GEN-X Energies

Source: Energy Digital

Date :11/04/2008 02:22:09

CEO Scott Johnson explains how GEN-X Energy Group has achieved rapid growth in a volatile industry by staying flexible and responding rapidly to fluctuations

Written by Emmet Cole & Produced by Melissa Abbott

GEN-X Energy Group president Scott Johnson describes life at his biodiesel company in three ways: “You don’t sleep. You don’t go home. But it’s been a lot of fun for the whole team.”

Instead, thanks to supreme patience, feed stock flexibility, and dedicated employees, GEN-X is able to take best possible advantage of the economic commodities markets and, in the process, has become a leader in renewable fuels.

Burbank Biodiesel

The idea happened in the lobby of a McDonalds near the company’s headquarters in Burbank, Wash., located on the confluence of the Snake and Columbia Rivers in eastern Washington, the dryer half of the state. Johnson, a microbiologist by trade with experience in the food processing industry, saw potential in producing biodiesel from sustainable products like potato waste oils after he began making the product in his garage at home. At first, Johnson and his two co-founders planned for a small, $50,000 plant that would pump out 400,000 gallons of B100 (pure biodiesel) each year. But after just one meeting, goals shot upward.

“It quickly grew from three owners to six when we realized the amount of local oil feed stocks available and greatly increased the capacity of the plant to five million gallons,” Johnson says.

The new version of the plant cost $800,000 to build. Built in 2007 in an 18,000 square foot warehouse on the Port of Walla Walla, it’s permitted to produce five million gallons of biodiesel per year, and at its current configuration could produce 15 million gallons if needed.

The plant can process a variety of feed stock feed stocks, including canola, tallow, sunflower, safflower, camelina, peanut, soy oil and yellow grease, providing crucial flexibility to deal with notoriously volatile feed stock prices.

“We only use sustainable feed stocks,” Johnson says. “We’re not part of the ‘food or fuel’ debate that’s going on right now. We look at feed stocks, not fats. This is probably the most important thing for us as we are focused on byproduct streams.”

GEN-X did all its own engineering and never wavered from its sustainable model. In fact, 85 percent of the plant was constructed with recycled materials. Which contributed to constructions cost at an unbelievable .08 cents per gallon.

Bio-challenges

The plant is a notable success, and the company has quickly grown to ten full-time employees, with Johnson predicting 40 employees within the next two years.

But GEN-X still faces several industry-wide challenges as it moves forward. The biggest obstacle, as most biodiesel producers know, is feed stock and commodities prices.

“It’s out of our hands,” Johnson says. “We designed GEN-X to capitalize lower cost feed stock feed stocks. We wisely spent private investor’s and owner capital to build the plant. We don’t have any loans, and we are profitable at a million gallons a year feed stock feed stocks. Our ability to find lower priced commodities helps offset feed stock costs. This allows us to leverage our position in the industry and provide a high quality product.”

In fact, while the plant is permitted to run at five million gallons a year, it’s solvent at just one million. So the company plays the waiting game, doing enough to stay viable until the economics of the commodity markets readjust. While several larger biodiesel companies can’t afford this approach, and therefore have to operate in the red, GEN-X can run at high or low-volume as needed. The wide variety of feed stocks it can process provides further flexibility, and the company only uses feed stocks within a reasonable trucking radius to further reduce costs.

“Everyone’s blown away,” Johnson says. “Prices are setting records almost everyday. The volatility is bouncing up and down, left and right. But we’re extremely flexible in what we do here, and can run just about any oil that comes available. It’s extremely fast-paced, and we are constantly jockeying to mirror with what’s going on in the industry.”

Dedicated employees

Despite the volatile markets, GEN-X has yet to lay off any of its employees for financial reasons. Instead, the company has avoided overreaching, and Johnson says there’s more work than the original team can find time to do.

“There’s just not enough time in the day,” he says. “I need about four copies of myself and another four copies of my other partners to take advantage of everything that is being offered to us. There’s so much to do, but that’s just the way the biodiesel industry works.”

To balance this problem, GEN-X only hires well-rounded employees who have a passion for renewable fuels.

“We look for people that want to be in this industry,” Johnson says. “They have to have a desire and passion. We have a fantastic team, and the biggest reason is that we’re all in it for same thing -- the excitement of this new industry. What you get out of that is people will work 24 hours a day.”

In many instances, the company doesn’t need to recruit at all –enthusiastic potential employees contact them first.

“Right down to the general laborers on the floor, people came to us wanting to be a part of biodiesel, not just looking for a job,” Johnson says. “That’s the biggest thing we look for - people excited about industry. And then we want qualified, extremely well rounded people. Our management team consists of an engineer for internal process design, a retired firefighter for regulatory compliance, an ex-paramedic for occupational safety. The management team represents 20 years process operations, 23 years of process automation, 50 years safety, compliance, code enforcement, and 60 years of business as sole proprietorships. Our employees range from finance, to operations maintenance. The team, because of its vast experience, is the key element to our success”

Big bio future

GEN-X is currently focused on expanding its current plant before embarking on any newer, bigger projects. The company is increasing further tankage, providing an increase in both in-bound and out-bound storage.

“We are focused on making this plant run much more efficiently,” says Johnson. “We built the plant ourselves, so there are opportunities inside the plant once we got it running that maybe an engineering firm would’ve noticed, such as adding more boiler capacity, because heat is a limiting factor. We’re redesigning the methanol recovery system to run much faster and produce reusable methanol, which will cut our production costs in half. It is our goal to provide a model that is inexpensive to build, and operate and to provide a better than standard biodiesel. We have strict quality controls that exceed ISO and BQ 9000 standards. “

When the company does build a new facility, it plans to outsource engineering and design duties. Eventually, the company hopes to produce 40 million gallons each year. And it will do so, as always, with feed stocks in mind.

“Instead of building a big huge facility where you have to ship in oil from around the world, we see it as more efficient to have a smaller, five million or ten million gallon plant, depending on the feed stock sources in the area,” Johnson says.

With patience, dedicated employees and a devotion to the industry, GEN-X is poised to become a biodiesel pioneer. “We’re not here to get rich,” Johnson says. “We’re here because we believe in it and we are using a common sense approach to avoid the pitfall of others. We constantly monitor this industry and relevant industries for indicators of change such as regulations, finance, and news. We base, in part, our lessons learned program with that in mind.”