Domestic Fuel

An investor in a biodiesel operation in Nebraska is donating $1 million to Oklahoma tornado relief. Koch Industries, Inc. made the donation to support relief efforts for the devastated the cities of Moore and Shawnee, and other affected areas of the state:

Half of that amount will be given to the OK Strong Disaster Relief Fund established by Governor Mary Fallin in coordination with the United Way of Central Oklahoma. The other half will go to the American Red Cross and The Salvation Army to help affected families with their most urgent needs, including housing, transportation, clothing and more. In addition, Georgia-Pacific, a Koch company, has donated six truckloads of products from its Muskogee, Okla., Fort Smith, Ark. and Naheola, Ala. facilities including Angel Soft® and Quilted Northern® bath tissue, Sparkle® paper towels, Dixie® cups and plates, and Mardi Gras® napkins.

“Koch has deep roots in Oklahoma, and we want the communities of Moore, Shawnee and others throughout the state to know we stand with them and pray for them as they begin the difficult process of rebuilding their lives,” said Dave Robertson, president and COO of Koch Industries, Inc.”

Koch’s Flint Hills Resources Renewables, LLC just inked a deal to use Benefuel, Inc.’s patented ENSEL® refining technology at Flint Hills’ Beatrice, Nebraska biodiesel plant.

A Nebraska biodiesel plant is being taken over by a group that includes a Japanese investor. Benefuel Inc., with shares held by Tokyo-based conglomerate ITOCHU Corp., and Flint Hills Resources Renewables, LLC, owned by Koch Industries, have inked an agreement to develop biodiesel refineries in using Benefuel’s patented ENSEL® refining technology:

The joint venture, named Duonix, LLC, is actively developing the first project, which is a retrofit of the 50-million-gallon-per-year facility in Beatrice, Nebraska, which was acquired by FHR out of bankruptcy and has since been transferred to Duonix. The Beatrice plant will continue to be operated by FHR.

“After significant validation of the Benefuel technology, we are looking forward to demonstrating its commercial application and the competitive advantage we expect it will offer,” said Jeremy Bezdek, managing director, Innovation, FHR. “We are excited to partner with Benefuel to bring this next-generation biofuels technology to market.”

Officials from both companies say Benefuel’s ENSEL method will allow for cheaper, high free fatty acid (FFA) feedstocks, such as distillers corn oil from ethanol refining, waste-vegetable oils, animal fats and unrefined oils, without the usual processing penalty, letting the refinery be profitable.

The Iowa Legislature has passed H.F. 640 that supports fuel choice for Iowa’s fuel retailers and consumers. The legislation protects retailers from Big Oil efforts to restrict competition by guaranteeing them the right to offer ethanol and biodiesel blends of their choice including E15, E85 and B20.

“This legislation represents a solid step forward for higher ethanol blends, consumer choice, and the federal Renewable Fuel Standard (RFS),” said Iowa Renewable Fuel Association (IRFA) President Rick Schwarck, CEO of Absolute Energy. “I find it ironic that Big Oil consistently claims that retailers don’t want to sell higher ethanol blends like E15, yet they use every trick in the book to prevent retailers from offering E15.  In fact, the American Petroleum Institute (API) fought tooth and nail to try to keep these retailer protections out of the bill.  This bill tears down one part of Big Oil’s bogus blend wall in Iowa.”

The legislation includes a section that amounts to a retailer ‘Bill of Rights,’ preventing oil refiners’ supply agreements from directly or indirectly limiting the ability of local retailers to offer the ethanol and biodiesel blends they choose. The provision was based on a law enacted in South Dakota in 2011 and addresses specific, anti-competition provisions from actual refiner supply agreements.  As a result, new supply agreements will not be allowed to:

• Restrict fuels from other suppliers;
• Restrict installing a blender pump;
• Restrict using current equipment from offering higher blends, like E15, E85, and B20;
• Restrict ethanol or biodiesel blends from being advertised;
• Restrict the locations where a retailer may offer the higher blends (like under a canopy); and
• Restrict payment for higher blends to cash only (no credit cards).

“One supplier should not be allowed to dictate to local retailers what they can and cannot do with products from other suppliers,” continued Schwarck.  “More freedom for retailers to offer the fuels they choose often means more ethanol and biodiesel blends, which benefits consumers by increasing competition at the pump.  And it also means more RINs will be generated for use in complying with the federal RFS.”

New numbers from the EPA show that biodiesel production in the U.S. hit 110 million gallons in April … staying on pace to hit more than a billion gallons for this year. The National Biodiesel Board hopes the green fuel can exceed targets set under the Renewable Fuel Standard (RFS) for a third consecutive year:

The numbers show a total of more than 118 million gallons of Biomass-based Diesel for April, but that total also includes production of renewable diesel. The biodiesel portion of the total was 110 million gallons – roughly the same production as in March and putting year-to-date biodiesel production through the end of April at almost 369 million gallons.

NBB also points out that the biodiesel industry supports about 50,000 jobs across the country.

A Florida-based biodiesel company says it has completed its research into using jatropha as a feedstock at its Central American operation. In a news release published in the Sacramento Bee, Alternative Fuels Americas, Inc. (AFAI) says it successfully completed research trials and is moving to establish above ground oil fields as a staged entry into a market forecasted to exceed $500 billion by 2019.

AFAI operates a 25 acre pilot plantation with 40,000 mature Jatropha trees in Tempate, Costa Rica. During the past years AFAI has conducted trials to establish best-practice protocols for maximum crop yield and production profitability. AFAI has successfully concluded its trials and plans to transition its activities to commercial scale.

“We have a strong degree of certainty that we can successfully farm and harvest Jatropha for the purpose of profitably producing biodiesel. We have dedicated much time and substantial resources to reaching this goal, which was a necessary rite of passage,” comments AFAI CEO Craig Frank. “Now that we have reached our breakthrough we can continue towards profitably producing and selling biodiesel and initiate our plans to enter additional markets worldwide.”

AFAI considers itself a “seed to pump” vertically integrated energy company.

A joint project between the National Research Council of Canada (NRC) and industry partners could result in technology to grow algae to be made into several items, including biodiesel, in the heart of the Canadian petroleum industry: oil sands facilities.

The Algal Carbon Conversion Pilot Project, a partnership among the National Research Council of Canada (NRC), Canadian Natural Resources Limited (Canadian Natural) and Pond Biofuels, will result in the construction of a unique, $19 million facility in Alberta.

In the coming months, a demonstration-scale algal biorefinery will be established at Canadian Natural’s Primrose South oil sands site, near Bonnyville, Alberta. This facility will recycle industrial emissions from their oil sands facility by using carbon dioxide to grow algal biomass, which will undergo further processing into products, such as biofuels, livestock feed and fertilizer.

Officials say the project will lessen the oil industry’s carbon footprint, while marking this unique partnership between fossil fuels and renewable industries.

Shut out of selling biodiesel the the European Union, Argentina is now trying its hand at getting into the U.S. biodiesel market. Reuters reports the Argentinians believe it will be easier to meet U.S. environmental laws than overcome Europe’s block

“We’re going through the process of getting EPA approval, which takes some time,” Luis Zubizarreta, president of the Argentine Biofuels Chamber, told the Reuters Latin America Investment Summit.

Argentina is the world’s top exporter of biodiesel – made from soybean oil – but shipments to its main client, the EU, plunged this year after the bloc launched investigations into possible dumping by Argentine suppliers.

The European block on the South American green fuel has cut in half Argentina’s production. If the EPA approves Argentinian bodiesel for RINs, the article says it would obviously help that country’s market while helping U.S. refiners, importers and others comply with biofuel blending requirements.

A new Colorado biodiesel plant will be supplied with used cooking oil as its feedstock. Bio Plant Technologies LLC (operating as ClearEcos) and GHP Biodiesel USA Inc. are joining forces to set up an 11.5 million gallon refinery in conjunction with ClearEcos’ Boulder, Colorado used cooking oil (UCO) collection business.

Kurt Lange, CEO of Bio Plant Technologies states: “Together with our restaurant partners, we will create a cleaner environment and cleaner communities in Colorado. The usage of local restaurants’ grease to create biodiesel for our municipal fleets ensures that the economic and environmental benefits of our business stay in the region. As our business grows, we will continue to create jobs for Colorado.”

Gregory Gettinger, CEO of GHP Biodiesel USA states: ”We are happy to announce this strategic merger between the UCO collection and the biodiesel production. The synergies in production and logistics are striking. Moving up the value chain from used oil collection to an integrated energy provider is a logical strategic step in this industry.”

Bio Plant Technologies touts itself as the only closed loop UCO-biodiesel-return to local communities system in Colorado.

The Iowa Renewable Fuels Association (IRFA) will be hosting a summer workshop series addressing upcoming changes in the fuels shipped to Iowa via the current pipeline system. According to IRFA, these workshops are aimed at assisting fuel retailers, suppliers and marketers in preparing for the first major change in the types of fuel available at retail locations since lead was phased out of gasoline starting in the mid-1970’s.

“Upcoming changes in the types of fuels offered through the major pipeline running through Iowa will force Iowa’s fuel retailers and distributors to make some important business decisions,” said IRFA managing director, Lucy Norton. “These workshops will help participants prepare for this product change, understand the economic considerations and evaluate how renewable fuel blending fits into the new product mix.”

Magellan’s announcement to eliminate regular unleaded gasoline shipments to Iowa will require all retailers to evaluate their product offerings. The workshops will provide details of the new fuel options along with the impact on ethanol blends, future market conditions, and E15 as a new fuel option.

“Fuel distributors and retailers have a lot to take into consideration before the fuel shipped through the major pipeline in Iowa changes in September,” Norton added. “We want to assist the fuel industry in preparing for this significant change to their business portfolio and encourage fuel suppliers and retailers to attend one of the workshops to better understand the fuel options that will affect the future of their businesses.”

A Canadian biodiesel plant plans to crank out 7 million gallons of the green fuel a year, but none of it is intended for use north or south of the border. Biodiesel Magazine reports Biofuel Weiss Inc.’s Halifax, Nova Scotia, multifeedstock biodiesel refinery product will go to Germany:

“We are different than the other [biodiesel facilities] in Canada because our business model is based on 100 percent export to Germany,” Weiss said. “We went through the difficult double certification process, Canadian and German (DIN)/EU (EN).”

Feedstock for the 7 MMgy facility will mostly be used cooking oil (UCO) from Atlantic Canada, as Weiss said the company is partners with a majority of the regional collectors. In addition to UCO, other feedstocks will include animal fats, fatty acids and, as a last option, second-grade virgin canola oil, if the price and availability work, Weiss said.

Biofuel Weiss had hoped to start operations in September or October but is now looking at a test start by the end of the year.

Biofuels producers in 38 states recently received payments from the U.S. Department of Agriculture. Acting Under Secretary for Rural Development Doug O’Brien made the announcement, pointing out these payments of nearly $14 million to 162 producers are still going out, even with the current budget cuts:

“These payments represent the Obama administration’s commitment to support an ‘all of the above’ energy strategy,” O’Brien said. “Producing advanced biofuels is a major component of the drive to take control of America’s energy future by developing domestic, renewable energy sources.”

The funding is being provided through USDA’s Bioenergy Program for Advanced Biofuels, which was established in the 2008 Farm Bill. Under this program, payments are made to eligible producers based on the amount of advanced biofuels produced from renewable biomass, other than corn kernel starch. Examples of eligible feedstocks include but are not limited to: crop residue; animal, food and yard waste material; vegetable oil; and animal fat. Biofuel can be from a variety of non-food sources, including waste products.

Biodiesel Magazine reports most of the current payments are to biodiesel producers.

In the five years the program has been in effect, the USDA says more than 280 producers in 45 states and territories have received $192.5 million, supporting the production of more than 3 billion gallons of advanced biofuels. A full list of payees is available here.

You can’t smoke it … well, you SHOULDN’T smoke it … but you might be able to burn it. A researcher from the University of California is working on getting more oils out of tobacco plants so it can serve as a feedstock for biodiesel, providing a green fuel source while finding a market for tobacco growers without it harming people’s health.

Peggy G. Lemaux, UC Cooperative Extension specialist, and Anastasios Melis and Krishna Niyogi, Agricultural Experiment Station faculty in the Department of Plant and Microbial Biology at UC Berkeley, are lead researchers in the project.

“There are several reasons we are modifying tobacco to produce biofuel,” Lemaux said, “It is a high biomass crop. If you want to extract oil, then the more biomass you have, the more oil you get. And, since tobacco is not a food source, tobacco production for biofuel would not have an impact on global food markets or find its way into the food supply. Finally, tobacco farmers are anxious to produce a product that is more acceptable to the public.”

The article goes on to say how the researchers are using algae genes to help the tobacco plants produce more oil. A commercially viable method is still in the distance, but Lemaux is optimistic. The school received a three-year $4.8 million grant from a U.S. Department of Energy to conduct the research.

According to recent study by FAPRI-MU higher biofuel blending requirements through the Renewable Fuel Standard (RFS) increase the incentives to use higher biofuel blends, as seen by high Renewable Identification Number (RIN) prices so far this year. The study began with baseline projections for biofuel and agricultural markets and then built on a series of assumptions about how the RFS will be implemented and how market participants will respond.

One key question of the study: what will happen when the RFS requires greater levels of biofuel use than can be achieved with 10 percent ethanol blends and mandated levels of biodiesel use?

The baseline assumes that domestic ethanol use will exceed the 10-percent “blend wall” if the effective cost of ethanol to blenders and fuel consumers drops low enough, long enough to encourage the use of higher-level blends such as E85 and E15; yet, how low and how long. The baseline assumes that use of these higher-level blends will only increase significantly if the consumer-level cost of these fuels is at a slight discount to conventional fuels, even after taking into account the lower energy value of ethanol-blended fuels.

The report looked at these questions from different perspectives using alternative assumptions about the implementation of the RFS and the behavior of biofuel market participants:

1. The first section calculates hypothetical RIN prices that would cover costs and discounts necessary to encourage expanded use of E85. Under one set of assumptions, the implied RIN values are very close to those recently observed in the market, but plausible changes in assumptions yield estimates that range from $0.28 to $2.34 per gallon.

2. The second section examines a scenario that assumes ethanol-blended fuel must sell at a deeper discount to conventional gasoline to encourage use of high-level blends—a somewhat steeper blend wall. This scenario results in less ethanol use than in the baseline, higher RIN prices, and increased use of biodiesel. However, the changes in quantities produced and consumed are fairly modest, so long as there remains a price that can encourage increased use of higher-level blends.

3. The third section explores the implications of alternative RFS implementation strategies and how they interact with alternative assumptions about the steepness of the blend wall. All else equal, the greater the total and advanced biofuel mandates, the greater the value of RINs and the greater the use of biodiesel. A steeper blend wall also results in greater RIN values and biodiesel use. Several different scenarios result in fairly similar levels of use of corn ethanol in 2013/14, provided that mandates are enforced.

4. The final section explores an extreme scenario where there is no price that will induce the use of higher-level ethanol blends. If the RFS remains in place, such a scenario would require large increases in biodiesel use that would require very high RIN prices and result in large increases in vegetable oil prices. Such RIN and biodiesel prices could induce new renewable fuels or trade patterns, and might be inconsistent with the view that ethanol expansion is impossible.

The U.S. Senate today confirmed Ernest Moniz to replace Steven Chu as the Nation’s Secretary of Energy. The 96-0 vote was welcomed by biodiesel and ethanol groups:

“Throughout his career, Ernest Moniz has supported efforts to move beyond fossil fuels to a cleaner, more secure energy future in which renewable sources play a prominent role,” said Anne Steckel, vice president of federal affairs for the National Biodiesel Board. “He knows that advanced biofuels like biodiesel are critical to our long-term energy and environmental security, and he has supported practical policies aimed at developing renewables in order to reduce our dependence on petroleum, create jobs and reduce harmful emissions.”

Michael McAdams, president of the Advanced Biofuels Association, issued a statement in support of the confirmation. “We are pleased that President Obama tapped such a strong advocate for policy that supports solid energy growth and is a friend of the advanced biofuels community.”

“I would like to congratulate Ernest Moniz on his confirmation as the Secretary of Energy. President Obama has chosen an excellent and well-qualified individual to lead the Department of Energy and I look forward to working with Secretary Moniz to continue to advance the growth and development of sustainable biofuels,” said Tom Buis, CEO of Growth Energy.

The Renewable Fuels Association also congratulated Moniz. “Given his background and expertise in energy, we look forward to the secretary’s first visit to an ethanol plant. We are eager for him to see firsthand the positive economic impact the renewable fuel standard has had in creating new jobs and revitalizing rural economies,” said Bob Dinneen, president and CEO of the RFA.

Brooke Coleman, executive director of the Advanced Ethanol Council, added his praise of the pick. “Secretary Moniz has just the right combination of technical expertise and political experience to be very effective as the new Secretary of Energy. He clearly understands what it takes to commercialize new energy technologies, and we look forward to working with the Secretary and his colleagues going forward as the advanced ethanol industry deploys commercially in the United States and abroad.”

It appears biodiesel giant Renewable Energy Group (REG) has inked a contract manufacturing agreement with an Iowa biodiesel maker. Biodiesel Magazine reports REG signed the 12-month contract with Iowa Renewable Energy LLC to purchase raw materials for the 30 MMgy multifeedstock plant and market biodiesel produced at IRE’s refinery.

“We are pleased REG has chosen to work with Iowa Renewable Energy,” said Ron Lutovsky, IRE’s chief operations officer and chief financial officer. “Our focus on fuel specifications and our BQ-9000 processes are aligned with REG’s commitment to biodiesel quality.”

“IRE’s processing technology allows REG to expand our diverse raw material procurement strategy as well as our transportation and logistics programs to meet our growing customer demand,” said Dave Elsenbast, REG’s vice president of supply chain management.

REG was the actual general contractor and technology provider for the construction of the IRE facility back in 2007.