff is the largest state corn growers association staff in America, only out-staffed by its national partner, the National Corn Growers Association (NCGA). Norton, working with other staff members, spends about 75 percent of her hours at work on ethanol promotion, education and development.
 	
 The development of ethanol in Iowa has taken off rapidly over the last few years, during which time half a dozen new ethanol plants have come online in the state. The state now has nine large-scale ethanol plants online, many of which are farmer-owned, and three more large-scale plants under construction. 
 	
 ICGA/ICPB, which has given boosts to many of these projects through technical assistance grants, has played no small part in the development of the state's booming ethanol industry. Norton, herself has played a vital role, too. 
 	
 "Lucy is one of a very few people who have worked on ethanol from thevery beginning," said Craig Floss, CEO of the ICGA/ICPB. "She has an incredible command of the challenges that have faced ethanol over the years. In fact, she's an essential source of knowledge for the entire industry. . . Her expertise and persistence have played a key role in making ethanol a success both in Iowa and on the national level."
 
 Spreading the Word
 For over two and a half years, Norton and members of her staff helped the ICGA/ICPB's host monthly ethanol workshop series that helped hundreds of farmers in the state set their sights on ethanol production. The meetings outlined the considerations future ethanol producers had concerning the legal structures, economics and technologies involved in starting up a new plant. 
 	
 Norton also helped lead a seven-year ethanol technical service program that was very successful in educating auto dealers and mechanics about ethanol-related engine performance and mechanical issues. It was, in fact, largely an effort to dispel ethanol myths automotive technicians are often led to believe. The program also has helped mechanics and auto dealers form intelligent purchasing decisions for automotive repair and maintenance. On this program, the ICPB contracted with a local community college, Northwest Iowa Community College, to carry out the program and publish a quarterly newsletter called Fuel Tech Connection. 
 	
 "Every year, the students call each auto dealer in the state to get the word out," Norton said. "It's an effort to direct our education and awareness campaigns through polling. The college students put out feelers and that helps us get issues of concern addressed in a preventive manner. We also have had fuel technicians working with the program to address technical questions we encounter. These are former automotive repair instructors who can speak the same language as the mechanics and the auto dealers. As you know, that sort of understanding goes a long way."
 	

 Norton said these and other programs have given the association the ability to respond to the false claims of ethanol opponents and stop negative perceptions from spreading. 
 	
 The association also facilitates statewide fuel quality seminars and publishes a quarterly newsletter that reaches 3,200 people. Next year, ICPB will be facilitating regional fuel quality seminars in Iowa. They have also developed a consumer hotline for people with ethanol questions.
 
 Creating More Choices 
 The ICGA and ICPB are also making efforts to expand the ethanol market in Iowa by creating more ethanol choices for consumers at the pumps. 
 	
 "We've got a person out there talking to gasoline retailers and encouraging them to blend ethanol with not only with mid-grade gasoline, but also premium gasoline."
 	
 Already, ethanol-blended gasoline has a 63 percent market share in Iowa, and Norton believes that share will steadily increase as the demand for ethanol grows and acceptance of the fuel continues to improve.
 
 25th Anniversary of Ethanol-blended Gas in Iowa 
 This summer, the ICGA/ICPB will celebrate the 25th anniversary of the first time ethanol was blended with gasoline in Iowa, June 15, 1978. 
 	
 "We will be celebrating with various activities throughout the summer," Norton said. "Ethanol has an amazing story in Iowa and we are going to promote it all summer long."
 	

 Last summer, ICPB celebrated its own 25th anniversary. The ICPB is composed of 17 corn growers, elected by their peers, who direct funds collected through the Iowa Corn Checkoff Program - a program designed to promote Iowa's corn industry. The Iowa Corn Check-off Program, established in 1977, was the first corn check-off in the nation and has been a model for corn check-off programs in 18 other states. The check-off program collects a one-half cent for each bushel of Iowa corn sold into commercial channels.
 
 Norton's Achievements 
 In 1996, Norton was appointed by the governor of Iowa to represent the state's corn growers on a renewable fuels advisory committee. Through reappointment, she still holds the position. The committee provides assistance to startups - including ethanol projects - in order to foster growth of renewable fuels in the state. "It's an honor to serve," Norton told EPM. 
 	
 The Iowa Renewable Fuels Association (IRFA) is not a commercial alliance, but an affiliated group of Iowa ethanol producers that have come together to create new markets for ethanol in Iowa and create a focused direction for ethanol production in the state. The group met for the first time in January. Norton, through the ICGA/ICPB, is under contract to perform management duties for the association. 
 	
 "We are currently developing a business plan for the upcoming fiscal year and drafting up priorities - short and long-term goals - developing lobbying efforts and continuing our membership drive," Norton said. "Our goal is ultimately to be the number one ethanol producing state in the nation."
 
 Turning Challenges Into Opportunities Norton started working in ag-processing related positions early on in her career. The work came naturally to her and she believed in the products she was promoting, even though she had no rural connection to farming. 
 	
 "I'm actually from a metropolitan area and I never thought agriculture would be part of my future when I was growing up. However, my career has been intriguing and very rewarding. I couldn't be more pleased with the way it has turned out." 
 	
 The job does have its trials, of course. But Norton has a way of turning challenges into opportunities. 
 	

 "It's always a struggle to get people to accept new products. Ethanol, especially in the early years, was no exception," she said. "We had to work very hard to gain acceptance while at the same time developing the industry itself. We wanted to pattern the state's ethanol program after the one in Minnesota, but that's one thing we still don't have. Of course, it's very rewarding when you do achieve acceptance and you know, on some level, that you helped achieve that. Seeing the growth of farmer-owned ethanol plants and cooperatives is also very gratifying. Those are the things that make it all worth while." 
 	
 Norton believes the future of ethanol production and use, both in Iowa and across the nation, looks very bright. She says biomass will eventually compete with corn as a feedstock for production, but in a way that is positive for the industry's growth. 
 	
 "Biomass will play a role in the future of ethanol production, of course," she said. "Corn has taken us to where we are now and will continue to take us even further but biomass - and alternative feedstocks - will become increasingly important. Biomass feedstocks may eventually compete with corn, but I think most agree that will become necessary if ethanol production and use is to grow the way we all expect it to." 
 	
 Overall, Norton said, she expects the ethanol industry to continue to grow rapidly and she expects farmer-owned ethanol plants to exceed corporate production in Iowa in the very near future. 
 	
 "I would like to see Iowa become the number one producer in the nation," she said. "Considering our rate of growth, that is not hard to envision."
 	
 But there will be challenges for ethanol production in Iowa, Norton said, and the industry will need continued state support. "We will need to maintain an economic environment that invites value-added agriculture. That means sustaining (state assistance and state programming) that encourages ethanol production." 
 	
 On the regulatory side, Norton said, the state's producers need to maintain an open dialogue with regulatory agencies in order to make sure every environmental compliance measure is taken care of preemptively. 
 	
 "If we continue down the right path, we have a lot going for us," she said. EP

Norton has been promoting value-added agriculture and renewable fuels for nearly 25 years.

June 2003

Columns

A View form the Hill

The Way I See IT

Featured

How is Consolidation Shaping the Industry?

Power of Perseverance The Success Story of Utica Energy, LLC

Energy Factor: Natural Gas & Electricity Considerations for Startups

The Center of Everything Ethanol

Active Dry, High-Alcohol Yeasts: The New Yeasts on the Block

Will flame arrestors get e-diesel out of the hot seat?

The Cost of Bad Water

From the Get Go in Iowa

June 2003.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Columns

A View form the Hill

The Way I See IT

Featured

How is Consolidation Shaping the Industry?

Power of Perseverance The Success Story of Utica Energy, LLC

Energy Factor: Natural Gas & Electricity Considerations for Startups

The Center of Everything Ethanol

Active Dry, High-Alcohol Yeasts: The New Yeasts on the Block

Will flame arrestors get e-diesel out of the hot seat?

The Cost of Bad Water

From the Get Go in Iowa

June 2003