Ethanol production capacity nears 15B gallons annually

Source: Nick Sobczyk, E&E reporter • Posted: Thursday, August 11, 2016

Total U.S. ethanol production capacity grew to about 14.9 billion gallons per year in January, an increase of more than 500 million gallons compared to the same time last year, said the U.S. Energy Information Administration in data released yesterday.

EIA’s most recent fuel ethanol plant production capacity report showed U.S. plants were able to produce 973,000 barrels per day of the biofuel.

The vast majority of production capacity comes from corn-producing states in the Midwest, like Iowa, which nearly doubled the capacity of Nebraska, the next-largest producer of ethanol, coming in just under 4 billion gallons for 2016.

U.S. ethanol production capacity has increased steadily since 2014 after remaining relatively stagnant in the three years after 2011, when EIA first reported ethanol production capacities.

Demand for ethanol has quietly continued to grow over the past several years, and the export market has emerged as a key driver of demand, said Geoff Cooper, senior vice president of the Renewable Fuels Association.

Cooper said about 6 to 7 percent of U.S. ethanol is exported, and EIA earlier this year reported that 2015 ethanol exports exceeded 800 million gallons for the second consecutive year.

“We expect to see continued demand growth for ethanol, as export markets continue to expand, [renewable fuel standard] blending requirements are set to increase, refiners continue to take advantage of ethanol’s high octane value and more retailers adopt higher-level blends of ethanol like E15 and E85,” Cooper said in a statement.

Cooper said he believes EIA underestimates nameplate capacity, and said U.S. ethanol plants are likely capable of producing closer to 16 billion gallons of the biofuel each year.

Nameplate capacity is not a production limit, however, and ethanol plants often exceed their capacity, given the right market conditions, by applying more efficient operating techniques.

EIA projects that actual U.S. production of ethanol will total 15.1 billion gallons by the end of 2016, an increase of about 300 million gallons over 2015.