The Changing Face of Biodiesel Production

By Peter Brown | July 14, 2008
Imagine a three-way chicken and egg question. What came first: the chicken, the egg or the nest? That is the latest conundrum facing anyone trying to get started in the biodiesel business. How does one ensure that over a plant's life that production will find an open market, access to feedstock, will not contravene local ordinances, and will have a trained and efficient pool of employees?

The best answer begins with feedstocks because they determine how far and how fast one can adapt to changing market conditions. Feedstock prices typically represent approximately 85 percent of the price of biodiesel. Never assume that the present choice of feedstock will be available, acceptable or within a reasonable price range when needed.

Take the case of palm oil. Many countries are now considering legislation to ban palm-based biodiesel because of the food-or-fuel campaign being so relentlessly pursued in the "civilized" world. For example, in the United States few question the food-versus-fuel argument when it comes to soy oil, and soy is so much more useful than palm since it serves as the basis for so many other products, contains one-half to one-third of the oil compared to palm, and is healthier. As a biodiesel producer, be aware that ecologists in some parts of the world are not in favor of using existing plant and animal life for transportation purposes.

On the other hand, a small country like Liberia could be completely energy independent using only locally available palm oil, a cold crushing facility and a medium-sized biodiesel plant. Fully 80 percent of their potential production is overgrown through neglect, wars and disease, but what remains could power generators, trucks and buses and revive the economy, replacing $18 per gallon fuel with $1.45 biodiesel.

Feedstock Flexibility, Pricing
Predicting new feedstocks is an arcane science. Jatropha came out of nowhere, and there is much talk of camelina and algae. Will the new processors be able to handle these newer oils? Will animal fats be cheaper? How will they be prepared for production? A multi-feedstock processor is recommended because as long as the chosen feedstock meets the basic chemical composition criteria, one can probably make biodiesel out of it without too many constraints. Be aware, however, that a "small" change can hide a lot of rework, so if the processor is flexible then the programming can adapt the catalyst, feedstock and methanol equation quite easily to meet immediate requirements. If not, plan to spend quality time with a plant designer.

Even the new oils may come with a high price on the learning curve. Jatropha is not the easy conversion it was thought to be and we are hearing stories from places such as Mozambique and Peru that the oil itself needs careful monitoring, let alone harvesting and crushing. It may be cheap, but there may be a reason for that. Algae oil is slowly appearing in experimental reactors and ponds, but the jury is still out on the ideal mono-cell, the way to harvest the oil and how to create a sustainable economic model for the colorful scum.

Lowering the feedstock price is an essential tactic for new installation, and one way to do that is to blend different oils so that the free fatty acids and other levels are within acceptable transesterification limits. Not all units can handle blends, and some blends, such as chicken fat and soy, or coconut and palm, can be exotic. These are actual requests that Euro Marketing Tools has fielded from places such as Fiji and Liberia, areas where mistakes will be hard to correct and changes impossible to implement. The term blending does not mean mixing the various oils as they head into the processor. It means a homogeneous blending of all the components so that the output does not contain pockets of one or the other feedstock. That blending comes with a price. Blending requires a centrifuge or two ahead of the processing plant.

As far as exotic oils and strange blends go, wise plant manufacturers will protect themselves in one of two ways. The first is to test run the plant for final delivery on its approved oil, most often virgin soy, and provide the buyer with the keys to the plant only after it has run on that oil and produced ASTM or EN standard fuel for a specific number of hours. The second is to request a sample of the oil that will be run in the plant and have enough adjustments built into the system to allow for other oils to be used. Always get the second option because there are many ways that the future of the facility will hinge on the ready acceptance of alternate feedstocks. Again, most of the plants built over the past four years are probably running on a different feedstock than originally planned, and high on that list are waste vegetable oil and animal fats.

Feedstock flexibility and availability are not the only considerations; there are volume considerations. The facility is expected to run continuously at near capacity, but what if there are climactic considerations, availability issues, local ordinances and other reasons to slow down production? What if, as happened recently in a facility in France, for religious reasons a 100,000-ton-per-year unit was not allowed to blend non-kosher animal fats because the glycerin offtake would be unsellable in Africa? That is where the ability to run portions of the plant is an essential consideration. The modern modular facilities have multiple production lines. This has two advantages. The first was just discussed, and the second is that there can be no single-source failures leading to a complete system shutdown with the attendant horrors of an idle plant while the single large processor is repaired.

Continuous production on multiple lines can be slowed or even stopped on two of the lines for whatever reason, and startups are simpler because the facilities can be brought on line sequentially. Each line can be tailored to perform specific tasks to meet clear goals. One can be highly productive for glycerin offtakes, the others strictly for ASTM biodiesel.

Robert Luiten, chief executive officer of Zenergy International Inc., started his operation with a clear idea of what biodiesel and the energy world would entail. "We decided right from the start that every one of our facilities would enable flexibility and ability to act on opportunities to ensure profitability at all times," he says. "We will be opening world-scale facilities in France, Malaysia, both sides of the United States, South America and possibly Africa with a clear understanding that all our facilities will have an underlying mission of allowing any feedstock at any time and without national limits. Each facility will be ecologically clean, have a small footprint, be standardized across the globe, allow for expansion to meet specific needs and will be logistically optimized. There is no other way to meet the challenges coming at us in the biodiesel market."

The Steep Learning Curve
Feedstock issues are the first step. Processor technology issues are another. After they're settled, the next step is deciding what size facility is needed. Usually the best option is to determine the optimal feedstock availability and add 20 percent more capacity to ensure that by the fifth year of operations the plant is capable of meeting an increase in demand. The increase may tax available financing, but it will be worth it in the long run. A number of facilities have hardly completed startup when the owner applies to double capacity. It makes no difference if the plant was a 10,000-ton unit or a 100,000-ton unit. The need to grow is universal; the demand for product steadily increases.

Also, take credit for a steep learning curve. What was an insurmountable obstacle at the start has now turned a project into random and routine. This new knowledge will allow one to negotiate better prices, get in contact with local, national and international businesses, increase a credit limit and provide a host of new services.

If one is unable to swallow the 20 percent increase, a better tactic is to drop down 15 percent in size to locate in a more comfortable zone with a facility that allows doubling in size with little additional inputs further down the line. Discuss this with the plant designer so that he or she can incorporate redundant sections, larger capacities and adequate foundations to support the eventual increase. Also make sure that the selected design can be upgraded in an easy operation that will not require new buildings, controls and additional employees. Stacking key components and over-sizing blenders, dryers, pumps and piping is best done earlier rather than later.

Other roadblocks to getting the most for the money include a too-small site, access restrictions and local ordinances. This is where long-term planning comes in handy.
Locating the plant in relation to a number of factors can be crucial. The plant site will play a key role in the type of facility. In the United States we are seeing a move toward smaller regional facilities located near specific feedstocks, within walking distance of a crusher and serviced by a rail spur with load and offload racks. These operations address the crucial issue of feedstock and biodiesel transportation, and are built and operated by a local or regional group. Financing is often from a local branch of a large bank and the whole operation rapidly becomes a source of community pride, jobs and taxable income.

At the opposite end of the spectrum, and not competing with the local facility, are the huge, multinational companies who build larger facilities in or near ports because they intend to tap into the international feedstock pool immediately. Where a plant is placed is not related to size, but be aware that the location can influence a lot of decisions down the road.
A final note on what is really a shallow review of the changing face of biodiesel production: make sure to understand every aspect of a new venture. From legislation and incentives on the books, upcoming rules and regulations, public opinion trends, who your friends are and will be, automotive buying habits, shipping conditions, ecological impacts and other trends. Biodiesel people are an open and friendly group as a whole. Do not hesitate to call and ask. There are Web sites, government agencies, corporations and journalists waiting for your call.

Make the call, and then build the plant.

Peter Brown is a principal with Euro Marketing Tools. Reach him at peter@euromarketingtools.com or (408) 206-7035.
 
 
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