Published: November 26, 2008 11:36 am            

Opportunities, logistics keep ethanol plants in the mix

Originally published in the Nov. 14, 2008, print edition.

Starting in March 1999, the 45-million gallon POET biorefining facility near Albert Lea markets coast-to-coast plus overseas shipments of its dried distillers grain feedstocks.

“It’s all about opportunities, and logistics,” said Rick Mummert, general manager, explaining that tight margins are making ethanol markets competitive.

Indeed. There are now eight other ethanol plants within a 50-mile radius of this POET facility. And though the most efficient facility of all POET plants, Mummert indicated that selling out daily production into 60-day markets is getting difficult. This operation maintains about 10 days ethanol storage; also about 10 days corn storage.

Nationwide, POET produces and markets more than a billion gallons of ethanol and nearly three million tons of distillers grains from its more than 20 facilities in six states. “Our constant goal is to keep the plant running regardless of what challenges come forward. That period of $7 corn virtually zeroed out margins for a few days. Corn prices have become a 24-hour moving target but we continue to be the low-cost producer in the POET organization,” Mummert said in this September interview.

Near this POET facility is SoyMor, a biodiesel refinery. However, because of high soybean prices last spring, SoyMor temporarily is shut down. Waiting for lower soybean prices, SoyMor is also researching for other products for biodiesel that might alleviate current market prospects.

Part of POET’s efficiency relates to water usage, now down to less than four gallons per gallon of ethanol produced. Plus three gallons ethanol per bushel of corn is now their standard, thanks to improved yeasts, improved processing techniques, and also higher starch corns.

With one of the wettest springs in recent history around Albert Lea, Mummert credits the seed corn industry for remarkable genetics noting that despite the early challenges, this likely will be the second highest yielding corn crop in much of southern Minnesota and northern Iowa.

“As we look to the future, more productivity per acre is not only vital to the grower, but it also is significant to the future of the ethanol industry. We’re still a fledgling industry so future opportunities are key. The prediction of 300-bushel corn by 2020 is extremely important to the corn-based ethanol industry,” Mummert said.

Will the growing number of “processor-preferred” hybrids be significant for ethanol producers? Perhaps, but he said POET is not yet offering a premium for these hybrids. Yes, higher starch levels are part of the genetics of these hybrids but Mummert maintains that POET lab work hasn’t identified that these higher starch levels enhance alcohol production. “But if this becomes a market-driven factor, then absolutely POET will go that route,” he said, suggesting there may be a day when farmers set aside specific fields for producing corn just for ethanol.

This Albert Lea facility has 500 producer-members living in both southern Minnesota and northern Iowa. It has undergone three expansions since its 1999 startup. “We continue to look at the dollar as a tool so if there is a new opportunity out there, our board of directors is very proactive. We installed the Broin BPX technology, which has been a huge win for us. We also in 2006 put in fractionation, a key input for successful cellulosic ethanol production. We put in this technology knowing that we’d take some arrows for the industry (meaning no guarantees of success) but fortunately fractionation has worked out very well at our facility.”

Fractionation, still somewhat unique to the industry, is a milling process that separates out the endosperm so that this too can become an ingredient source for ethanol. He said they end up with three feed co-products rather than just the standard DDG product. The typical ethanol plant throws the entire kernel into the fermentation process ending up with a 26 percent feedstock product. Thanks to fractionation, this POET facility also produces a high protein livestock feed (40-plus percent protein) that competes directly with soybean meal.

Taking a look at the “politics” of the ethanol world, Mummert sees blender pumps as the key to the ethanol industry simply explaining that if you let economics drive what the customer purchases you have a much more realistic market. He’s doubtful there will ever be enough E85 pumps and flex-fuel cars nationwide to enhance the future of ethanol fuels.

He’s OK with the Environmental Protection Agency being the testing agency to verify the safety and usage of ethanol fuels. His point however being that if E10 is OK, and E85 is OK, then certainly blends in between should be OK. “I think the public simply needs the opportunity to have a choice at the fuel pump as to which ethanol blend works best, and perhaps is also most cost-effective. I think blenders pumps are a huge win for America,” Mummert said.

He acknowledges the importance of the National Corn Growers Association and the renewable fuels industry having a voice in Washington, D.C. Regarding future growth for this Albert Lea facility, Mummert simply volunteered that his pro-active board of directors will continue to explore new opportunities to “be greener” and return more profits to all shareholders.

“We know we have a fantastic product and a fantastic future even as we acknowledge that corn-based ethanol is not the silver bullet. But it is a huge step in the right direction and as the seed industry and farmers gear up for 300-bushel yields, we know that corn can continue to feed livestock, feed people, feed our export markets, and also partially fuel our vehicles,” he said.

        

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