UNDERWOOD, N.D. - In honor of the 10th year of production for Blue Flint Ethanol, a celebration was thrown on June 28 and drew a crowd of 200 workers, industry leaders and government officials.
Jeff Zueger is chief executive officer for Midwest AgEnergy Group LLC. Midwest AgEnergy owns Blue Flint Ethanol, LLC, which started production in February 2007, and later Dakota Spirit Ethanol, Spiritwood, N.D., which started production in 2015.
Blue Flint initially was built for $95 million and was designed for 50 million gallons per year of ethanol production, using steam generated from a coal-fired electrical plant next door. The plant helped build a corn production industry for farmers in that region.
Today, Blue Flint produces over 70 million gallons a year and uses about 24 million bushels of corn, with over 90 percent coming from trucks. The corn comes from numerous farm suppliers. The company produces 200,000 tons of distiller's grains per year and 2.5 million gallons of corn oil, all from 24 million bushels of corn processed. Blue Flint brings in 70 semi-loads of corn every day.
John Weeda, retired director of North Dakota generation for Great River Energy, was on hand for the event. He helped implement the ethanol plant. "The biggest question was the volatility of the ethanol industry," Weeda recalled. "At the time we were doing the planning it was a very profitable industry, but as Murphy's Law would have it when we went into production, it was one of the harder times for profitability."
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At first the project was planned thinking that most of the corn would come on short line railroad from southeast North Dakota. "We knew the corn belt was moving this direction. We're very pleased to see how rapidly the producers in this area expanded production," Weeda said.
Initially, 80 percent of the corn came from southeast North Dakota, but the company invested in Coal Creek Drying and Storage in 2010. That "tipping point" allowed farmers without storage or drying equipment to contract and deliver wet corn. That was also the year they added corn oil production.
Tripling corn
Corn genetics improved and McLean County went from producing 2.7 million bushels of corn per year in 2007 to producing 10.2 million bushels in 2017.
Mike Clemens of Wimbledon, N.D., the only farmer-member of the Midwest AgEnergy board, said the impact of ethanol on the "mountain of corn" that North Dakota produced in 2016 is profound. "It all got cleaned up during the winter; it all went to the ethanol industry," said Clemens.
The "basis" meaning, the difference between local markets and Chicago trading markets, would have been $1.20 per bushel. The basis currently is 70 cents under the market, due largely to transportation. At times the basis has been as low as 50 cents per bushel under the market.
"The lower-cost thermal energy from the electric generation plant is a bigger factor at times when competing natural gas prices are higher," said Zueger. The company also saves on operating costs because they don't have a boiler or water treatment facilities to maintain. That can mean pennies per gallon or tens of cents per gallon, depending on the value of carbon.
The lower carbon footprint from using otherwise wasted energy allows access to market carbon credits in places like California and certain provinces in Canada, Zueger said.
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On to E30
Emily Skor, chief executive officer of Growth Energy, a trade group for ethanol producers, talked about expanding the market by stepping up from the current E10 (10 percent blend of ethanol to petroleum) to E15 and E30. This step has certain power advantages.
"We must demand market access for higher ethanol blends, we must drive growth and consumer demand, and we must change the status so that E15 becomes the new norm," said Skor. That could drive demand for another 7 billion gallons of ethanol per year.
Zueger said the company is looking ahead to new products besides ethanol for fuel and distillers grains. Blue Flint is served by the Canadian Pacific Railroad toward the Pacific coast. The company is studying new products to make cellulosic ethanol, also explained as breaking down fibrous components of the corn kernel currently sold as feed grains through distiller's grain. This study could have the ability to fit where there are carbon goals - carbon goals such as in California markets and in certain Canadian provinces.
Blue Flint initially was built by Headwaters Inc., a publicly traded company in Salt Lake City, Utah, which has 51 percent ownership. Great River Energy, an electric power generation cooperative based in Maple Grove, Minn., has the other 49 percent ownership.
In 2011, Headwater sold its interest to Great River Energy, then Great River Energy created Midwest AgEnergy with an eye toward expanding with a second ethanol plant near an electrical generation facility at Spiritwood, N.D. Midwest AgEnergy then brought on "qualified investors" at $500,000 each to own 20 percent.
