INSIDE: TAPPING ETHANOL PLANTS FOR CORN OIL FEEDSTOCK

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November 2006

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46 BIODIESEL MAGAZINE � November 2006

Recognizing crossover synergies, New York-based GS CleanTech is tapping the U.S.

ethanol industry for corn oil that it plans to route into biodiesel production. It has already

got a handful of ethanol producers on board and three biodiesel plants in the works.

By Holly Jessen

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47November 2006 � BIODIESEL MAGAZINE

n the renewable fuels business, “blend-ing” is a word used to describe the mix-ing of fuels—biodiesel with diesel,

ethanol with gasoline—but as one U.S. com-pany is demonstrating, it’s not just fuels thatcan be blended, but industries themselves.

Indeed, GS CleanTech Corp. saw thepotential for synergies between the ethanoland biodiesel industries, and developedtechnology to capitalize on it. According toKevin Kreisler, chairman and CEO of themajority-owned publicly traded company,GS CleanTech offers a commercial pathwayto create additional ethanol plant revenuethrough the extraction of a relatively novelbiodiesel production feedstock—corn oil.

Formerly known as Veridium Corp., GSCleanTech is the process engineering tech-nology transfer arm of GreenShift Corp.,which has its corporate offices in New York.GreenShift has made a name for itself in therenewable fuels business by aggressivelydeveloping clean technologies and support-ing and companies that facilitate the efficientuse of natural resources. The young corpo-ration has already acquired about a dozentechnologies that fit the plan, and one ofthose is GS CleanTech’s trademarked CornOil Extraction System. The technologyremoves the fat, or corn oil, from a dry-millethanol plant’s “thin stillage”—the precursorto the distillers grains coproduct producedin the ethanol distillation process. This mate-rial is heated and spun in a centrifuge to pullout the corn oil. With nearly all of the oilremoved, a more protein-concentrated formof distillers grains is produced.

While conventional ethanol productionmethods produce about ethanol, 18 poundsof distillers dried grains (DDG) and 18pounds of carbon dioxide, from one bushel(approximately 54 pounds) of corn, GSCleanTech’s Corn Oil Extraction Systemcan pull out two pounds of corn oil fromthat same bushel of feedstock, leavingbehind 16 pounds of a higher-protein ani-mal feed, Kreisler says.

Here’s the rub. GS CleanTech sets upcontracts to buy the corn oil from ethanolplants that use its extraction technology. Inturn, the plans to funnel the oil into its ownprocessing venture. According to recent

company statements, the company aims togenerate $14 million to $18 million in annu-al revenue from selling corn oil produced atU.S. ethanol plants. “Our plans moving for-ward are to remain relentlessly focused ondeploying our integrated multi-fuel technol-ogy … in the ethanol production industry,”Kreisler tells Biodiesel Magazine.

Practically PairingEthanol producers using the system

could increase their annual revenues by 3.5percent, Kreisler says. Currently, DDG isonly worth about 3.5 cents per pound,Kreisler says. The 2 pounds of corn oil thatcan be extracted from the 18 pounds ofDDG produced from a bushel of corn canbring in 12 cents to 17 cents per pound. Atypical 50 MMgy ethanol plant will be ableto produce 3 MMgy of corn oil, valued at anestimated $2.7 million to $3.8 million. Theethanol producer would also benefit fromthe lower operating costs of drying smalleramounts of distillers grains, in turn loweringplant emissions, Kreisler says.

The extraction system can be installedat an ethanol plant with minimal permittingor infrastructure alterations. Compared with

corn fractionation, for example, there aresignificantly lower capital costs and nodesign changes needed, Kreisler says. “Wecan literally plug and play into existing ornew production with little, if any, upset toongoing routine operations,” he says.

GS CleanTech offers ethanol producersa couple of options. An ethanol plant couldsimply purchase the process technology andequipment outright and sell its oil for goingmarket prices, or it could opt to have GSCleanTech finance and build a turnkey oilextraction system on-site in exchange for therights to purchase the plant’s oil at a discount.

GS CleanTech plans to sell the corn oilto its sister company, GS AgriFuels, whichis in the process of developing threebiodiesel plants to process the corn oil.

This summer, Cornell Capital Partnersinvested about $22 million in GreenShift andtwo of its subsidiaries, GS CleanTech andGS AgriFuels, according to Troy Rillo, man-aging director of Cornell Capital Partners.Part of that investment will be used to buildone of the biodiesel production facilitiesbeing developed by GS AgriFuels. The com-pany has a “heavy interest” in investing inthe renewable energy and clean technology

I

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This is the base design for the GS CleanTech Corn Oil Extraction System.

48 BIODIESEL MAGAZINE � November 2006

processes that GreenShift companies haveto offer, Rillo says. Cornell Capital Partners’investment in GreenShift allows it to beinvolved in the corn-to-ethanol market andthe biodiesel market.

GS AgriFuels’ corn oil-based biodieselproduction facilities will be small-scalemodular plants, with production starting at5 MMgy to 10 MMgy and later ramping upto 30 MMgy to 40 MMgy. The plants willbe built in Memphis, Tenn., and within andaround New York.

GS AgriFuels will be the first compa-ny to use corn oil for biodiesel productionof any magnitude, and it’s committed toproducing a high-quality, consistent prod-uct that meets the ASTM specification forbiodiesel. Kreisler admits that convertingcorn oil to biodiesel comes with certainprocess and economic challenges.However, a considerable amount ofresearch and development has led companyofficials to believe no major obstacle standsin their way. “We’re already there for cornoil biodiesel,” Kreisler says.

It’s not enough for the company toproduce biodiesel that just meets theASTM D 6751 spec; it wants to exceed theperimeters. The company is refining someaspects of the process design that will beimplemented at future GS AgriFuels facili-ties. These changes may include someprocess tweaks and additions, Kreisler says.Like most other U.S. producers and futureproducers, the company maintains as partof its governing philosophy that producingthe highest quality, most consistentbiodiesel product is critical to marketgrowth and sustainability.

Efficiency is also important to GS

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An additional pretreatment step was recently added tothe GS CleanTech Corn Oil Extraction System. Theextra step helps to bump up yields for a 50 MMgyethanol plant from 1 MMgy to 1.5 MMgy.

AgriFuels, and that’s prompted the companyto focus on collocating future biodieselplants with ethanol plants. Kreisler envisionsa day when a 50 MMgy ethanol plant, withthe GS CleanTech’s proprietary Corn OilExtraction System, can produce 3 MMgy ofbiodiesel from corn oil produced on-site,and then sell the biofuel locally. “I just thinkit makes for a more holistic, more efficient,more compelling economic model than put-ting it on a truck, a railcar or barge, andtransporting it half a country away or half astate away for production … ,” he says.

In addition to its plans to develop pro-duction facilities, GS AgriFuels announcedin mid-October that it has an agreement inplace to purchase 100 percent of the stockof NextGen Fuel Inc., a company that pro-duces modular continuous-flow biodieselprocess equipment that can handle multiplefeedstocks, according to a press release.

Successful Sign-Up After more than a year and a half of

work, GS CleanTech’s plan to bring itspatent-pending Corn Oil Extraction Systemto the ethanol industry is starting to pay off.The company has signed agreements withseven ethanol plants and one animal pro-cessing facility. In total, these agreementsrepresent the capacity to extract 22.5 MMgyof biodiesel feedstocks, Kreisler says.

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In October, the company announcedthe installation of the first stage of itsextraction system at Little Sioux CornProcessors LP, a 52 MMgy ethanol plant inMarcus, Iowa. Also, Glacial Lakes EnergyLLC, a 47 MMgy plant in Watertown, S.D.,had a portion of the GS CleanTech systemin place at press time. Three other ethanolfacilities, each with capacities in the 40MMgy to 50 MMgy range, have also signedup. Corn Oil Extraction Systems are cur-rently being built for Adkins Energy LLCin Lena, Ill., and Utica Energy LLC inOshkosh, Wis., while the system for a thirdethanol plant, Golden Grain Energy LLCin Mason City, Iowa, should be under con-struction in the first quarter of 2007. Inaddition, a producer with an ethanol proj-ect under construction in Illinois has alsoagreed to work with GS CleanTech. Theconfidential contract calls for eight extrac-tion systems to be installed in 2007 and2008 for a total of about 12 MMgy of cornoil extraction. Additional details about theproject were unavailable at press time.

Corn oil isn’t the only feedstock thatGS CleanTech plans to use at its biodieselproduction facilities. An Arkansas-basedpoultry processing facility has executed anagreement with GS CleanTech to use itstechnology to extract 1.5 MMgy of animalfat from the sludge coming out of a waste-water treatment facility, Kreisler says. In thepast, the animal processing facility paid tohave the wastewater taken away for a fertil-izer application. “We can reduce their dis-posal costs by roughly 80 percent,” he says.

GS CleanTech continues to be on thelookout for more biodiesel feedstocksources, Kreisler says.

There are several possibilities withinthe ethanol industry for extracting corn oil

for biodiesel production, according toDavid Winsness, president and COO ofGS CleanTech and a co-inventor of theCorn Oil Extraction System. Out of themore than 5 billion gallons of ethanol cur-rently produced in the United States, 4 bil-lion is from corn dry mills. In all, there’sabout 350 MMgy of corn oil not currentlybeing recovered from those dry-mill facili-ties, Winsness says.

The company’s predominant focus ison the corn-to-ethanol industry, Kreislerexplains. However, it is open to otheroptions as well, such as additional animalprocessing facilities.

Another possible target is industrialwastewater transfer stations and municipalsewage treatment facilities. Without anydevelopment necessary, GS CleanTechextraction technology could be used toextract yellow, brown and black grease atthese facilities, even though they are“somewhat nastier from a processingstandpoint,” Kreisler says.

There are also additional technologiesthat GS CleanTech wants to bring to mar-ket. Gasification of distillers grains to createsyngas, is one, Kreisler says. Using about 20percent to 25 percent of its defatted dis-tillers grains, a 50 MMgy ethanol plant canproduce enough heat and power on-site totake the plant off the power grid. Theremaining 75 percent of the syngas fromDDG can be used to create additional bio-mass or biomass-derived synthetic diesel.

For more information, check out GSCleanTech’s Web site at www.gs-cleantech.com or GreenShift’s Web site atwww.greenshift.com. �

Holly Jessen is a Biodiesel Magazine staff

writer. Reach her at hjessen

@bbibiofuels.com or (701) 746-8385.

Out of the more than 5 billion gallons ofethanol currently produced in the UnitedStates, 4 billion is from corn dry mills. Inall, there’s about 350 MMgy of corn oil

not currently being recovered fromthose dry-mill facilities.

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