Panhandle Energies LLC, a Shreveport, La., corporation, has announced plans to build two $40 million ethanol plants in west Texas, the first in the state, The Associated Press reported Aug. 6.
 	
 One plant will be built in Dumas while the other will be located in Sunray. A third plant in Perryton was also mentioned as a possibility.
 	

 Each plant would produce 40 mmgy with the capacity to expand to 80 mmgy.

Plants Set for Construction in West Texas

Pacific Ethanol Inc., is looking for financing to build two ethanol plants in Tulare County, Calif., the Tulare Advance-Register reported on July 23.
 	
 One plant is projected for Visalia, near highways 99 and 198, while the other would be in Madera. The Madera plant, a $50 million project, could be producing ethanol by 2004.
 	
 Currently, California has only two facilities.

Two Plants Slated for Tulare County, Calif.

EPM: Briefly tell us about your work at the National Renewable Energy Laboratory (NREL) and PG&E before that? 
 
 YANCEY: In my nine years at NREL I held several positions within the Biotechnology Center for Fuels and Chemicals and the Biofuels Program. As the Biofuels Program team leader, I was responsible for developing cellulosic ethanol research and commercialization partnerships with industry. I also managed dozens of contracts for the development of cellulosic ethanol technologies. It was exciting to be a part of the world's foremost renewable energy R&D organization and work side by side with NREL's outstanding scientists. Prior to joining NREL I work at United Engineers and Constructors in Denver, where I designed part of the world's largest hazardous waste incineration facility. At PG&E I worked on geothermal power plants in northern California for 10 years. I did everything from startup testing to research and development and operations management. 

 
 EPM: In just over two years with BBI International, you have amassed an impressive list of completed projects. Give us the abridged version of your BBI International consulting resume.
 
 
 YANCEY: BBI International, under the leadership of its founders Mike and Kathy Bryan, has been providing consulting services to the ethanol industry since the early 1990s. However, in the last two years the BBI Consulting team has completed over 40 feasibility studies and a dozen business plans for our clients. A growing number of these projects are directly related to the conversion of cellulose to ethanol. Corn stover, wheat straw, wood waste and pulp mill sludge are just some of the biomass feedstocks we have evaluated for tomorrow's ethanol plants. Corn, barley and wheat are some of the more traditional feedstocks we have looked at. Our most recent success stories include Big River Resources, Lincolnland Agri-Energy and Central Illinois Energy Co-op, all now under construction. I fully expect two of the projects we are working on in California to result in the construction of new plants and several others are nearing financial close.
 
 EPM: You are director of consulting services for BBI International, which essentially means you oversee all aspects of carrying out ethanol feasibility studies and preparing business plans, site assessments, etc. Perhaps the work is not always glamorous, but it must be rewarding at times, especially when projects come to fruition and are brought on line successfully. What is it that you find most rewarding about consulting the ethanol industry?
 
 YANCEY: Not glamorous? What do you mean? I get to see the heartland of America and meet the people that feed the world – our farmers. I know why they are the most productive in the world because I have to negotiate contracts with them and they are very sharp! Helping our clients develop ethanol projects is very satisfying, but it is also satisfying to tell a client when they do not have a good project, too. That can save them millions of dollars by avoiding a poor investment. You can't build an ethanol plant anywhere in the country and expect that it will compete effectively in today's competitive marketplace. You have to have an edge.
 

 EPM: What do you find most "future producers" groups have in common? What critical information do they typically lack when you begin meeting with them? Are their expectations sometimes unrealistic, or are they generally pragmatic? And how do you mitigate those hopes, fears and expectations?
 
 
 YANCEY: Most groups have a common desire to add value to agriculture and to improve their communities by creating good jobs and economic development. They also realize that to do this, their ethanol project must make good business sense and be profitable. Most of our clients do not understand how difficult it is to get a project financed, however. The lenders are a tough crowd and will finance only the best projects. I like to work with clients that are skeptical and say, "show me" rather than clients that sometimes overlook the facts and are overoptimistic about their project. 
 
 EPM: As a consultant that is paid to analyze information in order to make projections – and sometimes predictions – about the future, do you find it difficult to tell your clients their dream of building an ethanol plant is not viable? How frequently do BBI studies tell clients not to pursue a certain project?
 
 YANCEY: About 20 percent, or one in five, of our feasibility studies has a negative or "no go" outcome. The BBI consulting team works with every client to find that niche or advantage for each project, something that can give the project an edge so that it remains competitive in tough times. It's hard to tell a client that their project will simply not work. We would like to see all of our clients succeed, but that is just not possible.
 

 EPM: Explain how BBI acts as a representative for banks?
 
 YANCEY: Before lending millions for a new ethanol plant, banks review, study and evaluate the project – they do their due diligence. Construction begins soon after loan approval and lenders need to know that the construction is progressing as planned. BBI conducts monthly inspections of several ethanol plants under construction for lenders. We certify that the project is on schedule, that the construction quality meets industry standards and that the project is on or under budget. We also review the status of project permits and look for anything that could delay the startup of the plant.
 
 EPM: How about those "Ethanol One-on-One" sessions? What's that all about? 
 
 YANCEY: Ethanol One-on-One is the name of the service that BBI Consulting provides to companies that are looking to get into the ethanol business or to improve their position in the industry. For a very reasonable fee, you get the combined experience and expertise of BBI International President Mike Bryan and myself for a full day, focused on your business goals and strategies. We have had some very good successes in this area.
 
 EPM: Moving on to the industry in general: taking a pragmatic view, where do you see the ethanol industry in 10 years? Past five billion gallons a year maybe? How about the commercial viability of cellulosic conversion to ethanol? Where will that be in 10 years?

 
 YANCEY: I see the U.S. ethanol industry at about six billion gallons in 10 years. This will require 60 new plants with an average production capacity of 50 million gallons each. The availability of capital to build these plants will be a key issue. Because of growing concern about capital, BBI has and will continue to organize seminars deigned specifically for lenders. These meetings, called Ethanol Lenders' Symposiums, allow lenders not familiar with the ethanol industry to become familiar with the issues and opportunities for financing projects.
 
 My crystal ball for cellulose says that we are beginning the "century of biotechnology." Biotechnology will allow the production of new and existing chemicals from non-traditional feedstocks. The development of low cost cellulase enzymes for converting cellulose to glucose is a good example. This and other innovations will make ethanol from cellulose feedstocks a reality in the very near future. 
 
 EPM: What trends do you see emerging in the ethanol industry today that you find particularly interesting or remarkable?
 
 YANCEY: I find it remarkable that the cost of new plants continues to decline while the energy efficiency continues to increase. Today's plants cost far less and are more efficient than plants built just a few years ago. We have some very innovative people working in this industry. 
 
 EPM: What pitfalls or challenges does the industry need to be aware of? What's our biggest challenge? 

 
 YANCEY: A major challenge facing the ethanol industry today is to develop new markets for ethanol in a logical and cost effective way. When new production capacity comes on line, the owner should not only have an ethanol marketing plan, but also a market development plan. Lowering the price of ethanol is not a good market development plan. It will open up new markets for ethanol, but at a significant cost to the entire industry. More effort needs to be made in developing new markets before your plant comes on line. The ethanol market is growing at a rapid pace, let's do it in the most cost effective manner possible. EP

EPM Talks with Ethanol Industry Consultant Mark Yancey

Mr. Pragmatic

A New York-based corporation has acquired a small sugar and starch waste-to-ethanol plant in Iowa and merged with a Florida-based technology provider that claims to hold a key to turning municipal solid waste (MSW) into fuel ethanol.
 	
 Xethanol Corporation, of Manhattan, N.Y., acquired Permeate Refining as part of a "strategic initiative" to become a leader in the emerging worldwide business of MSW-to-ethanol. Under the direction of President Chris d'Arnaud Taylor, Xethanol set out to aggressively acquire or deploy technologies that will extract the starch and sugars trapped in MSW.
 	
 "Our value proposition is that we can produce ethanol and valuable coproducts less expensively than can large agri-industrial corn-based ethanol processors who pay dearly for their feedstock," d-Arnaud Taylor said in a company news release in early August. "Our plants will be located closer to the waste sources which are also the ethanol consuming markets.
 	
 Xethanol Corporation completed an agreement for a joint venture with DDS Technologies USA, Inc., of Boca Raton, Fla., Aug. 7. Under the terms of the ten-year renewable agreement, the newly formed joint venture company, DDS-Xethanol LLC, will combine the proprietary DDS technology with Xethanol's newly acquired waste-to-ethanol resources to convert MSW and other organic waste matters into starch and valuable coproducts. The starch will be converted into fermentable sugars as a feedstock for making ethanol, according to statements from both companies. 
 	
 DDS-Xethanol anticipates that a minimum of four machines will initially be required. The project is estimated to generate net operating income of approximately $5 million annually from the sale of ethanol and other valuable coproducts. 
 	
 The initial phase of the project is expected to begin in early 2004 and calls for processing approximately 40 tons of biomass waste per day, per DDS machine in a 20,000 square foot facility co-located at Xethanol's Iowa facility, the former one and half-mmgy Permeate Refining plant in Hopkinton, Iowa. 
 	
 Ben Marcovitch, chairman and CEO of DDS Technologies said, "We believe our technology has significant potential in a broad array of industries. We recognize the opportunity of the waste-to-ethanol market and the importance attached to developing this industry by the Federal Government. By aligning DDS with Xethanol, whose core business is processing waste into ethanol, we can achieve our strategic growth goals more efficiently. We are confident that a marriage of DDS technology with Xethanol's waste-to-ethanol expertise can develop a whole new market for DDS. Xethanol's capability to co-locate a new DDS processing facility within their fully permitted ethanol plant in Iowa gives immediate impetus to this joint venture. We are confident that by working closely with Xethanol, DDS will capitalize on the growing market for ethanol as a clean alternative fuel source, and look forward to a very successful and mutually beneficial relationship."
 	

 Marcovitch concluded, "We are confident in our ability to establish additional revenue generating agreements with leading companies within agricultural and other industries as we continue to implement our strategic growth plan and expand the company." 
 	
 Mr. d'Arnaud-Taylor said, "DDS stands alone as a unique and viable low-operating cost recovery and extraction technology. Our newly forged alliance will capitalize on the opportunity to process multiple waste streams into ethanol and other valuable coproducts. After the initial phase, we expect to increase our production capacity requirements involving additional DDS units as we penetrate the market for processing other waste streams including municipal solid waste."
 	
 According to Xethanol Corp., Permeate Refining, Inc. is a fully permitted and operational ethanol plant located in Iowa that has been processing waste corn starch and off-specification candy waste as its feedstocks for over 10 years. "It has unique know-how and expertise in waste-to-ethanol processing," a company statement claimed. "It has a nominal capacity of two [mmgy] which is being upgraded to five million over the next months."
 	
 Formed over 10 years ago to process cheese whey (waste from cheese production) from a co-located cheese factory into ethanol, Permeate developed the capability to process multiple waste steams of different origin. Now, Xethanol is trying codify this valuable processing "know-how" into a proprietary technology platform to be deployed in subsequent acquisitions or projects. 
 	
 According to a company statement from Xethanol, the company has a strong investor base committed to growing a large and important enterprise in the ethanol industry and includes seasoned energy industry professionals and strategic investors from the food processing industry who recognize the potential for extracting monetary value out of waste products. Xethanol's strategic plan calls for growth by acquisition and new venture development with the goal of having a minimum installed capacity of 70 mmgy by the end of fiscal 2006. 
 	
 DDS Technologies USA, Inc. holds the rights to a revolutionary processing technology which maximizes the net output of a broad spectrum of agricultural products. The company's new DDS System utilizes a new longitudinal micrometric separator, along with other technologies, to separate various fractions (proteins, fiber, starch, etc.) and converts processing waste streams into value-added products for further processing or resale. The company's Web site can be found at www.ddstechusa.com. EP

Permeate Refining Acquired by Xethanol Corp., Small Sugar and Starch Waste-to-Ethanol Plant to be Site of New MSW Venture

MSW-to-Ethanol

The first thing director Rodney Bothast clarifies about his newly unveiled facility, the National Corn-to-Ethanol Research Pilot Plant (NCERPP), is the apparent misunderstanding of its title.
 	
 Indeed, commercial ethanol plants – sometimes pilot plants, too – are expected to produce ethanol in high enough quantities to turn a profit. But the NCERPP is not interested in ethanol marketing. Bothast suggests that the title "research center" would have been a more accurate name for the facility. In fact, he told EPM in late July, modifying the name has not been ruled out. 
 	
 "People hear 'plant' and they ask, 'when are you going to bring in [truckloads] of corn?'" Bothast said. "But the point is to bring in new technology so businesses can grow."
 	
 The NCERPP, located at Southern Illinois University in Edwardsville, Ill. (SIUE), is projected to open in September, although no specific date has been set. As construction crews finish detail work on the facility this month, a tentative ribbon-cutting ceremony is set for Sept. 22. House Speaker Dennis Hastert, R-Ill., Sen. Dick Durbin, D-Ill., and other congressmen are among those expected to attend.

 	
 The groundbreaking of the $20 million center took place August 27, 2001, and construction started the following November. The 36,000 square foot, two-story facility will be capable of taking in 200 bushels per day (bu/d) of corn and producing at least 500 gallons per day (gal/d) of ethanol. The building contains a full-support laboratory and administrative and research operation offices, among the operational plant. Soon government researchers, universities and private industries will be able to rent the building to start their own research of ethanol processes that have endless possibilities.
 	
 "There's nothing like this in the U.S. that would allow you to do this," Bothast said of the NCERPP, the largest pilot ethanol center in the United States.
 		
 A valuable tool to the industry
 The NCERPP, owned by SIUE, offers several unique aspects to ethanol research. First, it's the only building in the world that contains both corn wet and dry mills under one roof. It enables researchers to explore both processes together and, perhaps, draw conclusions based on comparisons. 
 	
 The center is also unique in that it allows for outside equipment to be added into the traditional ethanol-making process. Each part of the process is separated into modules: corn receiving and storage, corn milling, germ and fiber separation, starch and gluten separation, coproduct drying, steep water evaporation, starch cooking, saccharification, fermentation, distillation, dehydration and ethanol storage and loadout. However, if researchers want, they can insert their own pieces into the process. Half of the facility has a central space allocated for that to happen.
 	
 "It allows bringing in an operation on a flat-bed truck and bringing it into the main flow of the process," Bothast said. "We should get very good scale-up information [that will contribute to industry growth]." 
 	
 The NCERPP will have about 10 to 12 permanent employees, while government researchers, universities and private industries that pay to use the center will supply their own staff. Using the NCERPP for research is cost-effective for interested parties because the center is already built and stocked with equipment.
 	
 "If you try to do these experiments in an actual plant, you'd lose production and also a lot of money," Bothast said. "These new processes must be demonstrated so that financial people will buy into them."
 	

 Already, companies like DuPont, St. Louis-based Monsanto and at least one major ethanol producer have shown interest in using the facility, although exact dates for their research haven't been set on account of the unspecified opening day. As reported by EPM last year, Monsanto is seeking to develop corn hybrids – the "perfect ethanol corn" – that will produce more ethanol per bushel of grain than current varieties. Several other groups, including the National Corn Growers Association (NCGA), have contacted Bothast about utilizing the facility as well.
 	
 Monsanto hopes to use the center to further its research on ways to use crop analytics, biotechnology and conventional breeding techniques to improve the quantity and quality of bioenergy. Specifically, they have already identified High Fermentable Corn (HFC) hybrids for the dry grind ethanol process and have validated that they generate higher ethanol yields in commercial ethanol plants. With the NCERPP's help, Monsanto can continue to test, confirm and optimize HFC hybrids, in order to release the final results into the ethanol industry. 
 	
 "We believe the [NCERPP] is a tremendous addition to the BioBelt region," Monsanto spokesperson Lee Quarles said. "[Monsanto's] research at the NCERPP will bring additional economic benefits to corn growers and ethanol plants by helping improve the yields of ethanol per bushel and reduce production costs."
 	
 Quarles said Monsanto favors the NCERPP because the center will allow them to take improved ethanol hybrid products under development from the lab to test the concepts before making a large transition to a commercial setting. One of the challenges of performing HFC hybrid testing in commercial-scale plants is the inherent day-to-day process variability, which makes it more difficult to determine significant increases in ethanol yields. The NCERPP would minimize that variablility and provide a more controlled environment for doing high-quality research.
 	
 "We believe the facilty holds tremendous promise and we hope that it will be able to provide faster results for existing research than methods that are currently available today."
 
 Getting the ball rolling
 Durbin approached SIUE executives with the idea for a pilot plant 10 years ago when he was a congressman. After he became a senator, Rep. John Shimkus, R-Ill., took up what became a bi-partisan plan.
 	
 The state of Illinois considers the ethanol industry so important that it gave the NCERPP a reported $6 million in funding for construction. llinois ranks second-highest of all 50 states in U.S. corn production, providing about forty percent of all corn used to produce U.S. ethanol. 
 	
 The Illinois Corn Growers Association, Illinois Department of Energy and Natural Resources, Illinois Department of Commerce and Economic Opportunities and SIUE also sponsored the NCERPP.

 	
 The Agricultural Research Service of the United States Department of Agriculture (USDA) also contributed federal funds in the amount of $2 million for designing the center and $14 million for construction costs.
 	
 Bothast, a microbiologist and one of the world's leading ethanol and corn researchers, agreed to take the reins at the NCERPP because he had long been interested in cutting-edge biofuels research. In the energy crisis of the late '70s, he worked as a fermentation researcher at the USDA, trying to stretch several materials into ethanol. From experience, Bothast knew that if the NCERPP facility was built, it had to be done right. 
 	
 "I was approached about (the NCERPP) and I thought if something is going to happen, we're going to make it the best we can," Bothast said.
 
 A need for change
 As the future of the industry rides on efforts to expand markets for ethanol and ethanol coproducts while continuing to boost the profitability of production, Bothast hopes the NCERPP will be a major contributor to change. Research conducted there, for example, would explore the effectiveness of bacterial enzymes and bioengineered yeasts that improve the efficiency of fermentation, among many other areas of research. 
 	
 Bothast predicts that as production grows over time, trouble will likely arise with the overabundance of distillers grains. New methods of production, he says, could include producing more ethanol and fewer dry products or producing a higher-quality dry product. For example, one project may stem from the NCGA, which has discussed aiding Archer Daniels Midland Co. (ADM) with parts of a fiber utilization project that could be facilitated at the NCERPP. The goal of the project is to convert lower-value corn fiber to higher-value chemicals and oils - an emerging form of biorefining. 
 	
 The arrival of the NCERPP facility, Bothast said, is well timed. 
 	
 "In the U.S., [we are producing] 2.7 billion gallons of fuel ethanol from one billion bushels of corn," Bothast said. "If the U.S. energy bill gets put in place and we're producing [at least] five billion gallons by 2012, we're going to have to change what we're doing now." EP

National Corn-to-Ethanol Research Pilot Plant to hold September Grand Opening

NCERPP: Opening for Business

Several hundred people converged in Sioux Falls, S.D., for the American Coalition for Ethanol (ACE) 16th Annual Meeting and Ethanol Conference on July 30-August 1. Highlighted by the U.S. Senate's passing of the Energy Bill, the conference focused on topics ranging from the current ethanol market to where the future market is heading. 
 	
 U.S. Senate Minority Leader Tom Daschle, D-S.D., was Thursday's keynote speaker for the event, but since he was in Washington D.C. to support the Energy Bill, he appeared at the Sioux Falls Convention Center via satellite. Daschle expressed his determination in passing the Energy Bill, which would double the country's output of ethanol and put a ban on the additive MTBE, found to contaminate drinking water supplies.
 	
 "We will spare no effort to get this legislation passed," Daschle said to the ACE conference audience. "I can't think of any work that is more worth doing than working for ethanol."
 	
 On Friday, Sen. Jim Talent, R-Mo., had the honor of announcing the Senate's completion of passing the Energy Bill via satellite from Washington. 
 	
 "I think this fall we're going to have a pro-growth, pro-jobs Energy Bill and it's going to be led by a Renewable Fuels Standard," Talent said. 
 	
 The ACE Trade Show featured 117 exhibitors displaying products and services for the ethanol business. ACE acting executive director Ron Lamberty said the wealth of information distributed was valuable to everyone involved in the ethanol industry.
 	
 "We're trying to provide as much information [as possible about the current state of] the ethanol industry," Lamberty said. "We're more geared towards giving a broad update of what's going on in the industry as opposed to technical issues." 
 	

 Tom Houser, of CoBank, and Randy Aberle, of AgCountry Farm Credit Services, presented "By the Numbers: What Bankers Worry About," giving a detailed account of what bankers are looking forward to in ethanol plants. Other issues such as "Biodiesel – What it Takes to Make it Work" and "Changes in the Petroleum Industry" helped those in attendance better understand those aspects of the fuel industry. 
 	
 The future of ethanol was discussed in "The Ethanol Industry 10 Years From Now," and corn prices were the topic of the "Commodity Market Update." Other sessions included an ethanol plant update from 41 of the 73 plants in the United States and an analysis of ethanol's role in the Northeast.
 	
 The conference closed with a tour of the Dakota Ethanol, LLC, plant in nearby Wentworth, S.D. The building was the first farmer-owned plant in the state and also the first facility in the upper Midwest to produce over 40 mmgy. There are currenly 10 ethanol plants in South Dakota. 
 	
 Overall, Lamberty said the conference went off without a hitch. He credited the ACE staff for excellent planning skills.
 	
 "Fortunately everything was pretty much put together," Lamberty said. "We wanted to put on a good conference that had what people expected out of ACE."
 	
 Next year's conference is slated for July 28-30, 2004, in Duluth, Minn. EP

Sens. Daschle, Talent Address Industry Via Sattelite

ACE Conference & Trade Show Held in Sioux Falls

The Hilton Minneapolis buzzed with activity July 20-24 because of the U.S. Grains Council's 43rd Board of Delegates' Meeting and 4th International Grain Marketing Conference and Trade Show. Upwards of 400 people from all over the world gathered for the conference, the purpose of which was to provide an educational forum for the Council's customers worldwide. Those guests included grain traders, feed mill owners, as well as government and organization officials. 
 	
 The program included an update on the ever-developing distillers grains market. Two well-known experts, Steve Markham, senior merchandiser with Commodity Specialist Company, and Dr. Jerry Shurson, professor at the University of Minnesota, were joined in a panel discussion by Luis Pericas, senior trader with Ceralto – the largest importer in Spain – and Jorge Patino, the director of technology for Finca S.A., a grain company in Colombia.
 	
 Approximately 3.2 to 3.5 million metric tons of distillers grains are produced annually in North America, according to the University of Minnesota. In 1980, North American production of DDGS was 320,000 metric tons. 
 	

 In North America, the dairy industry consumes an estimated 45 percent of the DDGS produced, while the beef industry consumes an estimated 35 percent, the swine industry 15 percent and the poultry industry five percent, according to Markham.
 	
 This year, much of North America's DDGS exports will go to the European community, Markham said. The consumption of DDGS in Spain, for example, has increased in recent years, said Pericas, who works as a senior trader for Ceralto. The company imports approximately 100,000 tons of DDGS out of the 300,000 tons the country consumes. In addition to Europe, export opportunities for North American DDGS lie closer at hand in Canada and Mexico, which are accessible by rail, barge and container freight, Markham pointed out. DDGS sales can be made up to two years in advance, Markham added.
 	
 For the swine diet, the "new generation" DDGS is higher in digestible nutrients and is an economical partial replacement for corn, soybean meal and dicalcium phosphate. For poultry, "new generation" DDGS must be used, Shurson said. It is an excellent energy and phosphorus source and is an effective partial replacement for corn and soybean meal, Shurson added. For dairy cows and beef cattle, DDGS is an excellent protein source, he said.
 	
 More information about DDGS can be found at a Web site developed by the University of Minnesota at www.ddgs.umn.edu.
 	
 The dynamics of ethanol worldwide was the topic for another panel chaired by Theresa Schmalshof, Illinois Corn Marketing Board, which included C.M. Lynn, U.S. Grains Council - Taiwan, Brazilian Grains Council representative Alfredo Navarro de Andrade, and Mike Bryan, BBI International. 
 	
 The Minnesota and Illinois Corn Grower Associations co-hosted a riverboat trip on the Mississippi River where grain exports begin in the Midwest. Attendees viewed a river terminal and passed through a lock. Following the close of the conference, many participants also toured ethanol plants in the region. EP

Markham, Shurson Take Part in Panel Discussion

Grain, DDGS Marketers Meet in Twin Cities

Oh what a difference a few months make!  Prices have gone from "intolerable" levels back in March 2003 (over $9.00/MMbtu) to "barely tolerable" levels today ($4.70/MMBtu). What happened? Natural gas demand has been relatively low this summer due to: (1) moderate temperatures reducing gas-fired electric generation requirements and (2) demand destruction in certain energy intensive industries driven by high gas prices. Diminished summer demand has allowed significant natural gas supply to be injected into storage facilities for use this winter. Having a larger cushion of gas available for this winter has lessened concerns about a supply/demand crisis and allowed natural gas prices to begin moving to more reasonable levels. Where are prices likely to go in the future? Prices will continue to drop if we continue to have large weekly storage injections. For that to happen, moderate temperatures will have to continue throughout the U.S., hurricanes will have to avoid the Gulf Coast and price-driven load destruction will have to continue. If one or more of the above listed events doesn't occur, prices will likely climb as we move toward winter. Actual winter prices will be driven by national weather conditions and local operational pipeline conditions. If we have normal winter weather, demand will be significant, particularly with increasing levels of gas-fired electric generation units. Last winter, for example, we had the highest level of storage withdrawals per Heating Degree Day (HDD) since we started tracking that statistic seven years ago. Finally, drilling activity seems to have stalled both domestically and in Canada. As such, we may not be able to count on significant supply additions over the next several months. Bottom Line: Prices have dropped consistent with increasing storage inventory levels; however, as we look down the road we see factors that may turn the price trend back upward. EP

Relatively Low Summer Demand Settles Natural Gas Prices to Better Levels

A federal judge gave final approval to the 2002 sale of Minnesota Corn Processors (MCP) in Marshall, Minn., to Archer Daniels Midland Co. (ADM), the world's largest processor of corn, the Associated Press reported this month. ADM bought MCP and its spin-off businesses for $756 million. The sale was slowed when a group of antitrust experts expressed concern over alleged price-fixing in the markets of corn syrups and ethanol. ADM has been operating MCP since the deal was completed last September, the AP said.

Judge Finally Approves ADM Purchase of MCP

Alfa Laval has announced an addition to its "TurnKey Service," which cleans and replaces all brands of plates on heat exchangers in ethanol plants. Alfa Laval now has 31 service technicians located at regional service centers throughout the United States. Previously, the company's customers had to take the plates off heat exchangers themselves and send them to Alfa Laval. With the new service, a technician will visit the customer's plant to remove the plates from the heat exchanger and then transport them to an Alfa Laval service center to be reconditioned and regasketed to "good-as-new" level. The plates are returned, re-installed in the heat exchanger by the technician and hydro-tested on-site to verify that the heat exchanger is operating properly.
 

 For more information, visit www.alfalaval.com.

Alfa Laval Introduces Addition to TurnKey Service

Bugs Graham, one of the founding fathers of the U.S. ethanol industry, returned to Alltech's sales team, the company announced this month. Graham joined Alltech in 1984 in the alcohol division, but left to pursue personal business interests. Before coming to Alltech, Graham managed the Grain Power-Tucumcari plant in New Mexico in 1982. In 1980, he designed and built his own ethanol plant.

Alltech Welcomes Graham Back to Sales Team

China's biggest fuel ethanol facility is expected to start operating in September, Reuters News Service reported. The plant, which will be called Jilin Fuel Ethanol Co., has the capacity to produce 600,000 metric tons per year of fuel ethanol. It is located in China's top corn province of Jilin and will take in about two million metric tons of corn per year to produce the ethanol. More than two billion yuan, or U.S. $242 million, has been invested in the venture, Reuters said.

Biggest China Fuel Ethanol Plant Set for Start-Up

Husky Energy is conducting a preliminary review of the logistics of building an ethanol plant at the site of its Lloydminster upgrader, The Edmonton Journal reported 
 July 25.
 	
 The plant would meet increased demand when Saskatchewan makes ethanol a mandatory component in gasoline next year. Husky Energy is studying the engineering, infrastructure and feedstock requirements of the facility, which would produce 130 million litres of ethanol per year. According to the Edmonton Review, cost estimates won't be available until the review is finished, probably at the end of the summer.

Edmonton Explores Ethanol Plant Options

The Web site www.NJ.com reported Garden State Ethanol proposed the East Coast's first ethanol plant on Aug. 4. The $60-million plant, located on 292 acres in West Deptford Township, is expected to use 14.2 million bushels of corn per year. It will boost corn prices for farmers in New Jersey, Pennsylvania, Delaware and Maryland, NJ.com said.

Farmers Put Hope in New Jersey Ethanol Plant

OsterDowJones reported July 17 that Japan Bank For International Cooperation (JBIC) has agreed to finance Brazil sugarcane and ethanol producers to expand Brazil's ethanol production capacity. The project would also allow Brazil to supply Japan with up to two billion liters of ethanol per year in the medium term. Japan recently introduced legislation to allow for a three percent bio-fuel mix in gasoline starting in August. The mix will eventually be increased to 10 percent, representing a demand of six billion liters of ethanol a year in the long term, OsterDowJones said.

Japan Bank to Finance Brazil Ethanol Expansion

The National Corn Growers Association (NCGA) honored Sen. George Voinovich, R-Ohio, with its President's Award, an honor given to leaders who demonstrate great commitment to U.S. corn farmers. NCGA president Fred Yoder selected Voinovich because of his efforts in promoting the ethanol industry and supporting the renewable fuels standard (RFS) included in the energy bill being debated by Congress. He is also reworking the highway trust fund, which he hopes will also be added to the nation's energy bill.

NCGA Gives Sen. Voinovich President's Award for RFS Efforts

The Lancaster Chamber of Commerce and Industry announced its support of an $80 million ethanol plant to be built in Conoy Township in Pennsylvania, the Lancaster New Era reported July 22.
 	
 Penn-Mar Ethanol voted to pursue the construction on 65 acres along the Susquehanna River last month. The plant would convert 20 million bushels of corn into 55 mmgy of ethanol.

Lancaster Chamber of Commerce Supports Ethanol Plant

South Dakota-based Western Biomass Fuels has proposed building an ethanol plant in Weston County in northeastern Wyoming, The Associated Press reported in a July 24 article.
 	
 The plant, possibly to be built near either Upton or Newcastle, would use wood thinned from the nearby Black Hills National Forest to make the alternative fuel. Ethanol is usually made with corn but can also be made with biomass, grasses and trees.
 	
 The Associated Press said the plant would cost $25 million to $30 million and would join just one ethanol plant currently in the state.

Ethanol Plant Consideredin Weston County, Wyo.

Treasure Valley Renewable Resources (TVRR) announced its plans to build an ethanol plant in Oregon instead of Idaho, as originally planned, The Associated Press said July 24.
 	
 The company had hoped to locate the plant in Payette County, Idaho, but those efforts crumbled in May when county commissioners couldn't agree on a zoning change that could have gotten construction started.
 	
 Officials from Oregon, Malheur County and the city of Ontario, Ore., put together a multimillion-dollar package of incentives to lure the plant across the border. According to the Business Journal of Portland (Ore.), TVRR eventually chose 115 acres in Malheur County for its facility.

Ethanol Plant Ends Up in Oregon

It Began with the Amoeba

 
 This month's cover story is devoted to a discussion on the concept of biorefining. Interestingly, many scientists do not consider biorefining a new concept, but rather a return to processing biobased products – in place of petroleum – for fuel, industrial products, valuable chemical intermediates and food nutrients. Biorefining, the ability to break biomass down into its most essential components, is as old as life itself. In fact, we are all, in a sense, miniature biorefineries, processing food into hundreds of different nutrients and chemicals that power our bodies, helping us fight disease and giving us energy and good health. Perhaps the amoeba was the world's first biorefinery. So while Mother Nature has been biorefining for ages, the trick is to recreate this natural process on a commercial scale and make it economically viable. The Cargill/Dow facility in Nebraska is a great example of converting corn to higher value products through the biorefinery concept. Genencor, Novozymes, Alltech and Iogen of Canada have made tremendous strides in helping develop enzymes that make the biorefinery process more efficient and cost effective. The Department of Energy (DOE), through their regional laboratories such as NREL, has made the biorefinery issue a top research priority.
 
 Fuel ethanol is produced in a biorefinery, but as a relatively low-value, mass-produced product. There are hundreds of other higher-value products that can be produced from the same grain feedstocks. We are on the brink of major advances in the field of biorefining and, in the years ahead, farmers around the world will reap the benefits of a new era of value-added agriculture.
 
 USDA Task Force Underway
 
 I was fortunate to have been selected to serve on a nine-person task force appointed by Congress to investigate the possible creation of a United States Department of Agriculture Research Institute. Our charge is to review the research opportunities such an institute may provide and to examine the possible pitfalls as well. The United States Department of Agriculture (USDA) has some of the brightest and best researchers in the world, yet does not receive federal research funding proportional to their capabilities. Earmarks and special interests are sopping up more and more research dollars and agencies like the USDA are often hamstrung to do anything about it. The creation of a National Research Institute may help to provide a more focused research effort on the part of USDA and, in doing so, secure an appropriate amount of federal funding. The challenge before us is formidable, but we are committed to delivering to Congress our very best effort.
 
 Have a great month!
 
 
 Mike Bryan
 President, BBI International
 mike@bbiethanol.com

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The Way I See IT

Little Sioux Corn Processors (LSCP) celebrated its grand opening with a ribbon cutting ceremony among other events in Marcus, Iowa, on July 26.
 	

 Marcus Mayor Darrel Downs and neighboring Cleghorn, Iowa, Mayor Mick Wetherell cut the ribbon together on one of the hottest days of the year, said Verdell Johnson, a director at LSCP.
 	
 Approximately 1,800 people enjoyed plant tours and lunch served by the Cherokee County Cattleman's Association and Cherokee County Pork Producers. Keynote speakers included Bob Dinneen, president of the Renewable Fuels Association (RFA), and Ron Lamberty, interim executive director of the American Coalition for Ethanol (ACE).
 	
 The 40-mmgy dry-mill plant was designed and built by Fagen Inc. and utilizes an ICM Inc. process technology. It began production on April 3, and employs about 31 people, according to Johnson. The plant is located between Marcus and Cleghorn and is expected to produce about 128,000 tons of distillers grains per year. EP

Open House Includes Ribbon-cutting, Plant Tours, Lunch and Keynote Speaker

Little Sioux Corn Processors Celebrates Start of Ethanol Plant

Ten minutes after an air quality permit was issued for the Platte Valley Fuel Ethanol, LLC, plant in Central City, Neb., Fagen Inc. began pouring the concrete foundation. Construction crews are on a time crunch as the plant is due to produce 8,330 gallons of ethanol by June 30, 2004, in order to be eligible for state-approved tax credits.
 	
 The construction deadline is June 17, only 11 months away. If the project is successful, it will be Fagen's first plant built in that short amount of time.
 	
 "We were lined up and ready to go," plant general manager Tim Morris said of the July 15 outset. "We had a flying start and good weather to go with it. We feel confident that [the deadline] is not a problem."
 	
 The crew plans to work through the winter by having the building enclosed by the time snow falls. If it snows before then, tents will be erected to shield workers and the ground will be thawed to allow the work to continue.
 	
 When finished, the plant, which is owned and operated by Fagen Inc., should produce 40 mmgy of ethanol and take in 16 million bushels of corn annually. EP

Fagen, Inc., Hopes to be Finished in Less than One Year

Construction Begins on Nebraska Ethanol Plant

Makad Corp., of Vancouver, Wash., announced in July plans for a 17-mmgy ethanol plant near Williston, N.D., the Associated Press reported.
 	
 The news came one week after fledgling Red Trail Energy LLC, was created to plan a 50-mmgy ethanol plant in Richardton, N.D., and three months after the Dakota Renewable Fuels (DRF) group announced plans for a 30-mmgy plant in Valley City, N.D.
 	
 The Williston plant, to be called the North Dakota Ethanol Complex (NDEC), would use about 6.8 million bushels of corn per year and is slated to be ready for business in 2005. The ethanol produced would be shipped to eastern Washington. The North Dakota site was chosen because of its proximity to corn supplies.

 	
 The cost of the project wasn't released, but the plant would create nearly 60 permanent jobs and possibly as many as 400 jobs during peak construction. It would add about $4.5 million in state tax revenue and $1.5 million in local taxes over a four-year period, according to North Dakota Commerce Director Lee Peterson.
 	
 The NDEC would be a sister operation to a plant being planned in Boardman, Ore. Project developer Makad Corp. has aligned with Monsanto Enviro-Chem Systems, which is acting as general contractor on the project.
 	
 North Dakota already has ethanol plants running in Walhalla and Grafton. EP

Williston, Richardton, Valley City in Early Stages, Considering Construction

Three Ethanol Plants Planned for North Dakota

In an sudden turn of events late last month, the U.S. Senate revived an energy bill discussed in the 2002 legislative session and passed it by a vote of 84 to 14 on July 31. The bill, which includes a renewable fuels standard (RFS), replaced a current energy bill that senators were having difficulty agreeing on.
 	
 "Although it was a bit unorthodox, the Senate is to be commended for finding a way to pass an energy bill and move the issue forward to conference with the House," said Renewable Fuels Association President Bob Dinneen.
 	
 The Senate and House will go to conference committee in September after an August recess to discuss a final draft of the bill, which would then be passed to President George W. Bush for his signature.
 	
 To an extent, the decision was a step forward for ethanol advocates. The energy bill, as it stands now, would double the use of corn-based ethanol in gasoline while banning the additive MTBE, which has been found to contaminate drinking water. It would provide $16 billion in tax breaks and incentives to promote energy production and conservation. It would also spur a natural gas pipeline in Alaska and reverse a law that restricts merger activities of utility holding companies. However, talk of rewriting the bill has already circulated.
 			
 The Republican-controlled Senate's decision was a surprise because last year's bill was written by Democrats, who controlled the chamber last year. Sen. Pete Domenici, R-N.M., who is co-leading the conference with Rep. Bill Tauzin, R-La., said the Republicans are in majority and "we'll write a completely different bill." 
 	
 Last year, the Senate passed the energy bill by a vote of 88-11, but disagreements with the House killed the final draft when Congress closed.
 	

 President Bush urged both sides to quickly resolve disagreements and finalize an energy bill he can sign into law, according to several news agencies.
 	
 "The president and the administration have been encouraging the Senate to finish the energy bill. . . and get the bill to conference so the president can get the bill to his desk," White House spokeswoman Claire Buchan told the Associated Press. EP

By an Overwhelming Vote, RFS Moves Forward

Senate Passes Energy Bill, Moves Issue to Conference

Land O'Lakes Farmland Feed, LLC, told EPM this month that it is working with corn and livestock producers to enhance their profitability through the marketing and sale of ethanol coproducts – wet and dry distillers grains. It's an effort that, a company spokesperson said, has literally materialized within the past three years. 
 	
 Distillers dried grains with solubles (DDGS) and distillers wet grains (DWG), coproducts of the ethanol production process, are recognized as practical and cost-efficient feed supplements for cattle, and more recently, swine and poultry.
 	
 By leveraging its expertise and national cooperative feed distribution system, Land O'Lakes Farmland Feed is working to provide ethanol producers with a national outlet to market and sell their DDGS and DWG, the company said. The marketer of these two products for several ethanol plants, the company is also aggressively pursuing other ethanol operations being proposed or currently under construction. 
 	
 "Land O'Lakes Farmland Feed has made a major commitment to develop markets for these products," said Jim Jolly, Land O'Lakes national manager, distillers grains. "We see a great potential within the domestic markets, and will continue to be a leader in research, marketing and promotion throughout the United States. Our efforts will not only offer returns to our ethanol producers, but we feel we offer our end-users some distinct advantages as well." 
 	
 Currently, about 80 percent of the DDGS and DWG produced is fed to dairy and beef cattle. As product awareness grows, swine and poultry producers also are incorporating these cost-efficient feed supplement products into their feeding regimens. 
 	
 Industry analysts expect ethanol production to dramatically increase over the next five to ten years. Land O'Lakes Farmland Feed plans to continue developing markets for ethanol coproducts through numerous marketing initiatives. 
 	
 Land O'Lakes Farmland Feed, LLC, formed in 2000, is a national organization serving producers and their families through 2,800 local cooperatives throughout the United States. The company, in combination with its wholly-owned subsidiary Purina Mills, LLC, is North America's leading feed manufacturer providing producers, cooperatives and dealers with an extensive line of complete animal feed, ingredients and services designed to help agricultural producers, dealers and cooperatives compete in the global marketplace. EP

Company Plans to Ramp Up Efforts to Attract New Producers

Land O'Lakes Farmland Feed Maintains Strong Interest in Distillers

A biorefinery can be compared to other advanced forms of processing: a petroleum refinery that fractionates crude oil into fuels, waxs and asphalts, or a hog processing plant that finds a valuable use for every portion of the animal. 
 	
 Doug Van Thorre, president of Minneapolis-based Biorefining, Inc., makes yet another analogy. 

 	
 "It's like an auto body chop shop," says Van Thorre. "If you replace a fender on a used car, you might pay half the price of the car for the fender alone. That's because the combined parts are worth more than the whole. The same [principle] applies to bio-based products. . . the parts are worth more than the whole."
 	
 Van Thorre's simplified definition of biorefining is, to put it briefly, what biological scientists and process engineers are fast discovering: a seemingly endless array of valuable products that can be derived from bio-based materials. Crops such as corn, beets and soybeans, once milled for only their most basic and obvious properties, are today yielding high-value extracts.
 	
 "Instead of simply going after a few products, a biorefinery prefractionates the grain or biomass and extracts valuable components," Van Thorre says. "Until now, everything has been geared toward sucrose, but there is so much more to a kernel of corn or a sugar beet." 
 	
 Corn alone, he explained, contains 14 unique amino acids, four pentose sugars and a plethora of other valuable components waiting to be mined. 
 	
 Distillers grains, once considered a mere "byproduct" of ethanol, can yield such valuable extracts as Xylose, a low-calorie sweetener and fluoride replacement; L-Arabinase, used in disease-fighting medications; Galactose, a low-calorie sweetener used in soft drinks and snack bars; and Galactronic acid, a nutrient for functional foods and a replacement for phosphates in detergents. In fact, Van Thorre said, a single corn fiber could yield as many as 20 to 30 different products through fractionization. 
 	
 The working concept of biorefining, many believe, will someday be synonymous with ethanol production. Indeed, ethanol and distillers grains production are rudimentary forms of biorefining, Van Thorre said. Mining the plant for its extracts seems to be the next logical step. 
 	
 However, most U.S. ethanol producers have been impervious to the idea thus far, choosing to, as Van Thorre said, "make hay while the sun shines." 
 	
 "We have initiated talks with many ethanol producers, and several have approached us," Van Thorre told EPM. "But we have met a considerable amount of resistance to the concept. . . They all want to see somebody else do it first."
 

 ACE Ethanol steps up to the plate
 ACE Ethanol, LLC, a soon-to-be 30-mmgy ethanol plant near Stanley, Wis., is one producer that's been willing to step up to the plate, albeit with little to lose. 
 	
 Last year, Biorefining Inc. signed a letter of intent to build its first biorefinery adjacent to ACE Ethanol. Van Thorre said the entities involved reached terms of agreement this summer and plan to break ground on the biorefinery this fall.
 	
 Biorefining Inc. is partnering with the engineering firm of Sebesta, Blomberg & Associates, of Minneapolis, to design the biorefinery, and looking to the same group of contractors that built ACE Ethanol for construction services, Van Thorre said. 
 	
 "It should be completed by the fourth quarter of next year," he said. 
 	
 The $16 million plant, which will be a separate company named ACE Biorefining, LLC, will receive distillers wet grains – 20,000 tons of it per year – extracting starch, cellulose, protein (gluten), corn oil, Xylose, L-Arabinase, Galactose, and D-Galacturonic acid. The components will be used in products ranging from pharmaceuticals to sweeteners and food additives. Biorefining Inc. holds a patent on an extraction process which, Van Thorre says, eliminates the need for massive amounts of water and harsh chemicals. 
 			
 The process being utilized in Stanley, however, is not the process Biorefining Inc. wants to license. "This is not a retrofit to the front end of the ethanol plant," Van Thorre said. "They weren't willing to go that route." 
 	
 The patented process Biorefining Inc. eventually would like to license to the ethanol industry is known as the "Biomilling Process." The company recently filed a patent based on pre-fermentation technology.
 	

 According to Thorre, biorefining will help improve the overall profitability of the ethanol industry from both the production side as well as the processing of residual fiber. In theory, this technology should expand the number and value of marketable coproducts made available by separating the corn germ and pericarp from the starch in the corn kernel prior to fermentation. By eliminating most of the fermentation inhibitors (oil, protein and fiber), the process can also improve production yields of ethanol on a per bushel basis by five percent to ten percent. The combination of these two proprietary processes in conjunction with an ethanol plant, Thorre told EPM, would create a "total corn processing" facility or biorefinery. The biorefinery would produce profits from sales of ethanol and CO2 and would replace sales of distillers grains with revenue and profit streams from three higher-value coproducts extracted pre-fermentation. 
 	
 But it appears Biorefining Inc. is not the only company with a lock on the ethanol plant-biorefinery concept. 
 
 Broin, DOE developing 'revolutionary' biorefinery process 
 Last year, the U.S. Department of Energy (DOE) awarded biomass research grants to several ethanol producers and corporations having a vested interest in biorefining. 
 	
 Broin & Associates, of Sioux Falls, S.D., won a $5.3 million research grant to work in cooperation with DOE in a joint project to research and develop a dry mill biorefinery process for enhancing the economics of existing ethanol dry mills by creating additional coproducts and increasing ethanol yields. 
 	
 Last year, Jeff Broin, CEO of Broin Companies, told the Associated Press his company would nearly match the DOE grant with its own money. The research – kept tightly under lid – is being carried out at Broin's Scotland, S.D., ethanol plant, Broin Enterprises, Inc., an 8-mmgy facility that reportedly serves as a testing unit for the company's larger plants.
 	
 What is known about the project is that Broin is fractionating the bran, germ and endosperm of corn using both a proprietary process and proprietary equipment. This mechanical separation – deemed "revolutionary" by the DOE – will enable flexibility in feedstock utilization, substrate conversion and fermentation processes, while expanding options for new high-value coproducts.
 	
 What's more, with the help of the National Renewable Energy Laboratory (NREL), Broin is investigating – at bench and pilot-scale – the technical and economic feasibility of converting the hemi-cellulosic and cellulosic fractions of the extracted corn bran to ethanol. They are also trying to upgrade the bran and endosperm fermentation residues to high-protein feeds.
 

 
 Abengoa Bioenergy, Novozymes biorefining distillers, corn stover
 According to official DOE reports, Abengoa Bioenergy (formerly High Plains Corporation) is working hand-in-hand with Novozymes North America, VTT Findland, and NREL to develop a novel biomass-derived process technology that utilizes advanced biorefined distillers grains and corn stover blends to achieve significantly high ethanol yields while maintaining the protein feed value. 
 	
 This research, categorized as "the biorefining of distillers grains and corn stover," will reportedly enable a more economical, sustainable industry, reduce energy use per gallon of ethanol and increase ethanol yields. 
 	
 At both bench and pilot scales, the project is intended to demonstrate a viable pretreatment process for distillers grains and corn stover – a process that converts residual starch, cellulose and hemicelluloses into ethanol and high-protein animal feed.
 	
 After bench and pilot-scale processes are achieved, final integration of the large-scale pilot facilities will be performed at the 50-mmgy Abengoa Bioenergy plant in York, Neb. 
 
 Other producers, corporations working on biorefinery platforms 
 Corporations ranging from Cargill and Canadian-based Iogen to Shell and DuPont are also currently working on DOE-sponsored biorefinery research. 
 	
 Cargill, in collaboration with industry partners, is developing a new bio-based platform technology to produce a portfolio of products based on 3-hydroxyropionic acid (3-HP) produced by the fermentation of carbohydrates. For this project, a U.S.-based company called Codexis will optimize the genes and pathways of the carbohydrates for production of 3-HP, according to DOE reports. Cargill will then optimize the organism and fermentation process. 
 	

 Another interesting biorefining project now underway has Cargill Dow in partnership with Iogen of Ontario, Can., Shell Global Solutions and CNH Global NV (CNH). The team is working with DOE to develop a pilot-scale demonstration biorefinery project in collaboration with wheat, corn and rice-grower organizations. The project focuses on process and fermentation technologies, according to DOE reports, as these will constitute the "heart" of the economically and environmentally sound biorefinery of the future. The project's primary aim is to establish a commercialized lignocellulosic biorefinery that cost-effectively produces sugars and chemicals such as lactic acid and ethanol. The project will give growers – and grower organizations – a "first opportunity" to participate in the commercial development of these technologies. 
 	
 Furthermore, DuPont is working with DOE in a joint venture to build a "bio-based" production facility. The plant will utilize new technology to convert corn and stover into fermentable sugars for "parallel production of value-added chemicals." DuPont is currently collaborating on the project with NREL and a company named Diversa, according to DOE reports. 
 	
 A corn fiber separation project, also an emerging form of biorefining, seeks to develop technologies that make it viable to recover hemicellulose, protein and oil components from corn fiber. Subsequently, these components would be converted into high-value products. The National Corn Growers Association (NCGA) is reportedly leading a team to conduct pilot-scale testing to validate the process prior to full-scale commercial implementation. DOE said the team includes business managers, engineers, chemists and biochemists from Archer Daniels Midland Co. (ADM) and the Pacific Northwest National Laboratory (PNNL). 
 
 
 Aulich, EERC explore chemical intermediates
 Ted Aulich, a process chemist at the University of North Dakota Energy & Environmental Research Center (EERC), is working with a small team of researchers to develop a biorefining concept centered around extracting valuable chemical intermediates from the ethanol production process. 
 	
 The EERC's biorefining process is unique, however, in that it divides – or reroutes – the corn glucose feedstock on the front end into two streams: one destined for ethanol production (yeast fermentation) and one destined for a carboxylic acid process (bacterial fermentation). 
 	
 The EERC's concept, Aulich said, is to use dual fermentation biorefining, direct esterification and a method called Guerbet catalytic condensation. 
 	
 The result of dual fermentation would produce coproduct options that would include fuel ethanol, lactic acid, succinic acid, ethyl lactate, ethyl butyrate, ethyl acetate and methyl acrylate. 

 	
 The result of catalytic condensation would produce coproduct options ranging from fuel ethanol to butanol and isobutyl acrylate.
 
 Minnesota launches biorefining center, AURI supports biorefinery research
 The University of Minnesota is also exploring biorefining through its Center for BioRefining, a program affiliated with the university's Initiative for Renewable Energy and the Environment. 
 	
 The proposed center will consist of a network of multi-disciplinary researchers holding teaching, research and extension positions at the University, as well as industry and government collaborators. This combination of the University's multi-disciplinary experts and interested private and government investigators will enable the university to establish research programs and attract funding to develop viable technologies for biorefining. 
 	
 Minnesota has been a pioneer of sorts in biorefining, with the state's Agricultural Utilization Research Institute (AURI) leading the way with both support and research. In addition to its own biorefinery research, AURI supports industry. In fact, AURI approved an $85,000 matching grant to Biorefining Inc. in 2002 to help the startup company commercialize its efforts. 
 
 Trade associations and non-profits supporting movement 
 Nationwide, the biorefinery movement is finding support from groups that represent farmers, ethanol producers, pharmaceutical and neutraceutical manufacturers and the like. 
 	
 In addition to the network of support received by ethanol trade associations like the Renewable Fuels Association (RFA) and the American Coalition For Ethanol (ACE), ethanol producers interested in biorefining concepts are finding valuable resources in groups like the New Uses Council (NUC) and its sister organization, Biobased Manufacturers Association (BMA). The National Corn Growers Association as well as the Corn Refiners Association (CRA) are also paving the way for biorefining. 
 

 These groups, and others, are working together to bring biorefining to the forefront of America's international, industrial, energy and environmental landscapes. 
 	
 The NUC calls the movement a "bioeconomy transformation," as Americans strive to transform an economy essentially dependent on fossil energy to one increasingly reliant on biofuels, biopower, biobased products and renewable energy. 
 	
 Like ethanol production alone, biorefining is a movement - a return to biobased products driven by issues related to sustainability of natural resources, human health, environmental quality, rural economics, and national security.
 	
 Perhaps, Van Thorre summed it up best in the April issue of Minnesota Business, when he explained how the vision for his company surfaced. "It was like a light bulb going off in my head," Van Thorre said. "I just thought, 'You have all these biomasses, why not take what Mother Nature gives you [and] break it down into its component parts?'" EP

Government and private industry are working with U.S. ethanol producers to develop biorefining processes that take grain and biomass further than ever before. Will these new high-value products transform the way we think about ethanol production?

Breaking it Down Biorefining Concepts Hit the Mainstream

Machine Description: 
 A decanter centrifuge, or horizontal solid-bowl centrifuge, is a mechanism used to dewater spent grains. A decanter is one type of centrifuge among perhaps 30 or more manufactured worldwide. The machine's function is to separate - or literally decant - liquids from solids in the ethanol-making process. A typical 40-mmgy ethanol plant would install four, sometimes five, decanters. 
 	
 Sharples, a company purchased by Alfa Laval several years ago, arguably supplied more decanters to first-generation U.S. ethanol plants than any other manufacturer of the era. In fact, many of the used and reconditioned decanters available today are Sharples machines. Known for lasting durability - but not necessarily great efficiency by modern standards - it is not uncommon to find robust Sharples decanters in use today that were originally manufactured in the early 1970s. 
 
 The Leading OEMs: 
 While several international companies manufacture new decanter centrifuges, the U.S. ethanol industry is supplied principally by three original equipment manufacturers, or OEMs: Westfalia Separator, Inc., with sales offices in Northvale, N.J., Alfa Laval, with sales offices in both Oak Brook, Ill., and Richmond, Va., and Flottweg Separation Technology, of Florence, Ky. 
 

 Used, Reconditioned Sales & Service:
 The decanter aftermarket is made up of several small companies that sell used and reconditioned machines and also service existing machines for producers. 
 	
 Bensenville, Ill.-based Aaron Equipment, a third-generation family-owned business, is one of the largest dealers of new, used and reconditioned process equipment in the world and the largest international dealer of used and reconditioned centrifuges. Aaron Equipment has been selling used centrifuges, dryers, evaporators, stand-by generators, seed tanks, fermentation tanks and other process equipment to the ethanol industry since the early 1980s.
 	
 Over the last decade, Aaron Equipment has supplied many of the used and reconditioned Sharples centrifuges used in the ethanol industry today. The company remains concentrated on supplying used and reconditioned Sharples centrifuges with "state-of-the-art, new drive and control systems" that meet industry standards. In addition, the company has been involved in selling surplus parts and equipment from ethanol plants. 
 	
 Roemer Machine of Davenport, Iowa, is a service provider that ordinarily rebuilds decanters purchased from Aaron Equipment's inventory. Roemer Machine is arguably the ethanol industry's most experienced decanter reconditioning and rebuilding service provider, with 34 years in the business. Producers say the company has impeccable quality standards and has earned one of the best reputations for machine repair in the ethanol industry. In fact, some of the repair procedures and specifications the company pioneered are today's industry standards.
 	
 "Service is the name of our game," Roemer Machine shop supervisor Carl Stark told EPM. "About 70 percent of our business is in the ethanol industry."
 	
 Jenkins Centrifuge, of North Kansas City, Mo., is a broker and small OEM that offers ethanol producers reconditioned decanters, as well as decanter rebuilding and repair services. Owner Doc Jenkins has a team of 27 employees primarily dedicated to rebuilding decanters. However, due to demands from its customers, Jenkins Centrifuge began manufacturing its own make of decanters (largely for the meat-packing and rendering industry) in 1990. Jenkins told EPM his company sells about four or five new decanters a year. 
 	
 In addition, Kyte Centrifuge Sales & Consulting (KCS & C), of New Bern, N.C. is a small broker that offers the ethanol industry used and reconditioned decanters and decanter parts. KCS & C, operated by Ken Kyte, sells reconditioned centrifuges and offers testing services, process recommendations, troubleshooting, inspections, reconditioning assistance, parts location assistance, appraisals and centrifuge disposal. 

 
 Cost, Materials & Engineering:
 While decanters are not particularly substantial in size, the machines are highly engineered and, as a result, quite expensive. Purchased new, the leading models range from $250,000 to $400,000 apiece, according to two industry sources. 
 	
 According to Aaron Equipment owner Alan Cohen, decanter centrifuges, both new and used, are costly because an extensive amount of engineering goes into the equipment's design; the raw materials used to manufacture the equipment are very expensive (e.g., stainless steel centrifugal castings and carbide composite wear protection), and the manufacturing process entails a great deal of high-tolerance machining.
 	
 For this reason, Aaron Equipment, Roemer Centrifuge, Jenkins Centrifuge, KCS & C and other dealers source, supply and sometimes recondition used decanter centrifuges, offering models from the leading manufacturers at reduced costs, they told EPM. 
 	
 Buying used decanters, while often considered a risk and a sacrifice on new technology, can save producers 20 to 40 percent - often more. For instance, Jenkins told EPM his company could remanufacture a used Sharples centrifuge for approximately $100,000. 
 
 Manufacturers' Claims: 
 Most dry-mill ethanol plants coming on line today are purchasing new decanter centrifuges, mainly from Alfa Laval, Westfalia and Flottweg. EPM learned that at least one dry mill that came on line in 2002 purchased multiple reconditioned decanters from a broker, but was considering replacing them with new decanters this year or next. 
 	

 Cohen and Jenkins claim little or no operational difference between a new decanter centrifuge and a properly reconditioned machine. The disparity, they assert, is in price and time of delivery. They say a new decanter could take several months to build and deliver, while a remanufactured decanter could be ready in less than six weeks. Aaron Equipment currently has about 325 decanter centrifuges in stock and offers all the major manufacturers' models, Cohen told EPM.	
 	
 However, the manufacturers contend, the turnaround time on a new centrifuge for an ethanol plant under construction is not problematic because it takes nearly a year to build the facility, giving the manufacturer several months to assemble and deliver the centrifuge. 
 	
 More importantly, today's decanters are higher-speed, higher-integrity versions of the models manufactured two decades ago. 
 	
 Higher speeds provide higher G-forces and greater separation efficiency, the OEMs said, and new decanters have built-in pumps for pressure discharge of the thin stillage, meaning there is no need for tanks, pumps or controls under the centrifuge. New decanters from Alfa Laval, Westfalia and Flottweg generally have lower motor horsepower requirements and a smaller footprint than old models. And there is evidence that new decanters provide cleaner thin stillage and drier wet cakes then the previous models, one OEM said. 
 	
 "There's simply no comparison [of the new vs. the old]," a leading manufacturer's rep told EPM. 
 	
 Furthermore, the manufacturers asserted, even though many reconditioned decanters are sold with warranties (Aaron and Jenkins both offer solid warranties), buying new typically comes with an assurance of having the latest technology and the best technical support structure available; these contracts typically include service and parts replacement guarantees and other advantages. 
 
 Disparity of Opinions: 
 As expected, companies that sell remanufactured decanters stand behind their machines whole-heartedly. Jenkins, for example, frankly told EPM, "There is no reason to ever scrap a centrifuge." 
 	
 The major manufacturers - and apparently the leading ethanol plant builders - tend to disagree.

 	
 "Even when the machines are reconditioned, they are still used. It's very similar to buying a new car versus a used one," one sales representative said. "You can buy new parts, but you are still putting them into old, tired machines."
 	
 The OEMs also say new decanters run more efficiently and have lower operating costs.
 	
 Cohen said, the top ethanol plant builders use new centrifuges to trim down design time and also to transfer process guarantees to the OEMs. But that can be avoided, he said. 
 	
 "If an ethanol plant knows its flow requirement, it can save a great deal on used or reconditioned centrifuges," Cohen said.
 	
 Indeed, manufacturers of new decanters will sometimes dabble in used equipment as well, but that usually means decanters that were used for a few years - or even as little as a few months - in a pilot plant or research setting. Companies selling used and reconditioned decanters will sometimes sell machines that are up to 20 or 30 years old, but offer newer models as well. 
 	
 "Many of the centrifuges we provide are unused or have only been in service a short time," said Whitney Craig of Aaron Equipment. 
 	
 Interestingly, the OEMs and used dealers both provide service support and parts for reconditioned centrifuges used in the ethanol industry. They generally provided new drive and control systems with full mechanical warranties on the centrifuges themselves. 
 	
 Manufacturers say their equipment is built to last about two decades. While the conceptual design of decanters has not changed much over the last 20 years, the systems built today are computerized. According to the manufacturers, that means getting parts for used models sometimes entails obtaining hard-to-find drawings and parts that are in short supply, and also custom-modifying machines. 
 	

 Find out more about used and reconditioned decanter centrifuges at Aaron Equipment's Web site, www.aaronequipment.com; Roemer Machine at www.roemermachine.com; KCS & C at www.kcentrifuge.com; and Jenkins Centrifuge at www.jenkinscentrifuge.com. 
 	
 Listings for the Alfa Laval, Westfalia Seperator and Flottweg can be found on Page 80 of the 2003-2004 Fuel Ethanol Industry Directory. EP

Most startups are installing new machines, but purchasing second-hand decanter centrifuges is a technology sacrifice some ethanol producers are willing to shoulder. Several U.S. dealers and brokers offer a variety of used and reconditioned decanter centrifuges. EPM explores the pros and cons of this option.

Spinning Again

There's only one reason to calculate how much ethanol you can extract from a bushel of corn. It's a handy measure of how efficiently your plant converts starch or fermentable sugars into fuel. A high yield gives you bragging rights to high performance. 
 	
 Given the importance of making a claim with a concrete number attached, it shouldn't be surprising that ethanol yield is one of the most abused performance parameters in the industry. There are many games people can play to exaggerate the result. Things aren't always what they seem. So let's take a look at seven ways inaccuracies can creep into the calculations and skew the numbers. Your own. And your competitors'.
 

 You can be hot or cold in determining yield.
 Yield is traditionally stated in terms of gallons of ethanol per bushel of grain. The first problem is to define "what is a gallon of ethanol". A "gallon" is a volumetric measure equal to 0.1337 cubic feet (3.785 liters). 
 	
 How much ethanol will a gallon container hold? Well it depends on the temperature of the ethanol. If you fill the container to the brim with ethanol at 60 degrees Fahrenheit and then heat it to 100 degrees, it will overflow and 2.5% of your ethanol will spill. Why? Because liquids expand when they are heated and contract when cooled. So a one-gallon container holds 2.5% less ethanol at 100°F than it does at 60°F. 
 	
 Our first problem then is to establish the temperature to use as the basis for our one-gallon measurement. That's not so difficult, because the decision has already been made for you. It is an accepted practice that ethanol for commerce is measured at 60°F (15°C), and most quality flow meters are temperature compensated to correct for temperatures higher or lower than 60°F. However, the ethanol that flows to your storage tank is rarely as low as 60°F. It's normally more like 100°F, so if you just "stick" your tank or rely on a tank gauge, you will think you have more ethanol than you really have. You must always adjust (shrink) the volume from that measured-at-tank-temperature back to 60°F. A 2.5% difference may seem small, but that "little" error will affect all your calculated efficiencies (capacity, yield, energy consumption), and besides that, your accountant will wonder where the rest of the ethanol went. A 40 mmgpy plant will show a discrepancy of one million gallons annually between your actual production and your tank measurement.
 	
 You can rest assured the market will buy either by weight or through a temperature-compensated meter.
 
 What does a gallon weigh?
 If we instead measure our production by weight, we need to know how many pounds a gallon of ethanol weighs at our reference temperature, and we can just weigh it to determine how much ethanol we produced, right? Well there's another problem. When I left the aerospace industry in the late 70's and became an "alcoholic," I was very frustrated because all the reference books used in the chemical engineering field listed different values for the density of ethanol. If you check "Perry's Chemical Engineer's Handbook", the "CRC Handbook of Chemistry and Physics", the "International Critical Tables", "Lange's Handbook of Chemistry," and other chemical references, you will find conflicting data ranging from a density of 6.57 to 6.62 pounds per gallon. Depending on which value you use to measure your ethanol, it can overstate or understate your yield by up to 1%. It doesn't sound like much, but for a 40 million GPY plant, it can cause an error of 400,000 gallons per year.
 
 The other barriers to accuracy.
 Problem one: most technical data is compiled for pure anhydrous ethanol. Your fuel ethanol plant doesn't produce pure ethanol. It will contain variable amounts of fusel oils, heads and water, each of which affect the ethanol weight. For example, if your ethanol contains 1% water (an amount allowed by ASTM Specification D 4806-01 for fuel-grade ethanol), it will increase your ethanol density by 0.4%. 

 	
 And what about the grain? A bushel is also a volumetric measure, but it's accepted for commercial purposes that a bushel of corn weighs exactly 56 pounds. But what about trash? Corn can contain from 1% to 3% trash (I've seen some as high as 8%). It is not fair to hold your ethanol plant responsible for not converting the trash to ethanol, so we normally include only the cleaned corn that entered the hammermill in calculating yield.
 	
 Moisture also varies from one load to another, and it generally declines the longer the corn remains in storage. The difference between 13% and 15% moisture corn doesn't sound like much, but a plant that yields 2.60 gallons per bushel with 15% moisture corn will produce 2.66 gal/bu with 13% corn.
 	
 Depending on the corn variety, growing season, climatic conditions and numerous other factors, the starch content of corn typically ranges from 68% of the bone-dry weight of the corn to over 74%. Starch is the only component that your plant can convert to ethanol. Well, to be more accurate, some grains such as wheat also contain small amounts of sugar that will convert to ethanol. If present in significant amounts, any C6 sugars should also be included as fermentable substrate.
 	
 Another big error can be introduced by calculating your performance in terms of denatured ethanol. Some simply call it "fuel ethanol". Unless you have a petroleum refinery as part of your ethanol plant, you did not produce the denaturant, and you should not include it in your performance calculations unless you make it very clear to your board (and to the other ethanol plant managers you're bragging to) that you have done so. Calculating your performance based on denatured ethanol will overstate all your performance parameters by 4.76%.
 So what is your bottom line?
 Let's look at the effect all these factors can have on calculated yield. Let's assume we have two plants that are each well engineered, maintained and operated, so that each one is able to convert one pound of starch into 0.52 pounds of ethanol. One plant calculates yield based on absolute (200 proof) undenatured ethanol adjusted to 60°F at 6.60 pounds per gallon, and uses corn with 15% moisture and 69% starch. The yield is then calculated as: 
 
 (1.00 - 0.15) x 56 x 0.69 x 0.52 / 6.60 
 = 2.59 gallons per bushel
 
 Not bad, but not spectacular either. And it's probably below the yield guaranteed by your plant builder. But look at your guarantee language, and you will probably find that the calculation basis is more optimistic (or not stated at all). 
 	

 If the other plant assumes as a basis 6.58 pounds per gallon of denatured ethanol with 1% moisture (sometimes just called "fuel ethanol"), and corn with 13% moisture and 74% starch, the calculated yield would be:
 
 (1.00 - 0.13) x 56 x 0.74 x 0.52 x 1.0476 / (0.99*6.58) = 3.01 gallon per bushel
 
 Quite a difference…. and all with the plant yielding exactly the same 0.52 pounds of ethanol per pound of starch. 
 	
 Let's put some dollar signs in this equation. We've already established for the purpose of this example that the two plants had identical actual yields, so at the same production rate they would use the same amount of feedstock. But what if the two plants actually did have different yields of 3.01 and 2.59 based on the exact same yield calculation assumptions? At 40 million gallons per year, the plant with a yield of 2.59 would use 2,154,979 more bushels to produce the same amount of ethanol as the plant achieving a comparable yield of 3.01. Assuming $2.00 corn, this amounts to an additional $4.3 million in corn purchases per year for the lower yield plant. Allowing for approximately one third of this cost to come back in the form of extra DDGS revenue for the plant with the lower ethanol yield, this equates to a net difference of approximately $2.8 million to the bottom line with all other factors being equal. 
 	
 Let's look at this from a sensitivity analysis standpoint. This is a linear equation, so maintaining the 40 mmgpy plant and $2.00 corn assumption, your bottom line would be affected about $100,000 per year for every .01 distortion in yield. You can see that as you buy a new plant with yield guarantees or benchmark your existing plant against the industry, it certainly pays to become expert at how to define and/or calculate yield.
 	
 Remember that all plant performance calculations will be distorted by these same factors. 
 	
 There are other games you can play to enhance plant performance, but usually with a negative impact on plant profits. For example, if you use an overdose of enzymes or yeast to boost yield, you will produce slightly more ethanol, but the additional yield will probably not be worth the extra cost. 
 	
 So the next time one of your friends tells you his plant yields over 3 gallons per bushel, ask him, as Paul Harvey would say, to tell you "the rest of the story." EP

7 Games People Play

The corn market was in freefall in July as crop ratings improved early and rains were plentiful for the first half of the month. The high for September corn in July was made on the first at $2.25; from there prices collapsed down to new contract lows at $2.04.5, made on July 25. The September contract closed at $2.06 at the end of the month. With the majority of the pollination completed, the corn market will have a tough time staging a big rally. Corn ratings on the August 4th crop progress were rated 67 percent good-to-excellent, a decrease of 3 percent versus the last week of July and versus 41 percent the same period a year ago. However, funds remain on the short side of the equation. Therefore, any dry and heated weather conditions could lead to fund buying, developing a small near-term rally in the futures market. At the time of this publication, private analysts had projected a U.S. corn production figure of 10.30 to 10.50 billion bushels. FCStone released the 2003-04 corn production figure at 10.416 billion bushels, resulting in a yield of 144.7 bushels per acre. This compares to the July USDA projection of 142.7 bushels per acre and a production figure of 10.270 billion bushels.  The market will focus on the August crop report released August 12. Longer term, new crop prices look to settle in the sub $2.10 range with weather being the driving force behind any major market swings. EP

Corn Prices Collapse Under July Conditions

Distillers dried grains has been steady for the past few weeks, with prices in Minnesota and Iowa ranging from $70-75 per ton. Early summer weakness has been alleviated not only by good demand from hogs and poultry, but from expanded export demand from Europe and Central America. There has been increased interest as well from the Pacific Rim, which was well-represented at the recent U.S. Grains Council Conference in Minneapolis.
 	
 Looking ahead, the DDGS market will be directly impacted by several things. The first is the price of corn, which looks to be affected by a bumper crop, and soybean meal, which is becoming increasingly competitive versus distillers grains. The price of natural gas has been an important factor in the equation, as plants will try to minimize its usage by maximizing distillers wet grains (DWG) sales. The export market, which had been impacted by a weaker U.S. dollar, has also been affected by cheap river barge freight. Other competing products are canola meal (which is cheap relative to last year when a drought in Canada hampered its exports to the U.S.) and whole cottonseed, an important factor in the dairy ration. And last, the Canadian demand for U.S. products is down because of the end of the two-year drought in the southern provinces and of the recent "mad cow" scare, both of which have been decreasing traffic away from the northern distillers grains plants. EP

Distillers Wet Grain Market Saturated Due to Expensive Drying Costs

The Economic Impacts of Bioenergy Crop Production on U.S. Agriculture (Agricultural Economic Report Number 816) – In response to energy security concerns, alternative energy programs such as biomass energy systems are being developed to provide energy in the 21st century. For the biomass industry to expand, a variety of feedstocks will be utilized. Large scale production of bioenergy crops could have significant impacts on the U.S. agricultural sector in terms of quantities, prices and production location of traditional crops as well as farm income. This study examines various possible scenarios.

 	
 Biomass from Crop Residues: Cost and Supply Estimates (Agricultural Economic Report Number 819) – The supply of harvested crop residues as a feedstock for energy products is estimated in this report. The estimates account for economic and environmental factors governing residue supply. The supply results span major agricultural crops in four distinct cropping regions of the United States, taking into account local variation in cost-determining factors such as residue yield, geographic density of residues, and competition for livestock use. EP
 
 To obtain a copy of these reports, please contact: 
 Dr. Hosein Shapouri
 USDA Office of Policy and New Uses
 Room 361 Reporters Building
 300 7th Street, SW
 Washington, DC 20024 
 Phone: (202) 401-0531
 Email: hshapouri@oce.usda.gov

USDA Publishes Two New Ethanol-Related Reports

The RFA announced the U.S. Senate voted 84-14 to pass last year's energy bill in place of the current, often debated bill. For complete details, see Industry News, Page 12.

July 31 U.S. Senate Approves Energy Bill, Conference to Decide

According to a recent study conducted by the National Defense Council Federation (NDCF), the RFA touted, hidden costs of imported oil equal over $5 per gallon for U.S. consumers.
 	
 Milton Copulos, executive director of the NDCF, revealed the results of the analysis in a Washington Times editorial. He said the NDCF focused on three elements to determine the costs: military expenses specifically tied to defending Persian Gulf oil, the cost of lost employment and investment resulting from the departure of financial resources and the cost of recurring "oil shocks," or cost inflation, the nation has experienced.
 	
 Copulos said when those three factors were added up, the total price tag came to $304.9 billion per year. That's about $102 per barrel of imported oil. For individual consumers, it would take $90 to fill an average gas tank.

July 23 New Study Indicates Real Price of Imported Oil

The Renewable Fuels Association (RFA) announced that the U.S. ethanol industry set an all-time monthly production record in June, according to data released by the U.S. Energy Information Administration (EIA).

 	
 Numbers indicated that 181,000 barrels per day (b/d) were produced. The previous all-time record was 179,000 b/d in April.
 	
 Production was up 47 percent compared to last June when 123,000 b/d of ethanol were produced.
 	
 "The rapidly rising demand for grain created by the nation's fastest growing energy resource – ethanol – is providing a real economic stimulus at a time when it is desperately needed in rural America," said Bob Dinneen, RFA president.

July 23 U.S. Ethanol Industry Produces All-Time Monthly Record in June

The RFA announced its support of the U.S. Ninth Circuit Court of Appeal's decision for the Environmental Protection Agency (EPA) to reconsider California's request for a waiver from reformulated gasoline requirements.
 	
 By a vote of 2-1, the Ninth Circuit ruled that the EPA "abused its discretion" by not studying ethanol's effects on particulate matter (PM) levels when it considered California's waiver request. California contends the state can make clean-burning gasoline without oxygenates such as ethanol.
 	
 Although it may seem like a blow to the ethanol industry, the court stated that the EPA had simply not done enough research. The court said the effect ethanol would have on California's ozone levels was still unclear.
 	
 "We are very confident that when the EPA evaluates the impact of the waiver request on PM, it will support its previous decision to deny the waiver," RFA president Bob Dinneen said. "Ethanol reduces both primary source and secondary (resulting from Nox emissions) PM." EP

July 17 Ethanol Industry Pleased by California Court's Decision

An oft-cited non sequitur jokes, "I went to a fight and a hockey game broke out." Well, that's exactly what happened in the U.S. Senate just before Congress adjourned for the summer. As official Washington was girding for another partisan debate over energy legislation with the very real possibility of killing the bill for the year, bi-partisanship broke out. America is grateful.
 	
 The effort to pass comprehensive energy legislation this year was mired in political battles over electricity restructuring, fuel economy standards, and environmental regulations. Beyond passage of the renewable fuels standard (RFS) amendment sponsored by Senate Majority Leader Bill Frist, R-Tenn., and Senate Democratic Leader Tom Daschle (D-S.D.), very little progress had been made. With the need to turn the Senate's attention to a bevy of appropriations bills, it was becoming increasingly likely that the energy bill would be postponed until next year, or killed all together.
 	
 In the closing hours of the session, however, Senator Daschle made an extraordinary offer, putting aside partisanship and providing a road map that allowed the Senate to pass a bill, very likely assuring an energy bill will reach the President's desk for his signature later this year. Senator Daschle suggested the Senate replace the bill being debated on the floor with the bill that passed the Senate a year ago by a margin of 88-11.
 	

 Almost everyone was skeptical. Was the offer sincere? Would the now Republican-controlled Senate take up an energy bill that passed a then Democratic-controlled Senate? And, of course, missing the point of the bi-partisan offer completely, a typical question was who would benefit politically?
 	
 All of the questions were answered when, in an equally selfless act, Energy Committee Chairman Pete Domenici, R-N.M., accepted the offer, forsaking his own committee's bill in order to move the process forward. Thus, in a matter of hours and in a remarkable display of bipartisanship, the Senate passed last year's energy bill by an overwhelming margin of 84-14. 
 	
 From an ethanol industry perspective, passage of last year's bill is terrific news because, just like this year's bill, it includes a five-billion gallon RFS and the small ethanol producer tax credit changes we have been seeking. But from a broader national perspective, all Americans should be proud of two courageous leaders and a Congress that, if for just one brief moment, put short-term political gain aside in favor of the longer-term energy, economic and environmental needs of the country. 
 	
 The House and Senate will now have to reconcile the two bills in a conference committee to be chaired by Senator Domenici. There is clearly a lot of work still to be done. We will have to assure the inclusion of the tax provisions passed by the Senate Finance Committee earlier this year that restructured the ethanol tax incentive to protect the solvency of the Highway Trust Fund while making the incentives more useable for E-diesel and E85 blends. We will also need to work to accelerate the RFS schedule in the early years to reflect the growth in ethanol production that has been necessary to keep pace with existing state MTBE phase out schedules.
 	
 But with the continued leadership of Senators Daschle and Domenici, I for one am confident that we will succeed. Because while I once watched hockey only for the fights, I now know the opposite is possible too!
 
 
 
 
 Bob Dinneen
 President and CEO, 
 Renewable Fuels Association

August 2003

Columns

The Way I See IT

A View from the Hill

Featured

Mr. Pragmatic

MSW-to-Ethanol

NCERPP: Opening for Business

ACE Conference & Trade Show Held in Sioux Falls

Grain, DDGS Marketers Meet in Twin Cities

Breaking it Down Biorefining Concepts Hit the Mainstream

Spinning Again

7 Games People Play

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

Columns

The Way I See IT

A View from the Hill

Featured

Mr. Pragmatic

MSW-to-Ethanol

NCERPP: Opening for Business

ACE Conference & Trade Show Held in Sioux Falls

Grain, DDGS Marketers Meet in Twin Cities

Breaking it Down Biorefining Concepts Hit the Mainstream

Spinning Again

7 Games People Play

August 2003