Organizers meet with area producers about biodiesel co-op idea

Proponents of a biodiesel plant in this area met with soybean producers in an effort to organize and raise funds for the project. Marvin Oerke, chairman of Prairie Pride Inc. spoke to the group outlining plans for the new generation cooperative.

"The new generation cooperative is very different from the old generation of co-op many of you are familiar with," Oerke said. "The old co-ops were for-profit groups where you would get very little in the way of dividends back at the end of the year. I'm not mentioning any names but you all know that great big co-op? Well, that's an old generation co-op. The new generation co-op is a not-for-profit organization where dividends are much higher."

Oerke told the audience the co-op is a by-product of a meeting in Butler approximately five years ago. "Five years ago we had a meeting up by Butler, the idea being to put more money into the producers pocket, that's why we formed," Oerke said. "Since we started we've been looking forward to finding something to increase profits for soybean producers and we think we've come up with something good -- this biodiesel production facility."

Before the group reached out for new members it had a feasibility study done by an engineering firm, BBI International. The study found that a facility that combined soybean oil extraction and biodiesel production would be feasible in the Bates County area. "The results of the feasibility study are very positive," Oerke said. "The study showed that a plant that extracted oil from 21 million bushels of soybeans a year and produced 30 million gallon of biodiesel per year would provide a return on investment of 30 percent over 10 years, which is above average."

Oerke said the facility would need 66,000 bushels of soybeans each day to maintain production.

"We need you and all your friends who are producers to meet the delivery commitments," Oerke said. "We'll be needing a lot of soybeans, so we need a steady source and we'll look to our members for that."

Membership in the organization would be a two-part process. First anyone wishing to join would have to pay a $1,000 membership fee and later, after the business plan is complete, could be required to purchase two units in the cooperative at a hefty fee. A total investment by the group of at least $20 million would be needed to build the facility but the total could be more depending on whether the group gets grant funding and how much capital the financial institution they deal with would require.

Oerke pointed out that there were several factors that were not taken into consideration when determining profitability but which could increase profitability.

"The study doesn't include a 30-cent incentive for the first 15 million gallons produced per year or a state incentive of 10 cents for the first 15 million gallons for a first use material like soybeans," Oerke said.

"Other factors that could impact the profitability are the price of diesel fuel, the price of soybeans and the price for soybean meal."

Oerke turned the meeting over to Joanne Godfrey, the coordinator for Prairie Pride, to give an overview of the process of producing biodiesel, the advantages or using biodiesel in engines and the market for the product.

Godfrey began with a short explanation of biodiesel as a product.

"Biodiesel is a domestic renewable fuel derived from natural oils," Godfrey said. "The oils could be from plants or animals, but the facility we are proposing would produce it from soybeans."

Godfrey pointed out that biodiesel was not simply soybean oil mixed with petroleum diesel, it is processed to remove the glycerin, which could cause deposits within the engine and cause problems.

Not only biodiesel would be produced by the proposed facility, soybean meal and glycerin are two byproducts that result from the process.

"Soybean meal is produced when the oil is extracted from the soybeans and glycerin is produced when the oil is processed," Godfrey said. "Soybean meal is an income source but we don't consider glycerin as one, even though we would be able to sell it, because of the market conditions."

Godfrey pointed out that Rudolph Diesel, the inventor of the engine that bears his name, originally designed the engine to run on peanut oil.

"There are a lot of advantages to using biodiesel," Godfrey said. "B20, a mix of 20-percent biodiesel with 80-percent petroleum-based diesel, reduces unburned hydrocarbon emissions by 20 percent; and, using a 20 percent mixture doesn't require any changes to existing engines."

Another advantage is the fact that biodiesel increases the lubricity of petroleum based diesel.

"By 2007 sulfur, which helps increase lubricity, has to be substantially removed from diesel fuel," Godfrey said. "A 2 percent mixture of biodiesel would be able to replace the sulfur."

The United States consumes 63 billion gallons of diesel fuel a year which makes a biodiesel production facility a good bet, even if it is only used to replace sulfur with a 2-percent mixture.

"The United States market is so great that even using the 2 percent mixture it would take 1.26 billion gallons of biodiesel," Godfrey said. "In a 250 mile market radius 16 billion gallons of diesel is used. Just in that area there is a potential demand for more biodiesel than all the proposed biodiesel plants can produce."

Another advantage Godfrey pointed out is that the odor of diesel is improved by adding biodiesel.

"Biodiesel pretty much smells like french fries when it's burned," Godfrey said.

Biodiesel has similar characteristics to petroleum diesel and can be used in similar environments.

"The startup range is the same for the two," Godfrey said. "Cold weather performance is the same for B20. A 100-percent biodiesel might gel sooner than petroleum-based diesel. Bio-diesel has a higher flash point -- 260 degrees fahrenheit as opposed to 125 degrees for petroleum diesel. That makes it one of the safest fuels to produce, transport and store."

After the presentation, Oerke opened the floor to questions and the crowd of approximately 40 people obliged with questions about everything from the environmental impact to questions about what would happen if a producer were unable to meet his obligation to provide soybeans.

After the question period, Oerke thanked the participants and handed out some material for their consideration, including a membership application.

For more information: www.prairieprideinc.us