By the time most of you get this issue, the first series of Regional Ethanol Symposiums for Lenders will have been completed. The first was in San Francisco, the second in Chicago and the final one in New York. We are very pleased with the success of the series.
 	

 The idea was born from working with lenders on the project financing side of the industry, and realizing that many lenders do not understand the economics of value-added ag processing. Lenders from New York to California and Florida to Alaska are being asked to consider various forms of value-added projects. Ethanol is the most predominant at this point, but biodiesel, wind power and co-generation projects are stepping up to the plate.
 	
 In some cases, loans are being turned down because the lender does not have a sufficient understanding of the financial capabilities, the market opportunities, or the production technology to make a reasonable decision. In other cases, some loans may be approved that should not be, as a result of lack of knowledge. So the concept was simple, put together a series of symposiums that will help educate lender. . . it worked.
 	
 Of course, it's just the tip of the iceberg. We reached perhaps a hundred lenders and will eventually need to reach thousands. But the work continues and as we conduct future symposiums the participation will continue to grow. It was refreshing to hear comments from those attending such as, "invaluable," "truly educational," and "time and money well spent." So the process continues. To coin an old saying, "so many lender. . . so little time."
 	 Have a great close to summer.
 
 
 Mike Bryan
 President, BBI International
 mike@bbiethanol.com

Regional Ethanol Symposiums for Lenders begin ethanol education for financial community

The Way I See It

If Northern Lights Ethanol stood alone on the plains, the newly unveiled dry-mill would govern the prairie skyline north of U.S. Highway 12 in Grant County, South Dakota.
 	
 The situation being what it is, however, this precisely engineered 40 mmgy ethanol plant looks almost diminutive next to the Big Stone Power Plant, a 25-year-old coal-fired facility that towers in the near distance outside of Big Stone City.
 	
 This unique situation, of course, is a good thing.
 	

 The ethanol plant's overshadowed presence is compensated tenfold by the Big Stone Power Plant in the form of energy, infrastructure, and reliability of resources. 
 	
 Beginning Oct. 1, the power plant will provide enough continuous steam for Northern Lights to fulfill two-thirds of its total energy needs. 
 	
 "Our relationship with the power plant is one of the things that makes this ethanol project unique and instantly successful," said Blaine Gomer, general manager at Northern Lights. "If you look back at the ethanol industry, you'll see that ethanol plants strategically built near power plants have done very well. It's not uncommon for all kinds of industries to spring up around power plants such as this."
 	
 Gomer said the power plant will pipe 100,000 pounds of steam an hour to Northern Lights. The steam is purchased at a price cheaper than what could be produced by their own natural gas boilers, which are in use now but will be mothballed after the power plant steam becomes available. The boilers will be kept in place as back-up power, should the plant ever need them again. 
 	
 The Big Stone Power Plant, jointly owned by Otter Tail Power Company, Northwestern Public Service and Montana-Dakota Utilities, produces 3.5 million pounds of steam an hour, meaning the 100,000 pounds 
 per hour piped to Northern Lights represents only 3 percent of the power plant's total output. 
 	
 "It's a few extra scoops of coal for them," joked Northern Lights Ethanol, LLC Board President Del Strasser, one of the area farmers that helped get the project rolling three years ago. 
 
 Lowered operating costs
 Strasser told Ethanol Producer Magazine the benefits of colocating with the Big Stone Power Plant are numerous. In addition to steam, the power plant brings to the table existing rail service, water, county roads, access to utilities and fire protection.
 	

 Additionally, the land where the ethanol plant is located is owned by the power plant and leased to Northern Lights at a favorable rate. All together, Strasser said, these benefits add up to lower capital and operating costs that result in a low risk, high return operation.
 
 Broin operation Northern Lights Ethanol was built, designed, and is managed by Broin & Associates, of Sioux Falls, S.D., a thoroughbred in U.S. dry-mill engineering and construction. Broin is involved in every aspect of the ethanol industry. They build and manage plants and also market ethanol and ethanol coproducts. They also operate their own plant. 
 	
 Northern Lights is the 12th plant Broin & Associates has built, not including expansions of existing facilities. (Note: Tall Corn Ethanol, LLC, Broin & Associates' 13th plant, began production Aug. 9).
 	
 After just one year of construction, Northern Lights reached full production in mid-June, six weeks ahead of schedule. The plant was originally scheduled to begin producing ethanol Aug. 6, the very day Ethanol Producer Magazine visited the facility. 
 	
 Like other Broin plants, Northern Lights is entirely "under roof." The whole production process is housed inside a large steel-sided building, making it "operator friendly" year round.
 	
 In addition to producing over 40 mmgy from approximately 14.4 million bushels of area corn, the ethanol plant will market about 250 million tons of DDGS, a vast majority of which is marketed as Dakota Gold, a trademarked "low moisture, high protein" cattle feed that has a "preferred light yellow color" considered palatable to cattle, Gomer said. The ethanol and DDGS produced at Northern Lights are marketed through Ethanol Products and Dakota Commodities respectively. 
 	
 The ethanol plant is a testament to efficiency, from corn delivery to product load-out. 

 	
 Truck drivers delivering corn to the plant (there about 70 such deliveries a day) can complete the drop-off in about six minutes. The plant can hold 960,000 bushels of corn on site, enough to last 15 to 20 days during peak production.
 	
 The plant uses a Broin-tailored operations system, with over 1,400 control points, precisely programmed for Broin's proprietary process technology.
 	
 Northern Lights Ethanol is a zero effluent facility - the plant utilizes a reverse osmosis system that allows them to recycle and reuse water. A thermal oxidizer has been installed that burns off 99.9 percent of the particulate emissions emitted from the plant's drier. All in all, Northern Lights has an environmentally sound presence and emits virtually no odor. 
 	
 "The facility is truly innovative in terms of overall air quality and production efficiency," said Larry Ward, director of marketing and development for Broin Companies.
 	
 The plant's ethanol is stored in two 500,000 gallon tanks (1 million gallons total storage capacity), 85 percent of which is shipped to market via rail cars. The remaining product is trucked out. 
 
 39 employees, most local 
 Typical of Broin-managed plants, most of the employees at Northern Lights are area residents (from the Big Stone City-Milbank area) and many had little or no ethanol production experience before working at the plant. 
 	
 "It's true that (Broin Companies) does tend to hire top performers from parallel industries," Ward said. "It makes sense to us because we have over a dozen engineers and numerous support personnel available to train new employees in our own production approach." 
 	

 Interestingly, Gomer, Maintenance Manager Lance Ishen, and Lab Manager Gwen Biersbach each came to Northern Lights from cheese/dairy processing industries. 
 	
 "There are many similarities between the cheese and the ethanol industries (in terms of plant operations)," Gomer told EPM. 
 	
 Technical Manager Blaine Olson had been in the mining industry for 17 years, Commodities Manager Gregory Nelson was previously a grain buyer, and Commodities Supervisor Doug Strei worked at a farmer cooperative for over a decade. The company's comptroller, Jennifer Block, had worked for a plastic manufacturing plant before joining Northern Lights.
 	
 There are exceptions, such as Operations Manager Garth Whiddon, who was a lead operator at the Broin-managed Dakota Ethanol plant in Wentworth, S.D., before transferring to the new plant a few months ago. 
 	
 In total, the plant employs 39 people who work varying shifts, depending on their job at the facility. All but Gomer, who works directly for Broin Management, are employed by Northern Lights Ethanol, LLC. 
 	
 Each employee received two weeks of extensive training and Broin's startup team worked with the staff at the plant for an additional three weeks after startup, Gomer said. 
 
 Seven member board
 A seven member board of directors oversees the operations of Northern Lights Ethanol, LLC. The board is comprised of five directors from the 658 member Northern Growers Cooperative and two directors from Broin & Associates. 
 	

 The Northern Growers Cooperative owns 78 percent of the plant. They have their own 15-member board that handles the cooperative's affairs. From that group of 15, five serve on the Northern Lights Ethanol board. 
 	
 Representing Broin on the Northern Lights, LLC board is Jeff Broin, CEO of Broin Companies, and Ward. Broin & Associates owns 22 percent of the plant.
 
 Adding value
 The project took flight in the fall of 1999, when discussions began concerning the need for some type of value-added project in region.
 	
 "We were open to anything - we talked about soybean processing," Strasser said. "But ethanol kept coming to the top of the list."
 	
 Due to an abundance of corn grown in the area, ethanol was a natural fit. Planning meetings were held and various sites were explored. A steering committee was formed and the group toured various ethanol plants in early 2000. In August of that year, the Otter Tail Power Company made a proposal to the Northern Growers Cooperative, which offered use of the power plant's land for the ethanol plant.
 	
 That offer helped solidify the group's plan.
 	
 Several organizations contributed funds that helped finance startup costs, including a $50,000 donation from the South Dakota Corn Utilization Council.
 	

 Beginning in late 2000 and ending in early 2001, investor meetings were held in the South Dakota communities of Milbank, Sisseton, Clinton, Madison, Groton, White, Watertown, and in the Minnesota towns of Clear Lake and Wheaton. The equity drive raised nearly $12.7 million. Each cooperative member invested a minimum of $10,000 (5,000 shares at $2 each). However, the average investment was just under $20,000.
 	
 Broin Companies invested over $3 million and the balance of the $50 million needed to build the plant was borrowed. Broin & Associates broke ground on the plant in June 2001 and the grand opening was held less than a year later. 
 	
 Today, three short years after it all began, Northern Lights is filling rail cars with ethanol and shipping a value-added, environmentally friendly fuel all over the United States.
 	
 "It's a realization of a dream for many of us," Strasser said. "What is most meaningful to me is that we are adding value to the crops we grow in South Dakota and Minnesota. . . It's a success story.

12th U.S. Broin-built plant comes online six weeks ahead of schedule near Big Stone City, S.D.

Northern Lights Ethanol is full ‘steam' ahead

On Aug. 9, the farmer-owners of Tall Corn Ethanol LLC held their ribbon-cutting ceremony at Iowa's largest farmer-owned ethanol plant. With Tall Corn Ethanol in production, Iowa is now home to ten ethanol plants and four more under construction.
 	
 Tall Corn Ethanol LLC, located just outside of Coon Rapids, Iowa, will process 15 million bushels of corn into more than 40 million gallons of ethanol and 120,000 tons of distillers dried grains annually. The plant employs 38 full time workers.
 	
 "I believe that we can all feel good about being part of a state-of-the-art ethanol production facility," said Warren Puck, Tall Corn Ethanol president. 	
 	
 The plant was designed and built by Broin & Associates of Sioux Falls, S.D. "The plant is designed to be one of the most energy-efficient, labor-efficient and microbiologically-efficient ethanol production facilities online in the U.S.," said Jeff Broin, C.E.O. of Broin Companies.

Tall corn ethanol begins production in Iowa

On Aug. 11, just two days after Tall Corn Ethanol began production in Iowa, Glacial Lakes Energy, LLC held its grand opening ceremony near Watertown, S.D. Construction was completed two months ahead of schedule.	
 	
 "South Dakota has certainly been a leader for the ethanol industry – both in expanding the industry at home and in promoting renewable fuels in Washington, D.C.," said Bob Dinneen, RFA president. "I want to congratulate the farmer-owners of Glacial Lakes Energy on their grand opening." 			

 
 Farmers have been leading the fight for energy independence by investing in ethanol plants. Thanks to Glacial Lakes and others, we are producing record amounts of ethanol each month and reducing our reliance on foreign oil."
 	
 The plant will convert more than 13.5 million bushels of corn into approximately 40 million gallons of ethanol and 128,000 tons of distillers dried grains annually. The plant will employ 34 full time workers.
 	
 "The demand from our plant is expected to add approximately 10 cents to every bushel of corn in our area," said Tom Branhan, Glacial Lakes Energy general manager. "This is great news for all farmers – not just the 800-plus who invested directly in the ethanol plant. We believe in building for the future. That's why we included a thermal oxidizer in the original design. Given the likelihood of new EPA regulations for the industry, that decision proved highly beneficial. We also had the plant designed for easy expansion if warranted in the future. We want to thank Fagen and ICM for bringing the plant online ahead of schedule."
 	
 Fagen, Inc., the Granite Falls, Minnesota design-build contractor, spearheaded the construction and incorporated a process design provided by ICM of Colwich, Kansas.
 	
 There are currently 66 ethanol plants operating in the United States and 11 plants under construction.

South Dakota now home to seven ethanol plants, two more under construction

Glacial Lakes Energy begins ethanol production near Watertown, S.D.

EPM: Can you explain your role with the USDA and maybe give us a short history of your background?
 
 Shapouri: I am a researcher in ethanol and biomass for energy in USDA's Office of Energy Policy and New Uses (OEPNU). I am responsible for economic and policy analysis of issues related to ethanol. For example I estimate the effects of ethanol production on farm income, commodity prices, balance of trade, and employment. I am also responsible for estimating the cost of ethanol production. I have a master's degree from Cornell University, and Ph.D from Washington State University. My work experiences include employment at the Economic Research Service USDA (3 years), Economic Perspective Inc. (7 years), USDA/ERS (4 years), and for the past 10 years in OEPNU/Office of the Chief Economist (OCE)/USDA.
 

 EPM: How did you become involved with this research?
 
 Shapouri: One of the objectives of OPENU is to develop a capacity within USDA to analyze policy and economic issues related to ethanol. Early on we noted that there was no study on the net energy balance of corn-ethanol by USDA. Since USDA supports the production of ethanol, I proposed the idea and gained the support of my supervisor (Dr. Roger Conway, Director) to prepare this research within the department.
 
 EPM: Would you discuss any challenges you encountered while conducting your research?
 
 Shapouri: The office wanted to develop a research report on corn-ethanol net energy value that is unbiased and reliable. The lack of research in this area meant we had to develop the framework, collect data, and prepare the report on our own. 
 
 EPM: During the coarse of your research, was there anything that surprised you?
 

 Shapouri: The surprising fact was the lack of knowledge within the research community regarding the availability of accurate data. There is existing state data related to energy inputs used in corn production by USDA/ERS and ethanol industry conversion data that could have been used. Studies published prior to 1995 rely only on assumptions rather than actual data and aggregated data instead of state data.
 
 EPM: According to your research, there have been five previous studies conducted on the net energy value of fuel ethanol production. What was the impetus for this report?
 
 Shapouri: In contrast to these studies, our study was based on survey data. Another important difference is that the study utilized both direct and indirect energy inputs used in corn production for major corn producing states. This information was collected through personal interviews, based on a large sample size, and conducted by the National Agricultural Statistic Service for the ERS (NASS/USDA).
 
 EPM: In this report, you attempt to account for differences among studies that have been done in the past. Differences range from Pimentel's 1991 result of -33,517 Btu/gallon net energy value (NEV) to Morris and Ahmed's 1992 result of +25,653 Btu/gallon NEV. Can you discuss some of the factors that account for this wide variance in results?
 
 Shapouri: Net energy balance of corn ethanol is directly related to inputs, application rates, fertilizer manufacturing efficiency, corn yield per acre, ethanol conversion technologies, ethanol yield per bushel, and coproducts evaluation. During the past 10 years, energy was used more efficiently in agriculture, the fertilizer industry, and corn-ethanol processing plants. For example, the average corn yield increased from 109 bushels per acre in 1991 to 138 bushels per acre in 2001. Energy used to produce a pound of nitrogen fertilizer declined from 37,000 Btu per pound in 1991 to about 18,400 Btu per pound in 2001. Thermal energy used to produce one gallon of ethanol and coproducts declined from about 100,000 Btu in the late 1970's to about 36,000 Btu per gallon in 2001 (shown in a study based on the BBI International's survey of ethanol plants in 2001). The recent study by Pimentel, however, utilized out-dated and non-reliable information, lower average corn yield per acre and ethanol yield per bushel of corn, and energy inefficient corn conversion technologies.

 
 EPM: A related question: In your report, you discuss differences among studies based on data assumptions on items such as corn yields, co-product evaluation, etc. Can you discuss the accuracy of the report results as it relates to the data used in your research? 
 
 Shapouri: Ethanol is produced in major corn producing states. Corn yield per acre in major corn producing states is significantly higher than U.S. average corn yield. All studies (with the exception of Dr. Michael Wang's study) used the U.S. average corn yield instead of a weighted average of corn yield for major corn producing states. In the USDA report, a 9-state weighted average corn yield per acre for the 1995-97 period was used to reduce the impact of annual yield fluctuation in the result.
 	
 Besides ethanol, other coproducts such as CGF, CGM, DDGS, corn oil and CO2 are produced when corn is converted to ethanol. Therefore, a portion of total energy used to produce ethanol should be allocated to coproducts. At least four methods are available to estimate the coproduct energy credits. In the USDA report, replacement value of coproducts was used to allocate energy to coproducts. This method is the most conservative approach. 
 
 EPM: While discussing "Estimating Net Energy Value" (NEV), you explain the reasons for not including secondary energy inputs such as energy required to produce farm machinery and to build ethanol plants. While it is obvious that collecting and accounting for accurate secondary input numbers is difficult, the report states that, "After going through all this trouble, the final result would add very little to the total energy value of a gallon of ethanol." Are you aware of other studies out there that calculate the NEV of other energy sources such as petroleum, natural gas, etc? If so, are secondary energy inputs used in these calculations? 
 
 Shapouri: Dr. Michael Wang made estimate of the energy required to produce machinery when he commented on Mr. Pimentel's paper. Wang's estimates were significantly lower than Mr. Pimentel.
 
 EPM: Are there any questions that are left unanswered with this report? 

 
 Shapouri: As you may know, the USDA report did not include CO2 as a coproduct of ethanol production. Currently, about 20 ethanol plants in the United States stripping CO2 for sale to beverage industry or other uses such as enhancing vegetation growth in hydroponics agriculture. Including CO2 as coproducts of ethanol production will improve the net energy balance of corn ethanol. Many ethanol plants in the U.S. are selling wet DG. About 1/3 of total energy used to produce ethanol is used to dry DDGS. Estimating the net energy balance for the above plants could improve the net energy balance for the industry.
 
 EPM: Can you identify any areas for further research?
 
 Shapouri: The main area that requires further research is the break down of the energy used to convert corn to ethanol and coproducts. More specifically, how much energy is used in each process, such as steeping, liquefaction, saccharification, distillation, fermentation, dehydration, coproducts drying, etc.? This research could likely improve the corn-ethanol net energy value.
 
 EPM: Is this report one that should put the NEV question to rest for the time being?
 Shapouri: Yes.
 

 EPM: Are there any other questions you can think of or any other points you would like to make?
 
 Shapouri: Department of Energy (DOE) plans to convert corn stover to ethanol and other biobased products in the near future and USDA will support the DOE efforts. Utilizing corn stover will likely increase the net energy balance of corn ethanol. Further research will be needed to evaluate the effect on the net energy balance.

Dr. Hosien Shapouri discusses the latest, most definitive report on ethanol's energy balance

USDA researcher explains decision to update ‘The Energy Balance of Corn Ethanol'

Breakthroughs in enzyme science have contributed to improved ethanol production efficiencies over the last 20 years. Most industry researchers believe enzymes, along with other advances in process technology, will open doors to increasingly higher yields, and greatly enhanced throughput. Ideally, these important advances would lead to wider net energy gains for ethanol production in the next 15 years.
 	
 Due to recent consolidation in the business, there are essentially three major producers of enzymes that service ethanol producers in the United States. These companies are Genencor International, Novozymes North America, Inc., and Alltech, Inc. Each company offers a variety of trademarked enzyme products for ethanol production. The products differ somewhat in that some are produced by deep tank fermentation and others by solid-state fermentation. 
 	
 According to Marlene Mueller, a scientist with Novozymes, ethanol producers use enzymes because they deliver the fastest, purest yield of fermentable sugars and yeast nutrients from plant starches. 
 	
 Of course, corn is the leading ethanol feedstock in America and the center of most enzyme-focused research in our industry. Alone, yeasts are not able to efficiently process the plant's starch and protein. Therefore, in order to produce ethanol at the levels required for commercial production, yeasts require ample "metabolizable" carbon and nitrogen. Enzymes make that happen. 
 	
 Enzymes, of course, also enhance yeast nutrition. 
 	
 "For example, the enzyme may have some protease activity, thereby releasing nitrogen for yeast growth," said Mike Knauf, director and industry manager for Genencor's Fermentation Alcohol Enzymes business.

 	
 Specifically, most ethanol producers are utilizing high-temperature alpha-amylases to liquefy starches from whole grains. Glucoamylases and fungal alpha-amylases are commonly used in ethanol production to efficiently hydrolyse fermentable sugars from the liquefied mash. Proteases are used to generate amino acids, and phytases to generate phosphates for yeast nutrition, according to all three of the leading enzyme manufacturers. 
 
 Tailored to specific needs
 "Today's state-of-the-art enzymes have been designed to meet the specific needs of the ethanol industry," Knauf said. "We have found that each ethanol production process, in fact each ethanol production facility, has unique requirements . . . Ethanol producers control process parameters . . . With today's enzymes that are designed for ethanol production, producers have more process flexibility. As a result, they are able to accomplish better throughput and yields than in the past."
 	
 By blending specific enzymes, fermentable sugar production (and the reaction speed) can be optimized to match the available capital equipment of an existing facility, explained Mueller. Enzymes such as protease, phytase, and pullulanase have benefits that can be advantageous for specific process configurations.
 	
 "Each customer is different, and each raw material is different," said T. Pearse Lyons, president of Alltech. "Therefore, . . .we sometimes do need to tailor an enzyme to an individual plant."
 Vast world market
 	
 Enzyme scientists agree that technological advances and scientific breakthroughs of the last 20 years have accelerated enzyme research and development for ethanol production. However, because ethanol is a relatively small market in the vast international enzymes business, some researchers believe that advances have been gradual.
 	
 It is estimated that the world market for enzymes is between $1.2 - $1.5 billion. Literally hundreds of industries use enzymes to obtain clean, accelerated production of specific reaction products. The biggest industry sector markets for enzymes are detergents, baking, starch processing, alcohol production, leather, and fruit juice/wine processing.
 
 Keeping pace with ethanol

 Modern science, biochemical tools, and robotics are allowing enzyme manufacturers to keep pace with the changing face of ethanol production. 
 	
 "We utilize all of the tools of modern biotechnology in order to deliver the enzyme products our customers need," Knauf said. "There are many new tools available and many different approaches we can take. But one thing is constant: The needs of ethanol producers are always changing. So we need to be in close contact with producers and screen for the right enzymes to add value to their operations."
 	
 Mueller said many of the biochemical tools and robotics developed in basic genome, proteome, and metabolic pathway research are now being applied to the improvement of enzymes and potential production organisms. 
 	
 "This allows more rapid development of new enzymes, and products that directly meet needs expressed by the ethanol industry," she said.
 
 Has real progress been made? 
 "I believe that the progress being made in solid state enzymes is the beginning of (achieving) true cellulose digestion," Lyons said when asked if real progress has been made in the science. 
 	
 Mueller and Knauf both cited cost-performance of enzymes as a major milestone in ethanol production science.
 	
 "Yes, we have made significant progress," Mueller told EPM. "The cost-effectiveness and increased performance reliability of the new generations of enzymes demonstrate the contributions of the teams which design and produce them. Low-calcium, thermostable alpha-amylases which greatly reduce mash viscosity are a good example of how far we've come." 
 	
 Knauf said one way to track progress is to ask if yesterday's enzyme products could compete with today's on a cost-performance basis. "The answer is clearly no," Knauf said. "We are providing the fourth and fifth generations of enzyme products and they allow ethanol producers to do things that weren't possible ten years ago."

 	
 Why is it important to keep working at this? 
 
 "By definition," Mueller said, "ethanol production is a commodity business with narrow margins that must be maintained by using the best processing methods in the most efficient fashion. This need for efficient use of process inputs is especially strong during periods of high feedstock cost. The most efficient enzyme in the world is only as good as the commitment of the ethanol producer to run his plant in an optimum way. This is why Novozymes has invested so heavily in technical service in the U.S." 
 	
 Lyons explained that enzymes are more than just a cost of production (about 5 cents per gallon), but also a way to improve its proof. "Along with yeast, this is the heart of the process," he said.
 	
 Knauf said continued work is vital because enzymes are often considered to represent an "enabling" technology when it comes to processes for ethanol and sweetener production. On the other hand, he noted, it's been said that ethanol production processes are built around the limitations of commercial enzymes. 
 	
 "If we can remove or minimize enzyme limitations, we will enable better ethanol production processes," Knauf said. "That's where we're putting our research and development dollars. There's value for both ethanol producers and enzyme suppliers in this approach." 
 
 Feedstock diversity
 Enzymes exist today which are specific for processing different types of grains, (e.g., corn, wheat, barley). Therefore, Mueller explained, enzyme technology is already conducive to processing diverse feedstocks. 
 	
 "Development of new enzymes will enable the ethanol industry to use these new tools to engineer processes using variable renewable feedstocks," she said. "For example, enzymes are being developed today that will convert corn stover and lignocellulosic materials to fermentable sugars. The future holds exciting new innovations yet to be discovered." 
 	

 Lyons said, "Once again, solid state enzyme technology is fundamentally a technology which takes diverse feedstock and converts them into proteins, which in turn can be used to convert glucose into alcohol. A breakthrough whereby solid-state enzymes would be produced at individual distilleries. This would be a major impact to our industry. Some 5 cents per gallon of alcohol is spent on enzymes. If one can imagine a situation where the distillers grains is actually used as the raw material upon which a solid-state enzyme could be produced, then effectively, you have the beginnings of an in-house enzyme system which is also using one of the byproducts, DDG. Within the 'biorefinery' concept, this is also placed high on the list."
 
 Will cellulose conversion become less expensive?
 Lyons suggested that technology-cost reductions could be achieved by avoiding the genetic engineering approach. "(A cost reduction could be achieved by) designing an enzyme, bacteria or mold that specifically grows on the cellulose," he said. "Hence, your raw material becomes your enzyme source."
 	
 Mueller said the cost of cellulase is not, in itself, "the major problem."
 	
 "Wood and plant fibers are complex heteropolymers which are much more difficult to hydrolyse than starch," she said. "Lignins in the biomass tend to bind and inhibit enzymes of the cellulose mixtures. Therefore, a very high dose of enzyme is required to accomplish the conversions necessary in this process." 
 	
 Knauf said there are a number of good reasons for the relatively high cost of cellulose hydrolysis, and "enzymes have little to do with it." 
 	
 "Cellulose is different than starch," he said. "Cellulose and starch both consist of glucose molecules linked in long chains, but the bonds between glucose units differ in their configuration. The alpha bonds in starch are not only easier to hydrolyze, they also allow starch to take on a configuration that is quite accessible to enzymes. Cellulose is a beta linked glucose. The bond is harder to break and is oriented such that the glucose units come into close proximity with each other and form stable, hydrogen-bonded structures." 
 	
 The bond is harder to break, Knauf said, simply because a plant uses starch to store glucose for later use by the growing seed. A plant also has cellulose to impart rigidity and structure to allow it to stand tall and take in the sun's energy."
 	
 In order to help address these challenges, DOE and NREL have contracted with two enzyme manufacturers to develop methods to reduce the cost of cellulose-hydrolysing enzymes. A DOE subcontract with Novozymes, which is administered by NREL, has a goal of reducing the cost of enzymes for bioethanol production 10-fold. Mueller said in the first year, Novozymes achieved a 2.3-fold reduction in enzyme cost compared to commercially available cellulase products and is thus on track in the research project. 

 	
 Genencor is also two years into a three-year project that is partially funded by DOE through NREL. After one year, Knauf said, Genencor developed and validated processes for improved cellulase enzymes that meet the intended objective at one-half the cost of currently available technologies. 
 	
 "And we are well on our way toward our goal of a 10-fold reduction," Knauf said. "We're working hard to reduce the cost of cellulose hydrolysis. We've identified the best types of cellulases, searched for and found similar cellulases in nature, improved our cellulase fermentations, and we've started working on designing the ultimate biomass cellulase product(s)." 
 	
 The next 15 years 
 "I believe the scientific barriers of the next 15 years will primarily be in matching yeast activity to enzyme activity," Lyons said. "In other words, we need to develop enzymes, which will spoon-feed our yeast, because yeast after all is the primary converter of sugar to alcohol (in the fermentation process)." 
 	
 Mueller said she believes that an increased variety of enzymes will be developed or found in the next 15 years, which will enable lower chemical and energy costs in production by increasing the potential pH and temperature ranges of the process. 
 	
 "Improved fermentation organisms will result from the synergy of biological research disciplines," she said. "These organisms may be armed with improved enzymatic systems, and could be expected to ferment 5-carbon sugars."
 	
 In the relatively short term, Knauf predicted, the ethanol industry will see cost-effective cellulases that will find new uses in existing ethanol production facilities. 
 	

 "Before we see cellulosic biomass processing widely commercialized, however, we also need to see improvements in pretreatment and fermentation technologies," Knuaf said.
 	
 What are the limits to this science?
 Essentially, there is still a lot to learn regarding cell biology and enzyme function, Mueller explained. Although, she said, each enzymatic reaction does have limits, and it is possible to introduce new enzymes from other sources. 
 	
 "We should also consider the benefits in efficiency and energy requirements which may arise from metabolic pathway engineering of the ethanol production organisms, she said. "Enzymes will continue to make a significant contribution." 
 	
 Lynons said Alltech scientists do not believe there is a ceiling to what can be achieved with enzyme science. 
 	
 "In our BioScience Center, we propose over the next few years to have 140-180 new Ph.D. students working in the (field) of alcohol production," he said. 
 	
 Genencor prefers not to define limits to the science either.
 	
 "Look at the cost of ethanol production today versus twenty years ago," Knauf said. "What was only a dream of ethanol producers two decades ago is now reality due partly to enzyme improvements. Enzyme technology is advancing rapidly and we are focused on enabling improved ethanol production processes to drive costs down so ethanol can take its place as the fuel of choice."

Enzyme technology will enhance ethanol yields, throughput and net energy balance

Ethanol production is growing so fast it may outpace a state tax break program designed to spur the industry. 
 	
 There is enough funding available under the Nebraska Ethanol Development Act is for two-and-a-half new plants, according to the state's lawmakers. 
 	
 However, 21 proposed ethanol projects have applied for the incentives with the state Department of Revenue. Not all those plants will be built but even if four qualify for the incentive program, it could be out of money in three years. 
 	
 The program provides supplemental income to new plants during their first eight years of operation. It includes an 18 cent-per-gallon production incentive on plants that produce at least 100,000 gallons annually and are running by June 30, 2004. 
 	
 State lawmakers met this month with representatives from nine ethanol plants to discuss ideas to increase funding for the program. Suggestions reportedly included asking for money from the corn and sorghum checkoffs or asking the state for more money. Producers also discussed the possibility of a distilled grains tax or a fertilizer tax. A deferred incentive program for new plants was another option on the table. 
 	
 Gary Kuester, vice president and founding member of Husker Ag Processing, predicted about six or seven plants would meet the state's 2004 operational deadline and be on track to receive the incentives.

Nebraska producers discuss ethanol incentive funding

The Corn Refiners Association (CRA) recently announced the appointment of Audrae Erickson as the new president of the organization. Erickson took the leadership position in mid-July. She most recently served as senior director of Congressional relations for the American Farm Bureau Federation (AFBF), where she specialized in agriculture trade issues including trade policy,  negotiations, dispute settlement,  trade promotion authority and matters involving the World Trade Organization (WTO) and the Free Trade Area of the Americas (FTAA).

Corn Refiners Assoc. appoint Erickson as new president

Farmers are discussing the potential of building an ethanol plant in central Texas. Central Texas Ag Development (CTAD) has been formed and an 11-member board representing 8 different counties has been elected. CTAD will now chart a course of action with the hope of building Texas' first modern ethanol production facility that would convert corn and milo into ethanol. In 2001, Texas ranked 12th in corn production and 2nd in milo production.

Central Texas farmers plan ethanol plant

A Pocatello, Idaho location for a proposed $50 million ethanol plant that would have employed 65 people has reportedly fallen through. An Idaho Falls-based company, Intrepid Technology & Resources Inc., had put a down payment on land for future development, but a feasibility study showed the property could not handle the increased transportation, according to the company's project manager. The company is considering alternative sites in Pocatello, but did not reveal locations. The plant would have been the first in a proposed series of ethanol operations in Idaho.

Potential Idaho ethanol plant on hold

The Lexington, Neb., City Council has approved a redevelopment plan to help clear the way for an ethanol plant that promises to bring almost 40 jobs to the community. Cornhusker Energy Lexington, LLC has proposed building a $50 million plant on a portion of the city's industrial park property. The council action was the first step to improving the area for the plant. Construction could begin as early as this fall.

Lexington, Neb. planjt site approved

The Renewable Fuels Association (RFA) has placed an updated version of its publication, "Fuel Ethanol: Industry Guidelines, Specifications and Procedures" on the RFA website - www.ethanolrfa.org. The technical publication was recently revised by the RFA Technical Committee and a future update is expected by the end of the year. "Given the fact that this publication is often used by those writing contracts to buy or sell ethanol, the RFA works hard to keep industry guidelines up-to-date," said Bob Dinneen, RFA president. "This latest version recommends a 10 parts per million (ppm) limit on sulfur in denatured ethanol well ahead of state and federal sulfur reductions guidelines. The RFA Technical Committee first published fuel quality guidelines for ethanol in 1991. This document is a compilation of the key technical aspects of fuel grade ethanol and its traditional application as a fuel component, based on the collective experience and expertise of RFA members.

 
 Western Plains Energy open to S.D. investors
 Western Plains Energy, LLC is now in the process of selling shares and raising capital for a 30 mmgy plant in western Kansas, near the town of Campus. The project had previously been open to just Kansas and Colorado investors, but is now open to South Dakota investors as well. The group plans to close its equity drive by Sept. 1. The group has chosen ICM to design and build the plant.

RFA ‘Guidelines, Specifications and Procedures' now available online

An "Ethanol Workshop for Rural America - Ethanol: Homegrown Fuel" will be held at the Radisson Hotel in Bismarck, N.D., Sept. 4. The workshop will cover basic ethanol and value-added information that will help farmers, investors, community leaders better understand the policies, support networks, and financial necessities behind successful ethanol projects. For more info: <a href="mailto:www.ethanolmt.org.">www.ethanolmt.org.</a>

Ethanol workshop to be held in North Dakota

Although the recently signed farm bill authorized $150 million a year for the CCC Bioenergy Program, the Senate Appropriations Committee approved just $50 million in the appropriations bill that followed. Senators Diane Feinstein (D-Calif.) and Thad Cochran (R-Miss.) led the effort that opposed full funding. Sen. Tom Harkin (D-Iowa), chairman of the Senate Agriculture Committee, will attempt to restore full funding to the bill before it goes to the floor of the Senate for a final vote.

CCC Bioenergy funding cut down to $50 million

The American Coalition for Ethanol (ACE) held it's 15th Annual Meeting & Ethanol Conference last month in Omaha, Neb. This year's event was larger than ever, boasting an attendance of over 700 ACE members and friends, as well as a successful trade show.
 	

 Some big names were in attendance at this year's event. Nebraska Governor Mike Johanns kicked off the 2002 ACE annual meeting, on the morning of Thursday, July 18th, and was later joined by Senators Tom Daschle and Richard Lugar live via satellite from Washington, D.C. Also included on Thursday's agenda was a live presentation of the AgriTalk radio program, and featured speaker Nancy Sutley of the California EPA. Nebraska Senator Chuck Hagel was on-hand to open Friday's general session. 
 
 Ethanol producer-future producer update
 Something that has become a tradition and highlight at the ACE annual meeting is the ethanol plant update - this year was no different. A packed room listened intently as 31 ethanol producers and future producers provided updates on their new and completed projects. "It's always exciting to hear what all of our ethanol producer members are doing," said Guthmiller.

Over 700 gather in Omaha for 15th annual ACE conference

Allfiber Technology Group, an alliance between five organizations in the finance, engineering and construction industries, has formed to help communities, farming groups and investors develop manufacturing complexes for ethanol, biodiesel, agrifiber board, hydroponics and other agricultural technologies. 
 	
 Gerry Hooper, of Allfiber Group, LLC, said the alliance develops projects to fit the communities involved. "We combine technologies based on the best feedstock at hand - that may be agrifiber-produced waste like wheat straw, raw products like corn or milo, or a combination," Hooper explained. 
 	
 According to Hooper, the investment community is ready to back agricultural technology projects. "Technology has come of age," he said. "Investors are interested because we can show a history of profitable operations for a wide variety of technologies." 
 	
 Hooper organized the alliance with Carol Babb, vice president, ethanol & biomass and process development for Harris Group Inc. In addition to finance, engineering and construction, Allfiber Technology Group provides business and product marketing consulting. Initial project types include ethanol, biodiesel, biomass, hydroponics, agrifiber board plants, and cogeneration of electric power. The team is Allfiber Group, LLC; Baldwin & Clarke Corporate Finance; Gore, Lindblom & Co., LLC; Harris Group Inc.; and North Central Construction Inc. 
 	
 According to a spokesperson for the alliance, Allfiber and Harris Group combine complementary skills in process development, process technology evaluation, engineering, design and consulting. North Central has built several ethanol plants and a variety of agricultural technology projects. Baldwin & Clarke, along with Gore, Lindblom & Co., provide financing and related consulting.

Allfiber Technology Group officially launches new design-build alliance

Colorado-based BBI International announced this month that it has launched a new industry service and expanded its conference planning staff. 

 	
 Matthew Spoor joined BBI International as manager of the company's newly established Biofuels Recruiting Service in June, just before the 18th Annual International Fuel Ethanol Workshop & Trade Show (FEW). His primary responsibilities are to develop and execute an extensive recruiting service that will locate, screen, and deliver quality individuals for hire in the biofuels industry. He is also responsible for the development and growth of BBI associated scholarship funds. 
 	
 Matthew has been a recruiter and account manager in the staffing industry for the past five years. His past experience was working for Tek Systems, a leading provider of information technology consulting and staffing services with revenue of nearly $2 billion and a client base ranging from small companies to the largest of the Fortune 500. 			Matthew is now looking forward to building and growing the industry's only recruiting service exclusively dedicated to biofuels. "By not pirating resources from one company to serve another, I want to build a service that will benefit companies in the ethanol business while also benefiting the industry as a whole."
 	
 Anne Wester also joined BBI in June. Her primary responsibilities are to assist BBI's Conference Services Division in the coordination of workshops and conferences of which there are currently 15 on the docket for the next twelve months. With Anne's help, BBI plans to continue to grow this division. Anne assisted with the 2002 FEW and is currently working on the Regional Ethanol Symposium for Lenders; the 2003 National Ethanol Conference: Policy and Marketing; and the U.S. Department of Energy Fuel Ethanol Workshop Series. Before joining BBI International, Anne organized and executed 21-day excursions for international students while working for an adventure travel company.

BBI International launches Biofuels Recruiting Service, expands conference planning staff

At work in Sioux Falls, S.D., Bob Scott is a marketer of ethanol. In simple terms, that means he sells ethanol to the folks who make our nation's gasoline. It also means he sees the ethanol business through a unique lens. 
 	
 Perhaps, more than anyone else in the business, ethanol marketers, like Bob, serve as conduits between the farmers who produce our clean, renewable product and the big oil companies that buy it. That means Bob has a lot friends on both sides of the fence. Actually, he chooses not to see the fence. 
 	
 "I don't think about ethanol and oil in an 'us-against-them' attitude," he says. "They (the petroleum refiners) are not our enemies - they are our customers. I think sometimes more people need to realize that." 
 	
 That is, of course, a necessarily bold and intelligent position for someone who is also a long-standing president of the American Coalition for Ethanol (ACE), a grass-roots organization that fights passionately for the expanded use of ethanol in America. 

 	
 Working for Ethanol Products, LLC
 Bob markets ethanol for Ethanol Products, LLC, an independent company based out of Wichita, Kan. associated with Sioux Falls-based Broin Companies. The company currently markets about 240 mmgy and will market 320-340 mmgy by the end of the year.
 	
 Like most other ethanol marketers, Bob serves a wide range of customers with diverse product needs, he said. These buyers range from small jobbers (usually "spot sales") to the largest refiners in the nation (typically longer-term contracts).
 	
 "I am involved with marketing on several different fronts," he said, "including maintaining relationships with customers that buy our product on a regular basis and those who buy less frequently - and in less volume.
 	
 "My job requires me to talk to customers every day. I learned years ago that selling is about service, and relationships still count. I think I've earned a reputation in this industry for service and I pride myself in making sure my customers' needs are met and their product is in place when they need it. When you work with a customer long enough, you develop a feel for their patterns. Eventually, you know what they need before they need it."
 	
 One daily challenge of Bob's job is staying on top of the game - and staying ahead of the market. 
 	
 "Marketers are always looking for new business, new customers, and ways to expand our reach with ethanol. That means market research is a necessary part of my weekly activities."
 	
 The most rewarding part of Bob's job, he says, is being on the front edge of industry growth. 
 	

 "I am one of the older marketers in the business and seeing the industry grow the way it has is just wonderful. It's easy to sell a product that you believe in, and I truly believe in ethanol. It's exiting to me."
 
 13 years in the business
 Of course, the ethanol marketing business wasn't so glamorous 10 or 12 years ago.
 	
 "Back in 1989, we were fighting tooth and nail to make in-roads. Now, to see how far we've come. . . that's something for everyone to be seriously proud of."
 	
 Bob joined the ethanol industry in the summer of 1989 as marketing director at Alchem, LLP, a small ethanol plant in Grafton, N.D. that he now serves through Ethanol Products.
 	
 It was an interesting job, because the position he held at Alchem is rare - if not obsolete - these days. Because of the consolidation of ethanol marketing in recent years, it's uncommon to find individual ethanol plants that have a full-time marketing director on staff. 
 	
 "Back in the day, just about every ethanol plant had a marketing person who was single-handedly responsible for moving the facility's products out the door," Bob said. "Of course things are much different today. It's much easier now for producers, for marketers, and for our buyers. In my opinion, we need even more consolidation in the marketing business. I hear it all the time (from buyers of ethanol). They want to take care of more of their needs in one phone call." 
 	
 Bob worked at Alchem for nearly nine years, during which time he was involved with important ethanol lobbying efforts in North Dakota. He accepted a marketing position with Ethanol Products in 1997 and moved back to his hometown of Sioux Falls.
 
 Longtime ACE leader 

 Bob has been on the ACE board of directors since his early days at Alchem. He has served as the group's president since 1999. 
 	
 ACE was formed in the early 1980s by the legendary Merle Anderson and others, but really solidified into a strong organization in the early to mid-1990s. 
 	
 Three years ago, the group had just over 200 members. Today, ACE is nearly 400 members strong. 
 	
 "ACE is about the growth of the ethanol industry," Bob said. "We get strength from a variety of different groups and it is our mission to unite these groups in our common goal." 
 	
 Bob is up front and direct about the actual - and perceived - political differences between ACE and the Renewable Fuels Association, the national trade association of the U.S. fuel ethanol industry.
 	
 "It's true that we don't always agree, but that's healthy," Bob told EPM. "What's important is that we do not go out and disrupt what the other group is trying to accomplish. We have many common objectives." 
 	
 He added, "There is great strength in numbers. Each of our organizations brings something different to the table. And the more we bring to the table, the more weight we have to accomplish our common goals. We can work together, and we do, much of the time." 
 	
 Bob said his work with ACE doesn't take up much of his time because the group has a talented and dedicated support staff in Sioux Falls, led by longtime ACE Executive Director Trevor Guthmiller. 
 	
 "I have weekly contact with the staff," Bob says. "But they're able to drive the organization independently. If you have really good people, like we do, you just have to let them work. Trevor doesn't need a whole lot direction, and we (the 25 board members) are always there if they need us.

 	
 How long will Bob serve as president of ACE?"As long as they want me to do it - and as long as I'm able to do it, he said. "I enjoy my leadership role with ACE and as long as we are growing, and the organization is effectively serving its purpose, I will be proud to help lead this group. If ever ACE needs a change of direction, I would certainly step aside." 
 
 His vision for the industry 
 "We are experiencing some pretty serious growth and what makes it so special is that we were sitting on the edge of this growth for so long and it finally happened, Bob said. "Today ethanol is widely accepted by buyers, and also the general public. I only see more expansion, more production, and more demand in the years to come." 
 	
 As for the renewable fuels standard (RFS), Bob told EPM, "It's a great thing for the industry" but he hopes a five billion gallon market becomes a floor, not a ceiling.
 	
 "Our product has value beyond what it gets from legislation alone," he said. "ACE supports an RFS, but it is not the only thing that our industry needs. However, ethanol was born in politics and it will probably remain there for a long time. So my hope is that (Congress) will say 'we believe in a sound energy policy and a renewable fuels standard should be a part of it.'"
 
 On corn and cellulose
 "The farmer coop is only one part of what ACE is about. Corn is not going to be the only feedstock in ethanol," Bob said. "Cellulose-to-ethanol will happen whether ACE supports it or not. Of course, we do, but the bottom line is ACE supports what is best for the growth of our industry." 
 
 Where will ethanol be in 10 years?"Well, a few years ago we said the 5 billion gallon RFS would triple the ethanol industry's production capacity. Now, we're saying the same legislation would double our production capacity because we've grown that much already. So I think we'll reach 5 billion gallons much sooner than 2012, and I think we'll surpass that by far."

Ethanol marketer launched his ethanol career 13 years ago in North Dakota

ACE President Bob Scott: ‘Relationships still count

An ethanol project near Clatskanie, Oregon is reportedly moving forward. The project is being spearheaded by Portland General Electric, Cascade Grain, and the Port of St. Helens. The group's next step is to obtain a permit from the Oregon Department of Environmental Quality to discharge water. The permit could be granted by the end of October. Fagen, Inc. would design and build the proposed plant if all goes as planned.

Oregon ethanol project moving forward

Both Al-Corn Clean Fuel, LLC, and U.S. Energy Partners, LLC, completed major expansions early this month. Al-Corn Clean Fuel, located outside of Claremont, Minn., has increased its annual capacity from 18 to 30 mmgy. U.S. Energy Partners, near Russell, Kan., increased its annual capacity from 25 to 40 mmgy.
 Al-Corn served as its own general contractor and hired design-builder ICM, of Colwich, Kan., to provide the process-design engineering. 
 	
 "It's great to join the ranks of other ethanol producers who have expanded their capacity to meet the growing demand for ethanol," said Randy Doyal, Al-Corn Clean Fuels CEO. "Our farmer-owners are proud to be doing their part for national security by processing home grown corn into renewable energy. We incorporated a thermal oxidizer into our expanded design to address any potential odor issues. This addition will also allow us to easily meet new requirements from the EPA regarding plant emissions."
 	
 ICM served as the general contractor and process design provider on the U.S. Energy expansion, while Fagen, Inc., of Granite Falls, Minn., handled the construction. "This is about putting the right pieces together," said Jeff Roskam, ICM's senior vice president.

Al-Corn, U.S. Energy Partners complete expansions

Customer: Plant design-builder
 	 
 Date: August 2002
 

 Background: Since 1991, Broin & Associates, Inc. of Sioux Falls, S.D. has been a key player in ethanol plant design and construction. Working with Broin & Associates, Croll Reynolds Company, Inc. of Westfield, N.J., has supplied its high performance vacuum ejector systems to the ethanol industry. 
 	
 Steam ejectors play a vital role in the evaporation process, and multi-nozzle thermocompressors improve plant production reliability and efficiency. These thermocompressors provide the reclamation and reuse of heat energy so important to the efficient production of ethanol.
 
 Specifying the Equipment: A thermocompressor is essentially an ejector used to entrain and compress a low-pressure fluid to a reusable pressure/temperature.As stated above, this equipment provides the reclamation and reuse of heat energy vital to an efficient ethanol production process.
 	
 Thermocompressors reduce steam consumption at low temperature ranges and are an effective method for achieving significant reductions in line steam consumption. They are also energy saving systems, which require a relatively low capital investment, and are installed with minimal labor.
 	
 According to Croll Reynolds, thermocompressors replace pressure regulators or reducing valves in high-pressure steam supply lines. By using high-pressure steam they recompress low-pressure steam to some intermediate pressure and temperature. They may be added to single and multiple-effect evaporators where thermocompressors provide energy savings equiv
 alent to the addition of another "effect" at substantially reduced costs. They are also used on flashed condensate recovery systems, reclaiming the heat content in high-temperature conditions.
 
 The Process: Thermocompressors are commonly employed in the evaporator area of an ethanol plant, where thin stillage is concentrated into syrup. Vapor recompression from the multi-nozzle CR thermocompressors is an essential part of the process.

 
 Materials of Construction: The no-moving parts simplicity of a Croll-Reynolds Thermocompressor minimizes maintenance and downtime. They can be fabricated from any workable or weldable material that the user's special needs may demand. 
 	
 Standard materials of construction for small, single nozzle unit are cast-iron with a stainless-steel nozzle. 
 	
 Spindle operated and multiple nozzle thermocompressors typically have carbon steel bodies and stainless steel nozzles as standard materials of construction. In spindle operated units, the spindle and spindle guide are also stainless steel. 
 	
 For most conventional applications, these materials will withstand abrasion and corrosion resulting from the passage of steam at supersonic speeds through the basic body and the stainless steel nozzle. However, where highly corrosive conditions exist, or where special industry requirements demand (as in the food industry), units can be fabricated entirely of stainless steel or from hastelloy, titanium and other exotic alloys. 
 	
 Since the user is best qualified to determine the corrosive properties of the process gas in his application, materials of construction are normally specified by the customer, Croll-Reynolds Company will, of course, offer its technical input based upon their experience in the design and manufacture of steam ejectors and similar equipment for the process industries.

Equipment provides reclamation and reuse of heat energy important to an efficient ethanol production process

Thermocompressors reduce steam consumption at low temperature ranges, help reduce line steam

After a sluggish spring and summer, a 90-day period of positive developments in the West Coast ethanol market may have, in part, helped lift prices to healthy levels again.

 	
 In mid-August, ethanol prices were pegged mainly around the $1.20/gal to $1.25/gal range nationwide. A few areas reached the $1.30/gal range and the Midwest was at about $1.19 at EPM's press time. 
 	
 Although several factors contributed to the price surge (such as high corn prices due to drought and winter supply contract negotiations), a tightened market was probably the best explanation. Industry analysts believe the growing demand for ethanol in California is helping to correct market prices. 
 
 90 days of good news
 Beginning with BP's May 2 announcement, saying it was moving forward with plans to switch over to ethanol from water-polluting MTBE, it has been essentially full steam ahead for ethanol in California.
 	
 On June 12, Shell followed BP's lead, announcing that it too would switch over to ethanol by the end of the year. ExxonMobil joined the switch July 11, the same day Phillips Petroleum Company ("76" stations) announced that it is the first gasoline supplier in the state to offer MTBE-free gasoline year-round at all of its retail outlets.
 	
 More good news was heralded by the Renewable Fuels Association (RFA) Aug. 1, when the national voice of the ethanol industry announced that the California Energy Commission (CEC) had released an updated report that found U.S. ethanol production capacity should reach 4.5 billion gallons by the end of 2005. 
 	
 By mid-August, it was clear ethanol prices were back to normal.
 	
 "The demand appears to be back in place. Prices have firmed up." said Jim Sneed, an ethanol marketer with Williams BioEnergy "This is a lot more than talk and corporate rhetoric. Contracts have been signed. We've got (long-term) contracts in place for a Nov./Dec. timeframe (to begin moving product)." 
 

 Market was flush
 The U.S. ethanol industry preemptively expanded its production capacity over the last 18 months to ensure an adequate supply of ethanol in California once MTBE is phased out. Unfortunately, as new ethanol plants came online - and existing ethanol plants expanded - the market failed to open up as rapidly as investors predicted. The situation worsened in mid-March, when California Gov. Gray Davis delayed the deadline for removing MTBE from California's gasoline supply until January 1, 2004, a year later than planned. 
 	
 Beginning this spring, ethanol stocks began to swell, and prices gradually fell, trading as low as 85 cents a gallon in the Midwest, Sneed told EPM.
 	
 "Ethanol is now 40 cents off its low from a few months ago," Sneed said. "There was a point when I was trading ethanol in Minneapolis at 85 cents and today we're back up around $1.25. The market is already correcting itself. In my view, the outlook for ethanol is looking very solid right now." 
 	
 At least in part, ethanol prices are strong because over half of the 600 to 900 million gallon market in California is beginning to open up. Refiners in California are expected to start shipping product from the Midwest as soon as early September. In addition, other markets - such as those in the Midwest and the Southwest - are still growing.
 	
 "Ethanol was priced way below its value for a while and the demand has picked up - not just because of the demand that is building in California, but also right here in the Midwest as well, where we are still expanding our markets, said Bob Scott, a Sioux Falls, S.D.-based ethanol marketer for Ethanol Products, LLC. "Some blending is going on in California right now, Phillips is using the product already and others may be building up storage as well. . . By late fall, we'll see storage building (in California) and we'll be watching inventories closely in order to get the product where they need it."
 	
 After BP, Shell and ExxonMobil complete the switch to ethanol, analysts say, nearly half the state's gasoline will contain ethanol. ChevronTexaco is the only other major California refiner that has not publicly announced its intentions to switch over to ethanol, but most predict it will happen anyway.
 	 
 Earlier in the year, there was concern that problems would arise if pipeline carrier Kinder Morgan did not join the switch to ethanol before 2003. Those concerns appear to have been quelled in light of recent developments.
 	 
 "It's not a real big issue," Sneed said. "With the exception of Valero and Tesoro, everyone else (all the major refiners) can operate without them (Kinder Morgan)." 

 
 Meeting the demand
 "On a broad scope, I look at what's happening in California and I think 'that is a lot of gallons,'" Scott said. "But you know, we've been working for this a long time and we're ready to deliver. This represents years of discussions, ground work, arguments and agreements finally coming to fruition. We should be appreciative of it and thankful that these refiners are willing to work with us. It's a nice shot for our industry right now."

Anticipation of West Coast market contributes to market correction

Ethanol prices recover in August

Industry leader Archer Daniels Midland Co. (ADM) reportedly expected to close on its acquisition of Minnesota Corn Processors, LLC (MCP) by September. 
 	
 During a conference call with investors and analysts following the release of fiscal fourth-quarter and full-year results last month, ADM Chairman G. Allen Andreas said the two companies have had a good relationship for many years, highlighted by ADM's purchase of 30% of the cooperative in 1997. ADM said earlier this month it had an agreement with MCP to acquire the remaining 70%. MCP's 5,400 members, primarily farmers in Nebraska and Minnesota, will likely vote on the deal by the time this issue of EPM goes to print. ADM has offered MCP shareholders $2.90 per share for 136.6 million shares - a deal totalling nearly $400 million. The merger must be approved by two-thrirds of the shareholders. 
 	
 As reported by EPM last month, the transaction will have to be reviewed by the Department of Justice for "anticompetitive" reasons, given ADM is the country's largest ethanol producer and MCP produces about 130 mmgy at its plants in Marshall, Minn., and Columbus, Neb. However, all signs were looking good early this month for the deal to go through.
 	
 "We have no reason to anticipate that they would feel anything other than this would add to the competitiveness of this industry and be a very positive development," Andreas told investors. 
 	
 He told analysts that the incorporation of MCP's high fructose corn syrup (HFCS) production into ADM's operations should strengthen the company's bargaining positions when it seeks new sweetener deals with its users. n

Nation's largest producer  would pay nearly $400 million for remaining 70 percent of MCP, 30 percent purchased in 1997

ADM expects govt. approval of MCP purchase

Frank Argenziano, Special Projects Coordinator/Facility Manager at the John D. Odegard School of Aerospace Sciences located at the University of North Dakota, has been given a Certificate of Appreciation Award for 2002 by the American Coalition for Ethanol. Argenziano was given this award for his efforts in support of the ethanol industry and for his role in organizing the Ethanol in Aviation conference, which was held at the Odegard School in May.
 	
 "Frank was instrumental in getting the Ethanol Project off the ground," stated Al Palmer, Director of Flight Operations at UND Aerospace. "He possesses a great deal of energy, is highly industrious, and doesn't believe in idle time."	
 	
 Argenziano is currently involved in a $765,000 FAA research contract at UND to further refine and certify aviation-grade ethanol for use in aircraft.

Agreziano receives ethanol industry award

Pierre, SD - The Dakota Value Capture Cooperative (DVCC) has achieved two major milestones: it has secured all required permits for the $65 million integrated beef and energy complex north of Pierre; and it has brought on board its C.E.O, Edwin Noehre.
 	

 The South Dakota Department of Environment and Natural Resources has issued the Confined Animal Feeding Operations (CAFO) permit, which completes the list of permits needed to construct and operate the Sully County complex. This significant achievement comes on the heels of the USDA's recognition of the DVCC complex as fully compliant with the National Environmental Policy Act (NEPA) provisions, for which it recently published a Finding of No Significant Impact (FONSI).
 	
 Curt Mortenson, DVCC President, noted the DVCC project exceeded expectations by receiving no negative comments during the required public notice periods. "The lack of negative public feedback is an indication of the strong community support enjoyed by this environmentally-friendly project," said Mortenson. "It also confirms what we have said from the start: This 21st Century closed-loop technology is the most environmentally friendly way to produce renewable fuels and fatten cattle."
 	
 The DVCC Board also hailed the selection of its new C.E.O., Edwin Noehre, who will be coming to Pierre from Madison, Wisconsin. A Bismarck, N.D. native, Noehre is a CPA with over 20 years of agribusiness experience, including 14 years with Cargill. He will report directly to the Board of Directors, and ensure compliance with all financial regulations and budgets.
 	
 Tom Tveit, DVCC treasurer, indicated equity shares are still available. "South Dakota residents should take advantage of this opportunity to add value to our agricultural products right here at home."

DENR gives thumbs up to Pierre, S.D. ethanol plant

Adkins Energy, LLC completed construction on their plant and began producing ethanol two months ahead of schedule this month. Adkins Energy is the first farmer-owned ethanol plant to operate in Illinois.
 	
 Located outside of Lena, Ill., the plant includes a cogeneration facility to produce steam and electricity for the plant. The plant will convert more than 13.5 million bushels of corn into approximately 40 mmgy.
 	
 "This plant is expected to return 8 to 15 cents additional value for each of the 13.5 million bushels delivered to the plant," said Todd Block, Adkins Energy general manager. 
 	
 A celebration was held at the plant Aug. 20, with design-builder Lurgi PSI holding a BBQ on site. Brief plant tours were also held.

August 2002

Columns

The Way I See It

Featured

Northern Lights Ethanol is full ‘steam' ahead

USDA researcher explains decision to update ‘The Energy Balance of Corn Ethanol'

Enzyme technology will enhance ethanol yields, throughput and net energy balance

ACE President Bob Scott: ‘Relationships still count

Thermocompressors reduce steam consumption at low temperature ranges, help reduce line steam

Ethanol prices recover in August

August 2002.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}

Columns

The Way I See It

Featured

Northern Lights Ethanol is full ‘steam' ahead

USDA researcher explains decision to update ‘The Energy Balance of Corn Ethanol'

Enzyme technology will enhance ethanol yields, throughput and net energy balance

ACE President Bob Scott: ‘Relationships still count

Thermocompressors reduce steam consumption at low temperature ranges, help reduce line steam

Ethanol prices recover in August

August 2002