August 19, 2006

PENNSYLVANIA: Co-locating Corn and Cellulosic Ethanol Plants

With over 97+ sugar fermentation plants already in operation in the United States questions arise about the siting of cellulosic ethanol biorefineries when they are finally deployed. Will a substantial number of the new facilities be co-located with existing corn state plants?

It would make sense to have on-site treatment of corn stover and other agricultural waste to increase feedstock efficiency and supplement the production of ethanol. Wouldn't the co-located plants guarantee that each facility would be producing ethanol during fat harvests and lean?

Recently, Green Car Congress published two unrelated stories about the co-development of corn-ethanol and cellulosic-ethanol plant technology. The earlier story (August 11th) announces the planned merger of Alternative Energy Sources (corn-ethanol provider) with Flex Fuels USA (cellulosic ethanol) to expand its technological portfolio offering to their clients. The August 17th story is about Bioenergy International's plans to build co-located plants at a single facility in Pennsylvania. Check out the complete stories by clicking on their titles...

New Corn Ethanol Producer Acquires Cellulosic Ethanol Technology
Green Car Congress

Alternative Energy Sources, a newly-formed corn ethanol producer led by former executives from Archer Daniels Midland, has entered into a letter of intent to acquire all of the outstanding capital stock of Flex Fuels USA—a developer of cellulosic ethanol technology—and its affiliate ACN Energy Consulting Inc. in a stock-for-stock merger. The parties expect to sign the merger agreement on or before Sept. 15, 2006.

Alternative Energy is excited about adding cellulosic ethanol into our aggregate ethanol portfolio. We have had an intense period of carbohydrate-based ethanol evaluation of sites, and are in the process of optioning land in cornbelt states for greenfield plants. Adding cellulosic ethanol will provide tremendous diversification to our future ethanol production base.
—Mark Beemer, CEO of Alternative Energy Sources

Flex Fuels, based in of Huntsville, Ala., has developed technology to produce cellulosic ethanol using biomass and other forms of waste rather than corn or sugar. Alternative Energy and Flex Fuels USA estimate four to five months of design and engineering, with an anticipated construction beginning in the second quarter of 2007. Once processes are finalized, he said the company anticipates building one of the first cellulosic ethanol facilities in the Eastern United States.

The company intends on lowering the cost of ethanol production via several mechanisms:

Coal-fired plants. The company projects that by using low-sulfur Powder River Basin Wyoming Coal for energy generation at the plants, it can reduce its costs per MMBTU by 70% compared to natural gas.

Economies of Scale. The company’s executives project that by building identical, large-capacity plants they can minimize repair and maintenance inventory. Management furthermore plans to use technology to reduce its labor requirements to those of smaller facilities producing 40 million gallons per year.

Unit Train Economics. Railroad economies of scale would be maximized by outbound 100-car unit-trains of ethanol and outbound 75- to 100-car DDG unit-trains. 100-car ethanol loading is intended to be accomplished in merely one day. The company plans to direct the ethanol shipments and DDG by-products into premium destination markets away from the saturated Midwest markets.

Lowest-Cost Producer Status. The ethanol plants are located in the Cornbelt on mainline railroads where cheap basis corn is grown. Droughts in these areas are minimized by the extensive deep prairie soils and truck sourcing of corn is available and plentiful.

Pennsylvania Announces Major Corn-Ethanol Plant, Cellulosic-Ethanol Pilot Plant
Green Car Congress

Bioenergy International will build and operate the 108-million-gallon corn-based ethanol plant, and Lukoil Americas—the US arm of Russian oil major Lukoil—will be the exclusive distributor of the finished product. In addition to the corn-ethanol plant, BioEnergy is building a smaller pilot-scale cellulosic ethanol plant using Bioenergy’s technology to produce the fuel from organic wastes such as wood and agricultural residue.

At the announcement, the Governor presented BioEnergy with $17.4 million in state investments to support the $250 million project. The majority of these funds, $180 million, will support the building of the primary plant, with the remaining $70 million going towards the development of the pilot-scale cellulose demonstration plant.

The return on this investment will be beyond measure. Ethanol production will provide a significant contribution to Pennsylvania's economy, impacting everyone from the farmers who grow the corn, the plant employees who manufacture the fuel, and the motorists who use it in their automobiles.
—Governor Rendell

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1 comment:

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