Domestic Fuel

Another indicator of the viability of ethanol and biodiesel might be the increasing numbers of investors in the alternative fuels. In Missouri, for example, the Secretary of State’s office reports the number of the number of biofuels investments filed with the state increased from just five in 2005 to 15 last year. In this Associated Press story, government requirements are seen as the driving reason for the increase.

Federal clean air requirements have people seeking cleaner-burning additives for fuel such as ethanol and biodiesel. At the same time, ethanol’s main competitor – MTBE – has been phased out because it contaminates water supplies faster than other fuels as it dissolves in water rather than separating like oil.

While Missouri does have its own burgeoning ethanol and biodiesel industries, most of the companies that sought permission with the Secretary of State’s office to solicit Missouri investors were from out of state.

Another major city is using greener burning biodiesel… this time for the school district’s buses. The Louisville (Kentucky) Courier-Journal reports that the Jefferson County Public School District has switched its entire 1000+ bus fleet to biodiesel.

Jefferson County uses a blend containing just 2 percent biodiesel but will consider increasing that to a 20 percent mix, which can reduce particulate matter, carbon monoxide, unburned hydrocarbons and sulfur pollution by as much as 21 percent, studies show.

Officials also expect it to be better for the kids as diesel fuel emissions have been blamed for increased rates of asthma, lung disease, and cancer.

It used to be the image of a modern oilman was a Middle Eastern sheik. But more and more, it’s an American Mid-WESTERNER. Case in point, this article from the Bangor (Maine) Daily News. The town of Bucksport, Maine could become the home of one of the largest biodiesel plants in the Northeastern United States.

Dirigo Biofuels, an Iowa-based company whose owners have experience developing similar refineries in the Midwest, is working on plans for a plant in Bucksport that would produce 30 million gallons of biodiesel fuel from vegetable oil each year.

Tobin Bush, the project coordinator for Dirigo Biofuels, tells the Bangor Daily News that Bucksport is a good choice because it is close to where people would be using it and has a deep-water port.

“Most of the feed stock [raw materials] is being grown in the Midwest, but the final product is used on the coast,” he said. “Maine is right in the heart of the home heating fuel market.”

The company plans to rely on the deep-water access in Bucksport to bring in the vegetable oils it will use in the refinery, and, potentially, to ship the finished product to customers.

Plans are for the plant to be up and fully running by the end of the year, but Bush admits there’s still a distance to go to finish the deal.

Recently, both Cindy and I have been telling you about using the leftovers from meat processing (chicken fat, in particular) to help make biodiesel. Now, I’ve talked with Vernon Eidman, Professor Emeritus in Applied Economics with the University of Minnesota about the economic viability of using these alternative feedstocks in alternative fuels. Check it out!

Professor Eidman
(5 min MP3)

Podcast: Play in new window | Download (1.6MB)

Back on January 4th, we told you about a plant near Dexter in Southeast Missouri that is using chicken fat to make biodiesel. Read the original AP story here.

Today, I talked with Jerry Bagley, one of the co-owners with Global Fuels, LLC. He told me that he thinks they are just on the edge of the potential for this type of fuel.

Check out the interview. Global Fuels (4 min MP3)

Podcast: Play in new window | Download (1.9MB)

Mark your calendars for Biomass and Biorefinery Deals 2007 March 26th-28th in Washington, D.C. Industry leaders along with government officials, and equity and venture financiers will get together at D.C.’s AED Conference Center to discuss the financial end of biomass operations.

They will address federal incentives and programs for the development of new biomass energy projects, as well as the potential for extension of current tax incentives and implementation of more federal legislation under the incoming Congress. They will examine the prospects for obtaining financing from private equity and other “new” sources, offering helpful hints on how to take advantage on the diverse revenue streams possible in these deals and optimally structure deals to fully capture the value of bio-energy projects and assure financing. Finally, they will review some of the practical issues involved in developing and financing projects using diverse feedstocks, technologies and revenue sources.

Gotta make at least SOME money to make an industry viable, and it looks like this conference will give some insight on how to best use government money and private finvestment and how to attract in those sources of investment.

Following up on Cindy’s post about the Reuter’s Global Biofuels Summit, I ran across this bit of news about the future of biodiesel futures from Reuters.

The chief economist at the Chicago Board of Trade, Dave Lehman, told attendees at the summit that the biodiesel market is still not big enough to be a hedging tool.

The biodiesel market is roughly 1/40 the size of the $8-billion U.S. corn-based ethanol market, Lehman said.
“It needs to grow by a factor of four or five just to get to our minimum” to support a futures contract, Lehman said.

In comparison, Lehman points out that the board already trades five to 10 ethanol contracts each day. But that is still not enough for ethanol to be considered a price-risk management tool. He also expects the dry distillers grain market… of course, the by-product of corn-based ethanol production… to be traded before biodiesel.

Lehman expects things to be much more rosy for the ethanol futures in the near future… possibly five THOUSAND contracts a day… as the renewable fuel standards really kicks up production.

A couple of days ago, I told you about how Cincinnati, Ohio had changed its bus fleet to biodiesel and saved the city nearly half-a-million dollars last year. Now, officials in Pocatello, Idaho are making the change to the cleaner form of fuel. They expect to change the city’s entire fleet… cars, buses, snowplows… over to a 20% blend of biodiesel.

That bandwagon seems to be just getting bigger everyday.

Cargill reported that its second quarter earnings for last year jumped 34 percent over the same time a year ago… due in part to the increased demand for ethanol and biodiesel. Earnings went from about $500 million in the same quarter in in fiscal year 2006 to more than $660 million dollars for the quarter ending November 30th. In addition, the first six months of FY2007 Cargill earned $1.16 billion. That’s a jump of about 16 percent!

In a company statement, Cargill Chairman and CEO Warren Staley, said “Similar to the first quarter, we experienced fast-changing markets in the second period, brought about by the interest in biofuels, investor flows into commodity futures and other markets offering diversification, and expansionary economies in many parts of the world. ”

Cargill runs two ethanol plants… one in Eddyville, Iowa and one in Blair, Nebraska… and this past spring has just opened a biodiesel plant in Iowa Falls, Iowa.

A former brewery in New York state will soon be brewing up biodiesel. Officials with GS AgriFuels have announced a partnership with Homeland Energy to build a biodiesel plant at the site of the old Miller Brewing Company plant in Fulton. Homeland Energy already has an ethanol plant adjacent to the site.

In a release on Business Wire, GS AgriFuels President and Chief Executive Officer, Thomas Scozzafava, says “We are pleased to have been able to partner with Homeland Energy and participate in this, our first majority-owned biofuels production facility. I’m proud to be involved with a project that will re-utilize an existing industrial facility to produce clean fuels that will benefit both the central New York economy and its environment.”

The 10-million gallon-a-year plant will use some of the old brewing equipment and storage tanks already in place and is expected to begin production later this year.

The Cincinnati Enquirer reports that buses in the city and the surrounding county ran on biodiesel, saving the city $450,000 last year.

(The metro area’s) 390 buses used about 3.6 million gallons of fuel last year – half of which was biodiesel.

But, there is one adjustment that has to be made for the city’s cold winters…

During warm months, Metro fueled all buses with a blend made of up to 75 percent of biodiesel. It switched back to 20 percent biodiesel blend in colder months because the biodiesel can jell in cold weather.

Either way, it’s another city in the heart of soybean country making use of a plentiful, renewable, close-to-home source of energy.

The opening of Iowa’s first biodiesel plant is set for this April in Newton, and now a second one will be built in Huxley. According to the Des Moines Register, a $15.4 million dollar facility, will be built by Ames-based Technochem.

The plant, which will employ 51 people, is expected to produce about 5 million gallons of biodiesel annually, and it will be involved in glycerine purification and vegetable oil processing, said Wade Greiman, an engineer for Snyder and Associates Inc., which is assisting city officials in Huxley.

In addition, the plant will perform research and development work, and it will manufacture biodiesel equipment, officials said.

Here’s the Register’s full article