If biodiesel truly is the wave of the future, Eastman Chemical is riding a surfboard.
“I want to share our story,” said Gary McDonald, manager of administration at the Batesville, Ark., company. “I don't want you to think we're presenting ourselves as experts in biodiesel. We're still getting up on the learning curve. But we're happy to tell you what we've done so far, what we've learned so far, and what we're planning to do.”
A brief history
McDonald, who spoke at the Arkansas Soybean Association annual meeting in Brinkley, Ark., on Jan. 31, said Eastman has been in Batesville since the mid-1970s.
“At that time, we were part of the chemical division of Eastman Kodak. We made photographic and other chemicals for the company.”
In 1994, Kodak spun off its chemical division and set it up as an independent company, Eastman Chemical. Today, the Batesville plant has roughly 408 employees. Only a fraction of the plant site's 2,200 acres is in use.
“We specialize in chemicals and have for 25 or 30 years. In a year's time, about 35 to 40 different chemicals come off our site. We sell those to around 200 customers around the world. We bring in raw materials from around the world and also ship around the world.”
There are many applications for the products coming off the Batesville site, which is equipped for both continuous and batch processing. “You can find (our products) in pharmaceuticals, in laundry detergents, in herbicides, photographic chemicals, fibers, paints and coatings, a wide range of things.
“As part of the chemical business, we've been certified as an ISO 9001 quality supplier for 20 years. We're also certified to manufacture pharmaceuticals under FDA guidelines so…we know how to make quality product.”
At one time, the plant had over 700 employees. Every company building was “pretty much” filled with production and product. Today, the plant has too much unused capacity.
“That's what drove us to the biodiesel business,” said McDonald. “We were looking for opportunities to use a local, raw material source, produce a product and provide it to a local market. We compete on a global basis every day and that gets difficult. We asked, ‘Are there some non-traditional things we can do to be a local producer?’”
McDonald pointed to a picture of Eastman's batch chemical production facilities. The two buildings contain 65 batch chemical reactors — large, 2,000- and 3,000-gallon vessels.
“We've taken some of our idle reactors and put them into biodiesel production. We also have a large batch facility with larger equipment in it. That facility is currently idle. There's also a continuous processing facility that's almost idle. I point that out because later you'll hear those are part of our vision to expand biodiesel production.”
The site also has a powerhouse and utilities area where coal and natural gas are burned to produce steam, the heating agent for the plant's processes.
“One of the byproducts of producing biodiesel is glycerin. You can find a way to use that glycerin in another product. If we don't have an application, though, we use it as a feedstock in our powerhouse. We burn it for the heat value.”
There are also waste products to deal with when producing the fuel. “We already have a fully permitted plant. You have to handle methanol, so that means air permits, air emission control systems. We also have our own waste-water treatment plant. So a lot of the production capacity and infrastructure is already in place.”
It didn't take long. Last May, Eastman began a feasibility study on biodiesel. By October, the company had begun commercial production with B100 (pure biodiesel).
Until now, soybean oil has been the only feedstock the plant has produced biodiesel from. “We'll continue to use the oil primarily. However, we're also looking at other options and are currently doing tests on rendered oil (from poultry, pork or beef fat). That's under way in the lab and, in a few weeks we'll likely have two lines of biodiesel in production: soybean oil and rendered oil.”
Experimentation has also been done on waste vegetable oil (WVO), “or French fry grease” with less positive results.
“When we began this in October, we thought we'd have a second line using WVO. But the reliability of the supply — both quantity and quality — wasn't there. It was too much work to get the WVO up to the point where it was workable. So we've parked that to the side. Maybe we'll go back to it later.”
As far as markets, simply supplying Arkansas was the company's vision when production began last fall. While that remains the primary focus, McDonald said “it's become obvious there are opportunities outside the state. We're trying to position ourselves to supply that market as well as the local.
“It also became obvious that if we stand up in front of people and say, ‘We make good product and you should use it,’ then we should be using it ourselves. So we're using a B5 blend in our small fleet of trucks, cranes and small locomotives.”
Last October, the Batesville site was able to produce 3 million gallons of biodiesel annually. Since then, the company has added reactors to the production line and is now able to produce 6 million gallons per year. By mid-2006, McDonald says, capability will be up to 15 million gallons annually.
That isn't the only change. “We'll soon introduce Biodiesel Services Business, a service for producers, blenders and users. It could be anything from troubleshooting the production process, to helping dispose of glycerin, to doing analytical work on fuel to see if it meets ASTM specifications or a number of other things.”
One of major issues facing the biodiesel industry is quality. Users — “particularly engine manufacturers so they can warrantee their engines” — want to be assured that what they put in tanks is an untainted product.
“The biodiesel industry has a program that encompasses not only the quality of the product but all the processes used to get to that product — analytical processes, raw material feed processes, production processes. The industry standard is called BQ9000.” Having already applied for BQ9000 designation and been audited, McDonald is confident the Eastman plant will soon receive the designation. If so, Eastman will be only the fourth producer in the United States to be BQ9000 accredited.
McDonald said there are roughly 55 to 60 biodiesel production facilities listed nationally. That number “seems to change weekly. Probably 60 percent are using soybean oil as the primary feedstock. About two-thirds of those have a production capability of 5 million gallons, or less. The rest have a capability from a bit over 5 million gallons to 30-plus million gallons.”
Eastman's business model is fairly simple. “There are three big blocks: feedstock, production, and marketing/distribution. We highlight the production block because that's the game we want to play — we know how to make stuff.
“Truth is, at our plant site, we don't know beans about beans. So we don't want to get into the bean acquisition process. We don't want to get into the extraction/crushing process. There are people doing all that really well already. We want to have partnerships with them on the oil supply side. We're also looking for people on the marketing/distribution side.”
Still in early days of biodiesel production, McDonald had some observations about the industry in Arkansas.
- The availability and price of soybean oil
“(Arkansas Secretary of Agriculture) Richard Bell talks about the difference in bean prices on basis points from Arkansas into the Midwest. Same thing applies to soybean oil. It's just about as economical to buy soybean oil from out-of-state and ship it in bulk as it is to buy it in-state.”
There are two Arkansas crushers and both are good suppliers, said McDonald.
“There's a small facility in England, Ark. It's a really good operation, but it can't produce the volumes we need for our business.
“Riceland has also supplied us some soybean oil. They're good folks and good suppliers. But frankly, they don't need us. They take their soybean oil and process it to a refined grade. They've got a market for every bit of the premium oil they can produce. They're doing us a favor by selling some of it to us.
“And we don't need premium oil — we just need crude. That's the most economical way to make biodiesel.”
- Soybean oil competing with rendered oil
These two are competing in terms of price as feedstock. Rendered oil is a bit cheaper than soybean oil.
“You can make biodiesel from either and, if processing is done right, the net result should be the same.”
- Extending the market beyond agriculture
“Probably 80 percent of the folks using biodiesel are agri-related. A handful of service stations around the state sell biodiesel from the pump. I doubt there are more (than five).
“We need to change that. We need the public to use (biodiesel), fleets to use it, school buses and municipalities. That should come in time as education and availability of the product improves.”
- Competitive state legislation
“Secretary Bell has also talked about this. (Arkansas doesn't) have the legislation other states have encouraging the use, production and distribution of biodiesel.”