Co-genplan shelved, ethanol refinery proposed

Published on Thu, Jul 12, 2007 by ack Kintner

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Co-gen plan shelved, ethanol refinery proposed

By Jack Kintner

Bill Grant, developer of Birch Bay’s Sandcastle condominiums among other local projects, is planning to build an ethanol plant on 20 acres of land near the BP Cherry Point refinery.

The announcement was made shortly before the industrial area’s biggest tenant, the BP Cherry Point Refinery, announced this week that it was shelving construction plans for a $500 million co-generation plant, essentially two big jet engines that would run on natural gas to supply electricity and steam to the refinery.

The co-generation plant was first proposed seven years ago. All the necessary permits have since been granted and construction was to have begun later this year, providing up to 200 construction jobs and about 80 full-time jobs.

That’s about the same amount of permanent high-wage employment that Grant’s on-site project manager for the ethanol refinery, Chris Landrum, figures will be working at their facility.

BP’s change in plans was based to an extent on the scarcity of technically skilled labor to both build and operate a co-generation plant, said refinery spokesman Bill Kidd.

“That’s a factor in most of the projects we envision. It will be a struggle to get the skilled operators, labor and engineers,” he said, adding that the refinery expects to spend $1 billion over the next five years on a number of major projects, “and the co-gen plant turned out not to be the priority.”

Some of the other projects, Kidd said, are an anticipated refinery turn-around in 2009-2010, a new administration building and maintenance facility, and hydro de-sulpherization (HDS) units.

The availability of water is the big question for Grant’s proposed refinery, designed to produce 300,000 gallons of ethanol a day. That would require a million or more gallons of water a day to produce, and right now that’s not available according to Steve Jilk, manager of Public Utility District (PUD) Number 1 that is contracted to supply 53 million gallons of Nooksack River water daily for the industrial area’s two refineries, the Intalco aluminum plant and area farms that irrigate their crops.

The Trillium Corporation also owns a commitment from the PUD for 2.6 gallons of water a day. Trillium CEO David Syre said that they hadn’t yet been contacted by anyone, “but we wouldn’t be prepared to give up our water until we decide how we’re going to use it.”

“We supply a little more than half of that amount currently,” Jilk said, “but right now all of the available capacity of our system is currently spoken for.” .” Jilk met with Landrum, Evans and construction supervisor Jason Burke of Blaine, who said two weeks ago that he expected a latter of intent “shortly” from the PUD to serve their project and that he expected this to be confirmed by Jilk at their meeting. Landrum, too, said he’d been assured by Jilk that water wasn’t a problem.

“The letter indicated willingness on our part to work with them, and if we have the water available then we’ll be able to set something up,” Jilk responded. “Availability is the key. We would be willing to provide water if it becomes available, but at this time it isn’t available.”

“That was a bit of a bombshell,” said Grant’s project engineer David Evans, “because this was the first we knew that they had no water for us.” He said they were pursuing alternative sources such as sub-letting part of the allotment from one of the big consumers.

Plant would be first in greater Northwest

There are more than 100 ethanol refining facilities in the U.S., and the number is increasing rapidly due to federal incentives of 52 cents per gallon produced.

“But none of them are in Washington, Oregon, B.C. or Idaho,” said Landrum, vice president of coordination and special projects for Vitality Fuels. The company is a part of Vitality Products, Incorporated (VPI), at 61 years the oldest natural food and nutrition company in Canada.

“We came to the conclusion near end of April we can do this thing,” Grant said, “and we’re now developing the seed capital we need for the engineering to get the plant going.” On the promise of this project, stock in VPI has jumped from 7 to 42 cents per share in the last six weeks on the Toronto Stock Exchange.

Evans said that “the edge that having a plant here gives us with the local refineries is that it saves them five to seven cents per gallon of additive in transportation costs.”

BP spokesman Mike Abendhoff said that they blend ethanol into their gasoline in Seattle, and that once that’s done it cannot be safely transported by pipeline. “On the other hand,” he said, “there’s going to be a continuing demand for ethanol as a fuel additive so if they can produce it at a competitive price they can probably sell it. Ethanol is produced by fermentation as yeast feeds on the sugars in the corn.

“Basically, it’s grain alcohol. You could call it moonshine, I guess,” smiled Landrum, “and we make it just like people make beer at home except that our product is de-natured, rendering it unsafe to drink.” Three to five gallons of water are required for each gallon of ethanol produced.

“Corn production in the Midwest to support this growth is reaching a limit due to water usage, but the Northwest, west of the mountains, is not faced with this limitation,” Landrum said, prior to his meeting with PUD officials.

Grant said that the production cycle yields other useful products such as high-protein animal feed, carbon dioxide in commercial quantities that can be re-captured and made into everything from dry ice to constituents of soda drinks and something he called nutraceuticals, the raw products behind certain kinds of health food supplements.

The $150 million project is being stimulated by “...a group of investors here in Vancouver that is making a private placement of a million for seed capital for engineering to get the plant going,” Grant said, adding that “the nice thing is that it helps meet the national goal of getting away from fossil fuels.

“It will also employ a lot of highly qualified technical people. Bringing in a lot of high value jobs like this is an add-on for the community.”

1990 amendments to federal clean air legislation mandated using the fuel additive methyl tertiary-butyl ether, or MBTE, as an oxygenate to help gasoline burn more cleanly and thereby reduce smog, but it’s also suspected of causing cancer.

When it began showing up in southern California water supplies the federal clean air legislation was again amended in 2005 to phase out MBTE by 2017. Ethanol (C2H6O) was seen as safer, and incentives were included in the same legislation toward its production to the point where it will use half the domestic corn crop in a few years.

Ironically, several years earlier federally sponsored studies by the National Academy of Sciences said oxygenates were shown to have little effect on smog production.

Requirements for their continued use were dropped in the same legislation, but it still mandated producing 7.5 billion gallons of ethanol by 2012, roughly twice what was produced in 2004.

Advocates of ethanol production point out that adding it to gasoline will still result in less dependence on foreign oil.

On the other hand, Evans said that there is a net reduction in the increase in carbon dioxide emissions because “you’re not freeing CO2 currently trapped in underground reservoirs by burning it in cars and sending it out the tailpipe, but are instead returning it to the air, which is the same place the corn got it from.”

Nonetheless, with federal incentives of about 52 cents per gallon produced, plants are sprouting up quickly, doubling the production capacity of ethanol nationally in less than 10 years.

According to a study done at the University of California in 2005, “inflating passenger car tires properly today will have much more impact on the energy independence of the U.S. than the 2012 ethanol production requirements.”

There appears,to be little else to recommend ethanol as a fuel additive beyond the current federal subsidies for producers.

The General Accounting Office said 10 years ago that “ethanol’s potential for substituting for petroleum is so small that it is unlikely to significantly affect over-all energy security.”

Similarly, there are concerns about pollutants and the smells emanating from what’s essentially a corn distillery in which ethanol is produced by yeast feeding on the sugars in corn.

The Minnesota Pollution Control Agency found high levels of CO2, methanol, toluene, formaldehyde and other substances, some of which are known carcinogens in animal test subjects, in ethanol refinery emissions, leading the Environmental Protection Agency to test other mid-western plants.

Another concern is “what this might do to the price of food when we start using food as a fuel, however, the by-products can be used for human food as well.”

But as Abendhoff said, the benefits vary according to how much of the production cycle is measured.

“Opponents will calculate the costs of the whole process, including growing the corn, where supporters tend to look at just the product itself,” he said.