Biodiesel company taps ethanol plants for feedstock

By Lisa Gibson
Posted April 19, 2010, at 1:43 p.m. CST

East Fork Biodiesel LLC, a 60 MMgy biodiesel plant in Algona, Iowa, is hoping to collect corn oil from surrounding ethanol plants, providing those plants a higher-value option for their coproduct and helping East Fork reconfigure for operation using a new feedstock.

Because of market conditions, the plant was not put on line as scheduled but is currently configured to produce biodiesel from soy oil, according to David Kreitzer, vice president of the Capital Division for Corval Group, a construction, fabrication and business solutions company working with East Fork. The plant is perfectly positioned, surrounded by 91 ethanol mills within a 150-mile radius, but only a few will need to provide their corn oil in order to break escrow and move ahead with plant modifications, Kreitzer said, adding that three or four have said they are not interested and the rest are on the fence. "To make this plant work, it's not going to take a tremendous amount of plants," he said. "We only need five or six plants to raise capital and move forward."

The value of the corn oil will be assessed based on the prices East Fork can secure for its biodiesel, ensuring ethanol operations get the highest value for their corn oil, Kreitzer said. Since East Fork recently entered into a marketing agreement for its biodiesel with C&N Cos., a division of Mansfield Oil, those prices will remain favorable because Mansfield focuses on optimizing and controlling fuel-related costs. C&N Cos. focuses on sales, logistics and regulatory reporting and represents more than 500 million gallons of ethanol production in the U.S., many from the plants surrounding East Fork. "We're encouraging our ethanol plants in the region to devote their corn oil for this project," said Jon Bjornstad, C&N president, adding that his group is also encouraging plants to install extraction processes, if necessary. "Our plants are all going to have to decide how they'll divvy up their corn oil supply."

Corval will help plants secure financing for extraction processes, if they are interested in contributing their corn oil. "If an ethanol plant doesn't currently have extraction capabilities, we believe we have some tools that can help," Kreitzer said. "We're trying to incentivize ethanol plants. We've got their attention and we think this is a viable option."

East Fork will be responsible for the transportation and logistics of securing the corn oil, giving as much of the excess funds from biodiesel sales back to the ethanol plants as possible, Kreitzer said.

"We're in support and encouragement mode," Bjornstad said. "It's really good for the industry. It's about time we consolidate things like this."