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Oil industry fighting new ethanol sources

DANIEL LOOKER 06/11/2013 @ 1:42pm Business Editor

Lobbyists told ethanol producers at the Fuel Ethanol Workshop in St. Louis Tuesday that their industry is at war with the petroleum industry, which doesn't want to give up market share, especially as cellulosic ethanol is on the verge of commercial scale production.

"We're on the cusp of commercialization and new technologies and feedstocks, and they can't let that happen," said Bob Dinneen, president and CEO of the Renewable Fuels Association.

If the ethanol industry is allowed to expand, "now they're losing a third of a barrel, and they can't let that happen," he said, referring to the amount of market share the oil industry could lose.

Tom Buis, CEO of another trade group, Growth Energy, agreed that the oil industry's concern is the main reason ethanol is under attack in Congress, the media, and elsewhere. The lobbyists said the oil industry aims to repeal the Renewable Fuel Standard, which mandates blending of ethanol with gasoline.

"It's over market share," Buis said. ""We're going to win this fight. It's not going to be easy. Oil has got a lot of money, and their interests have a lot of money."

Buis, Dineen, and Brian Jennings, executive vice president of the American Coalition for Ethanol, urged ethanol producers and anyone connected with ethanol -- farmers, bankers, and others -- to contact members of Congress to urge continued support for the Renewable Fuel Standard (RFS).

"The oil companies seem to forget that the RFS wasn't enacted to make their life comfortable," said Jennings. "It's working, and that's why they're coming after us."

The ethanol industry's capacity to make ethanol from corn and other grains is nearing the RFS mandate of 15 billion gallons. But the 2007 energy law's mandate ultimately aims to have the nation use 36 billion gallons of biofuels by the year 2022. Part of that will come from ethanol made from cellulose, an abundant plant material found in corn stover, grasses, and plant and wood wastes.

Representatives of the first commercial makers of cellulosic ethanol shared their companies' plans for production.

Abengoa Bioenergy, part of a Spanish construction and biofuels company, is completing construction of a 25 million-gallon commercial cellulosic ethanol plant near Hugoton, Kansas, said Chris Standlee, the fuel-maker's executive vice president.

"It is scheduled to come online at the end of this year, 2013," Standlee said.

The plant is able to make fuel from wheat straw, corn stover, prairie grasses, and grain sorghum, he said. "We've been able to contract for our needs by taking less than 20% of feedsock in a 50-mile area."

Dupont is starting construction of a 30 million-gallon cellulosic ethanol plant near Nevada, Iowa, said Steve Mirshak, global business director for cellulosic ethanol.

"We have completed all of the site preparation. We begin pouring the foundation next week. This project will go up very fast," Mirshak said.

DuPont will collect stover from 190,000 acres of land in a 30-mile radius, he said. "This will be the world's largest cellulosic ethanol plant."

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