Gulf Coast Energy

Source: Energy Digital

Date :11/04/2008 02:26:42

Biodiesel and ethanol are becoming viable fuel sources in the US, and globally, as Gulf Coast Energy’s Mark Warner and Scott Hazen explain

Written by Megan Santosus and Produced by Melissa Abbott

When Mark Warner and Scott Hazen were working for Mercedes-Benz, the two learned firsthand about the promise of alternative fuels. The experience was impressive enough that the two men, along with a handful of other people, founded a company called Gulf Coast Energy Inc.

The goal of the biodiesel and ethanol producing company is nothing if not ambitious: “We want to change the world,” says Warner, CEO.

Gulf Coast Energy is based in Livingston, Ala., a place that has an abundant supply of the biomass - wood waste in particular - that the company will use to make ethanol. The company however is not solely committed to producing ethanol. Gulf Coast Energy has licensed a proprietary, modular technology that will enable its plants to switch from producing one form of alternative fuel to another.

“Our technology makes it easy to change what we are producing and make whatever fuel is in demand at the time,” Hazen says. That includes jet fuel, propanol and butanol. “We have ten million gallon a-year modules,” says Hazen.

“We can shut one down for a week and do a retrofit to manufacture a different fuel using the same feedstock.” (Feedstock is the term given to the material such as wood waste or animal fat that is used to make alternative fuels).

A great opportunity

Gulf Coast Energy was launched in its current incarnation in April of 2007. The company conducted feasibility studies to determine whether a market for alternative fuels was viable and did some analysis to determine how profitable a business could be. “It blew us away how great of an opportunity this is,” says Hazen.

With political mandates calling for renewable energy, rising oil prices and a plentiful supply of feedstock material needed to make alternative fuels, the environment seemed perfect for a startup. “It’s a business opportunity there for the taking,” Hazen says.

That’s not to say that the path for Gulf Coast Energy has been an easy one. Early on, the company decided to use a process called gasification to convert carbon-containing feedstock (in Gulf Coast Energy’s case the feedstock is wood waste) into synthesis gas, and then reform the gas into ethanol.

While gasification has been used for years, it’s a fairly novel way to produce ethanol. “We are not doing fermentation to produce ethanol,” says Warner, referring to the method used by most ethanol producers. With the fermentation process, producers get three materials in equal amounts: ethanol, carbon dioxide and distiller grain. By using gasification, “our yield of ethanol is nearly three times as much,” Hazen says because ethanol is the only thing produced.

Clear advantages

While the advantages of Gulf Coast Energy’s processes are clear from a business perspective, domestic funding has nevertheless been a challenge. “It’s new technology, and we have to convince people that it really works,” Hazen says.

Getting through the permit process was also a challenge. “When we first met with environmental people for permitting, they didn’t know how to classify us because we are not a fermentation plant,” Hazen says. “They put us into a chemical category of business—we were a new entity.”

Gulf Coast Energy should have a smoother path once its initial plant is up and running in Livingston. Scheduled to open this spring, the first plant is located at an existing plywood factory that Gulf Coast Energy will retrofit.

In the next several months the company plans to open a plant at a greenfield site in Mossy Head, Fla., and a plant at an abandoned ethanol production facility in Jasper, Tenn.

Funding

Unlike many producers, Gulf Coast Energy will combine the production of biodiesel and ethanol in a single facility. “We want to take advantage of the synergies of biodiesel and ethanol production,” Hazen says. During the production of biodiesel (Gulf Coast Energy uses chicken fat and soybean oil as feedstock), glycerin is a normal byproduct; this can also be converted to ethanol using the gasification technology, and in turn, a methanol stream may be produced during the production of ethanol to make biodiesel, thus reducing production costs in both cases.

To make both biodiesel and ethanol, Gulf Coast Energy will use a continuous production process rather than a batch process. Making alternative fuels in batches requires more time and space than a continuous process, Warner says, and if there’s a problem, an entire batch has to be discarded. “To make ten million gallons of biodiesel in a continuous process requires a building that is only 50 ft. by 100 ft.,” Warner explains. The same capacity in a batch plant would require one-half acre.

The first phase of the company’s business plan calls for producing ten million gallons of biodiesel and 35 million gallons of ethanol annually at each plant. Hazen estimates that 50 people will be hired at each plant for that phase.

Gulf Coast Energy has a deal to sell all of its initial production to a single distributor. “As we grow, we’ll look at other avenues,” Hazen says. “It’s important to show that, on the financing side, all of our production is sold.”

The company has also been making progress in attracting funding. In January, the state of Florida awarded Gulf Coast Energy a “Farm to Fuel” grant of $7 million. That money will defray the cost of preparing the Mossy Head site.

Once the three initial plants hit phase one production targets, Warner envisions expanding throughout the southeast and internationally. Currently, the company is looking for a plant site in the area of Raleigh, N.C.

As for revenues, Warner says that Gulf Coast Energy has ambitious goals; while he wouldn’t get specific, he did say that the volumes of biodiesel and ethanol that the company is aiming to produce in its first phase of production can ring up $100 million in revenues at each plant. The first phase of production should be completed at the company’s three plants by the end of 2009, and Gulf Coast has no plans for stopping there.

“Within five years, we plan to have ten plants,” Warner says. “We’re really excited about what we’re doing.”