California’s biodiesel goes Crimson
Crimson Renewable Energy, operator of California’s largest biodiesel plant which opened on 29 July, is doing what few producers in the nation are.
The 30 million gallon a year producer will move away from the nation’s predominant choice of feedstock, soyabean, and process 50 million pounds of the crude glycerine by-product, turning it into high quality refined glycerine to tap into pharmaceutical and other industrial markets.
Crimson will primarily use yellow grease as well as animal fats, mostly beef tallow or pork fat, ‘the only feedstocks you can use to make fuel in this market to be competitive with diesel fuel pricing,’ Crimson’s CEO Harry Simpson says. The ability to use a flexible source of feedstocks is one way of avoiding the extreme price movements the US has experienced in the last two years.
It took a while to get soyabean out of the limelight. ‘In the last two to three years very few producers used animal fats, and those who did were doing it on a small scale and did a poor job, with no investment in vital areas of biodiesel production such as the treatment processes,’ comments Simpson.
In 2008, roughly 65% of the biodiesel market in the US was soyabean-based. ‘The US biodiesel industry grew as an offshoot of the soyabean industry. On the marketing side there was an impression that soyabean biodiesel was inherently better and that anything else was inferior. But last year the market became more receptive to other types of biodiesel.’
Another advantage of the Crimson approach is its valuable by-product processing. In the ethanol market Dried Distillers Grains (DDGs) may be keeping struggling ethanol producers afloat; across the different biofuel streams the security of a side profit stream is key.
Simpson believes there are only three other biodiesel facilities that refine glycerine at 98-99% purity, but at present Crimson has no off-take agreements for its glycerine, mimicking the model for the mainstay of its business. ‘The biodiesel market has largely been a spot market in the states. Not too many people buy forward in this market.’
The option to build a plant in California was a sound economic one. Crimson is backed by an oil and gas group which provides a solid source of financing. The cost to build biodiesel plants in the US is often $30-40 million (€21-28 million), without a glycerine refinery, which could add an extra $10 million. Crimson’s plant cost considerably less owing to the fact it acted as its own design and EPC provider. ‘We were motivated by the desire to save on construction and capital costs.’
The project, however, hit some hurdles. Planning for the plant started in autumn 2006, broke ground in autumn 2007, and construction was complete in April this year. ‘It took longer than expected partly because the plant was built on a natural gas refinery built after World War II, disused since the 1980s, so demonstration work was required on the 2.5 hectare site,’ Simpson explains.
In the midst of an economic downturn, certain companies planning a plant may be hesitant to enter the market. ‘I don’t think there was ever a question of not going forward, even after extreme price changes,’ Simpson asserts. ‘However, during the construction process in 2008 we looked at modifying the design to be able to handle other feedstocks, originally it is more typical to design a vegetable oil system.’
California as a location is looking like a gold mine for biofuels producers, what with its focus on the environment and its Low Carbon Fuel Standard. Colorado-based Crimson selected the state for a number of reasons. A key one was that the facility on which the plant was built was owned by a subsidiary, so the necessary zoning was all in place, something which can affect the smooth progression of a project. It is also near the point of consumption.
Commonly, plants are built where the feedstock is located; so many grew in the Midwest. Other business models focus on the point of export such as in the Gulf Coast. The export market took a hit with the European Union banning imports of B99 recently. ‘In my opinion US producers were taking advantage of the B99 dollar per gallon tax credit, and in that it was not unjustified for Europe to impose the ban,’ Simpson adds.
California fitted the company’s destination model with a focus on truck access to transport the fuel. ‘A lot of customers are not set up to receive fuel by rail. Being able to transport by truck is a significant advantage, as the storage tanks required are not as big as those for rail. Furthermore, the rail scheduling is not reliable, and you could be waiting two to four weeks.’
California’s Low Carbon Fuel Standard is the obvious incentive for producers to set up shop in the area. When the green light for Crimson’s plant was given however, the Standard had not yet been passed. ‘I spoke to Californian officials, and got a sense there was a good chance it would be passed. California is a leader in the environment and home to the largest fuel market in the US. The nation consumes 65 billion gallons of diesel a year, 4.2 billion of which are consumed in California, around two-thirds of it within 100 miles of our plant.’
The plant will almost double California’s current biodiesel capacity of 34 million gallons a year.
This golden market has led to the progression of other projects. ‘We tried to develop another plant in the San Francisco Bay area but finance dried up when credit markets turned around,’ Simpson notes.
Asked whether Crimson is eyeing new plants, Simpson points out that it is generally agreed within the industry that around a third of biodiesel plants are idle meaning ‘it’s hard to justify a new plant when there is dead capacity’.
The company is now looking at other green energy pathways. ‘We did some testing almost two years ago into converting agricultural waste, mostly manure from dairies, into syngas then to pipeline-quality gas. It didn’t work out at the time, but it’s an area we’d like to get back into,’ Simpson says.
The 30 million gallon a year producer will move away from the nation’s predominant choice of feedstock, soyabean, and process 50 million pounds of the crude glycerine by-product, turning it into high quality refined glycerine to tap into pharmaceutical and other industrial markets.
Crimson will primarily use yellow grease as well as animal fats, mostly beef tallow or pork fat, ‘the only feedstocks you can use to make fuel in this market to be competitive with diesel fuel pricing,’ Crimson’s CEO Harry Simpson says. The ability to use a flexible source of feedstocks is one way of avoiding the extreme price movements the US has experienced in the last two years.
It took a while to get soyabean out of the limelight. ‘In the last two to three years very few producers used animal fats, and those who did were doing it on a small scale and did a poor job, with no investment in vital areas of biodiesel production such as the treatment processes,’ comments Simpson.
In 2008, roughly 65% of the biodiesel market in the US was soyabean-based. ‘The US biodiesel industry grew as an offshoot of the soyabean industry. On the marketing side there was an impression that soyabean biodiesel was inherently better and that anything else was inferior. But last year the market became more receptive to other types of biodiesel.’
Another advantage of the Crimson approach is its valuable by-product processing. In the ethanol market Dried Distillers Grains (DDGs) may be keeping struggling ethanol producers afloat; across the different biofuel streams the security of a side profit stream is key.
Simpson believes there are only three other biodiesel facilities that refine glycerine at 98-99% purity, but at present Crimson has no off-take agreements for its glycerine, mimicking the model for the mainstay of its business. ‘The biodiesel market has largely been a spot market in the states. Not too many people buy forward in this market.’
The option to build a plant in California was a sound economic one. Crimson is backed by an oil and gas group which provides a solid source of financing. The cost to build biodiesel plants in the US is often $30-40 million (€21-28 million), without a glycerine refinery, which could add an extra $10 million. Crimson’s plant cost considerably less owing to the fact it acted as its own design and EPC provider. ‘We were motivated by the desire to save on construction and capital costs.’
The project, however, hit some hurdles. Planning for the plant started in autumn 2006, broke ground in autumn 2007, and construction was complete in April this year. ‘It took longer than expected partly because the plant was built on a natural gas refinery built after World War II, disused since the 1980s, so demonstration work was required on the 2.5 hectare site,’ Simpson explains.
In the midst of an economic downturn, certain companies planning a plant may be hesitant to enter the market. ‘I don’t think there was ever a question of not going forward, even after extreme price changes,’ Simpson asserts. ‘However, during the construction process in 2008 we looked at modifying the design to be able to handle other feedstocks, originally it is more typical to design a vegetable oil system.’
California as a location is looking like a gold mine for biofuels producers, what with its focus on the environment and its Low Carbon Fuel Standard. Colorado-based Crimson selected the state for a number of reasons. A key one was that the facility on which the plant was built was owned by a subsidiary, so the necessary zoning was all in place, something which can affect the smooth progression of a project. It is also near the point of consumption.
Commonly, plants are built where the feedstock is located; so many grew in the Midwest. Other business models focus on the point of export such as in the Gulf Coast. The export market took a hit with the European Union banning imports of B99 recently. ‘In my opinion US producers were taking advantage of the B99 dollar per gallon tax credit, and in that it was not unjustified for Europe to impose the ban,’ Simpson adds.
California fitted the company’s destination model with a focus on truck access to transport the fuel. ‘A lot of customers are not set up to receive fuel by rail. Being able to transport by truck is a significant advantage, as the storage tanks required are not as big as those for rail. Furthermore, the rail scheduling is not reliable, and you could be waiting two to four weeks.’
California’s Low Carbon Fuel Standard is the obvious incentive for producers to set up shop in the area. When the green light for Crimson’s plant was given however, the Standard had not yet been passed. ‘I spoke to Californian officials, and got a sense there was a good chance it would be passed. California is a leader in the environment and home to the largest fuel market in the US. The nation consumes 65 billion gallons of diesel a year, 4.2 billion of which are consumed in California, around two-thirds of it within 100 miles of our plant.’
The plant will almost double California’s current biodiesel capacity of 34 million gallons a year.
This golden market has led to the progression of other projects. ‘We tried to develop another plant in the San Francisco Bay area but finance dried up when credit markets turned around,’ Simpson notes.
Asked whether Crimson is eyeing new plants, Simpson points out that it is generally agreed within the industry that around a third of biodiesel plants are idle meaning ‘it’s hard to justify a new plant when there is dead capacity’.
The company is now looking at other green energy pathways. ‘We did some testing almost two years ago into converting agricultural waste, mostly manure from dairies, into syngas then to pipeline-quality gas. It didn’t work out at the time, but it’s an area we’d like to get back into,’ Simpson says.
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