New ethanol production capacity will supply California, officials claim

Sam Fletcher
OGJ Online

HOUSTON, Aug. 29 -- Based on proposed plant construction and expansions, annual US production of ethanol should double to 4.4 billion gal by the end of 2005, staff members of the California Energy Commission reported today.

Currently, 44 firms produce 2.2 billion gal/year of ethanol at 57 facilities concentrated primarily in the Midwest states of Illinois, Nebraska, Iowa, and Minnesota.

Expansions among those plants will add 633 million gal of production capacity within 4 years, if completed as scheduled. There are 13 new plants currently under construction that will increase total US production capacity by another 387 million gal/year within the same period, staffers reported. They said 33 more ethanol plants are in the planning stages among the 84 ethanol companies surveyed.

The US ethanol industry is expanding "ostensibly in anticipation of California's huge need for the gasoline-blending fuel beginning in 2003," said staff members in a study released today.

California currently uses 100-150 million gal/year of ethanol to replace methyl tertiary-butyl ether (MTBE) as an oxygenate in gasoline. Gov. Gray Davis ordered MTBE to be phased out of California gasoline supplies by the end of next year after apparent leakage of the chemical contaminated water supplies in parts of the state.

As a result, the Energy Commission estimates California's demand for ethanol will escalate to 660-950 million gal/year by 2003.

However, the ethanol industry will remain centered in the Midwest Corn Belt, since most existing and proposed plants use corn as a feedstock in huge volumes that are both difficult and expensive to ship long distances.

The Energy Commission noted that nearly all of the ethanol companies surveyed said they could ship their product by truck, while 77% can also use rail and 17% expect to move some ethanol by barge.

Although it indicates sufficient supplies of ethanol will be available to meet California's needs, the study did not examine the availability of corn or other feedstocks, ethanol costs, logistical challenges, permitting issues for new facilities, or the demand for ethanol in other states that also plan to phase MTBE out of their gasoline supplies.

Total replacement of MTBE in the US would require boosting ethanol production capacity to roughly 6.1 billion gal/year, said the New York City-based ratings firm Fitch IBCA, Duff & Phelps in a recent report of its own (OGJ, Aug. 20, 2001, p. 33).

Fitch further calculated that even partial replacement of MTBE by ethanol could likely increase demand for US corn by 15%, enough to drive up corn prices within 2-3 years. That, said Fitch officials, "would benefit corn producers but would cost an estimated $2-3 billion in subsidies."

Fitch reported, "The US currently exports roughly 20% of its corn production. Widespread adoption of ethanol would significantly decrease corn exports and probably result in significantly higher corn prices, which could, in turn, undermine the economics of ethanol as a motor fuel."

However, increased imports of foreign ethanol could eat into that potential windfall for US farmers.

At any rate, ethanol must be phased in as a replacement oxygenate since "production capacity and logistics simply [would] not allow such a rapid rollout," said Fitch.

Contact Sam Fletcher at samf@ogjonline.com

Related Articles

Security takes center stage

12/15/2014

Thwarting terrorists, repelling pirates, and routing organized crime: sounds like themes of familiar, big-budget Hollywood movies.

Linn exits Anadarko basin in deal worth $1.95 billion

12/12/2014 Linn Energy LLC has agreed to sell all of its oil and gas properties and related midstream assets in the western Anadarko basin for $1.95 billion t...

Barton introduces bill to remove US crude export limits

12/11/2014

US Rep. Joe Barton (R-Tex.) introduced legislation that would remove US crude oil export limits that have been in place for nearly 40 years.

Study improves subsea pipeline preheating

12/01/2014 A higher flow rate at lower temperatures can more effectively preheat subsea crude oil pipelines than currently used techniques. This article found...

US crude exports debate prompts a fresh look at the Jones Act

12/01/2014 The Jones Act, which requires that maritime transportation of goods between domestic ports take place on US-flagged vessels, is becoming more promi...

Legislative vote delays St. Croix refinery sale

12/01/2014 The Senate of the 30th Legislature of the US Virgin Islands has voted unanimously to send back a proposed agreement that would provide for the rest...

PAA, EPP to expand Eagle Ford pipeline, build terminal

11/04/2014 Plains All American Pipeline LP (PAA) and Enterprise Products Partners LP (EPP) are constructing a condensate gathering system into their Three Riv...

Pipeline, CNG top Cyprus gas export options

11/03/2014 Pipeline and CNG are the best options for exporting natural gas production from Cyprus to relatively close markets in terms of both initial cost an...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected