Poet plant gives $50,000 for blender pumps

By Kris Bevill | October 14, 2010
Posted Nov. 9, 2010

The number of blender pumps in Michigan has tripled, from one to three, thanks to the efforts of the Poet LLC plant in Caro, Mich. The plant recently contributed $50,000 toward blender pump installations at stations owned by Cooperative Elevator Co. in Sebewaing and Ignash Petroleum Inc. in Elkton, in response to a company-wide directive encouraging efforts to expand blender pump availability near Poet ethanol plants.

"We were challenged by the CEO of Poet, Jeff Broin, about two years ago to start pursuing blender pumps," said Dave Gloer, general manager of Poet Biorefining - Caro. "It's taken a long time to make this happen. We worked on this project for more than a year. Very few ethanol plants have been successful in getting blender pumps installed in their area. The fact that we got two of them is a pretty big deal."

Cooperative Elevator Co. spent more than $300,000 to install retail fuel equipment, including a blender pump that offers E10, E30, E40, E50 and E85, at its Sebewaing location. A total of $59,500 in various incentives will help finance the fuel pump installation, according to Tim Sielaff, vice president of petroleum for the co-op. In addition to the $25,000 given by Poet, Growth Energy contributed $2,500 for the blender pump. The co-op also hopes to soon receive final confirmation of a $32,000 grant from the Clean Energy Cities Coalition. Sielaff said the co-op installed E85 pumps at two of its facilities in 2006 and has since been seeking ways to increase ethanol availability to its members. "As a cooperative being owned by farmers, we want to do everything we can to promote the products they use and grow," he said. The offer of financial assistance for blender pumps from Poet and other groups has allowed the co-op to do just that, he added.

Ignash Petroleum used the financial assistance opportunity to replace three existing gas pumps at its Elkton convenience store with blender pumps and add a fourth blender pump. Company president Jerald Ignash estimated the total cost for the project was about $260,000, of which $94,000 was provided through a combination of donations by Poet, Growth Energy and a federal grant. Ignash said he felt it was important to install blender pumps at all of the station's fuel islands, and the money received for the project helped the company achieve that goal. "I wanted to give people a choice at every dispenser, because it's a very busy convenience store and I didn't want people to pull up and discover they're at the wrong pump," he said. "So far, it's been pretty positive feedback. The people that have flex-fuel vehicles [FFVs] are very happy. There are a lot of cars we sell fuel to that don't have FFVs, but there will be more and more."

Sielaff estimated that about 30 percent of the vehicles pulling into his new station are flex-fuel capable. He has witnessed a high-level of unawareness at the consumer level regarding FFVs, however, and stressed the need for increased consumer education in addition to infrastructure assistance from ethanol producers. "The ethanol industry has done a good job of educating the retailers," he said. "The problem is that retailers already know what they need to do. Educating the consumers is going to be key to the success of these blender pumps, especially in Michigan where there's so few of them."

According to Gloer, Michigan's sole pre-existing blender pump is located nearly 300 miles away from the blender pumps his plant helped to install. The Caro plant has no immediate plans to pursue other blender pump installations, but would consider it if the right project came along, he said. "I would hope that these two would drive some of the big [retailers] to install blender pumps," he said. "It would be nice to see somebody big start doing it."

In exchange for financial assistance from the plant, Ignash and Cooperative Elevator have agreed to purchase ethanol directly from Poet Biorefining - Caro. Sielaff said the co-op began purchasing E100 from the plant earlier this year to blend at its bulk facilities. He hopes to increase the co-op's E100 purchases to more than 10,000 gallons per month, representing 100,000 gallons per month of E10, but said ethanol-gas price spreads and conventional gasoline availability will dictate the exact amounts. "There's just a handful of terminals in Michigan that do not sell gasoline that already contains ethanol," he said. "So the terminals kind of dictate whether or not you can make your own ethanol-blended fuels."

Ignash will purchase E85, rather than E100, from the Caro plant. Before blender pumps were installed at Ignash's Elkton store, the location dispensed between 3,600 and 5,500 gallons of 87 octane per day. Ignash is not sure what the station's mid-level ethanol blend sales will be, but he hopes to ramp up to more than 800 gallons of E85 per day at that site. "I'm up to 200 gallons a day now and we haven't advertised at all," he added.

Gloer said there is no minimum amount of ethanol the two companies must buy from the plant, but he hopes demand for ethanol from his facility will increase significantly over the next two years. The decision to contribute financially to blender pump installations wasn't viewed as an investment as much as a contribution for ethanol infrastructure, he added. Matt Merritt, media relations specialist for Poet, said the company is continuing to look for opportunities for blender pump partnerships at its other plants.