2014 and 2015 were tough years for biodiesel. The lack of an established tax credit and delayed policy implementation for the EPA RFS program created uncertainty in the biodiesel market, and many smaller plants suffered for it. Even for 2016 the tax credit took over a month and a half to be established where plants could send in the forms to claim credits. That old saying about the 9 most terrifying words: “I’m from the government and I’m here to help”, sure seems to fit.
But things are picking up, and demand for biodiesel is increasing for the second quarter of this year. We have several upgrades underway to improve our production efficiency and throughput. We will be making some improvements to our boiler, adding another resin column, installing additional heat exchangers to scavenge heat and improve process temperatures, and improving our wash process to reduce the bottleneck we have there. We should have these improvements completed in the next few weeks, expecting an almost instant realization of efficiency savings and improved production capacity (assuming Murphy doesn’t step in and rear his ugly head).
On the longer term, we are revisiting our original master site plan for consideration of a major expansion at the facility. We have been looking at two different production paths for this upgrade, using the enzymatic biodiesel production process, or supercritical. They both have their advantages and disadvantages, and both will be expensive to convert the plant to. We are still in the evaluation stages but intend to move forward with one of them in the future, hopefully realizing an increase in our nameplate capacity while also reducing our cost per gallon production costs.
The fuel industry is on its heels right now, and while most are probably thinking of getting out of the business, it feels more like it’s time to double down while things are cheap. It wouldn’t take much for the oil industry to spike above $50/barrel again, or even $100. A war in the middle east, Iran and Russia, or our own US production going bankrupt because of the recent oil glut. There is no quick fix for oil, we don’t have any readily available replacement for it so it’s going to be with us for a while, always in demand; and biodiesel will be right there beside it.