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Corn+Soybean Digest

Supply Solutions: Distributors search for creative ways to meet demands

Demand for biodiesel is going gangbusters. Production has more than doubled in each of the last two years. Now your suppliers and distributors are pushing to get you product in a timely and efficient manner.

For some suppliers, that demand has come on stronger than expected. “By May this year, we'd already sold as much as we expected to sell all year,” says Matt Schrimpf, Piasa Motor Fuels, Alton, IL. “If demand maintains, we should sell more than 600,000 gallons of biodiesel in 2002.” Not bad for a company that had never sold a gallon of biodiesel until May 2001.

“It's absolutely been wild. The spring fills were just simply overwhelming,” says Mike Lockart, Growmark's marketing manager for alternative fuels. “The adoption process was really made easy for us because of the acceptance from the customer base. We see nothing but growth in the future.”

With sales on the rise, suppliers have been looking for a place to put all that biodiesel their customers are demanding.

“We're experts at distributing refined fuels. Now we're evaluating the most efficient way to get soy into that mix,” says Darin Hunhoff, Cenex refined fuels. “The initial answer was stocking it in 55 gallon drums and 5 gallon buckets. That was not cost effective, but it worked.”

Hunhoff says the next step is for retailers and bulk distributors to put in storage themselves or work together to put in an off-site distribution facility. “That's what's been the most effective for us,” he notes.

Tom Kolb, owner of Jefferson City Oil, Jefferson City, MO, followed that path. He added a 15,000-gallon B100 storage tank to his operation last December. Since he's one mile from the Phillips 66 terminal he works with, transport trucks can pick up their petroleum and splash blend biodiesel at his site.

“The reason I went with B100 is that it gives us the availability to do multiple blends,” Kolb says. “If somebody wants a B2, B5, B10, B15, B20 or whatever, we can blend it to the percentage they want.”

However, most fuel suppliers aren't setting aside big tanks for biodiesel just yet, says Paul Fauser, owner of Fauser Oil, Elgin, IA. “What I'm guessing is that you're more apt to find someone that has a 500 gallon barrel with B100 and he's splash blending onto the delivery truck before he goes to the farm,” he notes.

MFA Oil in Columbia, MO, falls into that category. “We added smaller 1,000 gallon tanks because we weren't real sure of the volume that we were going to get,” says David Perkins, fuel manager for MFA Oil. “In addition, we didn't want to make a major capital investment until we knew where it was going to go.”

Farms in the Midwest aren't the only places that biodiesel is heading. West Central Co-op, Ralston, IA — one of five national distributors of biodiesel — has been supplying the fuel to metro areas of the country.

“There are a lot of parts of the country that have grabbed a hold of biodiesel. It's gotten a lot of use elsewhere, almost at the same time as it did locally,” says Nile Ramsbottom, executive vice president. “I'm not surprised that it's being used in some of the biggest cities first, where they've had the biggest environmental problems.”

While some suppliers have taken a cautious approach to installing storage facilities, West Central has taken the opposite. They've constructed a 10 million gallon/year production facility, expected to go online this August.

“This makes sense for us. It's good for West Central, it's good for farmers, it's good for the environment,” says Ramsbottom. “This is a good thing for everybody.”

Warranty Watch

Most major engine companies have formally stated that the use of biodiesel blends up to B20 will not void their parts and workmanship warranties. This includes blends below 20% biodiesel, such as the B2 (2%) blend. Most engine companies have position statements about biodiesel that are available on the National Biodiesel Board Web site at:

Ethanol-blended fuels are approved under the warranties of all major automobile manufactures marketing vehicles in the U.S. In addition, all mainstream manufacturers of power equipment, motorcycles, snowmobiles and outboard motors permit the use of ethanol blends in their products.

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