Based on strengthening demand for biofuel, Pacific Ethanol intends to reopen a Madera, Calif., plant it shuttered five years.
Paul Koehler, the company’s vice president, said the plant, which has an annual production capacity of 40 million gallons of ethanol and will be staffed by 35 workers, should be operating later this spring.
Koehler said Pacific’s ethanol plants in Stockton, Calif.; Burley, Idaho; and Boardman, Ore., have been running at full capacity, following a period of reduced production during 2012, due primarily to high corn prices amid a drought.
Most of the corn for Pacific’s plants is imported by rail from the Midwest, with approximately 10 percent coming from local sources for the California facilities, 5 percent local corn in Oregon and little local corn used in Idaho.
Koehler said the Madera plant has been well maintained.
“We’re currently in the process of making sure everything is fit and ready to go,” Koehler said.
Koehler said ethanol production spiked significantly when the federal government implemented a Renewable Fuel Standard in 2005, which it expanded in 2007.
“The whole industry went from 2-3 billion gallons per year a decade ago to 14.5 billion gallons today in the U.S.,” Koehler said.
However, consumption of fuel in general has been declining 1-2 percent per year for several years, and a federal subsidy for ethanol production expired in 2011. By 2012, Koehler said, producers had oversupplied the ethanol market, and high corn prices amid a drought gave plants further reason to scale back or close.
Koehler believes supply and demand are now much more balanced, corn prices are lower and more gas stations are increasing from 10 percent ethanol fuel blends to 15 percent blends. By 2022, 36 billion gallons of U.S. fuel will be required to come from renewable sources.
“We produce a valuable transportation fuel that is needed in the market, and the ethanol industry is a lot healthier now than it was in 2008-2009 (when the Madera plant closed),” Koehler said.
Koehler said the Madera plant saves natural gas because it does not dry its distiller’s grain before shipping it to local dairies for feed, and much of California’s electricity is produced from windpower and hydropower, which should enable the plant to capitalize on state mandates for low-carbon fuel.
A Worldwatch Institute report released April 10 finds combined global production of ethanol and biodiesel fell 0.4 percent in 2012 — the most recent full year of biofuel data — declining for the first time since 2000. Global ethanol declined slightly for a second consecutive year to 83.1 billion liters in 2012. Biodiesel production rose slightly from 22.4 billion liters in 2011 to 22.5 billion in 2012.
Prugh believes high corn costs and decreasing fuel consumption due to the economic slowdown and fuel-efficient cars contributed to the 2012 production dip. Prugh said the U.S., nonetheless, remained the world’s top producer of both ethanol and biodiesel in 2012.
He said the outlook is for increasing production.