This week the National Biodiesel Boards annual conference will be held in Texas.
With last week’s release of the EPA’s final rules related to RFS 2, a biodiesel mandate will be in place this year. I suppose a good deal of time will be spent discussing the mandate, the future of renewable identification numbers (RINS), and the current situation with the lapsed excise tax credit.
But whether or not a new mandate is in place or the excise tax credit returns, the core industry problem remains; feedstock.
The life blood of any biodiesel production plant is feedstock. Whatever the feedstock, be it virgin vegetable oil, yellow or brown grease, or animal tallow, in general it must be tracked and prepared for its future conversion to methyl esters.
Feedstock represents the majority of the cost of operation, and its secure and consistent acquisition is a daily challenge. Preparing the oil in a way that facilitates its consistent conversion requires the development and maturation of a carefully coordinated system of processes and practices that allow incoming oil to be collected, cataloged, tested, categorized, filtered, de-watered, neutralized, at times blended, and stored prior to processing.
Promethean is fortunate to have a relatively large facility space, but early decisions made about our approach to storage has meant that the focus here is on high throughput.
It is easy to build excessive capacity in the biofuels arena and it is more important to conserve cash at startup than to spend it on potential future capacity. The issue here is that we have recently been approached by groups or organizations that want us to stretch the limits of our capacity. Although I am a proponent of service delivery based on just in time manufacture, in this industry issues related to transportation are relatively common, and it is best to have a cushion for problems that may arise from timing or the myriad other things that can interfere with the scheduled drop off of feedstock or pick up of finished product.
I am not conservative. I am a risk taker. The proof of the latter is my participation in this industry.
Feedstock prices in California remain high, and may remain so over the next few months.
At Promethean we view the production of biodiesel first and foremost as a service. This view means that we must constantly explore ways to add value to our customers as well as reduce the costs related to production. Focusing on manufacturing as a service has other consequents as well, some yet to be discovered.
As it stands, an increased level of vertical integration is required in our collection approach and infrastructure, since it is obvious that without the ability to obtain some percentage of the feedstock required for production we cannot sustain-ably render our services in the long term.
Problems are opportunities, and the feedstock problem for a plant of our scale is easily solved with hard work, a commitment to service, and time.
Make it a better place!
Todd
