The Matchmaker

Recognizing crossover synergies, New York-based GS CleanTech is tapping the U.S. ethanol industry for corn oil that it plans to route into biodiesel production. It has already got a handful of ethanol producers on board and three biodiesel plants in the works.
By Holly Jessen | November 10, 2006
In the renewable fuels business, "blending" is a word used to describe the mixing of fuels-biodiesel with diesel, ethanol with gasoline-but as one U.S. company is demonstrating, it's not just fuels that can be blended, but industries themselves.

Indeed, GS CleanTech Corp. saw the potential for synergies between the ethanol and biodiesel industries, and developed technology to capitalize on it. According to Kevin Kreisler, chairman and CEO of the majority-owned publicly traded company, GS CleanTech offers a commercial pathway to create additional ethanol plant revenue through the extraction of a relatively novel biodiesel production feedstock-corn oil.

Formerly known as Veridium Corp., GS CleanTech is the process engineering technology transfer arm of GreenShift Corp., which has its corporate offices in New York. GreenShift has made a name for itself in the renewable fuels business by aggressively developing clean technologies and supporting and companies that facilitate the efficient use of natural resources. The young corporation has already acquired about a dozen technologies that fit the plan, and one of those is GS CleanTech's trademarked Corn Oil Extraction System. The technology removes the fat, or corn oil, from a dry-mill ethanol plant's "thin stillage"-the precursor to the distillers grains coproduct produced in the ethanol distillation process. This material is heated and spun in a centrifuge to pull out the corn oil. With nearly all of the oil removed, a more protein-concentrated form of distillers grains is produced.

While conventional ethanol production methods produce about ethanol, 18 pounds of distillers dried grains (DDG) and 18 pounds of carbon dioxide, from one bushel (approximately 54 pounds) of corn, GS CleanTech's Corn Oil Extraction System can pull out two pounds of corn oil from that same bushel of feedstock, leaving behind 16 pounds of a higher-protein animal feed, Kreisler says.

Here's the rub. GS CleanTech sets up contracts to buy the corn oil from ethanol plants that use its extraction technology. In turn, the plans to funnel the oil into its own processing venture. According to recent company statements, the company aims to generate $14 million to $18 million in annual revenue from selling corn oil produced at U.S. ethanol plants. "Our plans moving forward are to remain relentlessly focused on deploying our integrated multi-fuel technology in the ethanol production industry," Kreisler tells Biodiesel Magazine.

Practically Pairing
Ethanol producers using the system could increase their annual revenues by 3.5 percent, Kreisler says. Currently, DDG is only worth about 3.5 cents per pound, Kreisler says. The 2 pounds of corn oil that can be extracted from the 18 pounds of DDG produced from a bushel of corn can bring in 12 cents to 17 cents per pound. A typical 50 MMgy ethanol plant will be able to produce 3 MMgy of corn oil, valued at an estimated $2.7 million to $3.8 million. The ethanol producer would also benefit from the lower operating costs of drying smaller amounts of distillers grains, in turn lowering plant emissions, Kreisler says.

The extraction system can be installed at an ethanol plant with minimal permitting or infrastructure alterations. Compared with corn fractionation, for example, there are significantly lower capital costs and no design changes needed, Kreisler says. "We can literally plug and play into existing or new production with little, if any, upset to ongoing routine operations," he says.

GS CleanTech offers ethanol producers a couple of options. An ethanol plant could simply purchase the process technology and equipment outright and sell its oil for going market prices, or it could opt to have GS CleanTech finance and build a turnkey oil extraction system on-site in exchange for the rights to purchase the plant's oil at a discount.

GS CleanTech plans to sell the corn oil to its sister company, GS AgriFuels, which is in the process of developing three biodiesel plants to process the corn oil.

This summer, Cornell Capital Partners invested about $22 million in GreenShift and two of its subsidiaries, GS CleanTech and GS AgriFuels, according to Troy Rillo, managing director of Cornell Capital Partners. Part of that investment will be used to build one of the biodiesel production facilities being developed by GS AgriFuels. The company has a "heavy interest" in investing in the renewable energy and clean technology processes that GreenShift companies have to offer, Rillo says. Cornell Capital Partners' investment in GreenShift allows it to be involved in the corn-to-ethanol market and the biodiesel market.

GS AgriFuels' corn oil-based biodiesel production facilities will be small-scale modular plants, with production starting at 5 MMgy to 10 MMgy and later ramping up to 30 MMgy to 40 MMgy. The plants will be built in Memphis, Tenn., and within and around New York.
GS AgriFuels will be the first company to use corn oil for biodiesel production of any magnitude, and it's committed to producing a high-quality, consistent product that meets the ASTM specification for biodiesel. Kreisler admits that converting corn oil to biodiesel comes with certain process and economic challenges. However, a considerable amount of research and development has led company officials to believe no major obstacle stands in their way. "We're already there for corn oil biodiesel," Kreisler says.

It's not enough for the company to produce biodiesel that just meets the ASTM D 6751 spec; it wants to exceed the perimeters. The company is refining some aspects of the process design that will be implemented at future GS AgriFuels facilities. These changes may include some process tweaks and additions, Kreisler says. Like most other U.S. producers and future producers, the company maintains as part of its governing philosophy that producing the highest quality, most consistent biodiesel product is critical to market growth and sustainability.

Efficiency is also important to GS AgriFuels, and that's prompted the company to focus on collocating future biodiesel plants with ethanol plants. Kreisler envisions a day when a 50 MMgy ethanol plant, with the GS CleanTech's proprietary Corn Oil Extraction System, can produce 3 MMgy of biodiesel from corn oil produced on-site, and then sell the biofuel locally. "I just think it makes for a more holistic, more efficient, more compelling economic model than putting it on a truck, a railcar or barge, and transporting it half a country away or half a state away for production ," he says.

In addition to its plans to develop production facilities, GS AgriFuels announced in mid-October that it has an agreement in place to purchase 100 percent of the stock of NextGen Fuel Inc., a company that produces modular continuous-flow biodiesel process equipment that can handle multiple feedstocks, according to a press release.

Successful Sign-Up
After more than a year and a half of work, GS CleanTech's plan to bring its patent-pending Corn Oil Extraction System to the ethanol industry is starting to pay off. The company has signed agreements with seven ethanol plants and one animal processing facility. In total, these agreements represent the capacity to extract 22.5 MMgy of biodiesel feedstocks, Kreisler says.

In October, the company announced the installation of the first stage of its extraction system at Little Sioux Corn Processors LP, a 52 MMgy ethanol plant in Marcus, Iowa. Also, Glacial Lakes Energy LLC, a 47 MMgy plant in Watertown, S.D., had a portion of the GS CleanTech system in place at press time. Three other ethanol facilities, each with capacities in the 40 MMgy to 50 MMgy range, have also signed up. Corn Oil Extraction Systems are currently being built for Adkins Energy LLC in Lena, Ill., and Utica Energy LLC in Oshkosh, Wis., while the system for a third ethanol plant, Golden Grain Energy LLC in Mason City, Iowa, should be under construction in the first quarter of 2007. In addition, a producer with an ethanol project under construction in Illinois has also agreed to work with GS CleanTech. The confidential contract calls for eight extraction systems to be installed in 2007 and 2008 for a total of about 12 MMgy of corn oil extraction. Additional details about the project were unavailable at press time.

Corn oil isn't the only feedstock that GS CleanTech plans to use at its biodiesel production facilities. An Arkansas-based poultry processing facility has executed an agreement with GS CleanTech to use its technology to extract 1.5 MMgy of animal fat from the sludge coming out of a wastewater treatment facility, Kreisler says. In the past, the animal processing facility paid to have the wastewater taken away for a fertilizer application. "We can reduce their disposal costs by roughly 80 percent," he says.

GS CleanTech continues to be on the lookout for more biodiesel feedstock sources, Kreisler says.

There are several possibilities within the ethanol industry for extracting corn oil for biodiesel production, according to David Winsness, president and COO of GS CleanTech and a co-inventor of the Corn Oil Extraction System. Out of the more than 5 billion gallons of ethanol currently produced in the United States, 4 billion is from corn dry mills. In all, there's about 350 MMgy of corn oil not currently being recovered from those dry-mill facilities, Winsness says.

The company's predominant focus is on the corn-to-ethanol industry, Kreisler explains. However, it is open to other options as well, such as additional animal processing facilities.

Another possible target is industrial wastewater transfer stations and municipal sewage treatment facilities. Without any development necessary, GS CleanTech extraction technology could be used to extract yellow, brown and black grease at these facilities, even though they are "somewhat nastier from a processing standpoint," Kreisler says.

There are also additional technologies that GS CleanTech wants to bring to market. Gasification of distillers grains to create syngas, is one, Kreisler says. Using about 20 percent to 25 percent of its defatted distillers grains, a 50 MMgy ethanol plant can produce enough heat and power on-site to take the plant off the power grid. The remaining 75 percent of the syngas from DDG can be used to create additional biomass or biomass-derived synthetic diesel.

For more information, check out GS CleanTech's Web site at www.gs-cleantech.com or GreenShift's Web site at www.greenshift.com.

Holly Jessen is a Biodiesel Magazine staff writer. Reach her at hjessen@bbibiofuels.com or (701) 746-8385.
 
 
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