Ethanol Producers Tackle Blend Wall with Direct Sales

by Holly Jessen (Ethanol Producer Magazine) A small number of ethanol producers sell E85 and other ethanol blends directly to consumers with on-site blender pumps or, in a few cases, own retail gas stations.

Mitch Miller, CEO of Carbon Green Bioenergy LLC, believes more ethanol producers should start selling the fuel they produce directly to consumers.

“I really believe, as leaders in the industry, we have to complete the supply chain,” he says. “There’re many ways to do that, but the way you best learn about the supply chain is actually being in it yourself. I’ve learned much more about how the system works, how the margin works, how the supply chain works, and how I can best fulfil the needs of that supply chain to actually break the blend wall, by actually being in it myself. Part of this is just, I needed to learn about this because it’s way better than secondhand information.”

The 50 MMgy ethanol plant located in Lake Odessa, Michigan, sells E85 and other blends at a blender pump located on the ethanol plant grounds. But the company’s newest venture into the retail world is to own and operate two of its own convenience store locations, where it will offer Michigan drivers ethanol blended fuel as well as the snacks and drinks typically sold at C-stores.

As was written about in Ethanol Producer Magazine previously, Carbon Green is also part of a small group of ethanol producers that sells E85 directly to area retailers. Carbon Green calls that its Yellow Hose Program, which supplies more than 30 area gas retailers with E85. Direct sales to the consumer are, however, a related but slightly different project Carbon Green took on about the same time. It’s all part of the company’s strategic diversification plan, Miller says.

In late July, a newly constructed C-store and gas station was set to open for business in Ionia, Michigan, in September, just seven miles from Carbon Green, Miller says. Branded NuVu Fuels, it will offer drivers E10, E15, E25, E85 and, possibly, E50, Miller said. Gasoline supplier Petersen Oil and Propane is a partner with NuVu Fuels Retail. The ethanol will come from Carbon Green, through its Yellow Hose program.

Family-owned Zeeland Farm Services made the leap to selling ethanol blends direct to drivers when the company built a 24-hour travel center across the street from Nebraska Corn Processing ethanol plant, in Cambridge, Nebraska, says Beth Westemeyer, director of Anew Business Development. The 44 MMgy plant is a subsidiary of Zeeland Farm Services, which restarted the idled facility in spring 2010. Ethanol blends sold at Anew Travel Center, including E10, E15, E30 and E85, are blended from ethanol produced across the street.

The close proximity of the two businesses has been mutually beneficial. “We are able to save in many areas and work together to benefit both the plant and the fuel stop,” she said. “Savings on transportation, as well as a direct supply of ethanol, are two large advantages.”

The company considers the venture a great success. “Consumers have taken well to the new business plan of selling ethanol blends as opposed to regular, midgrade and premium,” she says. “As we have continued to educate the consumer on these blends, we have seen an increase in our higher blends. Our E10 and our E85 are the highest sellers, but we are seeing an increase in E15 as well.”

But that’s not the only location where Zeeland Farm Services sells ethanol blends. The company purchases E85 through Carbon Green’s Yellow Hose program and sells it at a fuel dispenser at its headquarters in Zeeland, Michigan. READ MORE