Rest in Peace, old friend, your work is finished.......
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This is a fairly HIGH VOLUME ping list on some days......
Posted on 11/10/2006 6:57:11 AM PST by Red Badger
CHICAGO (Dow Jones)-Economic advantages are behind its plan to make biodiesel from a byproduct of ethanol production, a VeraSun Energy Corp. (VSE) executive said.
When ethanol is made from corn, a byproduct called distillers grains is also produced. VeraSun said last week it plans to extract oil from the distillers grains and use that oil to produce biodiesel.
"It's a natural extension of the ethanol business," VeraSun Chief Financial Officer Danny Herron told Dow Jones Newswires in an interview late Wednesday. "It just has a lot of synergistic capabilities because it's coming out of the same feedstock and going to roughly the same customers."
The ability to produce two fuels from one feedstock presents a "tremendous value proposition" and is something the company has been working on for several years, Herron said.
Currently, distillers grains are selling for roughly 4 cents a pound compared to soyoil, the most common biodiesel feedstock, which sells for more than 20 cents a pound, he said.
Every pound of oil extracted from the distillers grains is therefore less expensive than soyoil, "so it's a very strong value proposition for VeraSun," he said.
In terms of biodiesel production, Herron said the company expects to get 7 million to 8 million gallons of biodiesel per year from every 100-million gallon ethanol plant.
The company is also optimistic that the oil extraction process will also open up new markets for the distillers grains, which are typically used as livestock feed.
VeraSun said last week its oil-extraction process will enhance the resulting distillers grains as livestock feed "by concentrating protein and reducing fat content."
Distillers grains are currently limited to 35% of cattle feed because of the fat content, he said.
However, "by taking the fat content out, you will increase the palatability of the distillers to be used in the cattle industry as well as allowing more usage of it in the poultry and swine (industries)," Herron said.
Whether that translates into higher prices for the company's deoiled distillers grains is "probably yet to be seen," however Herron said that he feels livestock producers will choose the lower-fat distillers grains produced by VeraSun over standard distillers grains from other ethanol producers.
The company is currently evaluating locations for 30-million-gallon per year biodiesel production facility and plans to begin construction in 2007 and start producing biodiesel in 2008.
Herron said the company will make a decision on where to build the biodiesel plant in the next 90 to 180 days.
VeraSun said it expects to be the first company to develop a large-scale facility for biodiesel production from distillers grains.
Biodiesel, which can be made from vegetable oils and animal fats, can be blended with petroleum-based diesel to run in all existing diesel engines.
According to the National Biodiesel Board, an U.S. industry association, there are 86 biodiesel plants currently in operation with a maximum annual production capacity of 580 million gallons per year. The 65 plants under construction and the 13 more that are expanding will add another 1.4 billion gallons of production capacity when complete.
Biodiesel demand is expected to increase to more than 1 billion gallons by 2010 and 2 billion gallons by 2020, VeraSun said in last week's press release, citing statistics from the Energy Information Administration.
Company Not Concerned About Corn Supply
With regard to ethanol production, all eyes are on corn.
Corn futures on the Chicago Board of Trade have soared in recent weeks, due in part to fears next year's corn production won't meet the needs for ethanol, livestock use and exports. Even deferred contracts, which represent the 2007 crop, are rallying, encouraging U.S. farmers to plant additional acreage.
Since Oct. 2, nearby corn has rallied more than 90 cents a bushel. On Wednesday, CBOT December corn futures gained 6 3/4 cents to $3.57 3/4 a bushel.
Despite the market nervousness, Herron said the company is confident U.S. farmers will produce enough corn.
"We absolutely don't believe we're going to have corn shortages in the future," he said, noting that corn crop yields have increased every generation due to better seed technology and improved farming practices.
"If you look at the high commodity prices today, it's easy to come to the conclusion that the current high corn prices are going to buy a lot of corn acres in the spring," he said, noting that it won't be known how many additional corn acres will be planted until March when the U.S. Department of Agriculture releases its annual prospective planting report.
Herron said VeraSun estimates that the U.S. will need in the range of about 3 million additional corn acres next year, given the current yield increases being seen, in order to support new ethanol growth.
There are 106 ethanol plants already in operation, an additional 48 plants are under construction and seven more are undergoing expansion, according to the Renewable Fuels Association, an industry group.
Current ethanol output is 5 billion gallons and with announced capacity, it could add another 3.5 billion gallons, the RFA said.
The use of corn for ethanol production does not threaten the amount of grain available for use in the food supply, he said.
"At the end of the day, corn is not used in the food supply. There's a small percentage that goes into the protein market for animal feed, and we're replacing that with distillers (grains)," Herron said.
The USDA estimates the ethanol industry will consume 2.15 billion bushels of the 2006 corn crop, which was pegged at 10.745 billion bushels Thursday.
VeraSun, which is based in Brookings, S.D., operates two ethanol plants in Aurora, S.D., and Fort Dodge, Iowa, and is building a third plant in Charles City, Iowa. The company also has two more facilities in development in Welcome, Minn., and Hartley, Iowa.
Shares of VeraSun were recently trading down 6 cents at $20.34.
Rest in Peace, old friend, your work is finished.......
Diesel "Ping" List: If you want on or off the DIESEL "KNOCK" LIST just FReepmail me........
This is a fairly HIGH VOLUME ping list on some days......
anything is better than that damn ethanol
If they succeed, you can have the biodiesel for you car, and ethanol for your drink...........You can drive your corn and drink it, too!..........
>>>Two fuels from same source feedstock?!?!...........
Yup. Amazing, isn't it?
Audi Q7: the world's most powerful diesel passenger car
The diesel resurgence continues with Audi's announcement yesterday of the Audi Q7 TDI SUV with Audi's V12 TDI race engine. The development vehicle was revealed yesterday and gives a glimpse into Audi's yet-to-be-unveiled diesel flagship vehicle. The Q7 complies with EU5 emissions regulations effective from 2010, and gets a respectable 23.7 mpg combined (Imperial gallons, again, here, considering this is a European model). So, there's a least a little bit of green in the Q7. Now imagine driving one filled with B100. You can read Audi's press release after the jump.
How does 0-60 in 5.5 seconds sound?
VeraSun said last week its oil-extraction process will enhance the resulting distillers grains as livestock feed "by concentrating protein and reducing fat content."
I'm in the "food ain't fuel" camp. Who wants to the volatility of the fuels market injected into food prices? Not me.
There's plenty of feed stock in coal, shale and undersea Methane ice deposits. Of course these make use of prehistoric Carbon, so the GW doomers won't be happy, but I say screw 'em.
Renewable Energy PING?
Iowa baby.......the new cool state...
actually corn has gone balistic.....should be interesting....and they are building plants all over the place....
If you have ever been to Iowa...they need to get rid of the fat...
>>>I'm in the "food ain't fuel" camp. Who wants to the volatility of the fuels market injected into food prices? Not me.
It's not 'food OR fuel' - it's 'food AND fuel'. Don't wallow in ignorance.
http://www.iastate.edu/~nscentral/news/2006/nov/verkade.shtml
"A discovery some 40 years ago is showing promise as a chemical pre-treatment that breaks down plant fiber. That could release the simple sugars in corn stalks or switchgrass so they can be fermented into ethanol. And that could add value to Iowa's crops or the fibrous co-products of ethanol production."
Every little bit helps. All food is fuel, for something or somebody..........If you re-cycle the used oils, after their use as food (if you can call it that) in McKing Fries cooking and other restaurants sources, then it might not make such an impact. Fuel prices volatility is already part of the price of food, along with everything else. Shipping costs will continue to climb with the price of petro-oils anyway...........Coal oil/kerosene/diesel should be on the front line in our efforts to rid our markets of foreign controls. I don't understand why the UMW (mine workers' union) isn't out in force trying to get their product into every car in the USA. Looks like this is one instance where it could be a win-win situation for UMW-UAW and the industry as a whole..........
Ain't it grand?.........
From the article:
Corn futures on the Chicago Board of Trade have soared in recent weeks, due in part to fears next year's corn production won't meet the needs for ethanol, livestock use and exports. Even deferred contracts, which represent the 2007 crop, are rallying, encouraging U.S. farmers to plant additional acreage.
This isn't exactly the effect I described?
time to revisit the farm subsidy bills and take out some corn and soybean payments.then you will see some of the fence post to fence post farming that happened in the 80s and this timme there are two markets for corn...good for the farmer and good for fuel security.
You said, "I'm in the "food ain't fuel" camp."
Well, that is an ignorant position. Ethanol is not a "food OR fuel proposition" it's "food and fuel" just as I said.
What part of a corn plant is not food?
Do you think the production process for making ethanol consumes corn entirely? If so, you are mistaken. The process yields several products that enter the food chain. You get food AND fuel from the ethanol production process.
More information at:
The Value and Use of Distillers Grains By-products in Livestock and Poultry Feeds
http://www.ddgs.umn.edu/overview.htm
Distiller's Dried Grains with Solubles (DDGS) is a co-product of the distillery industries. Most (~98%) of the DDGS in North America comes from plants that produce ethanol for oxygenated fuels. The remaining 1 to 2% of DDGS is produced by the alcohol beverage industry.
Of the 3.2 million metric tonnes of DDGS produced annually in North America, about 700,000 metric tonnes are exported to countries in the European Union for use in livestock feeds. A very small amount of DDGS is exported to Mexico, leaving about 2.65 million metric tonnes available for domestic use in the U.S. and Canada.
In North America, over 80% of DDGS are used in ruminant diets. Currently, Minnesota is the only state in the U.S. where a significant amount of DDGS (40,000 to 50,000 tonnes annually) is fed to turkeys. Historically, less than 1% of the total annual production is fed to swine, but based upon recent research studies conducted at the University of Minnesota showing excellent nutritional value of DDGS in swine diets, its use is increasing in the pork industry.
The stover left on fields in no-till production, for starters.
The "Food ain't fuel" position gets zero, zip, nada, no credence among farmers. And I'm a farmer, albeit I don't grow corn.
The fact that corn futures are showing a price increase to all of (drum roll, please) $3.50/bu for corn is taken by the "food isn't fuel" crowd to run in circles, scream and shout portents for upcoming famines.
To which farmers reply: "Nonsense."
Go look at a historical chart of corn futures. If you go back to the early 70's, guess what you see? Corn was between $2.25 and $3.50 per bushel.
If corn prices were even keeping up with inflation, corn would be running about $7/bu right now, without ethanol uses in the markets.
There is a conspiracy of ignorance in farm product pricing among the US public that is the largest part of what keeps farm subsidies in place. Farmers have to make a buck too, and you can't do it with farm commodities being priced at 1975 price levels while inflating our fiat currency. One chart farmers like to show is how large a farm does it take to support a family of four. The size of that farm and the production levels required have easily quadrupled since the 70's. You used to be able to quite nicely support a family with a 400 to 600 acre farm.
Now, it takes thousands of acres to support a family with the income from only the farm.
This is why so many farm wives have to work off-farm jobs now. It isn't only the taxpayer subsidizing American farmers -- it is also American farm wives, working off-farm jobs.
Want to continue to eat? Start paying higher prices for your food and keep farmers in business without subsidies. Ethanol production has taken off in the grain belt because it finally provides an outlet for huge overstocks of corn, gets farmers off the subsidy treadmill and lets them pay down debt.
And as for the food component -- DDG or WDG (dry or wet distiller's grains) feeds cattle just fine. This is the "mash" that results after the corn has been through the fermentation process. DDG actually feeds cattle better than straight corn -- less acidosis.
No, they won't go away. Jeez, the misconceptions people have about how their food is made would be hilarious if only city slickers weren't allowed to voice their opinions on farm policy.
Here's why cattle get fat and marble: an excess of metabolic energy in their diet. Period, end of discussion. It doesn't matter where the excess of energy comes from. You can fatten and marble cattle on grass, if you want. DDG being fed to cattle from ethanol plants works just fine to fatten cattle as well as corn.
Did you know that most of the US soybean production isn't used to feed people? Where does the majority go? Into cattle feed. Wanna know what cattle producers like about beans? The protein. Wanna know the cheapest way to get bean protein? "Cake" -- what is left of beans after you've squeezed out all the soybean oil, which could be used in biodiesel production.
Sorry if my attempt at humor went over your head I must assume you are over educated...
Don't suppose there are any subsidies in the production of any of this stuff, are there?
Yes, there are...........
I do think that you are all underestimating the appetite for raw materials that the fuels industry has. It's much larger than the entire U.S. output of corn.
Fuel from biomass is coming, but keep it away from the food chain please.
You're going to see a merging of food and biomass/fuel uses, because, quite frankly, farmers don't have the capital to go buying a new line of equipment for both. A new combine costs over $250K. Tractors are running from $100K to $180K. Sprayers, drills/seeders, etc, etc, etc -- it all adds up to a whopping large amount of money. Unless farmers get huge new subsidies (not my preference) or better prices for their products (is my preference), you won't see farmers want to run a second line of equipment for non-foodstuff fuel bases.
As for DDG, yes, it makes a fine animal feed. Well, animals, all 14+ million of cattle "on feed" (ie, in a feedlot), can only eat so much, and right now they're eating corn or bean meal that could be put back into the human feed pipeline. Then there are dairy cattle, who are also eating corn and bean rations in their TMR mix. All tallied, there are over 97 million head of cattle in the US, with perhaps half of those getting corn and/or bean rations at some point along the way. If you pull the whole corn and bean meal out of those rations and put the aftermath of fuel-processed corn or beans into their diets, you have no net effect on human food consumption or availability.
About two-thirds of the US soybean production currently is fed to cattle. About 80% of the US corn harvest is currently fed to cattle. Are you seeing a trend here? We're not in any danger of there being any shortage of feed for humans as long as we don't start wasting the DDG's and cake that come from biofuel production. All we have to do is adjust cattle rations to substitute the by-products of biofuels for the virgin grain product and we end up in a no-net-loss situation.
As for the "appetite" for raw materials in the fuels industry: the biomass-based fuels industry will never supplant the conventional oil industry in the US energy portfolio. I once did a back-of-the-envelope calculation of how much land it would take in soybean production to provide all the diesel fuel that only farmers use.
The answer: a land mass about four times the size of Texas. Ain't never gonna happen. Biofuels will always be nothing more than a niche of the energy portfolio. That isn't to say that biofuels are a pointless exercise. We can eliminate waste and pollution and turn it into something useful. Waste is nothing more or less than inefficiency. Cattle/swine waste can be put into a digester and turned into methane and compost. There is an outfit in Missouri that has proven that you can turn just about anything, including turkey offal (ie, guts) from your Thanksgiving turkey into bunker oil by a process called "thermal depolymerization" -- add enough heat (in steam) and pressure and you can turn just about any organic matter into hydro-carbon fuel.
Add in the research being done in cellulose-based ethanol and now we can start to make a dent in a minority of our energy portfolio. If we focus our efforts on supplanting oil imports from the middle east with biofuels, we will have gained an important upper hand in dealing with the Salafists.
As you point out, the current tack on Ethanol is likely to be a boon for farmers. Unfortunately, with the yield at about 3 gallons per bushel, the subsidies are just being transferred from the raw material (corn) the the end product (Ethanol).
A path toward energy independence is the exploitation of a multitude of niches from farming, extraction of nontraditional fuels, to waste recovery. The two keys that will open this path are hydrocarbon reformation, and flexible fuel engines. It's a good time to be a farmer (or and engineer). The future is bright indeed.
ping for later
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