Refinery Seeks to Jump-Start Jobs in Delta

by Luke Jones  on Monday, Nov. 25, 2013 12:00 am  

In the sleepy town of DeWitt, past a wooden sign labeled “ArcoFeed,” within the walls of a half-ruined filling station, there sits a metal box about the size of a refrigerator.

At certain times of day, that box will be pumping out what could be the future of a small-scale biofuel industry throughout the Delta region.

The box is a miniature biorefinery. It turns waste vegetable oils into biodiesel. Its operator is Johnny Davis, a semi-retired farmer who owns the crumbling gas station, a feed business and a cattle farm.

On a sunny day in November, Davis points out a box of used cooking oil left at the filling station near a door marked “tire department closed.” The cooking oil will go into the refinery later.

Stepping through the door, Davis switches on some lights to reveal the refinery equipment. It consists of the metal box, a tangle of tubes and wiring and a large plastic tub to hold the finished product.

Davis picks up a Mason jar of golden liquid from atop the tub, unscrews the lid and sniffs: It smells like the diet version of diesel fuel. “They say you can drink this,” he says, adding that he has no intention of putting that to the test.

The refinery can pump out between 50,000 and 80,000 gallons of the liquid per year, which Davis will sell to the city of DeWitt for use in the same trucks that collect the waste oil input, as well as some tractors and mowers.

But Davis and the mini-refinery are small cogs in what is planned to be a giant machine of job creation in the Delta region. The plan traces back to alt.Consulting, a nonprofit in Pine Bluff that works to grow entrepreneurship in rural areas.

In 2010, the firm observed that the entire Delta region was declining in population.

“We knew, as the community development organization that we are, that we needed to create competitive business opportunities in the Delta,” said Ines Polonius, executive director of alt.Consulting. “What we were looking for was an opportunity to basically create more competitive opportunities because many opportunities available to entrepreneurs are not high-profit.”

Polonius said her firm began researching the biofuel industry in the state. There were obstacles:

  • Crop-based biofuel has difficulty competing with edible grains and vegetables, such as soy;
  • The costs of creating biofuel tend to outweigh the profits; and
  • Buyers are tough to find.

Rich Byers, manager of biofuels for Future Fuel Corp. in Batesville, said of the roughly five initial biofuel manufacturers in the state, only two are still producing.

“A couple of small ones tried to get fired up, but could never could get off the ground,” he said. “Smaller plants tend to have more problems getting up to and maintaining high levels of quality.”

He said about half of Future Fuels’ business was biofuels and most of its buyers were outside of the state.

But alt.Consulting, noting these difficulties, discovered some newer developments in the industry that were as-yet unexploited. One of them was miniature refineries, like Davis’, that were much more versatile than previous models.

“What we found with larger refineries is that you’re only allowed one input or else it requires a huge — basically — revamping of the plant,” Polonius said. “All of these processes are very costly and time-consuming before you can use a secondary input. What a micro-refinery can do is it can use any oil-based input.”

A prototype micro-refinery had already been built at Arkansas State University in Jonesboro.

The other factor: a seed crop called camelina.

Two agriculture professors, Terry Turner at Phillips County Community College in Helena and Steven Green at ASU, were studying the crop. It seemed perfect for biofuel for several reasons:

  • It’s not suitable for human consumption, so it wouldn’t compete with food grains;
  • It could thrive in cold temperatures, so farmers could grow it in their off season; and
  • Byproducts of the seed are rich in omega-3 acids and could be used in animal feed.

But Turner said there’s a steep learning curve to successfully growing camelina. The crop won’t survive in water, he said, and requires a different fertilizer schedule than other, similar crops.

The challenge was figuring out how camelina-based biofuel could be used with the new biorefineries effectively.

The answer, it seemed, was to scale the project from small to large, and to factor out transportation costs.

“What we were finding was the larger refineries in the state were transporting their tallow or other inputs from so far away that transportation costs of getting the input to the refinery were outstripping any money made on the back end,” Polonius said. “So what we said was we need a local source of input. We’ll grow our own, basically.”

Alt.Consulting began talking with the city of DeWitt, which already had some interest in renewable fuel resources. Davis was hired to operate the machinery, and alt.Consulting purchased it for $23,000. The nonprofit owns the unit in DeWitt and leases it to Davis, who in turn pays a royalty to the nonprofit based on his production.

The mini-refinery converts waste oils to fuel, and the waste oil collection can be performed either by the business owner or the city itself.

Once the mini-refinery is in stable use, alt.Consulting will reclaim it, and it will be replaced with a larger micro-refinery that can accept camelina.

The larger refinery will cost about $250,000 and will be purchased by the city. “A majority of it will be paid from grants,” DeWitt Mayor Ralph Relyea said.

The grants, he said will come from the Delta Regional Authority and the Southeast Arkansas Economic Development District.

Eventually, the business model can move outside of just the city and can sell its excess — the larger refinery can generate 250,000 gallons per year — to businesses like Valero and FedEx. “So when you take all the transportation costs out of the model, it suddenly becomes profitable even without federal or state subsidies,” Polonius said.

Making It Work

The plans for the Delta region are huge: Polonius said there are 870,000 acres that could be used for camelina.

The idea, Polonius said, is to lease Davis’ initial refinery to another town and continue replicating the process in 25 to 30 communities across the Delta. Once duplicated enough in Arkansas, the project can also expand to other Delta states.

But can the project succeed? If it works, it’s supposed to inject $1.3 million annually into the DeWitt economy alone.

“The [camelina] idea has been around since 2005 as a means of getting a little energy freedom for various communities,” Byers, at Future Fuels, said. “It always sounds good on paper, but it’s a little tougher to make it work, particularly if you’re going to sell the fuel and meet all the specifications to qualify for the [federal] dollar tax credit.”

Polonius said alt.Consulting understands the risks and says expansion of the project will be “deliberate” and “cautious.”

“On the smaller scale, you can control the cost of your operation and such to a much better extent to keep it profitable,” Relyea said.

The response has so far been positive, Relyea added. He said more than a dozen farmers from all around the Delta have already signed up to grow the crop.

“It’s turning out to be even more important than I think it was when we first visualized it,” Relyea said. “It will be something looked at by other communities to make sure it works. Because of the history of biofuels, investors are very skeptical, but once this model is proven, several private investors have already said if it works, they want in on it.”

In the meantime, the weight of the project’s success is all squarely planted on a little box in a run-down filling station in the middle of DeWitt.

 

 

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