GreenShift Agrifuels and Global Ethanol form corn oil biodiesel joint venture

GreenShift Agrifuels and Global Ethanol, LLC have announced the execution of agreements to extract about 10 million gallons (37.8m liters) per year of crude corn oil from the distillers grain co-product of Global Ethanol’s 100 million gallon (378.5m liters) per year ethanol facility in Lakota, Iowa and 57 million gallon (215.8m liters) per year ethanol facility in Riga, Michigan, and to convert the extracted corn oil into biodiesel at Global Ethanol’s Lakota facility.

Under the terms of the agreements, GS AgriFuels Corporation and Global Ethanol formed a jointly owned company called 'GS Global Biodiesel', LLC to build, own and operate the Lakota, Iowa-based biodiesel facility. The GS Global Biodiesel facility will be initially sized for 10 million gallons of biodiesel production per year but will be designed to scale up to 30 million gallons (113.6 million liters) per year in coordination with the onset of production of nearby corn oil extraction systems that are installed by GS AgriFuels’ parent company, GS CleanTech Corporation.

GS CleanTech’s patent-pending corn oil extraction system is designed to extract crude corn oil out of the distillers dried grain co-product of the dry mill ethanol production process (previous post, schematic, click to enlarge). This crude corn oil has been proven to be an excellent biodiesel feedstock with the proper processing. GS CleanTech executed a development agreement with Global Ethanol and GS Global Biodiesel to build and install corn oil extraction systems at Global Ethanol’s Lakota and Riga ethanol facilities and to design and build the GS Global Biodiesel facility.

GS AgriFuels will raise and provide the financing for the construction of the corn oil extraction systems at Global Ethanol’s Lakota and Riga ethanol facilities, as well as the financing for the construction and operation of the GS Global Biodiesel facility. Global Ethanol will manage and operate the GS Global Biodiesel facility and market all of the biodiesel produced. GS AgriFuels has recently engaged an investment banker to raise the estimated $35 million needed for the project. The parties expect that the first tranche of financing, which will support the construction and installation of two extraction systems in Lakota and one extraction system in Riga, will close in December 2007. The GS Global Biodiesel facility is expected to be commissioned beginning during the fourth quarter of 2008:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: ethanol :: distillers grains :: corn oil :: biodiesel ::

In addition to converting the 10 million gallons of corn oil that we extract from Lakota and Riga into biodiesel, we plan to ship an additional 20 million gallons of corn oil as we bring extraction systems online at nearby ethanol facilities to GS Global Biodiesel for conversion as well. Global Ethanol’s team will run the facility and market the biodiesel and their expertise in commodities management and operations will make a facility of this scale an exciting and successful project. - Kevin Kreisler, GreenShift’s chief executive officer

GS AgriFuels draws on its proprietary process intensification techniques developed by its subsidiary NextGen Fuel Inc. to accelerate and enhance traditional biodiesel reaction kinetics, thus decreasing process time, reducing energy and raw material needs, and increasing product quality. These benefits translate to reduced up-front capital and ongoing operating costs by as mush as 50% versus traditional technologies. Additionally, NextGen's systems can be manufactured and shipped to customers in as quickly as 12-18 weeks from the time of order. NextGen currently offers turn-key biodiesel production plants rated for 5 million gallons per year and 10 million gallons per year, but the modular and continuous-flow aspects of the technology make scaling plants up or down easy and cost-effective.

NextGen employs a number of chemical and physical processes (permutations and variations of chemistry, temperature and pressure) – in real time – to convert fats and oils at greatly reduced reaction times (minutes as compared to hours and days) in a true continuous flow operation. With the NextGen technology, the fats and oils noted above simply move through the process with no need to linger at any particular stage while a reaction is allowed to complete. In other words, the targeted fats and oils are reacted as they pass through the system.

This has several compelling implications for developers and operators of biodiesel production facilities:

• Greatly reduced equipment and related infrastructure needs – reacting the fats and oils as they move through the system versus at several stops along the away simply reduces the amount of tanks, pumps, controls, pipes, utilities, and square feet of floor space required to produce biodiesel.
• Process time – intensifying the chemical reactions involved in biodiesel production accelerates reaction rates. Increased reaction rates correspond to less time required to complete the process, less equipment to manage raw materials as reactions are completed, and overall less labor and other operating and maintenance expenses.
• Greater Native Feedstock Tolerances – standard biodiesel processing will require feedstocks to comply with a range of relevant material specifications – the chemical reactions involved in a conventional process will not produce the desired product quality if feedstocks are out of specification. Intensifying the relevant chemical reactions increases the tolerance of the process to a wider array of feedstocks and enables more liberal material specification requirements.
• These benefits translate to reduced capital and operating expenses and a broader feedstock market for the client – and equate to reduced financial, operational and market risk for the client and its stakeholders.

The Benefits of Modularity
Concentrations of risk in the feedstock markets correspond to concentrations of financing and operational risk for developers. These risks increase dramatically with the size of the production facility. Smaller plants simply have smaller risk profiles and are inherently easier for entrepreneurs to finance and operate.

The modular aspect of the NextGen technology allows developers and their financing sources to incur less financial and operating risk as they initiate production at, for example, a 5 or a 10 million gallon per year production facility, and then leverage their free cash flows to scale plant sizes up into their desired markets. An additional 10 million gallon system can simply be plugged into an existing plant with reduced balance of plant costs.

Most standard technologies, regardless of size, are designed to process a specific feedstock at any given time. The modular aspect of the NextGen systems allows operators to dedicate process lines to specific feedstocks or blends of feedstocks (for example, the first 10 million gallon line would process fat based feeds while the second processes oil based feeds).

When a standard processing facility needs to be shut-down for maintenance or has a process upset, the operator’s whole business stops. Modularity enables operators to keep their business operating as lines are iteratively shut-down for maintenance or the like. Standardization with a modular process technology also has compelling regulatory permitting and other operating benefits.

Finally, modularity and reduced equipment and infrastructure needs also translate to rapid delivery cycles (12-18 weeks) and quicker site development (6-9 months) as compared to conventional technologies (18-24 months).

Global Ethanol, a Minneapolis based company was established in 2006 and currently employs 140 employees in three locations. With operating plants located in Lakota, Iowa and Riga Michigan, Global Ethanol is turning fields of corn into clean-burning ethanol. In Lakota it produces 34 million bushels of corn into 100 million gallons of ethanol annually. Another 57 million gallons are produced in Riga from 19.9 million bushels of corn.

GS CleanTech Corporation provides applied engineering and technology transfer services based on clean technologies and process innovations that make the use of natural resources more efficient.

GS AgriFuels was founded to produce and sell clean fuels from agriproducts in innovative ways. GS AgriFuels’ business model is based on the manufacturing and sales of proprietary biodiesel equipment and the use of new technologies to produce biodiesel and ethanol from non-traditional feedstocks such as corn oil and cellulosic biomass through the utilization of several new proprietary technologies, including innovative desiccation, process intensification, gasification, and catalytic technologies, synergistically at small-scales to enable the refining of many forms of biomass into clean fuels at Integrated Multi-Fuel (“IMF”) production facilities.

References:
Biopact: GS CleanTech to produce biodiesel from corn ethanol co-product - October 23, 2007