Diversifying Energy Options

Alternatives to natural gas as a source for process heat and steam were especially hot topics this year despite retreating natural gas prices. Here's a look at what went down energy-wise in the ethanol industry in 2006.
By Ron Kotrba | December 13, 2006
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The unpredictable and sometimes punishing cost of natural gas over the past few years prompted a number of U.S. ethanol producers to roll out alternative process heat and steam strategies in 2006.

Generally speaking, if energy resources weren't subject to depletion—and if costs didn't fluctuate between high and very high—there would be much less of a need to develop alternatives. In the real world, however, resources are subject to depletion, and prices can swing wildly at times. In September, the U.S. Energy Information Administration reported that the nation's highest average natural gas price of the year occurred in January, at $10.84 per MMBtu, and steadily decreased through the year to approximately $6 per MMBtu in early October. This is down from the November 2005 five-year high of $12 per MMBtu.

Experts say one of the biggest concerns for those pushing alternative energies is that once natural gas prices dip for a period of time, the investment interest in supplemental systems could trend downward as well. As Chippewa Valley Ethanol Co.'s (CVEC) Jason Jerke told EPM last June, though, sustained lower natural gas prices aren't going to stop the company from moving ahead with its novel energy strategy. Other producers are also completing various stages of alternative energy projects. Likewise, the use of coal—as nonrenewable as it is cheap—is on the rise. It may seem like a stretch to classify coal as an "alternative energy," but in this industry, it is exactly that: an option outside the mainstream.

Love/Hate Natural Gas Relationship
In June, the EPM editorial staff attempted to call every U.S. ethanol plant in operation to conduct an energy survey for the 2006 "Energy" issue. At the time, 97 ethanol plants were in operation and 50 percent of those plants participated in the query. Data collected during the survey showed that 39 out of the 43 respondents (91 percent) used natural gas for processing and drying. It's important to note that many of the producers using natural gas reported that supplemental energy sources had been considered or were under consideration at the time. Four plants out of 43 surveyed were using alternative energies and, to varying degrees, natural gas, either to fireup a coal boiler or as a fail-safe backup.

"What amazes me is the ethanol industry's apparent preference for coal as an alternative energy source as opposed to biomass," one source tells EPM, in reference to the energy survey. Since EPM conducted the survey 12 more plants have come on line, most of which use natural gas for heat and steam. One of these facilities, Lincolnway Energy LLC in Nevada, Iowa, is coal-fired. While a few ethanol companies have broken off of the main gas line with alternatives to the versatile yet price-volatile fossil fuel, those companies skeptical of treading too far from the gas valve have managed to harness the effectiveness of sound risk management plans to better control their energy destinies.

One source tells EPM that when ethanol production reaches 7.5 billion gallons (assuming all of that capacity was fueled by natural gas) demand from the industry could represent a 1.2 percent increase in total U.S. demand for natural gas. That's a significant rise when you consider that the total increase in natural gas consumption from 2004 to 2005 was only about 1.4 percent. What happens if the ethanol industry goes to the apparent next production plateau at 12 billion gallons per year? Ultimately, increased natural gas use resulting from the ethanol industry's expansion affects total U.S. demand of fossil energy, helping to keep supplies tight and prices elevated.

Alternative Energy Project Highlights
Some great examples of trendsetter-hopefuls in the ethanol industry surfaced in 2006. The first ethanol producer to jump in with both feet by gasifying biomass was Central Minnesota Ethanol Cooperative (CMEC) in Little Falls, Minn., which recently completed its energy systems switchover from natural gas. The combined-heat-and-power (CHP) marvel consumes chipped wood waste in a Primenergy LLC-designed-and-built unit. Engineering firm Sebesta Blomberg helped integrate the system into the plant. It's running now, and sources tell EPM that data on its operations will be available soon. CMEC has a 10-year contract in place with a company nearby to assure its feedstock delivery. In case of unforeseen supply problems, other biomass feedstocks can be gasified in its CHP system.

Not far from Little Falls in Benson, Minn., CVEC's own plan to supplement natural gas use doesn't stop there. In partnership with Frontline BioEnergy, CVEC is testing multiple feedstocks, different handling systems and storage protocols, in addition to pilot operations of gasifying various biomaterials. Frontline BioEnergy's founder and Research and Development Manager John Reardon said earlier this year that once the team's developmental work is mature, he hoped Frontline BioEnergy could return value to CVEC through the sale of biomass gasifiers to others. CVEC's newsletter reported that feedstock research and development was underway late this summer, which involved wheat straw baling trials using custom balers. Testing collection techniques to gather soybean stubble and corn stover were expected after harvest was complete.

A plant that's already a proven leader in reducing natural gas use, Corn Plus in Winnebago, Minn., is moving even further from the conventional energies of natural gas and grid-born electricity. Nearly two years ago, Corn Plus started burning concentrated stillage in its Von Roll Inc.-furnished fluidized bed boiler. This has reduced natural gas consumption at the 45 MMgy ethanol plant by 54 percent, General Manager Keith Kor says. Von Roll is currently optimizing that very same system to achieve an additional 10 percent reduction in gas use at the plant. "We hope to have this done sometime between November and the first of January," Kor says.

With help from its partner John Deere, Kor says the installation of two 2.1 megawatt wind towers is nearing completion, which will supply electricity for the plant. "They're being built on Corn Plus property, next to our substation," he tells EPM. "We hope to have them running by the end of December." The wind towers—a "first" for an ethanol plant—will produce 40 percent of the plant's electrical power needs. The remaining 60 percent of electricity that the plant consumes may soon be generated in-house, too. "I just returned from Austria, where we met with [Von Roll] about burning our wet cake for electricity," Kor says. "That would produce about five additional megawatts of power. My goal is to shut off the natural gas valve and the electricity." This project is still in the discussion stage, and more work is planned for 2007.

On a less dramatic but nevertheless important front, is the proliferation of ICM Inc. and Phoenix Bio-Systems' Bio-Methanators, which is a solid step toward optimizing energy efficiencies. Bio-Methanators convert nonfermentable contaminants in the process water to methane, lowering the consumption of natural gas in the distillers grains dryers. ICM says this leads to a savings of "tens of thousands of dollars per year." This technology was introduced to U.S. ethanol producers before 2006, but its use has become more prevalent in the past year. Bio-Methanators come standard in all new ICM plants, and ICM is building new dry mills at a record pace. Thermal oxidizers, another energy saver and contaminant converter of sorts, also come standard in ICM dry mills.

Low Natural Gas Prices, Alternative Energy Interest
Many experts assert that energy prices trend together. By October, crude prices had dropped considerably from the peaks experienced earlier in the year. Ethanol prices have fallen significantly since the highs of mid-year, too. If there's truth to the notion that low energy costs deter the development and implementation of alternatives, then today's lower natural gas prices could warrant concern for those with vested interests in the proliferation of alternative energy systems and feedstocks. According to Nat Mundy, CEO of Future Renewable Energy Enterprises LLC (FREE)—a gasification systems provider—lower natural gas prices don't justify foregoing alternative energy plans.

"Those in charge of natural gas then (when the prices were high) are still in charge now," he says. "The same environment still exists." Mundy says low-cost energy, such as that produced from the clean combustion or gasification of waste materials, supersedes conventional pricing trends. The cost of natural gas for ethanol plants is significant, and Mundy insists that FREE's modular, scalable biomass gasifiers could reduce or eliminate those costs. Reducing bottom lines by producing energy with a "negative cost" feedstock could facilitate future ethanol projects' development outside the Corn Belt by offsetting higher transportation costs with lower energy costs in an effort to remain competitive. Overall though, Mundy says he still hasn't seen a lot of movement toward gasification of biomass in the ethanol industry.

"Ethanol producers don't have to jump into this with both feet," he tells EPM. "They could start by supplementing some of their natural gas use now without taking a giant leap into the unknown."

Ron Kotrba is an Ethanol Producer Magazine staff writer. Reach him at rkotrba@bbibiofuels.com or (701) 746-8385.