Newsletter | July 2018
Note from our General Manager:
The second quarter of 2018 brought with it a new set of challenges for the ethanol industry. Focus shifted from the impacts of record levels of production and the need for year-round E15, to the slew of “small refiner” exemptions granted by the EPA to petroleum refiners. These exemptions were meant to allow small refiners to avoid the ethanol blending requirement set forth in the RFS, if it could be shown to be a severe hardship.
It became obvious that the EPA was granting these exceptions to refiners that did NOT fit the small refiner definition and was doing so in a clandestine manner. It was further proof that Director Pruitt favored the petroleum industry and was not treating the ethanol industry as the President had directed. Fortunately for us, Mr. Pruitt was terminated from his position at the EPA and Andy Wheeler took over as Director. Mr. Wheeler was involved in establishing the RFS, and we feel he will not be such an adversary against the industry in his new role.
Hopefully, this transition will result in more equal and fair treatment and interpretation of the regulations by the EPA. We should start to see movement again on the year round E15 issue, and finally break through the 10% blend wall. There is demand for higher ethanol blends, and we need to be able to continue to meet the demand.
Ethanol margins for Show Me Ethanol seem to be less seasonably volatile this year, due mostly to the overall production levels within the industry and the associated demand. We continue to operate with monthly profits that seem reasonably level so far this year, and like last year. We hope to continue this steady performance through the rest of the year.
Did You Know?
Each year, ethanol decreases greenhouse gas emissions by 110 million metric tons. (That’s the equivalent of removing 20 million cars from the road!)
Growth Energy: American drivers pass 5 billion miles on E15
Growth Energy announced July 9 that American drivers have logged 5 billion miles on E15. The latest milestone was reached in the midst of Reid vapor pressure (RVP) restrictions on the sale of E15 fuel across most of the country. During summer months consumers only have access to E15 in reformulated gasoline (RFG) markets or if they drive flex fuel vehicles.
“When we give consumers a better option at the pump, they choose E15 again and again,” said Growth Energy CEO Emily Skor. “That’s why Americans have surpassed more than 5 billion miles on E15, which provides unrivaled value for their engines, the environment, and their wallets.”
Working hand-in-hand with Prime the Pump, a nonprofit organization dedicated to helping build the infrastructure and distribution of higher biofuel blends, Growth Energy has doubled the number of E15 stations four years in a row to include 1,400 stations across 30 states. In addition to the stores currently selling E15, Growth Energy and Prime the Pump have secured commitments for more than 2,800 retail sites that will offer E15 by 2021, generating approximately 350 million new ethanol gallons annually.
“To keep this incredible momentum, a year-round RVP fix is crucial,” said Skor. “E15 retailers face prohibitive costs each year just to relabel every pump around RVP season, while consumers lose options at the pump when gas prices are highest, and our rural economy suffers.”
RVP relief now would lift the rural economy out of the worst crisis in a generation and would put the biofuels industry on the path to an additional 1.3 billion gallons of ethanol demand within five years.
Custom Built E85 Motorcycle
A custom-built motorcycle that is fueled by E85 was on display at Show Me Ethanol on Monday, June 25, for employees and their families to see up close.
Renewable Fuels Association partnered with Paul Teutul, Jr. (formerly of Orange County Choppers) to have the ethanol motorcycle built and featured on the Discovery Channel show, American Chopper. The custom RFA motorcycle created by Paul Jr. Designs was revealed to the world on American Chopper June 11.
Robert White, of RFA, and Doug Brandmahl are traveling with the bike as it tours. Brandmahl stated the bike tour will end up in Lansing, Michigan. White described the bike as “old school” with the 100-year-old technology of a carburetor engine. The timing chain was increased and the changes made can be reversed to use gasoline.
“The motor runs cooler on E85,” he said, “and on a day like this, or in August, even a motor 10 degrees cooler is more comfortable.” The exhaust is also cooler. He said the bike “runs like a top,” and the engine is an Ultima 170 with 130-135 horsepower and a 6-speed transmission.
White added that most bikes are made in one single frame but the E85 chopper is a split frame, has shocks on both sides of the rear wheel and all the spokes have “Ethanol” emblazoned on them. He pointed to the rear fender which is the oil tank, and has lines to the engine for oil.
“There are lots of flex fuel vehicles available,” he said. “This shows that any vehicle after the year 2000 can burn alternate fuel.”
The Discovery Channel crew filmed the unveiling of the bike at East Kansas Agri-Energy in Garnett, KS. It was built for an educational campaign to inform consumers about the proper use of ethanol-blended fuels in boats, motorcycles and other small engines.
Representatives from RFA are traveling with the bike as it makes its way around the U.S., making stops at various ethanol plants.
From left to right. Robert White from RFA, Richard Hanson Show Me Ethanol GM, David Durham Show Me Ethanol Board Chairman
Q1 2018 Plant Update
Spring 2018 was another successful time for the plant operations. The transition from cool to HOT weather happened rather abruptly this year, allowing us to evaluate operations in the heat earlier than normal. The improved heat exchange equipment installed over the past 12-18 months has helped, culminating in nearly a record production month in June 2018. In fact, we were only 2,500 gallons short of producing record setting gallons in a 30-day month! Our typical production rate is nearly 8000 gallons per hour, we only needed another ~20 minutes of production to set the record. Total production in the quarter was 17.1 million gallons.
Corn Oil production was also excellent in June; we produced a record 1.75 million lbs. of corn oil, 25% more than the previous 6 months average! Although total volume is relatively low, corn oil is the most valuable product we make. The team continues to be focused on providing maximum oil recovery, while meeting our quality specifications for the Distillers Grains.
The plant will be shut down for 3 days in late August primarily for routine maintenance tasks. We will be completing inspection and testing of our pressure safety devices, an internal inspection of the boiler, and completing upgrades on the steam supply equipment.
Financial Results for Second Quarter Ended June 30, 2018
Total Sales were made up of $23.3 million of Ethanol, $7.7 million of Distiller Grains and $1.2 million of Corn Oil. Total Expenses include Corn costs in the amount of $23.3 million. Net income for the second quarter of 2018 was $1.9 million. Year to date Sales are $61.4 million with expenses of $58 million resulting in Net Income of $3.4 million. Included in year to date expenses are $43.5 million of Corn costs.