Feb. 14--LAKE CRYSTAL -- The ethanol industry, not long ago staggering from record high corn prices, has rebounded strongly as corn has fallen from a 2012 drought-induced high of $8 to around $4 recently.
"The industry has done real well this year," said Jim Basiliere, interim general manager of the POET plant at Lake Crystal, which produces 56 million gallons of ethanol a year, using nearly 20 million bushels of corn.
"We're looking at margins staying pretty favorable for the first quarter at least."
Archer Daniels Midland Co., the largest ethanol producer, released its financial results for the fourth quarter of 2013, reporting improved profits for its corn business, which was supported by improved ethanol margins.
Results in ADMs bioproducts segment increased by $228 million, reaching $134 million for the fourth quarter. ADM noted that strong domestic and international demand for ethanol resulted in significantly improved margins.
Green Plains Renewable Energy, the nation's fourth-largest ethanol producer with two plants in Minnesota, reported that the last quarter of 2013 was its best ever -- and the current quarter may be better. Valero, the nation's third-largest ethanol producer and owner of Minnesota's largest ethanol plant also reported record ethanol operating income in the fourth quarter.
Basiliere said the industry is able to weather uneven corn prices, but he said the pending decision by the Environmental Protection Agency on Renewable Fuel Standards could badly damage ethanol production and slow progress in advanced biofuels production, such as using cellulosic (plant) material for ethanol.
"The elephant in the room is this RFS decision."
The EPA proposed reducing the overall renewable fuel standard blending mandate below the statutory requirements for the first time in 2014. The agency is proposing that petroleum refiners and importers blend 15.21 billion gallons of renewable fuels into their products, rather than the scheduled 18.15 billion gallons.
"That's considerable. It equals the production of about 30 ethanol plants," Basiliere said. "If you reduce that volume, it's going to make investors wary of investing in the industry."
And that, he said, could stall promising advances in cellulosic ethanol.
POET is just beginning operation of a cellulosic ethanol plant in Emmetsburg, Iowa, that will use corn stover -- corn cobs, husks and stalks left behind after combining.
"We're vetting that plant in Emmetsburg. Once that's done, it's technology we can bring to the other 26 POET plants," Basiliere said.
He said that if and when cellulosic is brought to the Lake Crystal plant, it will mean new construction, significantly boost ethanol output and nearly double the plant's workforce, which now stands at 42. The cellulosic material, which is picked up from corn fields with special machines, would be purchased from area farmers and farmers further away.
The Lake Crystal plant also recently started producing corn oil as one of the byproducts it gets during the ethanol producing process. That premium corn oil is used for blending with biodiesel. Ethanol plants also produce byproducts used for livestock feed.
POET and other plants in south-central Minnesota are among the largest in the state.
The Guardian Energy plant in Janesville and Valero Renewable Fuels plant in Welcome, near Fairmont, are the state's two largest plants, each turning up to 40 million bushels of corn into 110 million gallons of ethanol annually.
The Heartland Corn Products plant in Winthrop is second, producing 100 million gallons of ethanol.
And the Corn Plus plant in Winnebago produces 49 million gallons.
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