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Texas Agriculture Archive

February 7, 2003

Texas Ethanol?

Potential plant could serve Central Texas farmers...

By Lana Robinson
Field Editor

What began as a handful of Central Texas farmers brainstorming in Cameron last June has emerged as a full-blown movement exploring the potential for an ethanol plant in the heart of the Lone Star state. The group, now known as the Central Texas Ag Development (CTAD), has established an eleven-member board representing eight different counties. CTAD President Kit Worley says there are still a lot of unanswered questions, but if the plant is built, it will provide new markets for corn and milo producers and benefit the region's economy while contributing to U.S. energy security.

"Other countries are ahead of us in ethanol fuel use and it just makes plain good sense to use ethanol. We've got plenty of excess corn and milo as feedstock for a plant. We are looking to conduct a feasibility study as soon as possible," said Worley.

A valuable co-product of dry grind ethanol distillation is distiller's grain, a protein supplement that can be used as a replacement for soybean meal and cotton seed meal.

"Texas has a robust cattle and dairy industry that would benefit from the feed co-products of ethanol production. Ethanol is also renewable," Worley added.

Ethanol is quickly becoming the fuel additive of choice in the United States as a safer, cleaner-burning alternative to the petroleum-based MTBE (methyl tertiary-butyl ether), which has purportedly shown up as a contaminant in groundwater.

"There are currently only 60 ethanol plants in the U.S. They're predicting as MTBE is being pushed out, they'll need 2.5 times more plants in seven years. We feel like this is a golden opportunity," he said.

The Federal Highway Administration reported that during 2001, Texas used nearly 60 million gallons of ethanol and ranked 12th out of all states in corn production and 2nd in milo production.

"We're very close to the Gulf Coast distribution network that will play a bigger role as ethanol use continues to increase from coast to coast," Worley suggested. "People are beginning to understand what ethanol is and how it can be beneficial to our environment."

California phases out MTBEs

Last month, the ChevronTexaco Corp. began the switch from blending MTBE to ethanol in the southern California market.

According to the Renewable Fuels Association, by joining with ConocoPhillips, BP, Shell and ExxonMobil, Chevron's announcement means that more than 80 percent of California gasoline will soon be blended with ethanol. ChevronTexaco, which controls 18 percent of the California retail gasoline market, will complete the switch for southern California in May. The company will stop using MTBE statewide by the end of the year in compliance with the state's MTBE ban. With the ChevronTexaco announcement, Valero Corporation, a major MTBE producer, is the largest California gasoline marketer with no plans to end MTBE use prior to the state's mandatory deadline at the end of 2003.

Worley also sees local opportunities, due to federal clean air and water quality mandates. He started thinking about the possibility of a regional plant when he attended a Department of Energy conference in Austin last year. Worley, the only farmer to attend the conference, had a chance to eat lunch with San Antonio officials, who told him the city would buy E85 ethanol, for their fleet of clean-burning vehicles, from a Texas plant if one was built.

"They're trucking ethanol in from the Midwest down I-35, right through fertile Texas farm country. I could see then and there that we were missing out on something, so I talked with a farmer or two to see what the interest was and that's how we really got the ball rolling," he said. "Now, Austin and five surrounding counties have been notified that they are in a non-attainment status with regard to the regulations. Unless something is done to correct it, they will start losing federal highway dollars. One thing they may be forced to do is lower speed limits, or they could consider more ethanol use. For once, it looks like environmental regulations may be working in our favor."

Ethanol is "a very high performing, high octane fuel that has received a lot of bad press," according to Dr. Max Shauck, director of the Renewable Aviation Fuel Development Center (RAFDC) at Baylor University, Waco. Shauck has been accumulating flight and ground test data on ethanol for the past 20 years. The RAFDC has helped the FAA develop more extensive engine modifications to improve range, engine life, and power using ethanol fuels. Shauck has been flying planes on 100 percent denatured ethanol fuel since 1981.

"We flew a single-engine plane across the Atlantic using ethanol. I'm excited to see a movement like this in Central Texas," said Shauck.

CTAD receives USDA grant

Worley said the group has received a matching grant from the USDA to help fund the study.

"Central Texas Ag Development is not just to develop ethanol, but to really explore all possible aspects of our commodities," said Worley. "Ethanol just surfaced as the frontrunner. We received a $65,800 matching grant for a feasibility study, and we're aggressively seeking funds. Dr. Larry Lehr at Baylor University wrote the application for our grant. He did a great job, and we are indebted to him."

An appropriate site for the proposed $55-million ethanol plant would be part of the study's focus.

"Some of the criteria would include proximity to interstate highways, rail access, water, natural gas, and communities that will accept you. There is list of things that have to be understood," Worley said.

Another part of the feasibility study will take into consideration the long-term potential of selling distilled grain to regional dairies, considering recent problems with the City of Waco over water issues and subsequent pressure causing operations to move out of Central Texas to West Texas and New Mexico.

According to Vince Neuhaus of Waco, another CTAD officer, plant capacity is estimated at 40,000 gallons of ethanol per day. Factoring 2.7 gallons per bushel of corn, Neuhaus said 25,000 to 35,000 acres of corn or milo would be needed to meet production requirements. The need may exceed local grain supplies. Texas is already a net importer of corn, consuming about 400 million bushels annually when the state only produces 300 million bushels. However, the men do not believe the plant would negatively affect the price of local grain. They cited a Missouri Extension study that indicated an ethanol plant in that state boosted the local basis about 20 cents per bushel.

"The Levelland area just produces 25 percent of the corn they will need for a proposed ethanol plant there," Worley noted. "We've got better numbers that's going to support us. It doesn't matter if we make our money on corn or the ethanol. We are interested in what will make the most for the producer."

Texas a corn-deficit state

While Texas is a corn-deficit state, 60 percent of the sorghum grown in the state is exported to Mexico and could potentially be used for ethanol production.

"The plant in Portales, New Mexico is 100 percent milo. You can't dump the grain in the same pit, or you shouldn't. You'd need to separate it for the by-product. They have not done a good job with their by-product," said Neuhaus. "Milo is 33 percent protein and corn is 24-28 percent protein going in and three times that coming out. Corn looks golden yellow and dried milo is brown. You need to have quality control."

According to Neuhaus, dried distiller's grain commands $85 to $90 a ton in the Midwest and $110 in Portales.

"Ninety percent of the product in Portales goes straight as wet feed to dairy operations," he reported.

Kit Worley said if the wet by-product can be sold to Erath County dairymen, it would save the cost of drying the distilled grain.

"To have natural gas piped in would cost $5 to $6 million per year, or about a half million dollars per month to dry it down. But even if we have to dry it, we believe we can remain competitive. We have seen some comparisons of Texas with Illinois showing that natural gas is a penny or more cheaper here. If the numbers are right, then we can be in a better position than they are to dry this grain," Worley said.

Unfortunately, aflatoxin is not destroyed with the distillation process.

"It is reduced to smaller amounts as a protein, but you still have to manage it. You can't sell it straight. Aflatoxin is still a problem," said Neuhaus.

CTAD has held meetings in Waco, Burleson County, Bryan and other communities in the area promoting the ethanol plant and asking for donations to fund the feasibility study.

"We have had a great response and participation. We made a lot of contacts, including businessmen and banking institutions. It seems like they want to be a part of this. Nonfarmers are wanting to plow money back into the local economy and local agriculture," Worley said.

Swinford bill backs ethanol

The group has also had productive meetings with legislators, including Sen. Kip Averitt (R-Waco), who has offered assistance in pushing legislation sponsored by David Swinford that establishes a state grant program for fuel ethanol and biodiesel production administered by the Texas Department of Agriculture (TDA). The bill calls for funds to be paid to ethanol and biodiesel producers as an incentive to develop the fuel ethanol and biodiesel industry in Texas. It entitles these ethanol producers to grants (payable at least quarterly) of 20 cents per gallon of fuel ethanol or biodiesel produced in each registered plant operated by the producer for 10 years. For the fiscal years beginning on or after Sept. 1, 2004, producers are entitled to grants for up to 30 million gallons per registered plant.

"We are hoping to have something on that by the end of February. We are asking producers to contact their representatives and ask them to support Swinford's bill," said Worley.

A number of entities, including Baylor University, Texas A&M University, and Southwest Texas State University, have demonstrated an interest in conducting the feasibility study but a decision hasn't been made.

"We have also talked with BBI International out of Colorado, the people who hosted the DOE meeting in Austin last year. They do this on a daily basis. We will have a board action to decide who will do the study. We understand it could be completed quick, within a month," Worley said.