Fuel of the future
Biodiesel catching fire in W.Va.
Charleston Sunday Gazette-Mail
April 1, 2007
http://www.wvgazette.com/section/News/Business/2007033118
By Joe Morris
Staff writer
It's almost impossible to buy biodiesel in West Virginia. But in short order the Kanawha Valley will be making at least 35 million gallons of it a year, and right now it’s home to research likely to shape the industry for decades.
Last week, a startup Illinois-based energy company called Emerald Biofuels announced plans to build a biodiesel facility at the Bayer CropScience site in Institute, where 30 million gallons will be produced annually. Also last week, officials at AC&S Inc., a 21-year-old chemical manufacturer and chemical industry services company in Nitro, said they planned to start a biodiesel operation this summer that would make at least 5 million gallons a year.
Meanwhile, the Mid-Atlantic Technology Research and Innovation Center, or MATRIC, the chemical engineering research center at South Charleston’s Technology Park, has formed a company that’s planning to build a plant to make 20 million gallons annually, though it’s not likely to be in the Kanawha Valley.
Those are giant steps for a state that, according to the National Biodiesel Board trade group, lacks any retail biodiesel sellers or plants and relies on only three distributors: two in the Morgantown area and one in Martinsburg.
“It’s a ground-floor time for the biodiesel industry,” says David Drew, Emerald’s president and chief executive officer. “It’s definitely a good time to get into it.”
Biodiesel is fuel for diesel engines that’s derived from the oils of plants, most commonly soybean and corn. It can power any vehicle that runs on conventional diesel, and in the United States that typically means industrial and military vehicles, commercial trucks and commercial and government fleets, said Amber Thurlo Pearson, a spokeswoman for the Biodiesel Board. It’s usually mixed with conventional diesel in concentrations ranging up to 20 percent.
The industry has grown dramatically in the past few years, driven by rising oil prices and efforts by the federal government to lessen the nation’s reliance on foreign oil providers. An energy bill passed in 2005 provides for a range of credits designed to expand the use of alternative fuels while requiring all federal vehicle fleets to operate on alternative fuels when possible.
In West Virginia, county school systems get bigger fuel reimbursements from the state when they run their buses on alternative fuels such as biodiesel. That has prompted at least 15 systems to start supplying their buses with biodiesel.
Last year, U.S. biodiesel developers made an estimated 225 million gallons of pure biodiesel, up from 75 million in 2005 and 25 million the previous year, according to the Biodiesel Board.
“With the price of crude going up, there’s a need for some alternative fuel plan in this country,” says Bob Cantrell, general manager and owner of AC&S. “But there’s not tremendous biodiesel manufacturing capacity in the U.S. at the moment.”
Cantrell said he decided to take the plunge last year after studying the market for months with Dean Cordle, AC&S’s executive vice president.
The company, which employs 46 on an 11-acre site in Nitro’s PAR Industrial Park, makes petroleum-related products such as petroleum dyes. Expanding into biodiesel production, consequently, doesn’t entail buying a vast amount of equipment, Cantrell said. AC&S has, however, had to hire two people to get ready for the biodiesel operation, and will hire two or three more, he said.
For all the biodiesel interest nationwide, right now West Virginia is a tough place for biodiesel developers to make money because none of the owners of the state’s fuel terminals is accepting it yet, Cordle said.
“Till the bulk terminals put in biodiesel, it’s going to be hard,” he said. “It limits the market in our area to the government, to county school systems.”
AC&S asked the state’s main terminal owners, Go-Mart Inc. and Marathon Petroleum Co., who said they were interested but not yet ready to start taking biodiesel, Cantrell said.
“The biggest problem is, who’s going to use it?” Cantrell said. “If we had someone in the Kanawha Valley offering a B5 [biodiesel mix of 5 percent biodiesel and 95 percent conventional diesel], there would be people buying it.”
Still, AC&S has lined up enough buyers to justify its initial run of 5 million gallons a year, Cantrell said.
“Obviously, I’m not going to turn on the pump without a place to put it,” he said. He said he had identified a customer base within a 250-mile radius to account for the purchase of 2.1 million gallons.
Where might Emerald plan to sell the 30 million gallons it makes?
Drew, the president and CEO, said West Virginia’s coal industry would be a big buyer, but Emerald plans to ship to Mid-Atlantic markets by rail and send to markets in the Midwest and South by barge.
Many biofuel plants have been built in the Midwest to be closer to the crops from which they’re derived. Emerald chose Institute in part because it’s closer to Eastern markets, Drew said. The partnership with Bayer, which will help in the production, was another factor, he said.
“We see this plant as one of the largest in the country,” Drew said. “The location is great to get to the Mid-Atlantic [and] it’s farther to the east relative to most plants.”
Emerald was formed last year by a group of investors and managers with experience in financing and engineering biofuels as well as farming-industry executives, Drew said. The company is talking with Bayer about opening another plant under the same partnership model, he said.
Construction on the plant will begin in June, and production should start in December, Drew said.
AC&S is expected to start production in June, Cantrell said. He described the 5 million-gallon output as “a small production unit” designed to test the market’s waters. The Nitro plant could double production with “minor modification,” he said.
MATRIC’s plant will be an offshoot of contract research it has done for a Madison, Wis., biodiesel company called Best Energies, says Keith Pauley, MATRIC’s president and chief executive.
Under a 2006 contract with Best, the research center, founded three years ago in the laboratory building left vacant by Dow Chemical Co., developed a “continuous” process for making biodiesel. Most biodiesel is made through a “batch” process, meaning only set quantities can be made; continuous processes allow for more rapid production. (AC&S will use a batch process, Cantrell said. Emerald hasn’t decided whether it will use batch or continuous, Drew said.)
Best is using the MATRIC continuous-process technology in a plant it’s building in Cashton, Wis., that will make 8 million gallons a year, starting this summer, said Tony Janowiec, the company’s vice president for operations.
However, the partnership worked so well that Best also granted MATRIC a license to use the same technology in a plant making 20 million gallons, Pauley said.
“Weve had a great relationship,” Janowiec said. “To have the depth of scientific and engineering resources in-house is a real differentiator for us.”
A MATRIC spinoff called Mountaineer Biofuels will build and run the plant. Such plants tend to cost $1 per each gallon produced, which would put the price of building the plant at $20 million, Pauley said.
“Hopefully, we can do that in West Virginia,” Pauley said. Emerald and AC&S “aren’t any deterrent at all — it’s fantastic synergy.”
The Kanawha Valley isn’t close enough to agricultural feedstock for the plant, making it an unlikely location, he said. There are other areas in the state that are candidates, however, he said without specifying.
“We’re not looking to put it in a site where we’ll lose any money,” Pauley said.
To contact staff writer Joe Morris, use e-mail or call 348-5179.