The future of the oilheat industry is biodiesel
Bioheat is becoming big business in the Northeast, and the market seems primed for even faster growth. Attendees at a panel titled The Business of Bioheat at the National Biodiesel Conference & Expo in Phoenix had the opportunity to learn about both the technical and market development aspects of the product.
While state mandates are obviously creating a market for low blends of biodiesel-blended heating oil, such as B2, oilheat dealers themselves seem to be driving a significant expansion of the market. The oilheat industry has been in need of a new opportunity to help rebrand the fuel its sells, said NBB Petroleum Liaison Paul Nazzaro. “What’s in it for them is a new lease on life—to save their businesses, frankly,” he said.
In fact, Earth Energy Alliance CEO Michael Devine noted that more than 900,000 homes in the Northeast switched from oilheat to a different fuel source between 2000 and 2007. Many of these customers switched to natural gas, a fuel that has been branded as cleaner and more environmentally friendly. Over a 20-year period, Devine estimates that those lost homes will cost the oilheat industry nearly $53 billion in lost sales.
When blended with more than 11 percent biodiesel, ultra low sulfur heating oil actually burns cleaner than natural gas with the added bonus of containing a percentage of renewable content. The opportunity to rebrand oilheat by blending it with biodiesel offers oilheat dealers a significant opportunity to help mitigate the loss of their customers to natural gas.
The oilheat dealers that are positioned to benefit most from the marketing of bioheat are the ones that Michael Cooper, Ultra Green Energy Services LLC’s vice president and director of sales and trading, refers to as “maverick marketers.” Although the entire oilheat industry is rebranding itself as the Bioheat industry, many marketers will supply minimal Bioheat blends to meet mandate obligations. However, maverick fuel dealers who really push to supply higher blends of biodiesel-blended heating oil will give themselves and environmental edge to better compete with natural gas.
During his presentation, Nazzaro described some of the actions the NBB plans to take this year to help support oilheat dealers that supply Bioheat to their customers. “What we are planning on doing moving into 2011 is to have a very dynamic and aggressive marketing campaign,” he said, noting that the initiative will be designed to help home heating oil dealers educate their customers on the benefits of Bioheat.
According to data compiled by the NBB, approximately 225 oilheat dealers are currently actively marketing Bioheat. “Our goal...with all these [marketing] resources we are going to bring online is to invest in those companies that have skin in the game,” Nazzaro said, rather than allocating funds and resources to dealers who do not.
Jason Lawrence, operations manager for Amerigreen Energy Inc., shared his company’s experience in marketing Bioheat. “Bioheat marketing begins at home,” he said. “Consumer education and awareness are our top priorities. Before we actually started marketing and selling Bioheat, we actually [began using] it ourselves first. I think that’s probably one of the biggest things a heating oil dealer can do is be your own testimonial. Experience the benefits first hand, and [leverage] that confidence to be able to go out into the marketplace and sell it.”
Devine also outlined some of the ongoing actions the NBB is pursuing in conjunction with the National Oilheat Research Alliance to help develop new ASTM standards for Bioheat blends that contain more than 5 percent biodiesel. “The Bioheat Technical Steering Committee is currently working with Penn State University on three types of certifications for higher biodiesel blends,” he said. The first is a legacy blend, which would be the highest percentage of biodiesel that could be included in heating oil without making any modifications to existing legacy heating systems. The second is testing to support certification of a B20 blend of Bioheat. Finally, the groups are also working on a B100 oilheat specification.
“About 20 years ago, 12 soybean farmers got together around a table and gave great thought to what they could do with their soybean oil,” Devine said. “Twenty years later, they’ve brought an advanced biofuel to the market. What they’ve done as a byproduct of their investments and their commitments is they’ve given the American public the opportunity to use domestically produced energy to heat their homes. It’s amazing what a small group of people can do if they have the will and they have an innovative idea. As history has told us, a small group of people can change the world.”