Investors now are looking to build companion businesses next to ethanol plants to take advantage of infrastructure, raw product supplies and transportation that fits both.
“The innovation going on at these facilities is tremendous,” KAAPA Ethanol CEO Chuck Woodside said. “People are finding ways to get more out of the product … and that spurs co-location of industries.”
One example, he said, is a plant in Iowa where the fiber from the distillers grains that are a co-product of ethanol processing is being processed a second time to produce more oil.
Steve Sorum, ethanol project manager for the Nebraska Ethanol Board in Lincoln, said a cellulosic processing plant has been attached to an existing corn-based ethanol plant at Emmetsburg, Iowa, to process such raw materials as corn stover, wheat straw and even municipal solid waste.
Sorum said he’s had numerous contacts, from mostly foreign interests, in matching ethanol plants with companies involved in processing items such as foods, pharmaceuticals and specialized livestock products.
They are interested in co-ownerships, leases or sale agreements with plants already located in places the necessary raw materials — corn, ethanol, distillers grains — and with the infrastructure and rail lines in place.
The co-located cellulosic and corn ethanol plants in Iowa do the initial 25 percent of raw products processing separately. Then, they both use the same final distillation process, utilities and transportation, Sorum said.
“We’ve had kind of a run on them right after the first of the year,” he said when asked if the Nebraska Ethanol Board office has had inquiries or given tours to prospective investors.
Sorum said the interest would be in plants across Nebraska because they all have the features wanted.
Significant development of such co-located plants could be quicker than five to 10 years in some cases, he said.
Sorum said U.S. processors produced more than 15 billion gallons of ethanol in 2014, an increase from 13.8 billion and 13.6 billion the previous two years.
That increase came despite the closing, temporarily or permanently, of some plants in recent years and a slowdown in construction or expansion of ethanol plants because of the uncertainty the Environmental Protection Agency has created about the renewable fuel standard.
Woodside said KAAPA Ethanol and other processors are constantly looking at ways to do things more efficiently.
Most recent sales growth for ethanol and distillers grains has come in exports, Sorum said, primarily to China.
There was uncertainty recently because of a dispute about some genetically modified corn getting into that market. “But they have relaxed their requirements” since then, he said.