Bio building blocks
By Stephanie Paige Ogburn

When Jeff Berman hatched the idea for San Juan Bioenergy in 2004, the biodiesel company, which was then a cooperative, was offering farmers around 11 cents per pound for sunflowers. Farmers who contract with the company this year can sell their crop for 23 cents per pound.

The jump in price, which reflects national and global shifts in the market for food-grade sunflower oil, has led Berman’s company down the path of using the sunflowers and safflower seeds they buy to make and sell food-grade oil rather than turning the sunflower oil into biodiesel.

The price of food oil has jumped along with sunflower prices, but diesel rates have not kept pace, said Berman. So now the company is looking into other options for producing biodiesel.

“Years ago we were just producing biodiesel,” Berman said when speaking about his early plans for the plant. “But right now our best option is to sell all sunflower and safflower oil as food-grade products and use used fryer oil (also called yellow grease) and canola for biodiesel production.”

According to a statement by the National Sunflower Association, which has a Web site addressing the use of sunflowers for biodiesel production, “sunflower oil is priced at a premium to soybean and canola oils due to demand from the food processing industry. The price premium may make it prohibitive to use sunflower oil in biodiesel.”

The change in price is relatively recent.

“Four years ago, vegetable oils were not nearly as high-priced as they are today,” Berman said. “And fuel prices have not kept pace with, particularly, sunflower and safflower oil prices. We can get twice the value for selling it for a food-grade oil than as biodiesel — that’s approximate.”

Experts say the company’s switch to selling food over fuel makes economic sense.

“Just in general, over the last two to three years, vegetable oils have gone in price from around 20 cents a pound to — now they’re close to over 60 cents a pound,” said Jerry Kram, a staff writer for BBI International, a company that produces trade magazines on biodiesel, biomass and ethanol.

Food oil prices have risen due to a number of factors, said Alan Weber, an economist who advises the National Biodiesel Board. More corn was grown in 2007, much of it for ethanol production, which displaces soybeans used for food oil. That raises prices for soybeans and other food oil crops.

Globally, the supply of food oil is low, which also raises prices, Weber said. And the fall of the dollar means other countries are buying a lot of U.S. commodities, also forcing prices up.

Production of biodiesel, which a nonpetroleum based diesel fuel usually made from natural oils like soybean oil, is sensitive to food oil prices in a way that differs from ethanol, another biofuel that is an alcohol produced from feedstocks like corn and sugar cane.

As food-oil prices rise and producers make more money selling their crops to make food oil, biodiesel producers have to look at other input sources to make their product.

“What we’re seeing is biodiesel producers looking towards other raw material sources (as the price of crops like soybeans and other food oil crops rise),” Weber said.

Berman agreed. He said San Juan Bioenergy is looking at using canola, used fryer oil and algae as potential feedstocks for the biodiesel portion of its operation.

Berman said the bioenergy plant will now get off the ground by selling sunflower and safflower food oil, and the biodiesel part of production will be more like a pilot facility.

The company is aiming for 1.25 million gallons of vegetable oils produced per year, and 250,000 gallons of biodiesel for this first year.

Berman thinks the sunflower oil production will start late this summer, and hopes to add biodiesel production soon after. His idea is to scale up biodiesel production as feedstocks and technology for non-sunflower biodiesel get off the ground.

“We’re looking at biodiesel as a pilot ... and we have significant plans down the road to secure additional feedstocks that has a potential to produce vastly greater quantities of biodiesel production,” he said.

However, San Juan Bioenergy has not yet secured the feedstocks of fryer oil or canola oil that it would need to produce biodiesel, and Berman doesn’t know when those pieces might fall into place.

“I can’t give you a certain date (on when we’ll know),” Berman said. “Markets are fluctuating wildly for both feedstock and fuel.”

The plant would have to secure additional equipment to make biodiesel from fryer oil, since oils like fryer oil and animal fats need an extra processing step before they can be made into biodiesel.

The plant is also investigating the creation of biodiesel from algae, and Berman said they’re looking at anywhere from a six- to 18-month time frame on that research and development, although he said it is hard to nail down a timeline.

“We are monitoring the industry and what is out there very carefully,” he said. “And we anticipate in the next six, nine, 12, 18 months that we will begin pilot projects in algae production using the facility.”

Copyright © 2008 Cortez Journal.