January 2007
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Alabama biodiesel refineries will provide homegrown fuel and boost to agriculture

By Alvin Benn

 
  Bob Amend, at the left, stands with Raoul Fenelon, right, during construction of Alabama River Pulp’s $15 million biodiesel plant in Monroe County.
Alabama’s once-profitable soybean industry may be resuscitated if biodiesel efforts sprout success at farms and refineries in the coming years.

Only time will tell if the biodiesel push will be an agricultural fad or fixture, but one thing is clear—a lot of people are willing to spend millions on ways to come up with alternate fuel sources in the U.S.

In Monroe County, for instance, Independence Renewable Energy Corp. (IREC) recently announced plans to invest $15 million in a biodiesel refinery with anticipated revenues of more than $100 million.

That’s a solid rate of return on a relatively small investment by a major corporation. Those involved with the IREC project are confident it will succeed. So will investors who are involved in other biodiesel projects across Alabama.

 
Alabama Commissioner of Agriculture and Industries Ron Sparks pours a sample of the first biodiesel produced at the Alabama Biodiesel Corp.’s plant in Moundville.  
Americans have become fed up with roller-coaster fuel prices in recent years. In 2006, oil prices fluctuated from the mid-$50-a-barrel range to nearly $70. Motorists may be unfamiliar with the nuances of petroleum trading on Wall Street, but they have a pretty good handle on it when the price of gasoline pushes toward or over $3 a gallon.

That’s why soybeans, cottonseed oil, corn and other agricultural products are being viewed as sources of ending dependence on foreign oil—even if it only amounts to a relatively small savings at each fill-up.

Mixing biodiesel fuel with standard petroleum products won’t eliminate the need for foreign oil, at least for now, but those who promote mixing ours with theirs are more than a bit optimistic.

Biodiesel is a renewable, clean-burning fuel made from vegetable oils and animal fats. In addition to soybeans, plans also are being made to produce ethanol and methanol—two other farm-based sources aimed at reducing U.S. dependence on foreign oil.

At the moment, Alabama’s largest bio-diesel operation is in Moundville, just south of Tuscaloosa. It has a capacity of more than 10 million gallons a year. Other large capacity operations are being planned in the state—from the Tennessee Valley to south Alabama.

U.S. Energy Inc. is about to begin construction on an $87 million biodiesel plant in Tuscaloosa County. Tax abatements for the alternative fuels plant were approved by the Tuscaloosa County Industrial Development Authority.

The Tuscaloosa News reported that construction on the plant, which is being located in Cottondale, is expected to begin in January with production set to start in May.

Gov. Bob Riley has proposed state tax incentives to encourage commercial development and private use of alternative fuels. The governor’s "Alabama Farms and Fuels Act" provides for tax incentives to help fueling stations as well as conversion of existing gas station pumps to offer biofuels.

The biggest biodiesel smiles these days are emanating from Monroe County where Riley announced plans for a $15 million biodiesel refinery. Estimates indicate the plant could produce between 20 and 40 million gallons annually.

The facility is being built by Parsons & Whittemore (P&W), a privately held, New York-based company. P&W also owns and operates the Alabama River Pulp and Alabama Pine Pulp mills.

Construction began almost immediately after the announcement and the facility is expected to be operational during the first quarter of this year.

Alabama River Pulp spokeswoman Peggy Jaye said the Monroe County facility, which is being built in Claiborne, will produce biodiesel fuels for local distributors and blenders and then mixed with petroleum to make different grades.

Jaye said the new plant will rely, in part, on soybean oil. She also said the design of the plant will be flexible enough to use alternate feedstocks.

"High oil prices driven by strong global demand for petroleum and the national fervor for independence from foreign petroleum are providing the impetus for alternative fuel development," Jaye said.

She also noted that biodiesel products are "eco-friendly" and can reduce greenhouse gas and toxic emissions linked with petroleum diesel.

P&W’s decision to build the biodiesel refinery has received national attention and honors. Chairman George Landegger recently received a citation at the Clinton Global Initiative Conference in New York.

At the plant announcement with Riley, Landegger made it clear that his company is doing all it can to reduce greenhouse gasses "which have led to global warming."

"It seems hard to believe that here in rural Alabama we can make a difference in global warming," said Landegger. "But the same is true in Wisconsin and California. Most states have now developed initiatives to encourage the production of biodiesel and/or ethanol."

He said those initiatives often take the form of reduced excise taxes on their use as well as mandates that increasing percentages must be included in their diesel or gasoline mix.

"In the case of biodiesel, we are blessed that blending it with regular diesel results in smoother engine operation with no loss of power," Landegger said.

In early December, Perihelion Global announced plans to build a $40 million bio-fuel refinery at Opp’s industrial park. The facility is expected to employ 150 workers who will receive an average salary of $17 an hour. The company said it plans to convert virgin oil feedstock such as peanuts and soybeans to usable fuel once the plant is operational.

A few days later, Auburn University professor David Bransby said Alabama could become the "Saudi Arabia of biofuels" by using such natural resources as wood and switchgrass for conversion to fuel. "If done correctly, bioenergy can revolutionize agriculture in Alabama," Bransby told new legislators at their orientation session at the University of Alabama.

Alabama Commissioner of Agriculture Ron Sparks is solidly behind efforts to build biodiesel facilities in the state. He said they could not only sustain agricultural operations in existence, but pave the way for even greater gains.

Sparks said the state has an abundance of natural resources and products that can be earmarked for a variety of energy uses, including peanuts, chicken litter, cottonseed, wood and soybeans.

"We produce a billion chickens a year in Alabama," he said. "Using the litter from them is something I’ve been mentioning for a long time."

Last month, Sparks took an additional step toward fuel self-sufficiency in Alabama by announcing the creation of an alternative fuels center.

He said the Center for Alternative Fuels, which will be located at the Richard Beard Building in Montgomery, will play an important role in developing homegrown fuel from agricultural products that can be blended with petroleum.

"Hardly a week goes by that we don’t get calls to provide guidance to interested parties on how to build biodiesel or ethanol plants or where to purchase alternative fuels," Sparks said.

The commissioner said changing agricultural times have arrived with a thud in Alabama and across the country.

"Alternative fuel is the biggest opportunity agriculture will have in our lifetime," he said. "It used to be food and fiber before. Now, it’s going to be food, fiber and fuel. This is an opportunity we don’t need to fumble."

Sparks named one of his top aides, Glen Zorn, to direct the new division which will serve as a "one-stop" shopping center, of sorts, to help farmers with questions about alternative fuel sources.

On the national level, several of Riley’s gubernatorial colleagues have announced state energy initiatives that will likely increase biodiesel availability and use. Incentives, grants and tax credits are designed to help biodiesel enhance local economies while reducing pollution at the same time.

The National Biodiesel Board (NBB) tracked more than 275 pieces of biodiesel legislation during 2006 sessions. Of those bills introduced, 53 of them were approved; prompting the NBB to announce that state legislation aimed at increasing biodiesel production is at an all-time high.

"When it comes to alternative energy proposals, there is an increasing momentum in statehouses across the country and we’ve seen it building year to year," said Joe Jobe, NBB’s chief executive officer.

Jobe said many governors and legislators want to go beyond what is happening on the federal level "and are tapping into their own state resources to offer proposals that will not only reduce our reliance on foreign oil, but create jobs and strengthen state economies."

California Gov. Arnold Schwarzenegger issued an executive order last year that establishes a target for the state to produce and use a minimum of 20 percent of its biofuels within the state by 2010. That figure would increase to 75 percent by the middle of the century.

Illinois Gov. Rod Blagojevich introduced a plan last August that would replace 50 percent of the state’s current supply of imported oil with renewable homegrown biofuels such as ethanol and biodiesel.

Blagojevich’s plan would also invest $25 million to help build five new biodiesel plants. On top of that, the plan would provide new incentives to drive continued investment in Illinois’ biofuels industry and increase public availability at the same time.

As Blagojevich was announcing his plans, Michigan Gov. Jennifer Granholm used the same month to announce her state was setting aside $250,000 to help gas station owners convert pumps to alternative fuels. It may be a small amount at the moment, but Granholm and other Michigan officials are hoping it’s only the beginning.

It may be awhile before the refineries can generate enough biofuel to pump into cars or trucks around Alabama, but some communities already are ahead of the curve.

In February of last year, ethanol-powered police SUVs in Hoover were featured at a gathering of Auburn University researchers and federal officials looking at ways to reduce dependence on foreign oil.

As 2006 drew to a close, Hoover’s success story had spread about the country and President Bush dropped by to compliment Mayor Tony Petelos.

It was the latest example of how far Alabama has advanced in the field of alternative fuels. It’s a trend most state officials feel will continue to grow.

Alvin Benn is a freelance writer from Selma.