AEP

At the request of Senate Majority Leader Derek Schmidt, Tom Tunnell, Mary Jane Stankiewicz, and Ron Seeber met with the Senator and Phil Near, President, Crescent Oil, Independence. Crescent Oil is an Independence KS based gasoline distributor and service station company with over 150 retail locations across the Midwestern United States. Crescent plans to implement more than 600 new ethanol blending dispensers thought its locations including 40 location in Kansas, Missouri, and Oklahoma. The plan will allow the company’s retail sites to dispense various blends of ethanol fuels to flex fuel vehicles through one hose while dispensing the regular unleaded and premium fuels through another hose. It is the first dispenser to offer blended products on multiple hoses. KAEP will work closely with the Legislature, the Governor, and Crescent to promote this exciting endeavor.

The National Governors Association (NGA) has announced that Kansas has been selected to partner with General Motors Corporation (GM) to jumpstart the siting, development and usage of E-85 across the state.

“By directing new resources to address the opportunities and challenges of E-85 fuel, Kansas can do its part in improving the nation’s energy security while giving consumers more choices at the pump,” said Governor Kathleen Sebelius, who served as Co-Chair of the NGA initiative, Securing a Clean Energy Future. “Ethanol makes up a portion of our nation’s fuel, uses our natural resources, and its availability in the market helps keep gas prices down by as much as thirty-five cents.”

Increasing ethanol usage offers an opportunity to displace a significant share of imported oil usage in the United States and diversify the transportation supply. In 2007, the United States used 6.8 billion gallons of ethanol, almost all of which was made from domestically- produced corn. With the production and use of Flex Fuel Vehicles increasing across the country, consumers are ready for an expanded E-85 infrastructure.

“Increasing the use of clean, domestically grown biofuels like ethanol will help move us toward a cleaner, more secure energy future,” said John Thomasian, director of the NGA Center for Best Practices.

Under the terms of the partnership, GM will provide technical assistance to help Kansas assess optimal locations for E-85 infrastructure. GM will work with top ethanol producers and fuel infrastructure experts to optimize the E-85 supply to the state and will leverage its network of dealers, plants and offices and its extended ethanol-related network to promote and advocate E-85 usage.

In addition to receiving technical assistance from GM, Kansas will also develop an E-85 taskforce including a team of state officials, retailers and automobile manufacturers to help identify target areas for E-85 refueling stations.

Kansas was announced along with nine other states: Alabama, Florida, Idaho, Mississippi, Missouri, Nebraska, Ohio, Tennessee and Wisconsin.

For more information about state efforts to secure a clean energy future, please visit www.nga.org/center/ci0708.

Panda Ethanol Inc. announced this week that it has successfully restructured the funding arrangements on the company’s 115-million gallon-per-year, biomass-fueled ethanol refinery, located in Hereford, Texas. The restructuring was made with the support of the project’s senior and subordinated lenders and will allow for the completion of construction and startup of the facility by late January 2009.

As a part of the restructuring, the Hereford project’s senior lenders waived all existing defaults occurring under the original financing agreements allowing the project to make construction-related borrowings of up to $31.5 million. The project can also draw upon $2.5 million in new proceeds received from the Hereford subsidiary’s subordinated lender. Panda Ethanol, the parent company of the Hereford project, will also receive $2.5 million in working capital as the result of a new equity investment from Panda Energy International, Panda Ethanol’s founder and single largest shareholder.

When completed, Panda Ethanol’s 115-million gallon-per-year ethanol refinery, located in Hereford, Texas, will be the largest biomass-fueled ethanol plant in the United States with one of the lowest carbon footprints of any similar-sized ethanol facility in the nation.

Ethanol passes key transportation test: Kinder Morgan reports successfully routing fuel through gasoline pipeline
Oct 20, 2008

Houston Chronicle

Houston pipeline operator Kinder Morgan Energy Partners signaled progress Wednesday in addressing a key hurdle to widespread distribution of renewable fuels in the U.S.

The company said it completed a test in Florida that moved ethanol safely through an existing gasoline pipeline and is performing similar tests with biodiesel fuel blends.

The tests could be important for a U.S. biofuels industry that now transports fuel only by truck, rail car and barge, and will require more efficient transportation options as it grows.

Kinder Morgan and other pipeline companies are still in the early stages of testing. Huge investments will be needed if the companies decide to ready more assets to handle biofuels, and upgrades could take years.

Pipeline operators have been reluctant to run ethanol in pipelines because it absorbs debris, rust and water, can damage components and taint petroleum fuels that share the lines. They have balked at biodiesel because of uneven quality and a residue that can damage jet fuel if it follows biodiesel through a pipeline.

Kinder Morgan spent 18 months on the ethanol pipeline test in Florida and made more than $10 million in upgrades to a segment that connects Tampa and Orlando, said Jim Lelio, director of business development and national biofuels manager for the pipeline firm.

The segment was ideal for the study because it was fairly new, situated on flat land and carried only one product, gasoline, Lelio said. But upgrading it wasn't simple.

First, the company had to replace a number of parts, including seals, gaskets and other components. Then, it cleaned the pipeline with a device called a "pig" that ran through the line and scoured the interior with brushes and chemicals.

Finally, Kinder Morgan ran a 5,000-barrel batch of ethanol through the pipeline earlier this month with good results, Lelio said.

The company is still modifying the pipeline but expects to be transporting ethanol for customers by mid-November.

Lelio said the company will consider upgrades to other pipelines in its portfolio, depending upon customer demand and the ability to maintain the operational integrity of the pipelines.

New energy legislation calls for blending 36 billion gallons of biofuels a year into the nation's fuel supply by 2022, five times the current level, to help reduce dependence on oil.

While most of that will be ethanol, the law also requires blending of 500 million gallons of biodiesel a year by 2009.

Biodiesel is chiefly made from vegetable oil in the United States and is often blended at low levels with petroleum diesel. U.S. ethanol, usually made from corn, typically is blended with gasoline to stretch fuel supplies and help curb tailpipe emissions in cities with the dirtiest air, including Houston.

Critics have charged that production of biofuels has strained food supplies globally, hurt the environment and received excessive government subsidies.

But the ethanol industry's leading trade group, the Renewable Fuels Association, praised Kinder Morgan on Wednesday for demonstrating that "any technical challenges that may exist with the transport of ethanol through pipelines can be overcome."

As the ethanol industry grows, it may need to ship ethanol via pipelines, group spokesman Matt Hartwig said, and "Kinder Morgan's success goes a long way in proving that can be done."

Elsewhere, Kinder Morgan is testing biodiesel transportation in its Plantation pipeline from Collins, Miss., to Spartanburg, S.C. It is preparing for tests in Oregon, where a new biodiesel mandate will take effect soon.

Steve Howell, technical director for the National Biodiesel Board, an industry trade group, said it is no coincidence the tests were announced after national fuel standards were released this month for certain biodiesel blends.

"That was one of the key factors in a lot of the pipeline companies' reluctance before," he said.
While there are other technical factors to work out, he said, his group is assisting with other upcoming tests.

"We don't see it as necessary to be viable," Howell said of transporting biodiesel by pipeline. "But we think we can be more viable with it."

KAEP staff attended the grand opening of the Zarco 66 Earth Friendly Fuels Station today in Lawrence, Kansas. The station at 2005 W. 9th Street (corner of 9th and Iowa streets) is offering four varieties each of ethanol and biodiesel fuels, including E-85.

Zarco 66 has also been working with the Environmental Protection Agency (EPA) and Kansas Department of Health and Environment (KDHE) to design a number of environmentally-friendly aspects at their station including:

In recognition of their commitment to green technologies, EPA Region 7 presented Zarco 66 with a Blue Skyways Collaborative Partnership Award. The Blue Skyways Collaborative is a voluntary, public-private network of individuals, businesses and communities that embraces partnerships and innovations and is voluntarily working to reduce pollution emissions beyond regulatory requirements. Participants identify cost-effective, innovative solutions to air pollution issues.

In the growing debate over food versus fuel, top U.S. government officials are telling Congress gas-pump prices would be higher if not for increased use of ethanol.

"It is clear ... that biofuels are already moderating gas prices," Energy Department Secretary Samuel Bodman and Agriculture Department Secretary Edward Schafer wrote in a letter to the chairman of the Senate Energy and Natural Resources Committee. "That impact is likely to grow substantially as more biofuels come to market."

The agencies estimate gasoline prices would be 20 cents to 35 cents per gallon higher if ethanol weren't blended in.

Further, Energy and the USDA wrote in the letter that without ethanol, the U.S. would need 7.2 billion more gallons of gasoline in 2008 to maintain current levels of travel. That would equate to 5% more gas and likely higher prices, the agencies said. Read More.

EPA Recognizes Two Ethanol Facilities in Iowa and Kansas that Demonstrate Exceptional Energy Savings

EPA has recognized POET Biorefining in Ashton, Iowa, and East Kansas Agri-Energy, LLC in Garnett, Kan., for reducing energy consumption and greenhouse gas emissions. ENERGY STAR awards were given to these facilities at the 24th annual International Fuel Ethanol Workshop and Expo in Nashville, Tenn.

"EPA is proud to recognize the outstanding pollution reduction and energy efficiency qualities of both ethanol facilities by presenting these ENERGY STAR Combined Heat and Power Awards. These facilities in Iowa and Kansas are making improvements that contribute to a cleaner and healthier environment," said EPA Region 7 Administrator John B. Askew.

In April 2004, POET began full production at an ethanol plant in Ashton. Electricity is generated by a natural gas-fired turbine, which requires approximately 16 percent less fuel than typical on-site thermal generation and purchased electricity. Based on this comparison, the system reduces carbon dioxide emissions by an estimated 18,900 tons per year, which is equivalent to removing the annual emissions from 3,100 cars or planting 3,900 acres of forest.

"POET is dedicated to making the process of producing ethanol even more efficient and environmentally friendly, so it's an honor to be recognized by EPA for the environmental benefits of the efficiencies built into our Ashton plant," said POET CEO Jeff Broin.

The East Kansas Agri-Energy dry mill ethanol plant in Garnett, Kan., began production in 2005. The steam turbine system generates approximately one-third of the facility's electrical demands. It requires approximately 23 percent less fuel than typical on-site thermal generation and purchased electricity. Based on this comparison, the plant reduces carbon dioxide emissions by an estimated 14,500 tons per year, which is equivalent to removing the annual emissions from 2,400 cars or planting 3,000 acres of forest.

"Our East Kansas Agri-Energy plant includes an energy-efficient system, which transforms a requirement to control air pollution into an opportunity to address the plant's energy demands," said Plant Manager Doug Sommer.

Dry mill ethanol facilities require large-scale, constant electricity and thermal loads, making these facilities an excellent fit for this innovative technology. These highly efficient and economical systems can use a variety of fuels, including natural gas or biomass. They can also improve the overall environmental benefits of biofuels by reducing the greenhouse gases associated with ethanol production.

This ENERGY STAR program recognizes projects that reduce emissions and use at least five percent less fuel than state-of-the-art, comparable separate heat and power generation. To apply, projects must be in commercial operation, operating within the emission limits stipulated in their permits, and have a minimum of 12 months and 5,000 hours of measured operating data.

ICM, Inc. today announced that ethanol biorefineries investing in the company's new, proprietary and innovative technology before the end of this year, will be capable of commercially producing both food and fuel in 2010. The announcement was made during ICM’s customer meeting at the annual Fuel Ethanol Workshop (FEW) in Nashville, Tenn.

“We are talking about the ‘ethanol biorefinery of the future’…and very near future at that,” said Dave Vander Griend, founder, president and CEO. “Fifty years ago, the U.S. fed the world. We will be able to do that again with a food supply brought about by the evolution of ethanol production.”

Since the company’s founding, ICM’s mission has been to sustain agriculture through innovation. Recently, the company’s mission expanded to researching ways to deliver much-needed protein to the world, by way of ethanol processing. At the same time, the corn-to-ethanol industry is maturing, and a changing economic outlook is prompting existing biorefineries to explore means of maintaining financial success in challenging tightethanol, high-corn price markets. ICM recognized this changing outlook and is delivering on its mission by developing technology to create "new renewables" that can be built upon the existing ethanol biorefinery – the key facilitator of the new technology is a process called dry fractionation.

Vander Griend says dry fractionation, the first component of ICM’s new six-part Food AND FuelTM technology package, can be installed as early as the fourth quarter of this year, with production coming on line in the second quarter of 2009.

After cleaning and moisture conditioning, the proprietary dry fractionation process mechanically separates the corn kernel into its three main components: endosperm (the starchy portion comprising most of the inner kernel), germ (the protein- and oil-rich center) and bran (the kernel’s fibrous outer layer). More than just producing ethanol, optimizing the whole kernel in this way allows for the production of a host of food-grade and feedgrade co-products, as well as another alternate fuel source to power the process.

In addition to new food-processing capabilities, ICM’s new technology offering also provides
several other advantages for biorefineries:

ICM installed their first Food AND FuelTM technology package at a biorefinery in St. Joseph,
Mo. This facility, LifeLine Foods, is the proving ground for ICM’s “ethanol biorefinery of the
future” package, which includes the technology to transform corn fiber to cellulosic ethanol.

“Our situation is a little different than that of the typical ICM customer because we were a food processor first,” says Mike Sobetski, vice president and COO, LifeLine Foods. “Prior to partnering with ICM, more than 70 percent of our revenue came from food production. Coproducts such as livestock feed and germ accounted for the remaining nearly 30 percent. Today, two-thirds of our revenue is generated by ethanol and its co-products, and higherquality food products comprise the remaining one-third. Even with this shift, we are generating more revenue from the-now-30-percent food production than we were with 70 percent because of the increased capacities and the synergies of the new processes brought to us by ICM.”

Based on the implementation and output happening at LifeLine, ICM has created a preliminary economic model to outline the adoption of the new six-part Food AND FuelTM technology package. By opening new markets for various co-products, there is the potential for $1 billion in additional revenue over 10 years.

“We have always believed that ethanol is part of the solution to our economic, energy and environmental issues and this is what we are doing to make ethanol better. We can now make food during the ethanol process, we can process ethanol in an efficient and more environmentally-friendly way, and we can help retain more of our energy dollars in the U.S. while creating new markets for diversified global agriculture” said Vander Griend.

About Ethanol and Ethanol Processing
Ethanol is commercially produced in one of two ways, using either the wet mill or dry mill process. Wet milling involves separating the grain kernel into its component parts (fiber, protein, and starch) prior to fermentation. ICM-designed plants utilize a proprietary dry mill process, where the entire grain kernel is ground into flour. The starch in the flour is converted to ethanol during the fermentation process, while also producing carbon dioxide and dried distillers grains (DDGS) as co-products. The carbon dioxide can be captured (where economics allow) so it can be marketed to the food processing industry for use in carbonated beverages and flash-freezing applications. Distillers grains are a valuable livestock feed.

Ethanol is delivering on its promise as a renewable fuel. It is good for American vehicles, it is good for the environment and it is good for the American economy.

It’s no secret I’m an advocate of biofuels. I have been for a long time, so I’m fairly accustomed to the anti-biofuel rhetoric. Even so, I was taken aback by the level of blame being heaped on biofuels this spring for rising food prices.

Biofuels do have an impact on grain prices and a more modest impact on food prices. The most recent estimates I’ve heard are that biofuel production increased the price of corn by about 20 percent over the last 12 months and food prices by about 1.2 percent.

Knowing these figures to be accurate, I had to wonder why biofuels were being pegged as the cause of a global rice shortage and record increases in food prices. I found out the reason this week. A group of food manufacturers hired a Washington, D.C.-based public relations firm to conduct an aggressive campaign to mislead all of us into believing that biofuels are to blame. The goal was to get Congress to roll back the amount of renewable fuels required to be in the supply chain.

The truth is that raw agricultural products account for less than 20 percent of the price of food. Prices we pay at the store are impacted most by marketing, labor and energy costs. We all know what has happened to the price of gas, so it should come as no surprise that our food costs more, too. Then there is a weakened dollar and increased worldwide demand for more and better food by a growing middle class. At the same time, world grain production dropped last year simply because of bad weather.

A Merrill Lynch commodity strategist recently said gasoline prices would be 15 percent higher if biofuel production didn’t exist. If fuel prices impact food prices to the extent economists say they do, imagine how much higher food prices would be without biofuels.

Cargill has suspended plans to build a $200 million ethanol plant outside Topeka, citing poor market conditions.

"The economics are not at a point where we see fit to move forward," company spokesman Bill Brady told The Topeka Capital-Journal. "The economics are not where they were a year and a half ago."

Asked when the company might reconsider its decision, Brady said, "Unless market conditions turn around, we have to remain suspended."

Brady wouldn't discuss the factors contributing to the decision. But Jay O'Neil, a senior agricultural economist at Kansas State University, said escalating grain prices are making it difficult for ethanol plants to make a profit.

Corn, used to make ethanol, is at a record price, more than $5 a bushel, and the cost to build an ethanol plant has doubled the past five years. If high corn prices continue, O'Neil said, companies could face losses.

"The ethanol industry has fallen on more competitive and difficult times," O'Neil said. "They are going to struggle. You will see a consolidation in this process. Some will go out of business."

A year ago, Emerald Renewable Energy, a Cargill subsidiary, proposed building the plant on 300 acres northwest of Topeka. The plant would have produced 100 million gallons of ethanol a year.

Emerald also proposed three other plants outside Kansas. Brady said no decisions have been made about those projects.

"Difficult market conditions are industrywide. We're in the process of making some tough decisions," he said.

The proposed plant outside Topeka generated opposition from residents who feared it would create pollution, increase traffic, deplete groundwater and cause their property values to drop.

"That is great news," Richard Johnson, a Shawnee County resident and a leading opponent said after learning of Cargill's announcement. "That is absolutely wonderful."

However, he said, he remains "guarded" because Cargill is describing the project as suspended.

Cargill is a private company based in Wayzata, Minn.

Inspectors from the Food and Drug Administration’s (FDA) Kansas City Regional Office have begun visiting ethanol plants to obtain distiller’s grains product samples and collect information about processing activities. The inspection activity by the regional office, which oversees the states of Iowa, Kansas, Missouri and Nebraska, is part of an FDA assignment to its field offices. FDA will analyze the obtained samples for antimicrobial residues and other potential contaminants. In addition to obtaining samples during the ethanol plant visits, inspectors are asking management about procedures in place to prevent the cross contamination of inbound corn with mammalian protein products that are prohibited from use in ruminant feeds under the agency’s feed regulations designed to prevent the amplification or spread of bovine spongiform encephalopathy (BSE). An example of one such prohibited mammalian protein product is ruminant meat and bone meal. But a number of other ruminant products are prohibited from ruminant feeds, as well. Typical assurances that firms can provide to FDA that inbound ingredients are not contaminated with prohibited mammalian product products include: 1) letters from suppliers and transporters indicating that their operations are aware of and are in compliance with FDA’s BSE-prevention feed regulations; and 2) written verification from transporters that incoming ingredient shipments have not been contaminated during transport.

Flexible fuel vehicle owners could get more choices at the pump under a pilot project launched by the Kansas Department of Agriculture.

"Fueling stations currently sell gasoline blended with either 10 percent or 85 percent ethanol," said Kansas Secretary of Agriculture Adrian Polansky. "This pilot project will allow them to install pumps that dispense ethanol fuel blends not currently offered, like 20 or 30 percent ethanol, to allow consumers to decide for themselves which blend is best for them based on price and performance."

All vehicles on the road today can use gasoline blended with 10 percent ethanol, or E10. Flexible fuel vehicles, however, can use higher blends with up to 85 percent ethanol. The blender pumps authorized under the pilot project will allow flexible fuel vehicle owners to purchase such blends as E20, E30, E50 or E85.

"The U.S. Department of Transportation is now testing how regular fuel vehicles perform on higher ethanol blends. Initial research shows that E15 and E20 blends deliver the same environmental benefits without any adverse effect on vehicle engines," Polansky said. "It's very possible the Department of Transportation may one day endorse using these higher ethanol blends in non-flexible fuel vehicles."

In the meantime, to ensure unwitting consumers don't accidently pump a higher ethanol blend into their vehicle than it can manage, the pumps will feature a bright orange label with the message "For use in flexible fuel vehicles only."

The Kansas Department of Agriculture's weights and measures program regulates gas pumps for accuracy and verifies the fuel's characteristics, including octane rating and whether the fuel contains impurities. Program staff will ensure that equipment used to dispense the ethanol blended fuel is suitable and properly installed, and that fuel quantity and quality standards are met.

The pilot project will allow blending on a trial basis until Jan. 1, 2009. Guidelines for the pilot project are online at http://www.ksda.gov/renewable_energy/content/191.

Currently there are 28 stations in Kansas selling E85 fuel. For a location near you, click here.

Congress is on the verge of writing into law one of the most ambitious dictates ever issued to American business: to create, from scratch, a huge new industry capable of converting agricultural wastes and other plant material into automotive fuel.

The potential benefits include reducing the nation’s dependence on oil and the emissions of gases that contribute to global warming. But the goals Congress is considering are so sweeping, analysts say, that it is not clear they can be achieved.

No fuel of the type in question has been produced commercially in the United States. Even in the view of people who back the idea, the technology to do it is immature, the economics are uncertain, and the potential for unintended consequences is high.

Hundreds of new factories will be required, perhaps a billion tons of plant material will need to be hauled around every year, and estimates of the required investment start at tens of billions of dollars.

“It’s not clear that it is doable, but it wasn’t clear you could send a man to the moon, either,” said Mark Flannery, head of energy equity research at Credit Suisse. “You don’t know until you try.”

As a new energy bill has slogged through Congress on the way to the president’s desk, much of the debate has focused on a historic revision of fuel-economy standards intended to make American cars 40 percent more efficient.

Less attention has fallen on other portions of the bill, but they could be far-reaching. One measure calls for a huge increase in the amount of ethanol used in the nation’s fuel supply. Much of it would be made from corn, as ethanol is today. Producing about seven billion gallons of ethanol a year from corn has reshaped agricultural markets and sent corn prices soaring. Congress wants to double that level of production, to 15 billion gallons.

But the bill goes much further. It calls on the country to use, by 2022, an additional 21 billion gallons a year of ethanol or other biofuels produced by unlocking the energy contained in such biological materials as straw, tree trimmings, corn stubble and even garbage, material known collectively as biomass. Read More.

Ethanex Energy, Inc., a development stage company planning to engage in the ownership and operation of ethanol plants as well as development and sales of low-cost ethanol production technology, today announced that it has entered into a letter of intent to acquire an ethanol plant located in Sutherland, Nebraska from Midwest Renewable Energy, LLC.

The facility currently produces 26 million gallons per year (MGY) and is undergoing a two-phase expansion. Each phase is planned to add an additional 42.5MGY of production capacity to the plant, which would bring the plant’s total capacity to 111MGY upon completion. The first phase of the expansion is scheduled to commence operation during the third quarter of 2008, and the second phase is scheduled to become operational in the first quarter of 2009.

“This acquisition will transform our company. It will provide Ethanex with immediate production and revenue at a cost that we believe is below that of building a new facility,” said Al Knapp, President and Chief Executive Officer of Ethanex. “This facility will also serve as a showcase to demonstrate our fractionation platform. We expect that sales of integrated fractionation systems to third parties will become an additional avenue for our company’s growth in the future.”

Ethanex plans to add its integrated fractionation platform to the plant in order to increase efficiency and profitability. Ethanex has developed the fractionation system in collaboration with Buhler, Inc., a technology group and global market leader in grain milling, food processing, chemical process engineering and die casting. Based on the anticipated timing of the acquisition and the planned plant expansion, Ethanex said it expects the fractionation mill would become operational in the third quarter of 2008, in conjunction with the startup of the first phase of the plant’s expansion. Ethanex estimates that the increase in production that will result from the use of fractionated feedstock will allow for increased plant capacity up to approximately 79MGY after the first phase of expansion and to approximately 128MGY when the plant expansion is complete.

Ethanex and MRE have executed a non-binding letter of intent for the purchase of MRE’s ethanol production assets for an aggregate purchase price of $220 million, consisting of $170 million in cash and $50 million in Ethanex common stock. This does not include the cost of the fractionation facility, which Ethanex plans to construct on its own. The letter of intent provides for the acquisition to be completed in three separate transactions. The initial transaction will be the purchase of the current operating assets for $50 million in cash and is anticipated to close in the first quarter of 2008. The second and third transactions will be consummated upon the completion of construction and successful performance testing of the two expansion phases. Ethanex will pay MRE $60 million in cash and will issue $25 million of Ethanex common stock at each of those two additional closings. Ethanex plans to seek third-party debt and equity financing to fund the acquisition and the construction of the fractionation mill (in addition to issuing shares of Ethanex common stock to MRE). The letter of intent states that the acquisition will be subject to satisfactory completion of due diligence by both parties, successful negotiation of mutually acceptable definitive documentation, receipt by Ethanex of equity and debt financing, approvals from both companies’ boards of directors and shareholders, receipt of requisite regulatory approvals and other customary closing conditions.

“We are excited to be working with MRE on this important transaction. The performance results achieved at Sutherland have exceeded industry averages in both energy consumption and production yield,” said Mr. Knapp. “Our companies share a belief that significant efficiencies can be brought to corn ethanol production to make it more environmentally friendly and profitable.”

"We look forward to joining a company of talented individuals that share our vision of efficient, responsible, and successful production of ethanol and unique, value-added by-products," said Jim Jandrain, Chief Financial Officer and board member of MRE. "The complementary technologies within our companies will give us a competitive advantage that is essential in the ethanol industry today and into the future."

In light of the opportunity, size and timing of the MRE transaction, Ethanex will defer efforts to seek financing for the construction of its planned projects in southern Illinois or northeast Kansas. Ethanex said that it expects pre-construction development work to continue at those sites to facilitate the possible financing and construction of the two facilities in the future, contingent upon market conditions.

Trucks come and go from the cluster of metal piping and distilling towers that rise above the surrounding crop fields near this rural Kansas town.

They come with corn and milo and leave with 200-proof alcohol. But leaders say the steady traffic on the region’s roadways symbolizes a lot more — a vital community.

The ethanol boom is spreading money into prairie towns like Pratt, where a 55-million-gallon-a-year ethanol plant began operating in mid-October.

The windfall comes in the form of $100 million spent on the plant’s construction — money that has trickled into the businesses along Pratt’s main drag. It has provided 35 well-paying jobs, increased grain prices and added $2 million to the net property tax base.

This is about more than just an ethanol plant, says Tim Barker, who serves as the chief executive officer, along with brother Josh, of Orion Ethanol — the company that built the Gateway Ethanol that sits on the northeast side of town.

Pratt is booming, he said, thanks to many factors: a good college, construction of a new high school, a bustling oil industry — and ethanol.

CropLife e-News

A new poll shows 88 percent of U.S. adults agree that the U.S. should pursue renewable energy source.

The poll, commissioned by the Clean Fuels Development Coalition, concludes that 72 percent of adults believe that higher oil prices have had a substantial impact on the rising cost of food in recent months, compared to only 35 percent who believe ethanol production has had a significant impact on rising food prices.

The poll, conducted online Sept. 21-25 by Harris Interactive, asked 2,199 U.S. adults about their attitudes regarding ethanol. Other results indicate that nearly eight in 10 adults (78 percent) believe usage of ethanol would lessen the country's dependence on foreign oil.

Energy policy is at the forefront of national debate with pending energy legislation expected to hit congressional calendars this fall. The Senate-approved version of the energy bill contains a provision mandating the use of 36 billion gallons of ethanol by 2022.

"This poll suggests that American consumers are aware of our severe dependence on foreign oil," says Doug Durante, executive director of the Clean Fuels Development Coalition. "We have reached a crossroads in the energy market, and consumers plainly want an alternative to imported oil. Homegrown, renewable fuels are clearly a viable answer."

Yesterday, Secretary Bremby denied the air permit for Sunflower Electric’s coal-fired generators at the plant near Holcomb. In denying the permit, Bremby said “ after careful consideration of my responsibility to protect the public health and environment from actual, threatened or potential harm from air pollution, I have decided to deny the application for an air quality permit….I believe it would be irresponsible to ignore emerging information about the contribution of carbon dioxide and other greenhouse gases to climate change and the potential harm to our environment.”

Governor Sebelius also released a press release praising Secretary Bremby’s action in protecting the people of Kansas. Governor Sebelius went on to say that her administration “will continue to work aggressively for jobs and economic opportunities for western Kansas. We are committed to achieving growth but we must make smart choices about the future. “

This decision is sure to cause a number of legislators to consider changing the Secretary of Health’s broad authority to “affirm, modify or reverse a decision on an air quality permit after the public comment period or hearing”.

The U.S. Department of Agriculture (USDA) cut their estimate of how much of this year's corn harvest will be used for ethanol by 100 million bushels last week. This is the second straight for a cut this size.

According to the department, several ethanol projects have been put off in recent weeks because of falling ethanol prices.

But what corn isn't being used by ethanol plants will fill demand for grain by foreign buyers. The USDA raised its estimate of corn exports by 100 million bushels.

The USDA estimated farmers nationwide will harvest 13.3 billion bushels of corn this year, slightly more than the department's forecast last month. Of that production, 3.2 billion bushels is expected to be used for ethanol. While down from the August forecast, it's still double the amount of corn that went into ethanol just two years ago as the biofuel industry began its boom.

Congratulations to KAEP Chairman Chris Standlee, Executive Vice President of Abengoa Bioenergy, for being elected as the new chairman of the Renewable Fuels Association (RFA). Previously, Standlee had served as Vice Chairman of the RFA.

Nexsun Energy broke ground on their ethanol plant on Tuesday, September 18 just two miles west of Ulysses. This 40-million-gallon plant will be built by ICM Inc. and be operated by Prairie Agri-Energy, LLC, after it's constructed. Grant County can expect to see 35-40 full-time jobs and $80 million in sales a year from ethanol production from the Nexsun plant.

The groundbreaking included speakers like Mayor Thadd Kistler, State Representative Bill Light (R-Rolla), State Senate President Steve Morris (R-Hugoton), and Prairie Agri-Energy, LLC, President Mike Erhart.

Ethanol fuel is becoming more accessible on the streets of Topeka, but it is debatable whether motorists actually save money using it.

A year ago, only one Topeka business sold E85, which is 85 percent corn-made ethanol and 15 percent regular gasoline. That business, Capital City Oil, required purchasers to have a company card to buy the fuel.

Crescent Oil Co., of Independence, started offering E85 at S.W. 15th and Wanamaker Road about six months ago. The company took over a gas station at S.W. 29th and Gage and put in E85 two months ago.

"We're happy with sales," said Nicole Leathers, Topeka district manager for Crescent Oil. "It's pretty new, a lot of people don't know much about it. We sell it in bright yellow nozzles and hoses."

E85 isn't for every vehicle.

Flexible-fuel vehicles can use E85. Those vehicles often are identified by an exterior badge, such as Ford's "road-and-leaf" badge introduced in 1993 and still used on Ford FFV and hybrid electric vehicle models. Most FFV vehicles have been made since 2000. The U.S. Postal Service has agreed to use some FFV vehicles in its fleet. Many state government vehicles use E85.

When Ryan Sweany, 27, of Topeka, discovered E85 at S.W. 15th and Wanamaker six months ago, he started putting it in his vehicles on a regular basis.

He bought E85 on Thursday for his 2001 Chrysler Town & Country.

E85 was selling for $2.39 per gallon Thursday at the Crescent store at S.W. 15th and Wanamaker, compared with $2.77 per gallon for regular fuel.

Sweany said E85 is usually 30 cents to 70 cents less expensive than regular fuel, but E85 gets less miles per gallon.

"It actually gets two to three miles per gallon less than regular fuel, but you make up for it in price," Sweany said.

Based on pure economics, it may not be such a good deal. Some automobile experts say the price of E85 needs to be 25 percent less expensive than regular fuel to make it worthwhile.

A motorist can determine whether E85 is a good deal using a federal Web site, www.fueleconomy.gov. The Web site offers mileage ratings using different fuels. For example, the Web site shows a 2001 Chrysler Town & Country on E85 gets 11 mpg in the city and 16 mpg on the highway, compared with regular fuel with 16 mpg in the city and 22 mpg on the highway.

When comparing E85 at $2.63 per gallon and regular fuel at $2.80 per gallon, E85 will cost $3,034 annually for the Town & Country compared with $2,335 per year for regular fuel based on 15,000 miles of driving in a year, according to www.fueleconomy.gov.

"You're saving on price, but you're losing it in fuel efficiency," said Mark Muller, a salesman at Jim Clark Auto World.

Muller said Jim Clark Auto World doesn't actively seek to buy and sell flexible-fuel vehicles. He isn't fond of ethanol.

"I don't recommend it to customers," Muller said. "People are looking for something that will give them good gas mileage, and E85 isn't doing it."

But others like E85. Sweany said he has saved money using E85, especially when regular fuel was $3.10 per gallon and E85 was $2.43 per gallon. He said E85 burns clean in his engine and doesn't hurt parts.

He said acceleration was fine. When he changed the fuel filter on his vehicle, he could smell the residue of E85.

"It smells nothing like gas," he said.

Leathers said E85 produces less pollution than regular fuel.

"It's better for the environment," Leathers said. "We offer it to the environmentally conscious."

A Cargill subsidiary is trying to build an ethanol plant northwest of Topeka. Emerald Renewable Energy, a subsidiary of Cargill Inc., applied for an air permit this summer, and the public was given 30 days to comment, ending Sept. 10.

A public hearing has been scheduled at 5:30 p.m. Friday at the Topeka and Shawnee County Public Library.

The U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration (GIPSA) on July 20 issued a final rule implementing changes to the U.S. grain standards for sorghum, which will take effect June 1, 2008. Among other things, the agency is amending the grade limits for broken kernels and foreign material (BNFM) and the subfactor foreign material. It also is inserting into the standards a total count limit for other material, and revising the method for certifying test weight. It also is changing the inspection plan tolerances for BNFM and foreign material.

Emerald Renewable Energy LLC, a subsidiary of Cargill, recently announced Topeka as one of four potential sites for their new 100 million-gallon ethanol plant. The company is looking at a 300-acre area northwest of Topeka. Emerald would invest $200 million in the plant and employ 45 workers. Construction would take 18 months, with 300 construction workers hired for the job.

Cargill will provide services to support he plant, including corn supply, natural gas, price risk management, and the marketing of ethanol and distillers' grain. Tomorrow, the Topeka City Council plans to discuss a proposed water service for the plant.

Ethanol producer Orion Ethanol announced earlier today that it has cancelled the previously announced merger with GreenHunter Energy, saying "it is not in the best interest of either company."

On May 31, both companies announced plans to merge in a stock-for-stock transaction valued at approximately $150 million. The plan was for current Orion Ethanol shareholders to own approximately 51% of the combined company and current GreenHunter shareholders to hold the remaining 49%. The proposed merger would have expanded Orion Ethanol's portfolio, since GreenHunter Energy is pursuing a 100 million gal/yr biodiesel plant along the Houston Ship Channel, among other renewable energy projects.

Orion Ethanol is working on bringing its first announced ethanol plant, a 55 million gal/yr ethanol site in Pratt, Kan., online this summer. In February, Orion Ethanol Vice President of Corporate Communications and Business Development Tim Barker told OPIS that the company's planned two 55 million gal/yr ethanol plants in Enid and Shattuck, Okla., would not begin production as expected, in the second quarter of 2008, due to a run-up in construction and capital costs for the facilities. Barker also said the company would begin construction nine months later, with production beginning another 12-18 months thereafter. The company is also pursuing an ethanol site in Wellington, Kan., although no timetable has been announced.

Similarly, Orion Ethanol is no longer pursuing proposed ethanol sites in Hugoton and Colby, Kan. "The company has determined that the Hugoton and Colby projects do not meet their internal return targets due to increases in corn and construction costs," the filing said, noting that the company is not renewing land and water options at the site and is not applying for air permits. "The company will continue to focus on its projects in Enid and Shattuck, Oklahoma and Wellington, Kansas, as these projects meet their internal return targets. The company will also continue to pursue the acquisition of existing capacity," the filing noted. - Rachel Gantz, rgantz@opisnet.com.

Today, several KAEP board members and staff watched as Governor Sebelius signed the Renewable Fuels Standard bill into law at the Kansas Statehouse. Other supporters of the bill were also in attendance, including the Kansas Soybean Association, Kansas Farm Bureau and the Petroleum Marketers & Convenience Store Association of Kansas.

The bill will give a 6.5 cent per gallon tax credit to fuel retailers who sell enough ethanol to meet an annually increasing Renewable Fuels Standard (RFS). The bill also would give a 3 cent per gallon credit for each gallon of biodiesel sold by a retailer.

The bill is an attempt to build the necessary infrastructure for ethanol and biodiesel throughout the state so retailers can purchase renewable fuels at fuel terminals. For ethanol, the RFS starts at 10% in 2009 and increases 1% per year until 2024 when it will be 25%. In order to qualify for the full ethanol incentive, retailers will have to add E-85 pumps after the first year. The biodiesel standard starts at 2% in 2009 and increases 2% per year until 2017 and then 1% per year until it is 25% in 2025.

The bill creates a $1.6 million incentive fund that can be accessed monthly by retailers. Retailers qualify on a monthly basis so that poor blending economics in one month will not discourage a retailer from continuing to sell ethanol throughout the remainder of the year. After 2009, retailers will only be able to qualify for the full incentive if they sell E-85 – although they will qualify for a reduced incentive until 2011.

Congressman Jerry Moran, R-Kan., is the main Republican sponsor of a bill that would increase the availability of alternative fuels at gasoline stations across the country. The bipartisan legislation calls for funding a study to find out whether underground pipelines would be a good way to transport ethanol and biodiesel. Senator Tom Harkin, D-Iowa, has introduced similar legislation in the Senate.

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