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First Memphis biodiesel refinery opens

If Americans are to meet President Bush’s goal of producing 35 billion gallons of renewable fuels by 2017, businessmen and businesswomen like Diane Miller Mulloy will have to be on the front lines of the effort.

Mulloy is president of Milagro Biofuels of Memphis, a company that recently opened a state-of-the-art biodiesel refinery in a former cottonseed mill. It’s the first facility of its kind in Memphis.

Mulloy and her partners, another businesswoman and the Memphis-based construction company, Lehman-Roberts, are clearly bullish on biofuels. But Mulloy says the fledgling concern can use all the help it can get from farmers and other members of the agribusiness community.

“It’s taken a lot of planning and hard work to get to this point, but we are producing what we believe is a premium product,” she told members of the Memphis Ag Club who toured the plant. “We need folks like you to spread the word about the benefits of biodiesel to farms and urban communities.”

The new facility, which features a waterless refining process that is self-contained, can produce 5 million gallons of biodiesel a year. It uses 416,000 gallons of refined, virgin soy oil a month.

“That’s the equivalent of more than 3 million bushels of soybeans (1 bushel makes 1.5 gallons of biodiesel) or more than 83,000 acres of soybeans per year at 40 bushels per acre,” says Mulloy.

The Milagro plant is unique in that it uses methanol to remove the final particles of glycerine from the virgin soy oil. The methanol is recycled through a closed system. Since no water is used in the process, the plant did not require a clean water permit for dumping effluent.

“This plant was designed and built in California,” said Mulloy. “The biofuels plants in California use the same pollution standards as those in Europe. Germany and other European countries have been using biodiesel for 20 years.”

Mulloy declined to reveal the construction costs for the plant, instead urging Ag Club members to encourage their gasoline retailers to begin offering blends of biodiesel and diesel fuel.

“Nashville has nine retail locations where you can purchase B-20 (a mixture of 20 percent biodiesel and 80 percent petroleum diesel),” said Miller. “Memphis has none. (Motorists can go to to find the locations of biodiesel-selling retail outlets.)

Milagro currently is selling B-100 — 100 percent biodiesel — to area distributors and farm co-ops for blending with petroleum diesel.

Biodiesel manufacturers recommend that farmers and others start with a B-5 blend for a month and then move up to higher blends of biodiesel diesel. They should check engine filters closely during that initial operating period.

“Biodiesel is a solvent, and it will clean out any impurities that might be in the storage tank,” said Mulloy. “That’s why some say you should start with a low blend until you get rid of sludge and other impurities.”

But not all users do. “The Tennessee Department of Transportation went straight to a B-20 in all of its diesel engines on the basis of testing it did on a small number of its vehicles.

“The newer vehicles can use B-20 as a rule,” she said. “Some manufacturers are going up to B-20 and still honoring warranties. Some people are saying you should consider going to a B-50 blend when diesel prices are high. You can change mixtures as prices rise and fall.”

Tax incentives offered by the federal government currently put the cost of biodiesel on a par with conventional diesel. It’s unknown at this point whether Congress will increase the tax breaks for ethanol and biodiesel production to help the president meet his proposed renewable fuel standard.

The “Twenty by Ten” concept — reducing gasoline use by 20 percent in the next 10 years — calls for a new renewable fuels standard in 2017 of 35 billion gallons, about five times the current level of production.

One factor that concerns Mulloy is the small number of soybean crushers left in the United States. Her first barge load of refined soy oil came from a crushing facility in Owensboro, Ky.

“They’re the ones making the money,” she said. “We understand there are only three crushing plants left in the United States. Gov. Phil Bredesen has set aside $1 million in state funds to provide an incentive for locating a new crushing plant in Tennessee.”

She’s optimistic demand will continue to build as people realize what a clean-burning, efficient fuel biodiesel is. “People have amnesia about fuel prices,” she said. “They forget the pain when fuel prices come back down. We need to educate people about the benefits of biodiesel.”

For now, Mulloy plans to stick with soy oil for biodiesel. “Milagro means miracle in Spanish,” she said. “Soybeans are the miracle bean. We’ve looked at cotton seed oil, but it’s too expensive.”

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