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Posted: January 21, 2009

Turning Colorado grease into gold

New biodiesel production facility to open in 2009

Heather McWilliams

Restaurants and even home chefs produce a prodigious amount of cooking oil (deep-fry your Thanksgiving turkey this year?) and getting rid of it can be daunting.

Used cooking oil must be legally disposed of, which prohibits discarding it in landfills or flushing it down most sewer systems. Traditionally processed into yellow grease and used as a feed supplement for live stock in the agricultural industry, yellow grease gained popularity as feedstock for biodiesel production in recent years.

Rocky Mountain Sustainable Enterprises, a Boulder-based company founded in 2005 with a focus on waste products as their biodiesel feedstock, collects the used oil from restaurants under the name recycOil. The company currently serves more than 2,000 customers ranging from family-owned restaurants to chains and institutions such as the University of Colorado.

This year, RMSE plans to break ground on a $4.2 million, high-quality biodiesel-production facility in Fort Morgan. The facility should begin producing biodiesel for sale to upstream refiners, distributors and terminal operators in the third quarter of 2009.

Once up and running, RMSE's Fort Morgan facility will produce about 4.5 million gallons of biodiesel a year, or 0.5 percent of the total diesel used in Colorado each year. That leaves a lot of room for growth.

"We think the market will ultimately support something about 10 times that - around 40 to 45 million gallons a year," said Aaron Perry, CEO and founder of Rocky Mountain Sustainable Enterprises.

But maintaining a biodiesel production facility in Colorado has proved tricky during past attempts. Several facilities began only to close their doors, Perry said.

Factors such as the fluctuation in the cost of feedstock oil can cause profit margins to shrink for biodiesel refiners. Many companies import feedstocks from out-of-state adding to costs, while some companies don't establish a strong feedstock supply before jumping into refining. Additionally, producing biodiesel that meets mandatory biodiesel standards for a commercial product can be a technological challenge, particularly when using recycled cooking oil.

One facility, American Agri-Diesel in Burlington, Colo., mothballed its 10 million gallon capacity biodiesel plant after five months of production due to feedstock price increases and changes in the price of gas, but they plan to reopen the plant in the future.

"We're just waiting for market conditions to improve," said American Agri-Diesel owner Jeff Dwire.

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RMSE plans to avoid these pitfalls through careful planning, Perry said. They've spent three years establishing a consistent stream of cooking oil and sourcing the proper technology.

"We have literally scoured the planet looking for technologies capable of producing high-quality products from waste feedstocks," Perry said. Perry spent six months looking for equipment he thought would meet his needs, eventually choosing a technology developed in Germany.

Perry traveled to Germany to "kick the tires," and did a test run with RMSE yellow grease at a New York plant that uses the German equipment. The state-of-the-art equipment accounts for a big part of the Fort Morgan facility's costs, 60 percent or about $2.5 million.

Jenna Higgins, director of communications at the National Biodiesel Board, attributes some closures to industry growing pains. "We are a relatively new industry and we're going through that period. Not everyone is going to make it, and it tends to be the strongest plants that survive," Higgins said.

Pure biodiesel produces around 50 percent fewer emissions, such as carbon monoxide and particulate matter, than traditional diesel, according to the biodiesel board. Most biodiesel is consumed as a blend. A B20 blend contains 20 percent biodiesel and 80 percent petroleum diesel and can run in any diesel engine without modification.

Perry said RMSE's business model, strong feedstock supply, reliable technology and in-state production will ensure the plant's success.

Tom Plant, executive director of the Governor's Energy Office agrees. "They have a very strong business plan. They have great financial backing. I think that they are serving a great purpose both from the production fuel side and for using a feedstock that would otherwise be wasted," Plant said.

The company garnered federal funding for their venture last fall, receiving a $500,000 grant from the U.S. Department of Agriculture to help build the plant. The GEO wrote a letter of recommendation for the company, and while Perry said he'd like to see more grant money from the state for biodiesel, the GEO has been instrumental in adding biofuel distributing pumps throughout the state.

"When Governor Ritter came into office there were 13 stations that served biofuels. At the end of his first year in office we had quadruple that, to over 50," Plant said. Now more than 100 stations offer biodiesel.

Many biodiesel production facilities use virgin oil, mainly soy. Grown for use in the protein market, soybeans are made into soy meal. Soybean oil is only a left-over from this process, Higgins said, so it doesn't have an impact on the food market.

Some first-generation biofuels, such as corn-based ethanol, have come under fire recently as inefficient fuel sources, taking as much energy to produce as they contain.

"Ethanol would be an example of one of the first-generation biofuels that I think has come under increased scrutiny in terms of it its total impact. We like to call what we do Generation 1.5," Perry said.

By taking used cooking oil and recycling it into biodiesel, a two-fold environmental savings occurs, said Natalie Swalnick, manager of the American Lung Association's Air Pollution and Clean Cities Coalition in Denver.

"By buying instead of growing a new source they are really taking something that no one wants and making it into an energy source," Swalnick said.

Environmental impact aside, a new biodiesel production plant will help stimulate the state's economy, provide new jobs in Colorado and contribute to energy independence.

Perry said the company plans to staff the Fort Morgan facility with 10 employees for on-site operations. An additional 10 employees could be added for offsite operations such as sales or truck driving.

"We're always hearing about how we don't have enough fuel refining capacity in this country ...Every biodiesel plant that goes up is adding to our nation's ability to refine fuel and obviously it's made from a domestic resource," Higgins said. "Plus, biodiesel plants create jobs and generate commerce and that's obviously on everyone's mind right now."

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Heather McWilliams is a freelance writer based in Boulder.

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