In Lexington, Ky., registration has begun, the curriculum is set, instructors are scheduled and the textbooks are ready. School is about to commence, but this isn't your traditional educational environment. It's the Alltech Alcohol School, and the doors are about to open on its 23rd year.
 	
 The U.S. session in Lexington takes place Nov. 2-7. Two weeks later, the third European session in Dublin, Ireland, kicks off Nov. 16-19. Although an average of 180 people have attended before, Alltech is hoping to see closer to 300 attend this year. The information one could learn from this school is abundant and invaluable.
 	

 "This started as a general course on alcohol production," Alltech's alcohol division director Jim Bannerman told EPM. "There's no formal place where you can go to learn it. You can go learn how to brew, but not distill. So Alltech started the school to give the distilling industry a forum that offers education and knowledge of the process in a formal learning environment."
 
 Over 2,100 Graduates
 In the past 22 years, more than 2,100 people have graduated from the Alcohol School, including laboratory chemists, production managers, process managers and marketing personnel.
 	
 The Alcohol School is also renowned overseas. People from nine different countries attended the second annual European Alcohol School in 2002. The first alcohol school in Vietnam hosted 67 participants from 11 distilleries, four breweries, two institutes and one trading company.
 	
 To stay on top of new technology, the Alcohol School has gone through several changes since it first opened its doors in 1980. For example, Bannerman said the classes at Alltech's Alcohol School used to be strictly lecture by academics. However, in the last few years, the curriculum was altered to include hands-on laboratory experience in Alltech's newly built alcohol-teaching lab. The school has also evolved so that it contains more detailed class topics. Before, students attended classes that covered general subjects interesting to everyone. As the years progressed, Alltech branched into more technical advanced sessions on issues such as yeast management, advanced distillation and beverage production while maintaining lectures on basic aspects of the process.
 	
 "The purpose of [more advanced sessions] is that over the years, people have been to the school a number of times," Bannerman told EPM. "We want to offer something to people with a great deal of experience in the industry as well as those who have just started their careers. It's a lot more work, but we think it's worth it."
 
 The Alcohol Textbook
 Another unique thing the Alcohol School offers is its textbook, aptly titled "The Alcohol Textbook." According to Bannerman, this type of publication is the only one in the world.
 	
 "Alltech personnel offer technical services across Europe, Asia and Latin America," Bannerman said. "The Alcohol Textbook is the one book everyone refers to. We sold right out of the last edition."

 	
 Alltech's president and founder, Dr. Pearse Lyons, published the first textbook in 1981. It was called "A Step Toward Energy Independence," and it launched Lyons and his school to national recognition. The book was rewritten into a second edition, which was called "The Alcohol Textbook." A third edition was printed in 1999. The fourth edition has been compiled, published and is ready to be handed out at this year's school session.
 
 Learn & Network 
 A typical day at school consists of general lectures in the morning. A number of subjects will be covered on all processes. More specific detailed lectures will take place in the afternoons, and students can choose which classes to attend throughout the week. The evenings are reserved for social events, such as a welcome dinner on Sunday night and a barbeque.
 	
 "[Social events] are part of an effort to facilitate friendships and industry contacts that we think are critical," Bannerman said. "We learn as much from contacts as we do from the lectures. And you always learn more when you're having fun."
 	
 Overall, Bannerman said participants would get two things from attending the Alcohol School. One is the opportunity to consult with experts in different areas, whether it be yeasts, distillation or other topics. Secondly, the school provides a place to stimulate thought, interest and discussion among peers in the industry inside and outside of the classroom. The Alcohol School assigns group projects to encourage participants to work together to solve problems. 
 	
 "One of the things Dr. Lyons noticed when he first started the School was there were few people with experience and industry know-how," Bannerman told EPM. "Now that the industry has grown, people have 20 years of experience. That's why we've evolved and grown to keep up and ahead of the natural technical progress of industry." EP

Alltech Prepares for 23rd Year of 'Alcohol School' in Lexington, Kentucky, and Dublin, Ireland.

Back to School

Tesoro Petroleum said it would switch to providing ethanol-blended gasoline at its California refinery instead of using MTBE, Oil Daily reported Aug. 8. The state has asked the Environmental Protection Agency (EPA) for a waiver from federal law requiring an oxygenating additive, but Tesoro said it would make the switch regardless of the EPA's decision. The 161,000 b/d refinery in Martinez, Calif., will complete the switch by mid-November, Oil Daily said.

Tesoro to Switch to Ethanol

From time to time I take opportunities to talk about a project or business activity that our own BBI International staff is involved in. One that I am particularly excited about is our Biofuels Recruiting service managed by Matt Spoor in our Grand Forks, N.D., office.
 	
 There are several reasons for us to be proud of the service offered. First and foremost, it fills a real need in the ethanol industry. Finding qualified employees is a struggle and when you are trying to run an ethanol plant at the same time, it is even more difficult. From the very onset of this endeavor, we made a commitment to not "pirate" from within the ethanol industry, simply moving a person from one plant to another. That has made the challenge of finding qualified personnel significantly greater.
 	
 Moving people from one plant to another would be easy, but it would do nothing to help grow the skilled labor pool of the industry. Bringing new people in from associated industries or educational institutions who have an education and/or possess skills that can be matched to the needs of the ethanol industry is a necessary function, especially with new plants coming on line nearly every month.
 	
 The primary responsibility of the staffing service is to ensure that our clients are not wasting valuable time screening resumes and interviewing candidates that are not qualified, not seriously interested in making a move, or generally not a good fit for the organization. While very labor intensive, this service provides clients with the assurance that the people they interview are qualified for the position and the choice becomes a matter of whether the candidate is a fit for the organization versus whether they are simply qualified.
 	
 The people who work in the plants have built this industry. The contributions made by bright, qualified, dedicated employees, who can look at a problem and find a solution, have been the foundation of many of the energy and cost efficiencies we enjoy today. Staffing an industry is a responsibility that we take very seriously and one that has little room for error. 
 	
 So as ethanol production continues to expand and finding qualified personnel becomes increasingly difficult, it is our hope that in addition to the colleges, universities and technical schools who are offering a wide array of related training, we can do our part to help build a top-notch ethanol labor force.
 Have a great month!
 
 Mike Bryan
 President, BBI International

 mike@bbiethanol.com

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Biofuels Recruiting aims high with principled 'no pirating' rule

The Way I See IT

On Aug. 12, Canada designated CND$1 billion (U.S. $725 million) in incentives for businesses, homeowners and governments as part of its Kyoto Protocol commitment to curb greenhouse emissions, Reuters News Service reported.
 	
 The figure is part of the CND$2 billion Ottawa pledged in a five-year spending initiative to reduce emissions blamed for global warming. 
 	
 About CND$100 million will go to capital investment of ethanol development across Canada. The money must be used for equipment, services and construction of ethanol facilities.
 	
 The CND $100 million for ethanol will be dispersed in two segments. The first will be CND $60 million by March of 2004 and the second segment of CND $40 million to be dispersed in 2006.
 	
 A number of current and future ethanol producers will be submitting applications for funding under the program. Submissions will be required by mid to late October of this year. Tom Cox, Chairman of Integrated Grain Processors Cooperative, a 125 million liter farmer-owned ethanol facility under development in Brantford, Ontario, said, "This program is very important to new projects like ours, and will allow us to move forward with development plans on a much faster time track." 
 	
 An investigation into potential venues for a cellulose-based ethanol plant is currently underway. "Iogen Corporation of Ottawa, a cellulose to ethanol production facility is encouraged by the Government of Canada's announcement that it is, in part, dedicated to support cellulose-based ethanol," said Jeff Passmore, executive vice president at Iogen. "With this support, we hope to build the world's first cellulose-based ethanol plant in Canada." EP

Ethanol Development to Receive CND$100 million, dispersed in two segments

Canada Earmarks CND$1 Billion for Environmental Initiatives

The key to becoming a successful vendor in the ethanol industry is immediately earning the trust of those at the top – and keeping it. 
 	
 That's the cornerstone of John Viskup's no-frills approach to business, and the push behind his company's rise to becoming one of the the leading suppliers of ethanol plant boilers in America. 
 	
 In just four years, Victory Energy Operations LLC, formed in 1999 by Viskup and co-founder James Sponder, has tripled in size. The company expects to surpass 400 percent company growth next year – at age five. 
 	

 While Victory Energy has also achieved success outside the ethanol industry, its rapid sales growth can be directly linked to the continued upsurge in ethanol plant construction since 2000. In fact, about 60 percent of the company's boiler sales in the last two years have been within the ethanol industry, with its leading HRSG (Heat Recovery Steam Generator) product. 
 	
 How did Victory Energy rise to the top of the ethanol boiler business so fast? In a word, ambition. 
 	
 The company made strong in-roads by installing HRSG boilers at Gopher State Ethanol in St. Paul, and Al-Corn Clean Fuels in Claremont, Minn in 2001. But Viskup said he knew the company would need to gain the trust of the leading process design companies if it wanted to achieve sustained growth in the ethanol sector. 
 	
 "When we first became involved in the ethanol industry, we did not have relationships with the leading ethanol plant designers and developers," Viskup said. "We didn't know the Broins [of Broin Companies], the Vander Griends [of ICM Inc.], the Fagens [of Fagen Inc.] or the Swains [of Delta-T Corporation]. Our team literally hit the road with our suitcases and our briefcases and started presenting a solution for efficient steam production to ethanol plant designers and producers in an environmentally-challenged industry." 
 	
 It took some time to assemble "the right team at the right time," but in a relatively short period of time, people started listening. 
 	
 "Dennis and Dave Vander Griend [of ICM Inc.] trusted us and gave Victory an opportunity to provide our first complete package boiler system at the U.S. Energy Partners plant in Russell, Kansas," Viskup said. "Our ethanol industry involvement sprung from there. Around that same time, we presented at the International Fuel Ethanol Workshop & Trade Show in St. Paul, discussing the benefits of thermal oxidation technology when operated with a Victory Energy HRSG. A lot of our early success came from that show and also from our exposure in that first issue of Ethanol Producer. 
 	
 At U.S. Energy Partners, Victory installed a natural gas-fired "fire tube" boiler and two HRSG units connected to the municipality's turbines. From an energy standpoint, the project benefits the entire community.
 	
 "Victory Energy really understands the ethanol industry, the importance of synergies and economizing waste streams into usable energy," U.S. Energy Partners General Manager G.J. Long said.
 

 Fulfilling Commitments
 What Victory Energy seems to be "doing right" is engineering, manufacturing and delivering a system – typically within 14 weeks– that fulfills the plant's requirements and satisfies its customers. 
 	
 Viskup told EPM, "Our customers have helped us develop cutting edge technology to continually improve the efficiency of our HRSG systems." 
 	
 One example of Victory Energy's improvements to the system supply is the development of a "Process Heat Exchanger" designed to recover waste heat from the feedwater economizer. In some cases as much as eight million Btu per hour has been reclaimed, providing a significant fuel savings to the ethanol plant's yearly natural gas costs, Viskup said.
 	
 Viskup added, "The moment we stop striving to support our customers in meeting the goals of providing the most efficient ethanol plant available today, we become the obstacle."
 	
 "I am open about the fact that we ran into various problems with the first generation of thermal oxidizers and HRSG systems. But what mattered most to Victory Energy was assuring our customers that we were a team and that those systems, even if the equipment was not provided directly by Victory Energy, would be fixed, no matter if it meant working around the clock to get it done."
 	
 Victory Energy showed both character and resilience as a company last year when its independent business associate of two years, MMT Environmental, folded and disappeared from the ethanol scene overnight, leaving several producers with multi-million dollar thermal oxidizer plights to deal with on their own. 
 	
 One ethanol plant left with unresolved thermal oxidizer problems was Chippewa Valley Ethanol Company (CVEC), of Benson, Minn. 
 	
 Bill Lee, general manager of CVEC told EPM, "When MMT fell, Victory hung on and honored its commitment with us. They stood by, and together we are now in the process of assessing the success of what's been done."

 	
 Today, Victory Energy is moving forward, with little or no interest in getting into the thermal oxidizer business. 
 	
 "We're a boiler company," Viskup told EPM. "With the relationships we have with ICM, Broin, Fagen and Delta-T, getting into [the thermal oxidizer business] is not something we are pursuing right now and we are choosing to support some of the ethanol plant designer's thermal oxidizer systems coupled with our HRSG boilers."
 
 Over 35 HRSG Boilers Installed
 What Victory is best known for, of course, is designing and manufacturing HRSG Boilers, a product line concept that originated with Viskup. 
 	
 "Our goal was to provide the ethanol industry with a value-added product, something that was distinct and recognizable," he said. 
 	
 What the Victory Energy team came up with was a finned, platen-style boiler designed in the traditional "D-frame" technique. This same boiler design was used by Victory Energy for cogeneration applications prior to introducing this HRSG to the ethanol industry.
 	
 "This product line has been very successful and it has achieved what we had hoped – people in the ethanol industry recognize it, too, which was our goal." 
 	
 Due to the emissions requirements that ethanol plants must meet today, thermal oxidation is required for destruction of volatile emissions. HRSG boilers like Victory's design, capture the heat from the process and utilize this heat to supply steam to the plant for the manufacturing process. 
 	

 Over the past 24 months, Viskup said, Victory Energy has manufactured, shipped and commissioned over 35 complete boiler systems for ethanol plants.
 	
 "We expect the ethanol industry will continue to grow over the next three to four years and we feel that our product supply to the ethanol industry will grow steadily," Viskup told EPM. 
 	
 The successful Victory Energy HRSG boiler design serves other industries as well, such as cogeneration, municipal solid waste (MSW) and other types of pollution control facilities. 
 	
 "The HRSG boiler line is truly a growth product for Victory Energy," Viskup said. "As our economy begins to strengthen again, we feel that the supply and demand for this product line will increase steadily as other industries implement heat recovery projects throughout the United States." 
 
 Keystone "O" Style Boiler Emerges Strong
 Victory also is proud of its line of time-proven "watertube" boilers. 
 	
 Specifically, the company manufactures a line of Keystone boilers that has been in production for well over 100 years. 
 	
 Victory recently purchased an exclusive license agreement from Erie Power Technologies, in Erie, Penn., to manufacture the boilers. The boiler has been manufactured since 1860 and there are currently over 3500 installations nationwide for this product. 
 	
 "The Keystone boiler is a respected name in the boiler industry and will provide significant growth for Victory Energy over the next few years," Viskup told EPM. "The success of the Keystone "O" frame boiler product line will be developed by our highly-experienced and talented manufacturer's representative force strategically located across the United States."

 	
 According to the American Boiler Manufacturers' Association (ABMA), the watertube boiler industry size over the last two years has averaged at 150 units sold. Victory Energy has already secured over 10 percent of the watertube boiler market in the United States and expects significant growth in 2004. 
 	
 The Keystone "O" type watertube boiler serves heavy manufacturing industries, refineries, petro-chemical, pulp and paper mills, steel mills, universities, hospitals and government facilities. The Keystone "O" frame watertube boiler is also a solid fit for most ethanol plants, Viskup said. 
 	
 "In fact three Keystone "O" frame boilers have been supplied by Victory Energy to the Iowa Ethanol, Sioux River Ethanol and Otter Creek Ethanol projects," he said. "Some ethanol plants have single HRSGs, and that's fine most of the time, but many plants that are designed for 40 million gallons a year will likely end up increasing production, and subsequently needing more steam," Viskup said. "We provide the Keystone "O" frame boiler or an industrial firetube boiler, as an auxiliary boiler to make up the difference in the steam demand requirements."
 	
 Viskup told EPM that coupling a Keystone boiler with an HRSG unit is a geat idea for several reasons, including straightforward auxiliary use, independent use when the dryers are not running or independent use during initial ethanol plant startup – a period of days when the plant needs steam for fermentation, but little else. 
 	
 Many ethanol plants, especially the larger ones, are also choosing to go with what Viskup calls "redundant HRSGs," or two identical HRSG boilers. The massive 100-mmgy VeraSun Energy ethanol plant under construction near Brookings, S.D., for example, has installed two 25-foot Victory Energy HRSG boilers, along with four ICM gas-fired, rotary-drum driers and ICM thermal oxidizer systems.
 
 Auxiliary Equipment & Other Boiler Systems 
 In support of all the boilers systems Victory offers to the industry, it provides various types of ductwork, stack fabrication, heat exchangers, structural steel, control systems and integration of control systems, low-NOx burner systems, water treatment equipment and other products in support of the boilers it sells.
 	
 The company also offers a line of "firetube boilers," ranging in size from 100 HP to 2200 HP. These boilers are used in light manufacturing businesses, schools, hospitals and the ethanol industry.

 	
 Victory designs and manufactures nearly all of its boilers and auxiliary equipment at its Owasso (Tulsa Metro Area), Okla.-based headquarters and fabrication plant. The company has branch offices in Lincoln, Neb., Chicago, Ill. and St. Paul, Minn.
 	
 Currently, Victory Energy has 27 employees focused on sales, engineering, project management, inspection, field service, operator training, and aftermarket service and spare part supply. 
 
 Focus on Service, Delivery
 Victory Energy maintains a full time service group available "24 hours a day, seven days a week" to ensure that all of its customers are able to keep their boilers operational with minimal downtime, as attested by the satisfaction of its clients. 
 	
 "Victory Energy has been very responsive to the requests of ICM," said ICM Inc. CEO Dave Vander Griend. "Their deliveries have been on time, and startup assistance has always exceeded contract requirements. We have appreciated their dedication to the ethanol industry."
 	
 Victory's service technicians provide the startup services, product line training, testing services, maintenance services and long term service contracts for all the equipment we sell, Viskup said.
 	
 The company maintains a fleet of trucks and specialty trailers designed to allow the company to deliver its boilers "on time," Viskup told EPM. "With the addition of our boiler delivery service, we have never missed a delivery commitment to any of our customers in the ethanol industry." 
 	
 And the company maintains a complete staff of engineers, highly experienced in mechanical, electrical, structural and heat transfer engineering. It also maintains AutoCad draftsman to provide quality drawings for all its equipment.
 	

 "We can provide complete 3-D models of our equipment if required by our customers," Viskup said.
 
 Riding the Wave, Planning for the Future
 How long can Victory Energy count on the ethanol industry for new business? 
 	
 "That's a good question, and one that a lot of industry suppliers would probably like to have the answer to," Viskup said. "Some say seven to 10 years, others say three to four years [of sustained industry growth and new plant construction].
 	
 "I'm guessing, on the safe side, that we can count on at least three to five more very good years of new plant construction," he said.
 	
 If the ethanol industry experiences a slowing trend, Viskup told EPM, Victory Energy will be transitioned into other new and emerging industries, which will provide continued growth for the company.
 	
 "Despite the emerging industries this company is serving, the ethanol industry will always be the industry that gave us a big start," Viskup said. "So there is a feeling of loyalty there." EP

Victory Energy 'Full Steam Ahead' on HRSG Boiler Sales

Bringing the Heat

Looking at Bill Holmberg's résumé, one could wonder how one man had time to accomplish so much. From a successful career in the United States Marine Corps to establishing Global BioRefineries and the New Uses Council, Holmberg has helped advance the biofuels industry a barrel at a time.
 	
 At 75 years old, he shows no signs of slowing down. The retired military officer is today focused on biorefining, biofuels production and new uses for crops and other forms of domestically-available biomass.
 	
 "In the best interest of America's national, energy, homeland, economic and environmental security, we must become increasingly self-reliant in the transportation fuel sectors," Holmberg, of Vienna, Va., told EPM. "Biomass needs to play a leadership role in that process."
 	
 Holmberg's opinions of biofuels drew him to the New Uses Council (NUC) in 1990. The mission of the NUC, in Holmberg's words, is to promote the production of the full range of biobased products and to urge better public understanding that essentially anything made from fossil fuels can be made from biomass. Holmberg lists ethanol, biodiesel, biogas, methanol and biohydrogen, as well as biopower cogenerating with thermal energy, as energy options for a self-sufficient community. 
 	
 "I'd like to work cooperatively with all like-minded people," Holmberg said. "And I don't just mean plant operators and feedstock producers. I mean bicyclists, joggers, public health officials and people who are concerned about our environment, homeland security, economy, etc."

 
 The NUC is born
 The NUC was founded by several people, including Sen. Sam Brownback, R-Kan., Jeff Gaines, Raymond Burns Allan Tracy and Mike Tumbleson. Holmberg joined up right away and is currently chairman of the board. 
 	
 In 2001, three other organizations were folded into the NUC. One company, Global Biorefineries Inc. (GBI), was Holmberg's own creation in 1995. He wanted GBI to promote the concept of converting agricultural and forestry crops and residues, as well as other forms of biomass, into biofuels, biopower and cogenerated thermal energy and a wide range of bio-based products. The NUC's mission is similar to that of GBI. The National Biomass Energy Industries Associaton, which concentrated on electric power, also merged into NUC. The United BioEnergy Commercialization Association (UBECA) was the third association to merge, and they also dealt with electric power.
 	
 In addition, the NUC formed a sister organization called the Biobased Manufacturers Association (BMA) in April of this year. 
 	
 Holmberg hopes three things will come out of the NUC. First, he said he wants to expand the whole biorefinery concept. He is convinced that climate change is a major threat that must be addressed and the growing of biomass and its conversion to fuels, power and products will be a major part of the solution. He would also like to help accelerate the transition from a hydrocarbon economy to a carbohydrate economy. Finally, he'd like to see biorefinery industries be of true service to farmers, ranchers, foresters, co-ops and communities.
 	
 "There will certainly be vital roles for major corporations in the transition to the carbohydrate economy," Holmberg said. "But the transition must also significantly improve the financial lot of the providers of the raw materials." 
 	
 Holmberg's path to the NUC and the biofuels industry is a long one. He was drafted into the Marines in 1944 when he was 15 years old. He attended the U.S. Naval Academy from 1947 to 1951. He was a Marines officer until he was medically retired in 1970. 
 	
 Soon after being discharged, Holmberg's experience with "dirt and trees" led him to the Environmental Protection Agency (EPA). He was one of the early contributors in establishing the organization. During the 1973 oil embargo, the EPA sent Holmberg, among others, to set up the Federal Energy Office that would be responsible for allocating fuel to the states. The supply was based on the amount of consumption and Holmberg's job was to make sure the big oil companies weren't hoarding and forcing smaller companies out of business.
 	

 "We discovered that too many of the companies were manipulating the books and making false statements about their operations," Holmberg told EPM. "When I was in the Marine Corps any officer making a false statement was court marshaled. Because of the damage they did to America, I thought those guys should've all been sent to jail. They were fined. That money was used to sustain state energy offices for almost a quarter century. But even when we hauled them to court that led to billions in fines, they still made a profit by cooking their books. I said to myself, 'This is America. This isn't right.'
 	
 "Ever since that time, I've seen the whole biorefinery industry as an opportunity to franchise farmers, co-ops and small businesses so that they get the value-added benefits instead of passing these benefits on to the major corporations," Holmberg said. "Of course, there is a critical role for major corporations, but the biorefinery concept, taking advantage of the economies of integration and value to the community and the environment, should be fairly shared to the benefit of the nation."
 	
 After the Energy Crisis ended, Holmberg returned to the EPA, which put him in charge of the Operations Division in the Office of Pesticide Programs. There, Holmberg discovered the concept of ethanol and met who he referred to as the early crusaders of ethanol: Al Mavis, of Illinois; Albert Turner, of Alabama; Dick Merrit and Scott Sklar, of Washington, DC; Allan Zeithamer, of Minnesota; Shirley Ball, of Montana; Doug Durante, of Maryland; Dave Hallberg, of South Dakota, Todd Sneller, of Nebraska; Fred Potter and Burl Haigwood, of Virgina.
 	
 The group of 11, and many others, convinced Holmberg that ethanol was part of an overall process to bring benefits to farmers and to clean up the environment.
 	
 "One reason the farmers were having trouble protecting the environment was the lack of resources," Holmberg told EPM. "That was my motivation in addition to the business of getting rid of the pesticide-treated corn. The deeper I got into it, the more I saw going into ethanol was good for the environment."
 	
 The more Holmberg learned about ethanol, the more he was convinced that the United States needed an alternative energy program. When the Department of Energy was created in 1978, he was one of the first who jumped on board. He ran the Citizens Participation Division, because he wanted to have the authority to get people involved in the production of energy, including ethanol.
 	
 From there, Holmberg became the legislative director for the Center for Renewable Resources and the Solar Lobby, where he used contacts to advance the ethanol industry. He took a position as an energy and environmental advisor to the mayor of Chicago, Harold Washington, in the mid-1980s. Holmberg lobbied for the passage of the Alternative Transportation Fuels Act, the Clean Air Act of 1990 and the Energy Policy Act of 1992. After the Clean Air Act passed, Holmberg formed the American Biofuels Association (ABA) in 1992, because he felt there was a major opportunity to advance ethanol and biodiesel. 
 	
 While the Energy Bill sits in Congress, with the renewable fuels standard (RFS) included, and a projected 2.7 billion gallons of ethanol will be produced in the U.S. this year, Holmberg has shifted his focus from ethanol to other biofuels. He's currently promoting and marketing biodiesel and striving for feedstock neutrality.
 	
 "We need to become increasingly energy suppliant using our own resources," Holmberg said. "Biomass needs to play a leadership role in that process. A great deal of credit goes to the ethanol industry. They built the infrastructure. They built the technology. There's no reason why corn shouldn't stay out front as the preferred feedstock. But you've got cellulosic biomass, like corn stover, wheat straw, woods chips, yard and garden trimmings, that we can convert to ethanol. It's not yet cost efficient, but it will be with time.

 	
 "I look forward to the day when these cellulosic feedstocks are converted to sugars and folded right into currently operating corn-based ethanol plants. The lignin residues can be used to generate needed steam and electricity to power the plants."
 	
 He then referred back to the "like-minded" people mentioned earlier.
 	
 "To do what we must do, we need millions of allies to promote biofuels, biopower and biobased products," Holmberg said. "As we increasingly turn to cellulosic biomass and recycled materials, like-minded people, and urban folks, will be there for us. We have to ask them to join us, and we have to work honestly in the best interest of America to deserve their confidence."
 	
 Never content by his past accomplishments, Holmberg still lives by a Marine Corp. work ethic. He told EPM, "To get the job done, we're going to have to work 24 hours a day, and, if that's not enough, we've got to start working nights."
 	
 That quote alone explains how Holmberg has accomplished so much for the biofuels industry.
 	
 "Unfortunately, at age 75, it's harder," Holmberg said. "But I still give it my best shot. It beats playing golf." EP

Holmberg has been addressing energy issues since the 1970s.

Raising the Biofuels Indusry

EPM: The CIE facility is being called a Lurgi/ICM 
 project, with Lurgi building the plant using an ICM process design. Is that an accurate description of the roles of these two companies? 
 
 Smith: This is an accurate description of the roles of Lurgi and ICM for the ethanol plant. It is similar to the structure used at Adkins Energy in Lena, Ill.
 

 EPM: What other major contractors are playing a 
 significant role in building and/or designing the facility, from grain handling to electrical work?
 
 Smith: The grain handling facilities will be constructed by Grain Flo, Inc. of Heyworth, Ill. The co-generation facility will be constructed by a team of Central Illinois contractors led by Diversified Buildings, Inc. of Morton, Ill., using proven technology provided by Energy Products of Idaho and Industrial Technology Group of Champaign, Ill. Lurgi will select the sub-contractors for its scope of work. They have relationships with many contractors known in the ethanol industry. CIE's strategy has been to bring together contractors and engineers that are specialists in their fields as opposed to one turnkey firm.
 
 EPM: What lender(s) are financing the project's debt? Briefly explain the process of choosing, or finding, these lenders. 
 
 Smith: We are currently still negotiating with several creditors. Finding a right fit has proven to be one of the more challenging aspects of this project. Lurgi recognized this hurdle early and has been helpful in connecting CIE with viable sources and has been involved in assisting with the negotiation. Lurgi has gone far beyond the normal role of a design/builder especially in the area of finance.
 
 EPM: Is there still a plan in place to use waste coal to generate electricity at the plant? And what would the actual economic benefits of this plan be? What are the challenges of using waste coal? How about emissions concerns? 

 
 Smith: This area of the country was extensively surface mined for coal since the mid-1900s. There are several deposits of waste coal (coal fines) within just a few miles of the CIE site. One is within three miles, has a thirty-year supply and is accessible without ever leaving the coal mine's property. CIE intends to use this waste coal to generate both its steam and electric needs. By doing this, CIE will significantly reduce the overall cost of energy, protect against the fluctuations in natural gas prices and eliminate a potential future environmental hazardous area. It is a win-win-win. There are challenges associated with the strategy. It has significantly increased the capital cost of the facility as well as the complexity. The waste coal has high SOX and NOX emissions that must be controlled. Overall, however, including the additional cost burden, CIE can generate steam and electricity less expensively with waste coal than it can by using natural gas and electricity from the grid. 
 
 EPM: According to your web site, the plant will be capturing and processing CO2, using a nationally known company. Is that plan still in place? Please explain. 
 
 Smith: To date, CIE has not entered into a contract for the sale of its CO2. We have discussed the possibility with a number of CO2 vendors. We are permitted by the EPA to discharge to atmosphere if needed. We expect that as we come closer to actual production, more solid opportunities will arise. Being able to provide less expensive power will help attract these vendors. 
 
 EPM: Your cooperative's common stock increased this year from $1,000 to $1,113 before ethanol production was even a factor. What does that tell you about the vitality of your 
 cooperative? 
 

 Smith: To an extent, the increase in book value of it stock is a quirk in generally accepted accounting practices. It is largely due to some grant opportunities that have added to the equity of the co-op. CIE, however, has worked diligently in adding value to its shareholders and this increase demonstrates that our co-op is committed to "paying its way," even during development and construction.
 
 EPM: The current 
 schedule calls for the plant to be operational by the fall of 2004? Is that a
 conservative start-up 
 estimation?
 
 Smith: Fall 2004 is a realistic estimation based on where we are and what still needs to be done. It is important to the shareholders to get started as soon as possible and begin generating income.
 
 EPM: When will hiring 

 decisions be made? When do you expect to have a full staff on board? 
 
 Smith: CIE would like to see the management team in place relatively early in construction. It will likely begin hiring in the first half of 2004 to provide time for training and to involve the employees in the final phases of construction. CIE wants its employees to feel the same type of ownership of the plant as the shareholders have. We have not solicited any employment to date. Yet we have over 300 résumés on file for fifty jobs. Many of these represent people with manufacturing and ethanol production experience. We are fortunate to have a strong employee pool in this area.
 
 EPM: Lurgi PSI recently agreed to increase its production warranty from 30 million 
 gallons per year to 33 million gallons per year, without added construction costs. Why? And at whose request was that new 
 commitment made? Please explain the 
 significance of this agreement.
 
 Smith: Lurgi's previous experience led them to a higher comfort level in the guarantees they are willing to provide. With the possibility of the SEP tax credit increasing the production level, CIE's interest in more production capacity increased. It was basically a mutual decision to further enhance the profitability of the project and a further indication of Lurgi's desire to work with its clients for a financially strong project.
 
 EPM: Are there already plans to expand the CIE plant, assuming the markets continue to improve? How large could this plant eventually become? Is it being built with expansion in mind? 

 
 Smith: We would like to get this plant built and running smooth before we plan an expansion. However, that does not mean we are not looking long term. The footprint of the plant is designed to accommodate at least a doubling in capacity should that become attractive in the future. CIE also has over 280 acres at its site, all of which has been designated as an enterprise zone. We think there is opportunity for complimentary businesses, either owned by CIE or others. There is already an organized effort outside of CIE looking at other such projects.
 
 EPM: How about emissions control? Has that been an issue? What steps have you had to take in that area? 
 
 Smith: The emission concerns of the cogeneration facility greatly dwarf the emission concerns of the ethanol facility. Yet, since we are primarily an ethanol producer, we are being held to the stricter guidelines used for ethanol plants. CIE will use thermal oxidation to control VOC emissions. Emission controls on the cogeneration facility will effectively control the other emission concerns. The permits required for construction are completed and approved. We have developed a positive relationship with the IEPA and are committed to maintaining that relationship in the future. The same is true for our neighbors in the area.
 
 EPM: So many producers today are working toward finding a niche for their distillers grains. Some are trying to standardize the product, others are extracting the germ, adding varying amounts of solubles, etc. Any cutting-edge plans for CIE's distillers grains? How much you will sell dry, wet or modified? 
 
 Smith: Unlike many plants west of the Mississippi, CIE has less opportunity to sale wet distillers to feedlots and dairies even though this area has the largest cattle population in Illinois. We will have capacity to dry 100 percent of our distillers grain, if necessary. There does appear opportunity to capture non-traditional markets (swine, poultry and fish) to the east and south. We also are told our close proximity to river transportation and to rail headed south and southwest is advantageous. 

 
 EPM: You just held your first annual meeting of the CIE cooperative shareholders with over 300 in attendance. What kind of comments (concerns, hopes, etc.) are you hearing from your members, and what issues are on their minds right now? 
 
 Smith: Prior to the meeting there were concerns that the construction and financing were not as far along as we had initially planned. Despite a strong commitment to keep shareholders informed, there is always misinformation floating around small, rural communities. At the meeting, we addressed these concerns in a straight forward, honest manner. We also reported on areas of the project that were going better than expected. The feedback afterward was overwhelmingly positive. It was recognized at that meeting that we have only one opportunity to "get it right the first time." This has been our approach since the beginning: frequent and honest communication to the shareholders. As a result, we have maintained shareholder confidence, support and enthusiasm for the project despite the occasional problem a project this size is bound to have. The main issues on their minds right now are getting the opportunity to deliver their corn to the plant in the fall of 2004 and to continue a strategy of being a least cost ethanol producer rather than increasing the price of the corn feedstock. EP

Mike Smith is the general manager of Central Illinois Energy (CIE), a 30-mmgy ethanol plant under construction in Buckheart, Illinois. As site preparation is being completed this month, the project is entering full gear and is scheduled to be completed late next summer.

Q & A CIE General Manager Mike Smith

Control-system technology, sometimes referred to as process-control automation, is a constantly evolving facet of ethanol production. Innovative solutions for optimization, advanced control and predictive maintenance of control systems is likely to provide continuous improvements in production efficiency.
 	
 Presently, "control functionality" of many automation systems on the market is limited, making the selection process a comparison of technologies. Still, selecting a new control system as part of a plant modernization, expansion or greenfield project is more than just a technology decision. Users should also consider factors such as system architecture, enterprise integration, vendor experience, customer support and ease of future system upgrades.
 	
 When navigating a decision for a new control system, manufacturers face a number of important considerations that will have a major impact on the success of their project over the long-term. The following is a brief discussion of key purchasing decision factors, including: 
 Primary Considerations, Vendor Selection and Technology Requirements.
 
 Primary Considerations
 Project Methodology
 	

 A primary automation contractor can act as the principal on a project, by providing single-source accountability. An automation contractor's familiarity with the integrated control solution ensures that the user gets the greatest benefits out of the new technology. In the role of the main automation contractor, the control vendor provides or obtains all necessary automation equipment and oversees design, engineering, installation and commissioning of the new system.
 
 System Integration
 Companies wanting to unite the worlds of process and business should choose an automation solution that allows them to establish a single, global database for all manufacturing information. This database must be available to all interested users, and easily accessible from the supervisory to the operator level. The solution should also include applications that synchronize the database with the business environment. 
 
 Vendor Selection
 Established Technology
 
 When it comes to selecting a control system provider, bigger is usually better. The provider should offer an expansive, well-supported product portfolio or at least have in place strategic alliances with the third-party suppliers in order to meet the full scope of the customer's automation requirements.
 
 The supplier's control-system platform should be based on a flexible, nonproprietary architecture that can deliver vigorous process control, unlimited connectivity, reliable safety and seamless encapsulation of installed systems. The supplier should also offer a suite of applications supporting advanced process control (APC), optimization, asset management, Six Sigma methodologies and other business-driven initiatives. In addition, the supplier should provide all of the instrumentation, control devices, value-added programs, services and training necessary to support their solution.
 	
 Always keep in mind that an automation provider may offer a state-of-the-art computing platform but fall short when it comes to integrating advanced tools and applications in its solution. Applications must then be purchased separately and "bolted-on" to the system.
 

 Domain Proficiency
 When evaluating prospective control-system providers, domain proficiency is quite often one of the most important criteria. Only a supplier with a proven and demonstrated understanding of your industry, company and business can help you succeed.
 	
 The chosen supplier should have different branches, teams and consultants that are all focused on your market. They should be capable of deploying a project engineering group familiar with your production strategies, knowledgeable about your business practices, and able to apply automation technology to improve financial results.
 	
 A supplier with enduring customer domain proficiency can also uncover implementation cost savings. This supplier will ensure their project proposal covers all of the bases, thus minimizing change orders and resulting in a proposed initial price and finishing price that are relatively similar.
 
 Application Knowledge
 After establishing your supplier's domain proficiency, the next factor to consider is application knowledge. As your automation partner, the control-system supplier must have a sufficient knowledge of your manufacturing processes to effectively apply advanced control strategies, and then put this knowledge to use improving plant efficiency and business performance.
 
 Joint Accountability
 Automation providers who believe in joint accountability are so confident of the benefits of their solution that they are willing to join you in sharing risks. Rewards to the provider come from sharing in financial results attributed to improved manufacturing performance.
 	
 In this type of business relationship, rather than the customer devoting capital to control-system purchases, the supplier owns, installs and maintains all plant automation equipment. This includes updating technology as needed to capture the largest performance benefits. The supplier also assumes control-related payroll costs, and is responsible for recruiting, employing and training support personnel for the automation solution.

 	
 Contracts based on joint accountability remove the risks and costs of process automation from the customer. Furthermore, they eliminate budget constraints that keep users from modernizing their control-system architecture.
 
 System Improvements
 Pay close attention to whether potential suppliers provide a secure, affordable migration path to the latest technology. Too often, customers invest in physical and intellectual assets, only to find out that their supplier has stopped supporting, or has even discontinued a particular control-system architecture. This can require an entirely new and expensive program to replace your previous one.
 	
 Wise automation providers tend to construct investment protection guidelines that help customers leverage the value of their existing assets. Some offer integration tools that supply operators with a common view of data, applications, alarms, events and messages across different platforms. Consequently, new and legacy systems can coexist while the customer migrates – at a pace they determine – to the latest control technology.
 
 Support Assistance
 In the competitive process-control field, a vendor's success hinges not only on the performance of its system solution, but also on the quality of its support services. Despite rapid changes in automation technology, suppliers must be willing and able to support legacy equipment dating back 10, 20 or even 30 years (relatively old analog systems and instrumentation are still the norm in many plants).
 	
 Automation vendors should provide services offerings that support and protect their customer base, such as service contracts to allow customers to lock-in their automation budget at a fixed rate over an extended period of time and guaranteed hardware and software upgrades to keep technology up-to-date.
 
 Technology Requirements

 Control Architecture
 	
 Choose an open, scalable control system that is fully redundant, includes robust control algorithms, and provides on-process upgrades to minimize plant downtime. The system should be embedded with the best-in-class applications for advanced control, asset management and control monitoring, and include a human interface integrating plant-wide information and delivering real-time process data. Additionally, the system should comply with open industry standards.
 
 Field Instrumentation
 Process Industry users are now seeking control solutions that support digital integration of field instruments, allowing processes to be linked with monitoring and control equipment and providing the platform needed to operate plants more profitably.
 	
 However, increased implementation costs for installing fieldbus technology in all areas of the plant may not be justifiable for some users. Some processes simply do not warrant the added capabilities of smart field devices. For this reason, your automation provider should offer a maintenance-management program incorporating all of your field assets – traditional and fieldbus alike – and providing tools for integrating all device information in a single database.
 System Networks
 	
 Control systems employing open network protocols provide process plants with new levels of connectivity. Users have the freedom to select the best control and instrumentation solutions for a given task. They can mix and match devices from a variety of manufacturers and transparently integrate them in a field network strategy that suits their needs.
 	
 Be sure the control system you choose makes full use of recognized open standards and is equipped to integrate the industry-leading field network protocols. These include Foundation fieldbus, Profibus, HART, DeviceNet and ControlNet, among others.
 
 Optimization Solutions

 Increased competition is causing manufacturers to look for ways to squeeze additional productivity out of their operations. This requires a solution that redesigns work processes across the enterprise to get the most out of your personnel, processes and technology.
 	
 When selecting a new control system, it is important that the vendor offer a solution capable of accommodating optimization, multivariable control and APC. In this manner, you will have access to the information needed to involve the right people in the process, at the right time. You will also have a methodology in place for continuous improvement.
 
 Predictive Maintenance
 Asset-management systems are designed to support a reliability-centered maintenance program, automated decision support for identification and repair of equipment problems. Benefits include increased plant availability and uptime, focused maintenance efforts and reduced equipment failure.
 	
 Users should determine whether a supplier's asset-management solution is "field centric." A field-centric solution relies on device diagnostics to enable preventative maintenance on valves, transmitters and other intelligent instruments. Although a good first step, this approach does not provide an understanding of how device status impacts process performance.
 	
 With a process-centric solution, users have an enterprise-wide view of the relationships between all installed assets, and as such, can make informed decisions affecting plant availability. This approach allows the user to determine: 1) the impact of equipment problems on the process; 2) the association between these problems and the business; and 3) the priority of need repairs. EP

When buying ethanol plant control technology, manufacturers face a number of important considerations that will have a major impact on the success of their project over the long-term. Contributing writers Hans Alwin and Dustin Howe, of Swanson Flow Systems, outline the primary factors and technology requirements involved in making a solid purchasing decision.

Deciding Upon Control-System Technology

South Dakota Gov. Mike Rounds said he wants to explore natural gas deposits on the eastern side of South Dakota for the state's booming ethanol industry. Fred Steece, oil and gas supervisor for the South Dakota Department of Environment and Natural Resources, told EPM that several groups have talked to state administration about evaluating potential resources. However, exploration hasn't started yet. Steece said he isn't aware of any existing natural gas deposits near South Dakota ethanol plants.

S.D. Explores Natural Gas Deposits for Ethanol Plant Power

Cornell University professor David Pimentel updated his 2001 Energy Balance Study in August. He concluded that it still takes more energy to produce ethanol than it saves, but his percentage has dropped from 70 percent more energy to 29 percent. Among changes in his study, Pimentel increased his corn yield production from 126 bushels/acre (b/a) to 126 b/a. He also added a mean value of energy input in irrigating the farmland corn grows on. In 2001, Pimentel said 100 percent of the farmland was irrigated. The U.S. Department of Agriculture estimates that number to be closer to 15 percent.

Pimentel Updates Energy Study Results

Adkins Energy has officially been awarded a $2 million grant from the state of Illinois. The amount had been awarded in previous administrations but held up for various reviews and administrative issues until it was finally released Aug. 12. Adkins Energy board chairman Scott Trainum told EPM that the 40-mmgy plant plans to use the grant money for pollution control equipment, rail equipment, inventory and miscellaneous plant improvements.

$2M Grant for Lena Ethanol Plant Unfrozen

Archer Daniels Midland (ADM) released its fourth quarter and yearly earnings in late July. Despite posting a 15-percent fourth quarter net earnings loss, ADM's corn processing division, including ethanol, made $33,089 more than the same period last year. Year-end results showed a 12-percent loss in net earnings and an $111,505 increase in the corn processing division's profits.

Archer Daniels Announces Fourth-Quarter Earnings

The Washington Department of Ecology issued an air-quality permit to Pacific Rim Ethanol LLC, which plans to build an ethanol plant near Moses Lake, Wash., The Associated Press reported Sept. 4. The $122 million plant would produce 40 mmgy of ethanol from wheat and barley at an old sugar beet factory three miles east of Moses Lake.

Air-quality Permit Issued for Moses Lake Ethanol Plant

The California Energy Commission (CEC) recently conducted an ethanol survey in order to get an idea of the amount of ethanol that will be produced in the U.S. through 2006. The survey ran from July 24-Sept. 17 and was sent out to ethanol producers across the country. The goal of the survey as stated in a letter from the CEC was to "identify nameplate capacity and expansion plans for existing facilities, capacity under construction and capacity of planned future facilities." The CEC said it will publish its findings.

CEC Conducts Ethanol Survey

U.S. Liquids Inc. announced the official sale of its Oilfield Waste Division, Beverage Division and Romic Environmental Technologies business to ERP Environmental Services, Inc., U.S. Liquids Vice President Gary VanRooyan told EPM. U.S. Liquids' Beverage Division had produced ethanol from case goods such as alcohol and soft drink beverages. U.S. Liquids still owns a facility in Canada, called Royal Recycling, that produces a very small amount of ethanol. VanRooyan said the sale took place primarily so U.S. Liquids could pay off debts.

U.S. Liquids Completes Sale of Divisions

A U.S. Geological Survey (USGS) investigation has released its results on the abundance of MTBE in drinking water. The study found that MTBE is frequently found in underground and above-ground sources of drinking water but generally at low levels. The substance was in nearly nine percent of the drinking water sources examined but usually at levels of less than five micrograms per liter. In areas of the United States that heavily use reformulated gasoline, MTBE was found four to five times more often in source water. The three-part survey can be viewed at http://water.usgs.gov/nawqa/vocs.

USGS Survey Reports MTBE Findings

Dakota Renewable Fuels LLC named its ethanol marketers for a possible plant in Valley City, N.D. Ethanol Products LLC, of Wichita, Kan., the second-largest marketer of ethanol in the country, will be handling the ethanol shipments primarily to the West Coast. Commodity Specialists Co., of St. Paul, Minn., will market Dakota Renewable Fuels' distillers dried grains. Contracts between Dakota Renewable Fuels, Ethanol Products and Commodity Specialists were finalized in early 2003, according to Dakota Renewable Products board member Joci Iszler.

Valley City Plant Names Marketers for Ethanol Plant

On Aug. 11, Wisconsin Gov. Jim Doyle signed into law Senate Bill 117, which bans the use of MTBE, the Telegraph Herald in Dubuque, Iowa, reported Aug. 13. Wisconsin joins 17 other states to ban the fuel additive, which has been found to contaminate drinking water supplies. Sen. Dale Schultz and Rep. Steve Freese were the bill's primary authors, the Telegraph Herald said.

Wisconsin Bans MTBE

The "Great Blackout of 2003" might encourage Congress to pass an energy bill sooner than expected. On Aug. 14, power outages at oil refineries across the Northeast set off fuel shortages, which in turn forced gas prices to shoot up from an average of $1.56 to $1.72 over two weeks. The combination of the blackout and high gas prices may speed Congress's debate over the Energy Bill, said Jon Doggett, National Corn Growers Association vice president of public policy. "I'm hoping that by mid-October, the President is signing a bill," Doggett told EPM.

Blackout Likely to Speed Up Energy Bill Debate

Stan Cotton and Orrie Swayze have launched another campaign to put down foreign oil, The Associated Press reported Aug. 3. Cotton and Swayze partnered with the South Dakota Veterans of Foreign Wars last year to erect billboards reading "Foreign oil funds terrorism." Now the two men are using their Foreign Oil Independence League to draft a bill demanding that country-of-origin labels be placed on gasoline pumps. Their theory follows that if a consumer is given the choice of two pumps and one is labeled American and one is labeled Iraqi, the consumer will choose the American fuel.    EP

U.S. Pair Wants Labels on Pumps

Ethanol plant managers realize that some corn hybrids outperform others in the dry-grind process. They also are fully aware that optimal use of ideal corn hybrids can improve product value and maximize profit margins. Until recently, however, identifying the best ethanol-yielding hybrids has been difficult, time consuming and relatively expensive. 
 	
 That may no longer be the case. 
 	
 Early this month, Pioneer Hi-Bred International Inc. introduced an innovative new evaluation tool that will help the international seed company identify its best corn hybrids for ethanol production. 
 	
 The Pioneer whole-grain Near Infrared Reflectant (NIR) rapid assay – a calibrated testing method – is the first-ever analytical tool specifically designed to quickly quantify the ethanol yield potential of a given sample corn, according to Pioneer. The rapid assay, combined with Pioneer's extensive hybrid evaluation program, enables the company to identify corn genetics – such as "high total fermentables," otherwise known as "HTF hybrids" – that are better suited for dry-grind ethanol production than typical commodity corn. (Note: ethanol wet mill managers would probably be more interested in identifying high extractable starch (HES) corn hybrids.) 

 	
 Using this information, Pioneer is able to recommend to its customers which of its high-performing elite hybrids has potential to achieve "above-average" ethanol production, which may result in higher revenue for the ethanol producer. 
 	
 By combining performance data from these evaluations with the company's knowledge of where products are sold, Pioneer is able to tailor specific hybrid information for a given location of an ethanol facility. The company has released an HTF list for 10 corn-growing locations in the United States. And the rapid assay analytical tool has already helped the company identify 60 HTF hybrids optimal for use in dry-grind ethanol production. 
 	
 "We are mining the resources that we already have," Pioneer Ethanol Account Manager Pat Hilliard told EPM. 
 
 Tool Available for Point-of Sale Assay
 Pioneer is making this crop evaluation tool available to the ethanol industry for a "point-of-sale assay" of commercial grain, enabling ethanol producers to predict the value of corn for ethanol production by identifying HTF grain arriving at the plant. 
 	
 "Currently, we are offering this tool to ethanol plants on a loaner basis," Hilliard told EPM. "There is a simple testing agreement, and we're still working out the details of the licensing terms." 
 	
 Hilliard said Pioneer has talked with nearly half the ethanol plants in the United States about this new analytical tool, with good results. 
 	
 "There is a lot of interest in what we are doing," he said. 
 
 Near Infrared Reflectant Technology 

 A countertop grain analyzing device, manufactured by FOSS North America and other companies, is used to analyze the corn in the Pioneer rapid assay method. The NIR whole-grain analyzer has been used for years, but not in this specific application. 
 	
 Dorn Severtson, of FOSS North America, explained how the computerized device works. 
 	
 "Spectrums of light are absorbed differently," he told EPM. "Protein and starch in corn produce different spectrum results, and that makes various types of corn hybrids uniquely identifiable due to varying levels of starch, protein, etc."
 	
 The information produced by analyzing the variance of starch, protein and other components of corn is similar to looking at a medical EKG, Severtson said. 
 	
 "It would be practically meaningless information by itself, but when companies like Pioneer couple it with wet chemistry and analyze each result in the context of thousands of similar results, every picture takes on meaning and conclusions can begin to be drawn. . . It gives them a report card that helps to more accurately identify optimal hybrids," he explained. 
 	
 The device itself costs approximately $30,000, Severtson told EPM. 
 	
 "But that's not much when you consider the amount of money it takes to put an ethanol plant up, especially when that machine will help you achieve over two percent [higher yields]," he said. 
 	
 Hilliard further explained, "The machine is the equivalent to the hardware of a computer and the calibration we have developed is equivalent to the software."
 	
 The proof is in the pudding – or the ethanol – according to Hilliard. In commercial trails, individual Pioneer hybrids identified as HTF have been shown to increase ethanol yield by up to four percent in dry-grind production, compared to use of regular commodity corn, or corn that has not specifically been selected for the ethanol end-use market. However, Hilliard added, yield improvements would be less for producers already receiving a significant percentage of elite HTF corn. 

 	
 "A dry-grind facility producing 40 million gallons of ethanol a year could realize a $1million to $2 million increase in revenue from solely using HTF-identified hybrids," said Hilliard. "Even if you're not a farmer or active in the ethanol industry, as long as you live in a community or state with an ethanol facility, you have the potential to benefit. 
 	
 "On an annual basis, the income generated by an ethanol plant of this size could pass along several economic benefits to the community where it is located – benefits such as an expanded economic base of up to $110.2 million or as much as $1.2 million in new tax revenue for state and local governments, not to mention the additional revenue generated for local farmers by increasing demand for their crop." 
 	
 Although the identification of grain offering above-average ethanol production may appear simple, it is actually a complex, time-intensive process.
 	
 "To arrive at this point, Pioneer has invested more than five years and countless hours perfecting its end use product offering for dry-grind ethanol production – analyzing more than 15,000 grain samples for ethanol yields over a three-year time period," said Doug Haefele, senior research scientist for Pioneer. "Innovations derived from Pioneer research, such as our rapid assay and elite hybrids, will be important contributors to improvements within ethanol production as the industry moves forward." EP

Seed Company Making Crop Evaluation Tool Available to Ethanol Plants

Pioneer 'Rapid Assay' Identifies Hybrids For Above-Average Ethanol Production Potential

Dakota Commodities has become Dakota Gold Marketing, a Broin Companies representative told EPM. The change, was made to reflect Broin's name recognition of its Dakota Gold product line.
 
 "The word 'commodities' sometimes confused people and doesn't represent our true product line," said Henry Bender of Dakota Gold Marketing. "It sounded like we were handling a whole grocery bag of products, which we weren't. Dakota Gold Marketing focuses specifically on the promotion of high-quality, premium brand Dakota Gold distillers dried grains."

Dakota Commodities Takes New Name, New Logo

BBI International announces the addition of Jessica Williams to the editorial staff of Ethanol Producer Magazine (EPM).
 
 As Staff Writer/Editorial Assistant, Williams will play a key role in contributing to the editorial content of the publication.
 
 Prior to joining BBI International, Williams worked as a reporter, editor and page designer for local daily newspapers. She holds a Communication degree from the University of North Dakota. EP

Williams Joins Ethanol Producer Magazine

BBI International announces the addition of Lisa Earls to the recruiting staff of BBI Biofuels Recruiting. Lisa holds a Master's of Art degree in Industrial-Organizational Psychology from Minnesota State University, Mankato and a B.S. degree in Psychology from the University of North Dakota.
 

 Prior to joining BBI, Earls worked as a testing and measurements intern at 3M Human Resources and as a membership specialist for the Girl Scouts. EP

Earls Joins BBI Biofuels Recruiting

Broin Companies, of Sioux Falls, S.D., announced the hiring of Kenyon Gleason, Communications Director, this spring. He is in charge of coordinating a communications strategy throughout the Broin Companies organization.
 
 Gleason grew up in North Dakota and attended St. Cloud State University, earning degrees in communications and broadcasting. His past work experience includes TV broadcasting, editing, lobbying and public relations. EP

Broin Companies Hires Communications Director

VeraSun Energy Corporation announced Scott Zabler as its new Commodities Manager this month. He will be responsible for developing and executing the company's risk management plan. Zabler has more than 25 years of commodity management experience at companies such as Penford Products, FCStone and Ralston Purina. VeraSun Energy is a renewable energy company currently building a 100-mmgy ethanol plant near Brookings, S.D.   EP

VeraSun  Energy Names Commodities Manager

Could the ethanol industry be "left out of the picture" if hydrogen fuel cells gain widespread commercial popularity in the next 20 years? 
 It's a question not being left to time. 
 	
 Thinking long-term, ethanol industry leaders have launched a grass-roots campaign to win support for ethanol-derived hydrogen fuel cells. They're drumming up enthusiasm for ethanol in fuel cell R&D circles which, until recently, were entangled with non-renewables – gasoline and natural gas – with vast storage and refueling infrastructures in place. 
 Ethanol, however, is gaining ground fast. 
 	
 Arguably the most promising renewable source of hydrogen for fuel cell energy, ethanol storage and refueling infrastructure is growingly competitive, yet still not comparable, with gasoline and natural gas. A growing number of researchers are publicly saying ethanol is "attractive," clean and easy to reform. 
 	
 Suddenly, what was once "a game the ethanol industry could not win" is looking more and more like the beginning of what may become the ethanol industry's next big market: supplying a renewable, domestically-produced fuel for use in clean, ultra-efficient power modules that might someday provide energy for millions of commercial buildings, homes, automobiles, farm machinery, cell phones and laptop computers. 
 
 Task Force Keeps Focus on Future 

 The Renewable Fuels Association, the ethanol industry's legislative voice in Washington D.C., has created a Fuel Cell Task Force to promote the advantages of using ethanol in various fuel cell applications. Thanks to the vision and commitment of the task force's volunteer board members, ethanol is increasingly "in the picture." 
 	
 The task force meets every two to three months, alternating between telephone conference calls and in-person meetings. The group has an important date with officials from the Department of Energy (DOE) this month and will gather at the RFA's National Ethanol Conference in Miami in mid-February. 
 	
 The group formed two years ago but operated under relatively quiet terms until releasing a white paper on ethanol and fuel cells last September. The document, Ethanol & Fuel Cells: Converging Paths of Opportunity, prepared by fuel cell analyst Jeffrey Bentley and writer Robert Derby, is a 14-page synopsis of the converging paths, and potential synergies, between ethanol and hydrogen fuel cells. Commissioned by the RFA, the paper brought ethanol to the forefront of renewable fuel cell R&D discussions and publicly articulated the mission of the Fuel Cell Task Force.
 	
 The release of the document was welcomed by the ethanol industry and hailed by the RFA as an important new market investment. 
 	
 "Fuel cells will clearly play an important role in providing electricity and powering vehicles in the near future," said RFA President Bob Dinneen last September when the paper was released. "In the search for hydrogen to power these new fuel cells, only ethanol combines the ability to utilize the existing fuel distribution infrastructure with the safety and environmentally-friendly attributes that consumers are increasingly demanding. Clearly, fuel cells represent an important new market for renewable ethanol."
 	
 According to the document, ethanol and fuel cells are both the focus of major investments in technology, production and market development. However, the white paper noted, little attention has been paid – until recently – to the combination of these two powerful developments. 
 	
 "In fact, there are major benefits that can be achieved by relatively minor shifts in focus of existing development paths to recognize and capitalize on the broad synergies that come from using ethanol to power fuel cells," the paper's authors asserted. 
 	

 Notably, the white paper also pointed out that ethanol is easily stored and dispensed in the current fueling system and generates fewer greenhouse gas-forming emissions than conventional fuels. It also stated that tests have demonstrated that ethanol is more efficient to reform into hydrogen than gasoline.
 
 Why Fuel Cells Now? 
 With combustion engines expected to reign supreme for decades to come, and ethanol gaining widespread consumer acceptance as a clean-burning gasoline additive, why the interest in fuel cells now?
 	
 "At this point, it's an 'us too' thing," said Randy Doyal, CEO of Al-Corn Clean Fuel, a 30-mmgy ethanol plant in Claremont, Minn., and a member of the RFA Fuel Cell Task Force. "We're sort of trying to catch up [with gasoline, natural gas, and methanol] right now. We want to make sure ethanol is in the game. . . because it really should be." 
 	
 Ethanol is hydrogen-rich and has a relatively simple molecular structure, making it better suited than most other fuels to be reformed into hydrogen. Hydrogen, or H2, does not exist in nature for very long and is usually found combined with other elements, such as water, hydrocarbons (methane, propane and gasoline) and alcohols (ethanol and methanol).
 
 Tailing Methanol 
 Like ethanol, methanol also has a simple carbon structure and is easily converted into hydrogen but lacks the storage and refueling infrastructure that already exists for ethanol. And whereas ethanol is renewable, methanol is made from fossil fuels, such as coal and natural gas, and is extremely toxic.
 	
 Nevertheless, the methanol industry has been undeniably successful at attaching itself with fuel cells.
 	
 "The methanol suppliers, especially Canada-based Methanex, have been involved with fuel cell developments for years – even before MTBE fell out of favor. You take a look at Ballard (a leading fuel cell company) or the California Fuel Cell Partnership and you'll see that methanol is everywhere. That industry has injected a significant amount of cash into fuel cell research and development, and it's paid off for them," said RFA Fuel Cell Task Force member Jeff Roskam, of ICM Inc.

 	
 Doyal added, "I think [the methanol industry] saw the handwriting on the wall with MTBE on its way out."
 	
 Whether or not methanol producers have pursued fuel cells more aggressively since MTBE (the gasoline additive methyl tertiary butyl ether) was found to pollute groundwater and banned in several states, is unclear. But what is clear is that methanol is preferred by many fuel cell developers, because it has one less carbon molecule than ethanol and it is available worldwide. 
 	
 "In terms of sustainability and being renewable, ethanol wins out, of course," Roskam said. "But methanol is available internationally, the infrastructure is good, and it's fairly cheap." 
 	
 For automobile applications, most fuel cell demonstrations have been trying to use gasoline as the hydrogen source, Doyal explained. "But ethanol clearly works better than gas. It's renewable and much cleaner. Gas, however, has the infrastructure and that's what it's all about right now." 
 
 Hydrogen Initiatives Recognize Ethanol 
 The hydrogen fuel-source "race" alone, however, has not solely triggered the ethanol industry's sudden interest in fuel cells. Increased government funding for fuel cell R&D, coupled with vocal support from the Bush Administration, has amplified the call for ethanol-derived hydrogen fuel cell demonstrations. 
 	
 President George W. Bush earned praise from Corn Belt politicians last spring when he recognized ethanol as a domestic source of hydrogen to power fuel cells. Early last year, President Bush announced a $1.2 billion "Hydrogen Fuel Initiative" that includes support for research and commercialization of fuel cells for automobiles and stationary power generation. 
 	
 In a speech to fuel cell technology leaders, automobile industry executives and DOE personnel, the president outlined his vision for a hydrogen-powered future. He included ethanol. 

 	
 "There's a lot of advantages that I want to explain to the American people about why this initiative makes sense," he said. "First, hydrogen can be produced from domestic sources – initially, natural gas; eventually, biomass, ethanol, clean coal, or nuclear energy."
 
 Automobile Use and the 'Flexibility' Factor
 According to the RFA's white paper, studies, such as one conducted by the California Fuel Cell Partnership have shown that a major advantage to using ethanol in automotive fuel cell applications is its compatibility with gasoline reformer technology and its flexibility to be used "neat" – as pure ethanol – or in various gasoline-ethanol blends ranging from E10 to E85. 
 	
 Doyal reiterated those claims, telling EPM, "Maybe they will end up using a mixture of ethanol and gas. . . That's an option, too. There is certainly enough E85 refueling sites in Minnesota [and some other states] for something like this to happen [with E85 and fuel cells]."
 	
 Studies have also highlighted ethanol's compatibility with the gasoline infrastructure, which means that ethanol can be optimized regionally and according to ethanol economics and availability in relation to gasoline. In fact, the ethanol-gasoline blend option is the only fuel cell vehicle refueling strategy that does not require the commitment of major infrastructure investments to a single fuel. 
 	
 This "flexibility factor," ethanol's ability to be reformed into hydrogen even when mixed with gasoline, is an attractive quality for fuel cell applications, according to fuel cell researchers who spoke with EPM this month. 
 	
 According to another recently published study, the use of ethanol-powered fuel cells could have a profound impact on reducing U.S. consumption of gasoline. If only 10,000 vehicles were fueled by fuel cells using ethanol, oil consumption would be decreased by almost seven million gallons per year, the study found.
 	
 "I personally like the idea of using renewable fuels like ethanol," said Jim Johnson, a senior research engineer for Caterpillar, Inc., which is involved in an ethanol-powered fuel cell project in Pekin, Ill. "The idea of using renewable fuels to help reduce greenhouse gases, while also helping the economy, has obvious appeal." 
 

 The 'On-board, Off-board' Question
 One of the unanswered questions facing the fledgling hydrogen fuel cell industry is whether automobiles would utilize onboard hydrogen reformers or off-board hydrogen reformers. 
 	
 In both cases, a reformer is a device that converts fuels like ethanol and gasoline into hydrogen for fuel cell power. Fuel cell developers would like to see off-board reforming become a reality, but the public would probably be slow to accept the idea of driving around with a tank full of potentially explosive hydrogen.
 	
 "Onboard reforming is very expensive, but seems to be the most practical option right now," said one industry analyst. "Off-board reformers, where everybody just fills up with hydrogen, tends to sound a lot like we would have thousands of little Hindenbergs everywhere. So I think onboard hydrogen reformers might be the answer, and the stations would still [offer ethanol or ethanol-blended gas] much like they do now."
 	
 While most auto industry analysts believe widespread commercial sales of fuel cell vehicles is still years off, every major automaker has a fuel cell development program in place, many of them with massive budgets and hundreds of engineers. According to the RFA white paper, automakers are "hedging their investments" by developing onboard reformer systems capable of converting hydrocarbon and renewable fuels (gas and ethanol) into hydrogen to power fuel cells. General Motors, Toyota, Volkswagen and others are developing reformers and GM has already demonstrated a truck powered by a fuel cell operating on gasoline. 
 Still, most indications lead one to believe automotive fuel cells will follow the successful commercialization of stationary fuel cells. 
 	
 "Maybe in 15 or 20 years we'll see everyone with fuel cell cars but I think stationary fuel cells will come first," said Mary Giglio, RFA congressional and public affairs director, and point-person for the Fuel Cell Task Force.
 
 Stationary, Auxiliary, Micro Fuel Cells
 Used in niche areas, stationary hydrogen fuel cells running on ethanol make sense and have already been demonstrated in real commercial applications. Indeed, stationary ethanol-derived hydrogen fuel cells would be an ideal source of electricity for rural homes and farms, especially those near the Corn Belt.
 	

 "These cells could be used to provide electricity to a building," Doyal said. "In this [application], ethanol could be trucked farm to farm."
 	
 In fact, it's already happening with other fuels in the Untied States and many other parts of the world.
 	
 One leading fuel cell company has delivered hundreds of 200 kilowatt fuel cell systems throughout the United States and 14 countries, another has manufactured over 300 residential systems, and a third has installed a fuel cell that provides power to a building in Yellowstone National Park. 
 	
 The successful demonstration of these stationary fuel cells for distributed power generation, coupled with increasing scrutiny of America's energy infrastructure – and rising questions about its vulnerability – have given stationary fuel cells a "domestic security" appeal.
 	
 Roskam believes farm machinery could be easily transitioned to ethanol-powered hydrogen fuel cells because the weight of the ethanol reformers (which are fairly heavy) would have a negligible effect on the performance of a large machine like a combine.
 	
 "I think it's a perfect match for the Corn Belt," he said. "True energy independence. You would have farmers harvesting corn for ethanol plants with combines running on hydrogen fuel cells that use ethanol. What could be better?" 
 	
 There are equally big ideas for very small fuel cells. 
 	
 There are companies developing "mini" and "micro" hydrogen fuel cells that can run on ethanol, even beverage alcohol. One such company has designed micro fuel cells for cell phones and other small electronic devices. The tiny power module includes a built-in reformer that turns ethanol into hydrogen. The ethanol additive is contained in a small cartridge that fits into the device. 
 	
 There are also "auxiliary power" fuel cells that are powerful enough to run the electricity and engine heating needs of a diesel semi without using engine power.

 	
 "There are just so many interesting avenues of discussion right now," Giglio said. 
 
 Task Force Members to Attend Conference 
 In early November, Doyal and other task force members are planning to represent the ethanol industry in Miami, where over 3,000 people from 40 different countries will converge for the 2003 Fuel Cell Seminar, the largest fuel cell trade show in the world. 
 	
 "We went last year and it was well worth our while," said Aventine Renewable Energy's Gary Welch, chair of the RFA Fuel Cell Task Force. "A bunch of us are looking forward to going back."
 	
 The RFA has a special booth for the show that highlights synergies between ethanol and fuel cells. Task force members attending the show will be prepared to "sell" inquiring researchers, engineers, automakers and investors on ethanol. 
 	
 "It's a great opportunity for exposure," said Giglio. "In the least, it's an opportunity for members of the task force to meet with more fuel cell suppliers."
 	
 The task force members will also look for opportunities to speak with representatives of the auto industry. 
 	
 "There is lot of money being spent in this area, but not necessarily [on ethanol]. . . The task force does not have the dollars to support our own research. We don't have that type of funding," Giglio told EPM.
 	

 Roskam said even though his company and others have contributed significant amounts of money to the task force, the industry as a whole – has fallen "woefully short" of making in-roads into the fuel cell industry. 
 	
 For now, task force members will focus on new partnerships, new opportunities and new ways for the ethanol industry to get involved in fuel cell developments.
 	
 "The RFA task force is definitely on the right track.," Roskam said. "Just getting out in front of people and talking about ethanol is a big step in the right direction. We need to answer all the viability questions and get ethanol in the race." EP

As the leading domestic, renewable choice for hydrogen fuel cell power, ethanol is winning over the fuel cell R&D community. EPM goes inside the RFA Fuel Cell Task Force responsible for 
getting ethanol 'in the game' before it's too late.

Ethanol Gets Into the fuel cell race

In August, EPM reported that an $80 million ethanol plant in Conoy Township was to be the first ethanol plant in Pennsylvania.
 	
 That may no longer be true.
 	
 Sunnyside Ethanol LLC, which has paired with Monsanto Enviro-Chem Systems, Inc. of St. Louis, is moving forward with plans to build a 40-mmgy ethanol plant in Clearfield County, Penn. Project manager and co-founder Herb Balzuweit told EPM the company was finalizing preliminary engineering layouts, looking at environmental issues and obtaining necessary permits at the end of August. The $80 million construction project is slated to be finished in the spring of 2005, the same time the Penn-Mar Ethanol plant is hoping to open as well.
 	
 Balzuweit told EPM that competition between the two plants wouldn't be an issue.
 	
 "When you're looking at the New York market. . . . and their ban of MTBE in 2004, there will be plenty demand for ethanol," Balzuweit said. The two plants are also on opposite sides of the state.
 	
 Sunnyside Ethanol's facility will feature a state-of-the-art cogeneration plant beside it, the only combination east of the Mississippi River which would use waste coal to produce steam and electricity for the ethanol plant. 
 	
 "In order to make (Sunnyside Ethanol) a viable project, we need to project steam and power at the least amount of cost," Balzuweit said. "Unless you have a power generation facility designed to burn waste coal, it is simply waste."
 	
 Waste coal produces acid when it rains, which could pollute water. Balzeweit pointed out the more waste coal converted to energy (to power the plant), the better it is for the environment.
 	
 Sunnyside Ethanol will obtain most of its corn supply from the western states, such as Indiana or Ohio, because of the lack of abundant corn sources in Pennsylvania. EP

Sunnyside Ethanol Features State-of-the-Art Plans, Co-generation

Race is on for First Pennsylvania Ethanol Plant

Biorefining, Inc., the Minneapolis-based company profiled in last month's cover story, "Breaking it Down," informed EPM this month that some readers were apparently confused by the article's description of the company's patented biorefining technologies. 

 	For the record, Biorefining, Inc. develops proprietary processes capable of converting residual plant material into value-added products. The company maintains two technologies: (1) a patented and trademarked "Biorefining Process," and (2) a patented and trademarked "Biomilling Process." 
 "Our main concern is the [lack of] distinction [made in the article] between our two processes and the products that are produced from each," explained a spokesperson for the company. "For instance, the products that will be produced from the Ace-Biorefining, LLC plant, which uses our Biorefining Process, will be D-Xylose, L-Arabinose, D-Galactose, and D-Mannose. Our Biomilling Process is a separate process that is not being used at this facility."
 	
 Clarified brief descriptions of the two processes are outlined below: 
 
 Biorefining™ Process
 The Biorefining Process converts residual plant matter into value-added products, mainly carbohydrates or "sugars." These specialty sugars are used primarily as "starting raw materials" or ingredients for pharmaceutical, nutraceutical and functional foods applications. The first commercial application of the Biorefining Process will be a joint-ventured production facility with ethanol producer Ace Ethanol LLC, to form Ace-Biorefining, LLC. The products the plant will produce have been outlined above. 
 
 Biomilling™ Process
 The Biomilling Process, a pre-fermentation technology, provides for a more efficient first, or gross, fractionation of the starting raw material (i.e., a corn kernel into its basic components, corn germ, pericarp and starch). The Biomilling Process replaces the front-end dry-milling process currently being used in most ethanol production today. The company claims its technology may allow an ethanol plant to increase the number and profitability of its coproducts, increase per-bushel ethanol yields and reduce overall energy consumption. Coproducts from this process include food-grade corn oil, corn gluten meal, dried fiber feed (or dietary fiber) and yeast cream. EP

Biorefining Inc. Clarifies Descriptions of Patented Technologies

Plans for a Denison, Iowa, ethanol plant are moving ahead as Amaizing Energy Cooperative looks for investors.
 	
 Amaizing Energy board president Sam Cogdill said the company is holding 64 meetings in seven weeks to seek out possible investors and to inform the area about the benefits of ethanol to the community and the economy.
 	
 An accounting firm is on hand at the meetings to present the projected success of the new plant, based on the history of other ethanol facilities. Citizens are also given an idea of estimated return investments.

 	
 For $400, interested parties can buy a membership into the co-op before they invest. Those invested must sign a corn delivery agreement for three cents per bushel. Investors must deliver a minimum of 12,500 bushels of corn per year to the plant for ethanol production. If investors don't have a corn supply, they can join a corn pool and pay $373 for Amaizing Energy to buy the corn from another source.
 	
 Investments can be made at $2 per share, which equals a minimum of $25,000 from each party. If committed by Oct. 15, investors can receive a 10-percent discount worth $2,500 off. If committed by Dec. 15, the discount is worth five percent. 
 	
 At the meetings, instead of asking who wants to invest, Amaizing Energy simply takes a straw poll by asking participants to write down on a sheet of paper what they would be willing to invest. Cogdill told EPM that as of Sept. 2 and after 21 meetings about $3.5 million had been offered.
 	
 "We've been told by others that what you actually collect for money as compared to what you get in a straw poll is actually more," Cogdill told EPM. "We're not hard-pressuring (for them to invest). We're just giving them all the information." EP

Ethanol Plant Planned for Denison, Iowa

Alfa Laval is now releasing a new brochure featuring the company's entire line of plate heat exchangers. "Alfa Laval - plate technology. It's all about optimizing everything" presents the range of heat exchanger types, plate technologies and sealing technologies offered by the company. 
 
 The 16-page four-color publication also describes the working principle of the plate technology and what the company calls "its advantages over competitive technologies."

Alfa Laval Releases Heat Exchanger Brochure

Liquid Resources of Ohio, LLC, announced the receipt of a $500,000 grant from the U.S. Department of Agriculture (USDA) on Aug. 27. The funds will help Liquid Resources develop an ethanol plant in Medina, Ohio.
 		
 The facility, projected to open in early 2004, will be converted from a vacant building and expected to produce six mmgy of ethanol from waste liquids, such as Coca-Cola or beer.
 		
 "It's a process that is well known in the industry but only done at a very short list of facilities," said Tim Curtiss, Liquid Resources CEO and co-founder. "It is less capital-intensive and the economics are less risky than making ethanol from corn."
 		
 Liquid Resources would collect the liquids from manufacturers, who can't sell the products because either the products have passed their freshness dates, been mislabeled or spilled. The packaging would be recycled and the liquids fermented and distilled into pure alcohol and converted to ethanol.

 	
 "This is about keeping stuff out of landfills and using renewable resources more efficiently," Curtiss told EPM.
 	
 Construction and design companies have yet to be named for the Medina project. Curtiss declined to talk about additional funding.
 	
 Three other ethanol projects also received USDA grants. Harrison Ethanol LLC, Central Ethanol LLC and Pike Ethanol LLC, all based in Ohio, each received $500,000 to develop projects.
 	
 Overall, the USDA selected 113 applications for renewable energy systems and energy efficiency improvement grants in 24 states totaling $21,207,233. EP

Converting Vacant Building into Waste-to-ethanol Plant

Liquid Resources Receives USDA Grant

On Aug. 6, MGP Ingredients Inc. (MGPI) reported a net loss of $1,372,000 or 18 cents per common share, on sales of $52,529,000 for the fourth quarter of fiscal 2003. Several factors affected the outcome, including a distillery explosion, increased energy costs and raw material costs per grain.
 	
 MGPI's fiscal year ran from July 1, 2002, to June 30, 2003. On Sept. 13, 2002, an explosion at the company's Atchison, Kan., ethanol plant blew out most of the distillery, preventing them from producing alcohol at that location. MGPI had to transport the unfinished alcohol 350 miles to its Pekin, Ill., plant to complete the process.
 	
 "We're rebuilding the distillery," MGPI representative Steve Pickman said. "It's moving along very well. Work remains on schedule, and we anticipate having a full distillery back in operation by early December."
 	
 No one was seriously injured in the explosion.
 	
 "It's pretty amazing," Pickman said. "If you were here and saw the aftermath, compared to where we are now, you'd never know we had an explosion."
 	

 On a more positive note, MGPI received a $1.9 million ethanol tax incentive from the USDA this year, which helped offset the financial loss somewhat. Also, MGPI's specialty ingredients division experienced a 12 percent increase in sales, allowing the company to declare a dividend of 15 cents per share on the company's common stock. The dividend is payable on Nov. 6 to stockholders on record as of Oct. 10. EP

MGP Ingredients Reports Year-End Results

The RFA announced on Aug. 21 that the U.S. ethanol industry set a production record for July with 178,000 barrels per day (b/d). The 
 U.S. Energy Information Administration (EIA) released the information.
 	
 Production was up 39 percent compared to last July when 128,000 b/d of ethanol were produced. The ethanol industry is expected to produce over 2.7 billion gallons in 2003. In 2002, 2.13 billon gallons were produced.

August 21 U.S. Ethanol Industry Produces All-Time Monthly Record in July

The RFA sent a letter to Arizona Gov. Janet Napolitano on Aug. 20 after a fuel shortage occurred there. The RFA urged the governor to use 10 percent ethanol-blended fuel to ease the shortfall. Arizona uses ethanol primarily in the winter months to reduce carbon monoxide pollution, so an established supply distribution network was already in place.
 	

 In the wake of the shortage, the Environmental Protection Agency (EPA) announced it would allow Arizona to use conventional gasoline, including 10 percent ethanol blends, until Sept. 7. RFA president Bob Dinneen said in his letter, "Ethanol is available today at storage facilities in Arizona in anticipation of the coming winter oxyfuel program. Additional supplies of ethanol can be shipped to the state within days. That will extend precious gasoline supply while helping to reduce consumer costs."

August 20 Ethanol Available to Boost Arizona Gas Supplies

Renewable Fuels Association President and CEO Bob Dinneen testified before a Senate Finance Committee field hearing in an attempt to prompt Congress to include important tax modifications in the final energy bill that would address concerns regarding the Highway Trust Fund. Dinneen also asked for a boost for farmer-owned ethanol plants.
 	
 Called "the Volumetric Ethanol Excise Tax Credit (VEETC) Act of 2003", the proposal improves the flexibility of the existing ethanol excise tax credit while eliminating any impact on the Highway Trust Fund due to the use of ethanol-blended fuels. The changes to the small producer credit will allow farmer cooperatives to fully participate in the program and updates the definition of a small producer to include ethanol plants producing up to 60mmgy.
 	
 At the Dallas Center, Iowa, hearing, chaired by Sen. Chuck Grassley, R-Iowa, Dinneen said, "The importance of ethanol as an alternative fuel to the nation's economy has never been greater, and its value promises to grow even larger. Oil prices are again playing havoc with the American economy. With 45 percent growth in the last three years, one of the only economic sectors that is currently posting gains in the economy is the ethanol sector. If Congress adopts the proposals discussed today, the growth in the ethanol industry and the benefits to rural America will continue." EP

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

Is the average American family hopped in the car Labor Day weekend, they had to contend with more than the usual traffic congestion. They also faced the highest average gasoline price in the history of our country – $1.75 per gallon.
 	
 There had been no national strike in Venezuela. There had been no new major military activity in the Middle East. There had been no OPEC oil embargo and no terrorist attack on the oil supply line.
 	
 So what happened?
 	
 Labor Day 2003 highlighted the very real and somewhat new fact that major international incidents are not the only problems that can send gasoline prices soaring. Due to the lack of adequate refining and distribution infrastructure, a series of otherwise unremarkable refinery and pipeline problems combined to produce a record gas price spike. 
 	
 More important than a one-time event, Labor Day weekend provided a glimpse of our future.
 	
 A few refineries were shut down for a few days after the Northeast blackout. A pipeline ruptured in Arizona. And numerous run-of-the-mill refinery outages were ongoing in California and the Gulf Coast.
 	
 Isolated, these events would have had a marginal price impact in their immediate vicinity. But together, they laid the foundation for the highest gasoline prices U.S. motorist have ever faced. Simply put, the U.S. has reached the point where any unexpected disruption in the petroleum industry is immediately, and significantly, felt at the gas pump. "Just-in-time" inventory means "just-pay-higher" prices for consumers.

 	
 Given today's regulatory environment, it's unlikely refiners will build another refinery in the U.S. After all, they haven't built one in the last 20 years.
 	
 We can import refined gasoline. But we already import more refined gasoline now than at anytime in our history. Further, these transoceanic shipments take weeks and cannot respond in a timely fashion to unexpected disruptions.
 	
 More realistically, we can turn to alternative fuels made in the U.S. like ethanol. Ethanol use expands gasoline supplies, provides diversified production and distribution networks, and takes the pressure off overburdened oil refineries.
 	
 In fact, a recent study conducted on behalf of the National Corn Growers Association found that blending gasoline with 10 percent ethanol will lower consumer prices by 7 cents a gallon.
 	
 Recently in California, the last two refiners still using MTBE announced they would switch to ethanol by the end of the year regardless of the status of the oxygenate requirement. Their message was loud and clear – refiners need volume and octane and they need it affordably. The solution is ethanol.
 	
 The Renewable Fuels Association is working to ensure a robust renewable fuels standard that promotes the increased use of ethanol will be included in the final energy bill pending before Congress. A diversified fuel marketplace with options not reliant on our limited petroleum refining capacity would be good news for consumers. Such a commitment to ethanol will help make gas price spikes like those on Labor Day 2003 a distant memory.
 
 
 Bob Dinneen
 President and CEO, 
 Renewable Fuels Association

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As Refinery, Pipeline Problems Worsen, Ethanol is America's Answer

A View from the Hill

The market continues to search for equilibrium, moving up one week, down the next, up the next, etc. Weekly moves tend to be triggered by the weekly storage inventory report that is released each Thursday. If the injection report is higher than expected, prices move down; if the injection report is lower than expected, prices move up. On balance though, storage injections have been strong over the summer period and the ending inventory level should be in the "reasonable" range by the end of October. Over the last 2½ months, the November 2003-March 2004 natural gas strip price (winter strip) has ranged from $5.15/MMBtu to $5.70/MMBtu. We appear to have stubborn resistance when the strip price approaches $5.70/MMBtu and stubborn support when the strip price approaches $5.15/MMBtu. Commodity markets generally, and the gas market specifically, doesn't trade in a tight range for extended periods. So what will happen? Will prices move above the $5.70/MMBtu level or below the $5.15/MMBtu level? It depends. Will temperatures continue to be moderate, creating relatively high storage injections? Will hurricanes avoid the Gulf of Mexico, keeping all production flowing? Will oil prices moderate, giving an economic alternative to high priced gas for large industrial and electric generation loads and, finally, will energy intensive industry demand remain soft? If all of these outcomes occur, prices will drop. As each of the above factors go the other way, there will be an increasingly likelihood of higher prices as we move toward winter. Once winter arrives, prices will be driven by weather factors throughout the U.S. and associated storage inventory volumes. Longer term - we need continued robust and increasing drilling levels to keep up with increasing demand and natural gas well production declines.    EP

Natural Gas Market Continually Responds to Weekly Injection Reports

The corn market found support at the tail end of July as dryness and heat entered into the Corn Belt and began to take a negative toll on the corn within the heart of the U.S. growing region. Crop ratings continued to deteriorate offering support to the corn market. On Aug. 12, the USDA released its most recent production estimates. The USDA projected the national corn crop at 10.064 billion bushels versus trader's estimates of 10.3-10.5 billion bushels. With a 1.009 billion bushel carryover from 2002-'03, this would place total corn supply at 11.084 billion bushels (a small amount of imports are in the total). As of Sept. 1, the 2003/04 demand is projected at 9.90 billion bushels leading to an ending inventory figure of 1.184 billion bushels. The USDA lowered the Food, Seed and Industrial sector by 25 million bushels from the July Supply/Demand report, now estimated at 5.475 billion bushels. The ethanol sector is expected to consume 1.100- 1.125 billion bushels next year. Currently the USDA has been utilizing approximately 85 million bushels per month. With beef, swine and poultry numbers on the increase, corn for feed demand is likely to increase next year. 
 	
 With crop ratings the last week of August placed nationally at 50 percent good-to-excellent, corn prices continue to find strength and upward momentum. The USDA will release the next crop production report on Thursday, Sept. 11. The market will look to consolidate in anticipation of this report. EP

Good-to-excellent Crop Ratings Give Corn Prices Strength, Upward Momentum

Just before Labor Day weekend, DDGS prices had been firming up for at least two weeks. Prices in Minnesota were $80 for September, with a $5 premium for October-December. Export demand, which is very strong due to extremely dry conditions in southern Europe, has been a main factor in driving up domestic DDGS prices. Rising costs of corn and soymeal are another factor, along with high whole cottonseed and canola meal values. Demand from hogs and poultry remains strong, and increased cattle numbers are beginning to pull more feed.
 
 Going forward, the focus will remain on European demand, natural gas costs, and EPA inspections of plant emissions. Export demand from Europe, Mexico and Latin America will continue to keep the DDGS market tight throughout the winter. Natural gas costs appear as though they will remain above the $5/decatherm level, inducing plants to run wet grains as much as possible. EPA inspections will also be a focus for the plants, as they must comply with mandated emission levels, and may also be a factor in necessitating more wet product, thereby decreasing dry feed. EP

Dry Conditions in Southern Europe Lift DDGS Exports, Boost Domestic Prices

Conceived as one of the largest ethanol plants in the world, China's Jilin Fuel Ethanol Company Ltd., in the country's northeastern province of Jilin, will begin producing ethanol this month, sources close to the project told EPM in early September. 
 	
 The plant is designed to produce 196 mmgy, but will reportedly produce half that amount (approximately 90 to 100 mmgy) for several months while construction is deferred on the plant's second half until early 2004. 
 	
 The total cost of building the massive facility was not disclosed to EPM but early projections ranged from US$247 million to US$340 million. The construction project was managed by Jilin Tianhe Co. Ltd. as a collaboration between China National Petroleum Corp., the Jilin Grain Group – the largest government-established corn trader in the province – and China Resources Corp. Several international companies with strong ties to U.S. ethanol projects were employeed in the planning, construction and startup of the facility. 

 
 Vogelbusch Handles Process Engineering
 Vogelbusch GmbH, the Austria-based parent company of Vogelbusch U.S.A., served as a provider of basic process engineering for raw material preparation, continuous fermentation, distillation and mole sieve dehydration on the Jilin project, according to Josef Modl, executive vice president of the corporation. 
 	
 "[The scope of our work] included supervising services for detail design done by Shanghai Design Institute and partially by the Design Institute of the Petroleum Industry, along with the startup," Modl told EPM. "Our company also delivered the column trays for all columns in the distillation section."
 	
 Vogelbusch GmbH was chosen for the project in early 2001 and began construction on the project the following fall, nearly two years ago. The plant was not completed in record-breaking time, Modl admitted, but construction stopped for three to four months each year due to bitterly cold winter temperatures in the northern regions of China. 
 	
 Presently Vogelbusch GmbH technologists are on-site to assist in starting up the plant. Modl told EPM he anticipates test runs to be in progress by the second half of this month. The plant could be running at full capacity in its current half-completed state prior to October.
 	
 Designed to produce about 530,000 gallons per day in two parallel lines, only one line has been built. The infrastructure (e.g., grain handling, power station and water) needed for the plant's full-capacity design are already in place and it is anticipated that construction of the second line will begin by the beginning of next year. 
 	
 "That's still to be decided by Jilin Fuel Ethanol Co.," Modl said.
 	
 The plant is sited on 500-plus acres of land and is designed to "double or triple" its production capacity as China gradually mandates ethanol use nationwide. 
 

 Multiple Coproducts 
 Raw material corn, wet-milled into starch slurry, is being used as the plant's feedstock. The facility utilizes full, continuous liquefaction with partial sachrification, continuous fermentation, distillation with two mash columns and two rectification columns, plus one aldehyde column, Modl told EPM. 
 	
 "[The design] reduces the steam consumption in distillation significantly as the mole sieve is also energy integrated," Modl said. "The DDGS drying system uses steam-heated tube dryers, and vapors are used for heating the evaporation station with no live steam required."
 	
 The plant will produce a range of ethanol-related products including fuel ethanol, beverage ethanol and "bio-fertilizer."
 
 The Project 'Cannot Fail'
 Genencor International, a major supplier of enzymes to the U.S. ethanol industry, is the startup enzyme supplier and technical advisor for enzyme use on the Jilin project. 
 	
 "The Chinese government is fully supporting this project, so it cannot fail," said George Virgil, a Genencor International Inc. account manager on the project. "The site is in the middle of corn country, not unlike Iowa, except there is a rim of low mountains around the area." 
 	
 Currently, production and use of ethanol is encouraged by the Chinese government, which hopes the renewable fuel additive will help promote the country's energy, environmental protection and agricultural industries. The Jilin provincial government announced in July that the entire province will move to ethanol-based fuels for their 90 and 93 octane fuels. The province, with a population of 28 million people, must make the switch by Oct. 18. 
 	
 Chinese officials are worried that China's known oil and gas reserves are running out. Currently, domestic coal and hydropower are widely used for electricity generation. China produces about 70 percent of its national crude oil needs, but still imports another 70 million metric tons, mainly from the Middle East. 

 	
 Corn warehouses in China are reportedly "bulging with stocks" after several years of good corn crops. Prices have plunged to 25-year lows as a result. 
 	
 The region is expecting another healthy corn crop this year, but the Jilin plant will eat up 900,000 tons of it, and perhaps 1.8 million next year. 
 	
 "[The crop looked] pretty good to me on my travels to and from the plant," Virgil said. "It should be a good harvest for them."
 	
 When at full capacity (196 mmgy) the project is expected to employ about 800 people – times the number of workers that would be employed at a plant of equal size in the United States. More new ethanol plants will mean hundreds, perhaps thousands, of new jobs in China.
 	
 Feasibility studies are being conducted on ethanol projects in the Anhui and Guangxi provinces, the latter of which is considering producing ethanol from cassava. EP

Jilin Fuel Ethanol Company Ltd. is designed to produce 196 mmgy, but will run at half capacity in 2003 as the facility's second half is completed.

September 2003

Business Briefs

Blackout Likely to Speed Up Energy Bill Debate

Dakota Commodities Takes New Name, New Logo

Williams Joins Ethanol Producer Magazine

Earls Joins BBI Biofuels Recruiting

Broin Companies Hires Communications Director

VeraSun Energy Names Commodities Manager

VeraSun Energy Names Commodities Manager

Alfa Laval Releases Heat Exchanger Brochure

Columns

The Way I See IT

A View from the Hill

Featured

Back to School

Bringing the Heat

Raising the Biofuels Indusry

Q & A CIE General Manager Mike Smith

Deciding Upon Control-System Technology

Pioneer 'Rapid Assay' Identifies Hybrids For Above-Average Ethanol Production Potential

Ethanol Gets Into the fuel cell race

Half of China's Mega-Plant On Line

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

Business Briefs

Blackout Likely to Speed Up Energy Bill Debate

Dakota Commodities Takes New Name, New Logo

Williams Joins Ethanol Producer Magazine

Earls Joins BBI Biofuels Recruiting

Broin Companies Hires Communications Director

VeraSun Energy Names Commodities Manager

VeraSun Energy Names Commodities Manager

Alfa Laval Releases Heat Exchanger Brochure

Columns

The Way I See IT

A View from the Hill

Featured

Back to School

Bringing the Heat

Raising the Biofuels Indusry

Q & A CIE General Manager Mike Smith

Deciding Upon Control-System Technology

Pioneer 'Rapid Assay' Identifies Hybrids For Above-Average Ethanol Production Potential

Ethanol Gets Into the fuel cell race

Half of China's Mega-Plant On Line

September 2003