Confessions of a Biorefiner: Green Plains’ Journey into the Land of High-Value Proteins, and the Who, What and Why of That

December 19, 2019

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by Jim Lane (Biofuels Digest) This week news came out of a partnership between Novozymes and Green Plains to use biological technology to extract more value from corn protein, at what used to be known as corn ethanol plants, but with this news we might finally and forever begin to think of them as something else.

This provided us an opportunity to spend some time with Todd Becker, the long-time Green Plains CEO, who remains the visionary he always has been, but of the “two millimeters above the ground” type and not the flying through the blue skies of this weeks’ edition of the Opportunity of the Month Club.

Though you’ve never met anyone who’s found more ways to grind a penny out of a process, and I suspect he picks up nickels in the parking lot, he’s not short on vision. It’s just of an unusually practical kind, the kind that John Madden used to have as a coach in his days with the Oakland Raiders, there was never innovation for innovations sake, there was a lot of it and always with a purpose.

Our topic today — the transformation of the ethanol industry towards something else, which meant getting out of the management of commodity fractions and into the development of true added-value in the corn kernel using the concepts of refining itself.

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Back then, you could find an equities analyst with an informed take on ethanol as the prize at the bottom of any box of Cracker Jack, I think — these days, you can hardly find one using water diviners, GPS and surveillance technology stolen from the NSA.

“Our story got hijacked,” Green Plains CEO Todd Becker told The Digest in an in-depth, exclusive interview. “We had the most successful low carbon fuel ever built, we reduced GHGs and all that. We reduced BTUs [used in the ethanol making process]. We reduced water, we reduced our carbon footprint. Then, we got highjacked with a story that we we raising food prices, we were raising corn prices. We weren’t focused, we got highjacked, and we lost.

“Now, a major oil company runs ads on TV about algae fuels and we know there’s not as much there as suggested by the advertising. They highjacked our whole story [about the beneficial impact of renewable fuels], and we can’t fight back with the resources we have, and they know it.”

I was with some of the biggest investors in Boston last week, and for more and more investors sustainability is a strong driver in their investing, and price and performance will always matter. But one of them said to me, “you guys got to get back to your story.”

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Plants were scrutinized across the Green Plains network. “We sold some off’, closed one, but we have 13 left, and the question is, what’s out there [for improvement], and I always come back to the corn kernel. There’s more in there.”

“DDGs are going out as 30 percent protein,” Becker reflected, “and we watched the soybean industry, and the demand for high protein, and how they separate and isolate. And we thought, let’s see how we can transform ours. We evaluated lots of partners, each one had something a little different. We wanted to get to the highest level, unless you make 48% like soy, we thought, you’re suck in the mids and we didn’t want to be there. Fluid Quip we thought would get us to that level the quickest with their solution, and we chose Fluid Quip for the first unit. We chose our 1G Shenandoah plant, it’s big and efficient, and we have a world class lab there to test feed with any kind of fish. And we’ve attached protein production to that.

So, off they started. Aquaculture to start. Couple of reasons for that.

First, its deep,. As Becker noted, : there are 325 million tons of demand for good protein, and at 150,000 tons we’re not going to saturate that, it’s not like cellulosic or butanol.

Second, no policy dependencies. No waiting around in an attitude of prayer while the Environmental Protection Agency, which you might just as well regard as the Emitters Protection Agency, decides how much of the notional ethanol market will be destroyed — in the name of making the world safer for Texas light sweet crude and a sustainability story right out of the Seven Bowls of the Book of Revelation.

Third, acute need. Demand for fish is rising fast, population is rising fast, we’re short on feed for the demand that will be upon us. And sustainable aquaculture based on farming fish and not overfishing the oceans, is already the mantra of the times, and more to come.

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"... If you think you’re going to produce high-value isolates at a single ethanol plant and just dial up some aquafarming operation in Asia and they’ll buy your product without knowing you or your operation, think again. For this, we need redundancy, new staffing, new training, we need consistency, reliability, a reputation, a history in high value protein, You need quality assurance, quality control. You can’t just degrade the product, or make more and make it cheaper, in another race to the bottom.

You can’t have poor products, bottom line, and customers don’t swap in this feed today, that feed tomorrow, and no feed at all the next day if the price isn’t right. They demand long term relationships before they will become your customer. That’s the bottom line in the high-value game.

“You need research, you need trails, customers will run their own trials. And they are going to grow a salmon for 28 months, and this is a global industry, there will be 45-55 projects built out in the US, but there is a lot — a lot — in this that does not have to do just with the feed."

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“Now, we think that there’s more to be done, through biological solutions for functional proteins that improve the product even more. We found that Novozymes shared that vision, and we’re tapping into their mastery of biology, that depth in yeast. This partnership is very powerful and important to both.”

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“$500 million it will take us to do this across our network of plants. That’s not an easy check after the years we have for a lot of people to write, or to finance. And they may well have priorities in cutting costs, or improving their CI score, or whatever is critical to them, and that makes this even less likely to be pursued by many. It would take $10 billion to deploy technology like this across the industry, and the industry doesn’t have it, so we feel we’re in a good position, because we have developed our vision, we we have the access to capital and we have a proven ability to execute."

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Becker pauses, as if in reflection.

“If we get this right, we’ll get our story back, too. That leadership in sustainable industries that provide high value products with an ability to execute at world scale, that is.

“We’ll hijack it back.” READ MORE

Marginal Improvement (Ethanol Producer Magazine)

U.S. ethanol woes spur new animal food focus for Green Plains -CEO (Reuters)

Fluid Quip Technologies starts up MSC system at Green Plains Shenandoah (Biofuels Digest)

How a unique approach from Fluid Quip Technologies is providing vital building blocks for the bioeconomy. (BioMarket Insight)

Green Plains Announces Clean Sugar Project at York, Nebraska Innovation Center: CST™ Production to Target Applications in Food Production, Renewable Chemicals and Synthetic Biology (Green Plains/Globe Newswire)

Excerpt from Green Plains/Globe Newswire: Green Plains Inc. (NASDAQ:GPRE) and Ospraie Management, today announced that recently-acquired Fluid Quip Technologies (Fluid Quip) is engineering and constructing a fully scalable commercial Clean Sugar Technology™ (CST) production facility at the Green Plains York Innovation Center. This technology effectively transforms a dry milling facility into a clean sugar biorefinery where dextrose/glucose replaces ethanol as the primary product.

“Over the past two years, Green Plains has made strategic investments to dramatically transform our business into a leading, technology-focused producer of sustainable, value-added ingredient solutions,” said Todd Becker, president and chief executive officer of Green Plains. “Fluid Quip is leveraging our York Innovation Center to validate and develop technologies, beginning with their patented CST system. We believe this technology will provide industrial quantities of carbohydrate feedstock for manufacturing applications in the growing biochemical, renewable chemicals and synthetic biology industries at more competitive prices than other technologies today, providing a significant uplift in overall margins and profitability.”

Co-located on the York, Neb. biorefinery campus, the Green Plains York Innovation Center was originally built by the previous owners for over $70 million. It is comprised of pilot and industrial scale fermentation systems which have been utilized for various functions including sugar based cellulosic fuel developments, algae production, yeast fermentation processes, as well as antimicrobial scale up for third party customers. A world class analytics lab allows for rapid testing of process yields and efficiencies. Additionally, the York Innovation Center has downstream separation equipment which is ideal for testing enhancements to the CST system, as well as the MSC™ technology. Green Plains expects the initial CST project at the York Innovation Center to begin production by the end of the first quarter.

“In addition to CST, the York Innovation Center will also function as a platform to further develop Fluid Quip’s MSC system to enhance protein concentration levels, increase yields and develop additional high-value proteins and yeasts,” added Becker. “Consistent with our focus on ESG initiatives, early indications are that sustainable products and fuels produced using Fluid Quip’s CST system, will reduce carbon intensity scores compared to those produced from competing wet milling processes. The indicated customer demand for our new products, in addition to interest in single use technology licenses, has motivated us to accelerate implementation of this technology.”

Fluid Quip has been in over 40 active CST dialogues or trials with customers in a wide range of industries including synthetic biology, renewable chemicals and energy, and industrial biotechnology. This technology also has the ability to produce food grade sugars and Fluid Quip has been actively working with customers in the food production space. Initial quantities from the York Innovation Center will be around 2.5 million pounds per year. Upon successful implementation, Green Plains anticipates modifying one or more biorefineries to the CST system, to meet anticipated customer demand.

About Green Plains Inc.
Green Plains Inc. (NASDAQ:GPRE) is a leading biorefining company focused on the development and utilization of fermentation, agricultural and biological technologies in the processing of annually renewable crops into sustainable value-added ingredients. This includes the production of cleaner low carbon biofuels, renewable feedstocks for advanced biofuels and high purity alcohols for use in cleaners and disinfectants. Green Plains is an innovative producer of ultra-high protein and novel ingredients for animal and aquaculture diets to help satisfy a growing global appetite for sustainable protein. The Company also owns a 48.9% limited partner interest and a 2.0% general partner interest in Green Plains Partners LP. For more information, visit www.gpreinc.com.

About Fluid Quip Technologies
Fluid Quip Technologies® (Fluid Quip) provides custom technologies and engineering services to biofuel and biochemical industries worldwide. Fluid Quip’s capabilities include process optimization, yield improvement technologies, advanced co-product technologies and turnkey capital projects. Fluid Quip has commercialized multiple patented and patent-pending technologies to enhance the base corn-to-ethanol dry grind process, create new and novel alternative feed products, and supply the growing need for carbohydrate feed-stocks into the biochemical market. For more information, visit www.fluidquiptechnologies.com.

About Ospraie Management, LLC
Ospraie Management, LLC (Ospraie), was established an independent firm in 2004. Ospraie is an asset management firm that actively invests in commodity markets and basic industries worldwide.