Concept to Construction and Exports are Crucial

October 24, 2018

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by Lisa Gibson (Ethanol Producer Magazine) In the U.S. ethanol industry, three plants are under construction, while a fourth makes its way through the permitting process. -- In an industry with more than 200 existing plants, four new projects is a small figure. Greenfield ethanol plant development is in a lull, but three plants are under construction and one is making strides in development, classified as proposed on Ethanol Producer Magazine’s 2018 Fall Fuel Ethanol Plant Map.

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A few more companies in the industry have plants they consider proposed and under development, but Ethanol Producer Magazine classifies plants as proposed only if they’ve made progress on financing or permitting in the past 24 months. Details and timelines of the four new ethanol plants are as follows:

Ringneck Energy & Feed
Under Construction

Ringneck Energy & Feed was formed in September 2014 after it was determined that Onida, South Dakota, had sufficient infrastructure to support the 80 MMgy plant, says Ringneck CEO Walter Wendland.

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Red River Biorefinery
Under Construction

Red River Biorefinery broke ground just outside Grand Forks, North Dakota, in August. The plant will process sugar beet tailings, as well as potato and pasta processing waste from the region. Developed by BioMass Solution with technology from Biotechnika, the plant will use up to 500,000 tons annually of process wastes, producing 16.5 MMgy of ethanol and generating D3 and D5 renewable identification numbers (RINs). The Biotechnika process is used at a sugar beet-to-ethanol plant in Poland. While the feedstock is innovative in the U.S., it’s used to produce 21 percent of the ethanol in the European Union, says Tomasz Kapela, owner of Biotechnika.

BioMass Solution has a long-term contract with area sugar beet cooperative American Crystal Sugar Co., as well as with partners Simplot, a potato processor in Grand Forks, and Philadelphia Macaroni Co. The plant will operate year-round, as at least one of the three feedstocks will be on hand at all times, says Jacek Chmielewski, BioMass Solution principal. The plant will process all the waste from all three local plants, though pretreatment will vary slightly with each, Kapela says.

The plant is scheduled to start up at the beginning of 2020, selling fuel to the California market and taking advantage of the Low Carbon Fuel Standard.

Element LLC
Under Construction

A partnership between ICM Inc. and The Andersons, Element LLC is a $175 million project expected to start up in the summer of 2019. The 70 MMgy ethanol plant will use ICM’s Gen 1.5: Grain Fiber to Cellulosic Ethanol Technology to produce more than 5 MMgy of cellulosic ethanol. It is being built adjacent to ICM's headquarters in Colwich, Kansas, on the site of the former Abengoa Bioenergy plant.

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Poet Biorefining – Shelbyville
Proposed

Poet LLC announced in July that it is developing an 80 MMgy ethanol plant in Shelbyville, Indiana, that will process 28 million bushels of corn annually. READ MORE

ETHANOL’S FUTURE? EXPORTS ARE CRUCIAL (Successful Farming)

Opportunity for ethanol production, exports growing (Faribault Daily News)

Developers consider ethanol plant, pipeline in Napa Junction (Aberdeen News)

Developers consider ethanol plant, pipeline in southeastern South Dakota (Argus Leader)

Ethanol plant and pipeline plans in Napa Junction (Biofuels International)

Permits Passed for Proposed Napa Ethanol Plant (WNAX)

Excerpt from Successful Farming: As the U.S. ethanol industry struggles to regain its strong financial performance of 2013-2014, three new ethanol plants will come online this year and next with a combined annual production of 270 million gallons, adding to the oversupply that’s plagued the industry since 2015.

To reduce the oversupply, the ethanol industry is moving aggressively to boost demand for its product by developing overseas markets of U.S. ethanol. It’s also increasing its market share of the U.S. liquid fuel market by promoting the availability of higher blends of ethanol such as E15, E30, and E85, which contain, respectively, 15%, 30%, and 85% ethanol in a gallon of gas.

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Scott Irwin of the Department of Agricultural and Consumer Economics at the University of Illinois summed up the dilemma facing the U.S. ethanol industry in the March 2018 farmdocdaily publication:

“Domestic and export use for U.S. ethanol has increased nicely since 2014, but production capacity and actual production increased even faster. The surge in production basically overwhelmed the rise in use, which caused ethanol stocks to increase and ethanol prices and profits to fall. The fortunes of the U.S. ethanol industry are unlikely to improve until production and use are better balanced. Based on recent production and stocks data, it looks like this could take some time.”

The oversupply scenario for U.S. ethanol has been compounded, Irwin said, by the hardship waivers granted recently by the EPA to some petroleum refiners that exempt them from blending requirements contained in the Renewable Fuel Standard.

The EPA told U.S. Senator Charles Grassley (R-IA) that it has granted hardship waivers for refiners that account for 2.25 billion gallons of bio-fuels in 2016 and 2017.

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Prime the Pump offers cost-share grants to gas retailers for installing flexible-fuel gas pumps that can dispense higher blends of ethanol, he says. It also supplies market analysis about consumer behavior that will assist retailers in gaining a competitive advantage when they offer higher ethanol blends. Prime the Pump is currently working with 12 of the top 20 gas retailers in the U.S.

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Iowa’s Renewable Fuels Infrastructure Program (RFIP) has provided cost-share grants to retailers since 2006 ....

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At CHS, Thomasson sees four drivers of demand for U.S. ethanol exports:

More mandates to blend ethanol into gasoline. China aims for nationwide E10 sales by 2020. Some nations are shooting higher. The Philippines has a goal of E20 by the same year. Healy adds that blending is driven, in part, by a desire to lower greenhouse gas emissions under the Paris climate accord.
Ethanol is the cheapest octane source for fuel. Last summer it was running 10¢ to 15¢ per gallon less than MTBE, an octane now banned in the U.S., and 20¢ to 25¢ under BTX (a mixture of benzene, toluene and xylene) Both streams are non-ethanol sources of octane.
Environmental benefits and energy independence. Eliminating MTBE helps with both for some countries. India, for example, produces no oil but has large refineries. Miller says his group is trying to show potential costs savings for those refineries by using ethanol. And ethanol can play a role in reducing air pollution in large cities in India, where seasonal burning of rice straw nearby creates smog that rivals the worst in China. Until now, India has relied only on domestic ethanol made from cane molasses. The government recently approved using domestic corn ethanol, which U.S. exporters see as a hopeful sign that American ethanol may one day fill in some supply gaps.
Growing populations and a growing middle class. Gasoline demand is growing at about 10% a year in both China and India, a rate that was typical in the U.S. in the 1960s and ’70s, says Healy.

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WHERE IS ETHANOL HEADED? WATCH THREE TRENDS

Delays in starting year-round E15 sales. President Donald Trump has said he supports it. Yet, in order to open new markets to E15 by next summer’s driving season, the EPA needs to end vapor pressure restrictions on higher ethanol blends. It takes months to finalize such new rules.
Continued ethanol export growth. A new record is expected for 2018, even after trade disputes froze sales to China. Mexico and Canada – two strong markets – are at risk if NAFTA talks go poorly.
Regaining ethanol demand destroyed by former EPA Administrator Scott Pruitt. That fight could languish in courts and bureaucracy for months. Ethanol groups have sued the EPA and petitioned the agency to reallocate ethanol volume lost when Pruitt gave oil refiners hardship waivers to stop blending ethanol.

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Exports remain crucial. Renewable Fuels Association CEO Geoff Cooper expects up to 1.7 billion gallons in U.S. ethanol exports this year, above last year’s record of 1.37 billion.

“Exports have been a godsend to the industry because we are seeing softer demand domestically due to the small refinery waivers,” he says. It almost offsets a drop in domestic use, from 14.4 billion gallons last year to 14 billion gallons in 2018.

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Meanwhile, a study by the Fuels Institute projects battery electric and plug in hybrids with about 8% of market share of light duty vehicles by 2025 and only a slight effect on fuel demand. Ron Lamberty is senior vice president of the American Coalition for Ethanol, a group that belongs to the Fuels Institute. Lamberty remains optimistic about demand for ethanol, in part because of rapid growth of sales of conventional cars in developing nations. Americans own about 250 million cars, but global ownership will hit 2 billion soon, he says. READ MORE

Tags

BioRefineries/Renewable Fuel Production South Dakota corn ethanol North Dakota Sugar Beets/Energy Beets food processing waste potato Poland European Union (EU) Pretreatment California LCFS (Low Carbon Fuel Standard) D-3 (cellulosic) RINs D-5 (advanced biofuel) RINs RINs (Renewable Identification Numbers) corn fiber corn kernel Indiana Kansas markets/sales Investing Sustainability marketing Iowa Missouri corn stover import/export China India Mexico Japan Canada EPA (Environmental Protection Agency) waiver octane price/value MTBE (Methyl tert-butyl ether) small refinery exemption (SRE) pipelines permitting

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