Lake Erie Biofuels

Source: Energy Digital

Date :2/18/2008 2:07:13 AM

Energy Exec talks to Lake Erie Biofuels’ management team to find out more about its new biodiesel facility.

Written by Ian Armitage and Produced by Melissa Abbott

Supplier of alternative fuel additive Methyl Ester (or biodiesel as it is more commonly known), Lake Erie Biofuels, LLC is one of the leading participants in the fast-growing US biodiesel industry. Its state-of-the-art biodiesel plant, which became fully operational in fall 2007, has the ability to annually produce 45 million gallons of biodiesel.

Located on the former Hammermill Paper plant in Erie, Pennsylvania, a town emerging as the center for biofuels and environmental research, the company supplies “the highest-quality biodiesel in the industry,” according to Mark Heckman, part of Lake Erie Biofuels’ experienced three-man management team, which includes Mike Noble and Chris Peterson. Continuing, Heckman says the plant “exists to aid Pennsylvania shed its dependence on foreign oil.”

State-of-the-art production

Lake Erie Biofuels, an Erie Management Group company (a holding company that invests and manages companies with innovative products and prospects for growth), is Pennsylvania’s first large-scale biodiesel production facility. The multi-feedstock, 45-MMGY biodiesel plant, which cost an estimated $54 million, employs around 40 people and could strengthen national energy security and help grow the regional economy.

Mike Noble, the plant’s manager, helped to build the facility, which is co-incidentally the fourth biodiesel plant he has played a significant role in building. Believing it is amongst the most successful he has ever worked on, Noble tells Exec more about the facility’s benefits and how it is different to other plants: “Well first off it is strategically situated on the shores of Lake Erie. That means we are easily accessible to the Northeast’s high-consumption diesel and heating oil markets. We also have in-plant railcar and tanker truck load-out capabilities,” he says, excited by the prospects of the plant that operates continuously, producing more than 136,000 gallons of Biodiesel per day.

So, it has the transport infrastructure in place. But what else makes it appealing? According to Chris Peterson, as the leading producer of biodiesel in Northeasten United States, Lake Erie Biofuels “can be trusted for excellent, competitively priced biodiesel product.”

He continues: “Our Desmet Ballestra designed continuous-flow technology is the front runner in industry processing methods. The technology, capable of both transesterification and acid esterification, means the product produced is of the highest standard.”

Quality biodiesel, adds Chris, begins with quality process-technology design and this is why Lake Erie Biofuels “maintains the best technology and on-site laboratory facilities in the entire industry.” Indeed, its on-site laboratory facilities for ASTM D6751 and EN 14214 testing “guarantees,” he says, “the biodiesel produced will surpass industry standards.”

There are other benefits too; the Desmet Ballestra continuous-flow technology allows superior feedstock flexibility and helps ensure the facility runs at full capacity, while maintaining high standards of quality. “Quality is our number one priority,” adds Heckman, when talking about the facility which has adopted BQ-9000 standards and is working to become a fully accredited BQ-9000 producer.

Benefits of biodiesel

Biodiesel meets rigorous EPA Clean Air Act standards and because it is derived from renewable resources it is considered to be an environmentally-conscious fuel choice. “Biodiesel significantly reduces the harmful emissions associated with global warming,” explains Mr. Peterson, when talking about the fuel which also enhances the lubricity of conventional diesel fuel.

It is also a versatile and reliable fuel, which operates like petroleum diesel, meaning there is no need for engine modifications. Most importantly, its high cetane rating results in efficient ignition.

Increased production?

The US will produce record amounts of biodiesel in the coming years, so naturally everybody at the company is excited by the future in what is an “industry still in its infancy,” according to Heckman. He has a point; nationwide, biodiesel production amounted to just 25 million gallons as recently as 2004 (according to figures from the National Biodiesel Board).

Production climbed to 250 million gallons in 2006, and it is expected to dramatically increase in the next few years.

“It’s an industry that is growing so rapidly,” comments Noble, who believes that because of this a strong focus on quality must be maintained. Mike wants Lake Erie Biofuels to separate itself from “the smaller plants that are trying to get into the industry who are not up to scratch.” He adds: “these are damaging the reputation of the industry by producing poor quality product.” Despite this the management team is sure the market will “filter out eventually”.

Another challenge, plaguing most producers is rising feedstock prices, which have doubled in the last year. This has created what Plant Controller Peterson calls “severe margin compression.”

Peterson continues: “I guess our approach to that is to focus on quality and demand fair compensation for the quality of the product we are producing.” He suggests solid risk management will play a very important role in overcoming this challenge, while the pursuit of long term relationships with reputable suppliers of alternative feedstocks will also be essential.

Education is another problem. Mark believes “there is a large void” between what biodiesel can do and what the general public knows about it. “I think education is critical to the development of the industry,” he adds. “The National Biodiesel Board is taking the lead in promoting the product and educating the public as to what the benefit to biodiesel actually is.”

He adds: “To give you an example, there are federal and state mandates that try to reduce emissions through utilising ultra low sulphur diesel and our petroleum product is by definition a low sulphur product; so it is an alternative to that low sulphur diesel that is currently being pushed. If we can get the message out that we have a renewable alternative to low sulphur diesel we can help lower pollution.”

In the short term, the biodiesel facility is a 45 million gallon capacity producer and “we have to be able to sell that much biodiesel,” continues Mike. “Our first and foremost goal is to be able to sell, profitably, 45 million gallons worth of biodiesel per year. Past that we are looking at some strategic growth initiatives. I don’t know if we can go into those right now. But we are looking at capacity increases as well as vertical integration.”

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