Firm makes country's biggest biodiesel bet
By JIM FUQUAYStar-Telegram Staff Writer
STAR-TELEGRAM
GreenHunter Energy of Grapevine on Monday opened the country's largest biodiesel refinery, a 105 million-gallon facility in Houston that should make the state the leading producer of the alternative fuel.
GreenHunter, an 18-month-old company that has several alternative-energy initiatives, said the plant represents a $55 million investment. It will be capable of producing biodiesel from a variety of sources, or feedstocks, including vegetable oils, animal fats and waste petroleum products.
Sales of biodiesel in the United States have soared as crude-oil prices have spiked. But the rising cost of soybean oil, used by many biodiesel plants, has eroded profits.
"Fortunately for the industry, if you can produce high-quality biodiesel, you can sell every drop you make. It's the feedstock where most of the industry is struggling," said Jack Zedlitz, director of corporate communications for GreenHunter. "We can take any feedstocks and blend them interchangeably."
GreenHunter's refinery, on a 22-acre site on the Houston Ship Channel, was originally built to process used motor oil. It has a storage capacity of 700,000 barrels.
Zedlitz said the location on the ship channel will allow the company to bring in feedstocks economically, as well as help move biodiesel to markets.
For example, he said, "If there's a bumper crop of rapeseed oil in the Ukraine, we can take it all" by shipping the oil to the refinery and storing it until it can be converted to biodiesel.
Balancing the costs of feedstock, processing and transportation makes the difference between profit and loss in today's market.
According to the National Biodiesel Board, U.S. biodiesel makers last year produced about 450 million gallons, up from 250 million the previous year. That's less than a fifth of the industry's capacity of about 2.2 billion gallons a year, an imbalance that reflects rapid construction and tougher economics.
"There was an initial frenzy to build plants," many near farms where soybeans were grown, said Warren Bonham, president of Direct Fuels in Euless, which in February opened a biodiesel plant with a capacity of 10 million gallons a year.
But as commodity prices rose, the economics came to favor plants that could accept a variety of feedstocks and were close to markets or transportation hubs.
"Today, the most economical feedstock we can locally procure is a variety of animal fats," Bonham said. "We are profitable. But it certainly is not what it looked like two or three years ago."
Direct Fuels' facility is next to its fuel-distribution terminal, which also handles ethanol for blending into gasoline sold locally, putting it "in a good position," he said. GreenHunter's Houston plant likewise should be a good location, he said.
Earth Biofuels of Dallas, which produces the BioWillie brand of biodiesel, has struggled with the challenges of feedstock.
It is modifying its Durant, Okla., biodiesel plant to process restaurant waste oils instead of the soybean oil it was designed to handle.
Soybeans, like corn and other agricultural commodities, have jumped in price, more than doubling in two years.
That led Earth Biofuels to sign a contract with Fort Worth-based Alliance Processors for up to 400,000 gallons a month of "yellow grease" collected from restaurants across the state, spokeswoman Shawne Horn said.
GreenHunter is exploring yet another way to lessen its biodiesel plant's dependence on food crops. It's investing in plantations of jatropha, an inedible plant that grows wild in India whose seed oil is already being used to make biodiesel.
The company, which in November bought two office buildings for its headquarters at 1048 Texan Trail in Grapevine, has energy roots but is new to the renewables business.
It was founded by Gary Evans, who previously headed Irving-based Magnum Hunter Resources, a natural gas producer that was acquired in 2005, and started trading its stock publicly in January.
Zedlitz said the company's strategy is to offer a portfolio of renewable-energy businesses. In May 2007, it acquired an inactive 18.5-megawatt biomass electricity plant in El Centro, Calif., which it plans to power with wood- and manure-based fuels. It expects the plant to begin operating in early 2009.
And in November, it agreed to buy 22 wind turbines, each of which can produce 1.5 megawatts of electricity, from a Chinese manufacturer. GreenHunter says it has rights to potential wind-farm locations in Montana, New Mexico and California, and expects to begin construction this year on a wind farm in Montana.
JIM FUQUAY, 817-390-7552
[email protected]
http://www.star-telegram.com/business/story/680789.html
By JIM FUQUAYStar-Telegram Staff Writer
STAR-TELEGRAM
GreenHunter Energy of Grapevine on Monday opened the country's largest biodiesel refinery, a 105 million-gallon facility in Houston that should make the state the leading producer of the alternative fuel.
GreenHunter, an 18-month-old company that has several alternative-energy initiatives, said the plant represents a $55 million investment. It will be capable of producing biodiesel from a variety of sources, or feedstocks, including vegetable oils, animal fats and waste petroleum products.
Sales of biodiesel in the United States have soared as crude-oil prices have spiked. But the rising cost of soybean oil, used by many biodiesel plants, has eroded profits.
"Fortunately for the industry, if you can produce high-quality biodiesel, you can sell every drop you make. It's the feedstock where most of the industry is struggling," said Jack Zedlitz, director of corporate communications for GreenHunter. "We can take any feedstocks and blend them interchangeably."
GreenHunter's refinery, on a 22-acre site on the Houston Ship Channel, was originally built to process used motor oil. It has a storage capacity of 700,000 barrels.
Zedlitz said the location on the ship channel will allow the company to bring in feedstocks economically, as well as help move biodiesel to markets.
For example, he said, "If there's a bumper crop of rapeseed oil in the Ukraine, we can take it all" by shipping the oil to the refinery and storing it until it can be converted to biodiesel.
Balancing the costs of feedstock, processing and transportation makes the difference between profit and loss in today's market.
According to the National Biodiesel Board, U.S. biodiesel makers last year produced about 450 million gallons, up from 250 million the previous year. That's less than a fifth of the industry's capacity of about 2.2 billion gallons a year, an imbalance that reflects rapid construction and tougher economics.
"There was an initial frenzy to build plants," many near farms where soybeans were grown, said Warren Bonham, president of Direct Fuels in Euless, which in February opened a biodiesel plant with a capacity of 10 million gallons a year.
But as commodity prices rose, the economics came to favor plants that could accept a variety of feedstocks and were close to markets or transportation hubs.
"Today, the most economical feedstock we can locally procure is a variety of animal fats," Bonham said. "We are profitable. But it certainly is not what it looked like two or three years ago."
Direct Fuels' facility is next to its fuel-distribution terminal, which also handles ethanol for blending into gasoline sold locally, putting it "in a good position," he said. GreenHunter's Houston plant likewise should be a good location, he said.
Earth Biofuels of Dallas, which produces the BioWillie brand of biodiesel, has struggled with the challenges of feedstock.
It is modifying its Durant, Okla., biodiesel plant to process restaurant waste oils instead of the soybean oil it was designed to handle.
Soybeans, like corn and other agricultural commodities, have jumped in price, more than doubling in two years.
That led Earth Biofuels to sign a contract with Fort Worth-based Alliance Processors for up to 400,000 gallons a month of "yellow grease" collected from restaurants across the state, spokeswoman Shawne Horn said.
GreenHunter is exploring yet another way to lessen its biodiesel plant's dependence on food crops. It's investing in plantations of jatropha, an inedible plant that grows wild in India whose seed oil is already being used to make biodiesel.
The company, which in November bought two office buildings for its headquarters at 1048 Texan Trail in Grapevine, has energy roots but is new to the renewables business.
It was founded by Gary Evans, who previously headed Irving-based Magnum Hunter Resources, a natural gas producer that was acquired in 2005, and started trading its stock publicly in January.
Zedlitz said the company's strategy is to offer a portfolio of renewable-energy businesses. In May 2007, it acquired an inactive 18.5-megawatt biomass electricity plant in El Centro, Calif., which it plans to power with wood- and manure-based fuels. It expects the plant to begin operating in early 2009.
And in November, it agreed to buy 22 wind turbines, each of which can produce 1.5 megawatts of electricity, from a Chinese manufacturer. GreenHunter says it has rights to potential wind-farm locations in Montana, New Mexico and California, and expects to begin construction this year on a wind farm in Montana.
JIM FUQUAY, 817-390-7552
[email protected]
http://www.star-telegram.com/business/story/680789.html
