Friday, December 19, 2014

Company: Diesel plans mean new jobs for ethanol plant

By DOUG CARDER, Herald Senior Writer | 8/1/2014

GARNETT — An expansion into renewable diesel production is expected to mean 12 to 15 new jobs in 2015 at the Garnett ethanol plant, the company’s top executive said this week. 

East Kansas Agri-Energy LLC recently announced its plans to integrate renewable diesel production into its product mix by building a new facility capable of generating 3 million gallons of the hydrocarbon fuel per year, with the ability to double that capacity in the future.

Construction is expected to begin in the next eight to 12 weeks and should take about 12 to 14 months to complete, Jeff Oestmann, East Kansas Agri-Energy’s president and chief executive officer, said.

Established in 2005, the Garnett plant annually produces 45 million gallons of ethanol, more than 200,000 tons of distillers grains for livestock feed and more than 10 million pounds of corn oil.

The addition of renewable diesel is a natural compliment to the plant’s existing product mix, Oestmann said.

“This is about maximizing revenue, leveraging activities that we already do every day, and enhancing the value of products we already produce now,” Oestmann said. “Adding renewable diesel capability aligns perfectly with our business strategy of diversifying our energy portfolio and creating additional enterprises that are sustainable on their own.”

The product expansion will increase the plant’s value, Bill Pracht, East Kansas Agri-Energy board chairman, said. 

“We’ll be taking advantage of our experience and current facilities to create two biofuels out of one kernel of corn,” Pracht said. “Furthermore, we’ll be adding value to the corn oil we already produce.”

East Kansas Agri-Energy purchases more than 16 million bushels of corn each year, most of it from local corn farmers, according to company estimates.

A market for renewable diesel fuel is readily available in the Midwest, company officials said.

“There is more than enough demand here in Kansas and the Midwest [for renewable diesel],” Oestmann said.

Markets for renewable diesel are the same as petroleum derived diesel fuel including motor fuels (automobiles, trucks and rail), heavy duty equipment in agriculture and construction, and aviation fuel, a company news release said.

If prices are favorable, the company eventually might look at marketing some of its supply on the West Coast, where there is a premium market for renewable diesel, Oestmann said.

The fuel dramatically reduces greenhouse gas emissions compared to petroleum, the company said. Additionally, renewable diesel has a very low carbon intensity score under the low carbon fuels standard established by the California Air Resources Board, which opens up a “huge West Coast market” for East Kansas Agri-Energy, company officials said.

Oestmann cited several advantages of producing renewable diesel rather than biodiesel fuel.

“Whereas biodiesel has blending restrictions and seasonal concerns, renewable diesel is a true ‘drop-in’ fuel indistinguishable from the ordinary diesel fuel found at the pump,” Oestmann said. “It does not present the blending and pipeline transportation challenges of biodiesel, and that may make it easier and less expensive for fuel marketers to integrate it into their operations.”

The co-products of renewable diesel are more valuable than those from biodiesel, creating greater marketing and revenue opportunities, Oestmann said. High value co-products of the renewable diesel process include naphtha, which is a common component in gasoline and is used in ethanol production as a denaturant. Another co-product is a fuel gas similar to pipeline natural gas, which will also be used in the ethanol process to reduce energy consumption, the news release said.

Renewable diesel technology is not new, East Kansas Agri-Energy’s technology partner said in the news release.

“Our renewable diesel technology is commercially proven,” Ron Beemiller, president and CEO of WB Services, the technology partner on the project, said. “The process creates renewable diesel along with valuable co-products including steam, fuel gas and denaturant that are integrated into the ethanol plant. It is an elegant solution that adds value while reducing the carbon intensity.”

The planned expansion provides another example of how the company has “created a strong balance sheet,” Scott Burkdoll, East Kansas Agri-Energy board member, said.

“We are in an extremely advantageous position to establish market leadership quickly and profitably,” Burkdoll said.

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