Wednesday, January 16, 2008

Oil From Corn

Researchers at Iowa State University have announced that they are working towards a method to extract oil from corn during the ethanol production process to make biodiesel. Tong Wang is working on this method that would allow for the production of ethanol at the same rate, but would extract the oils from the corn during the early stages of fermentation so that the oil could be used for a co-product; biodiesel. The idea is that during the treatment of corn that is to be fermented, oil is released some of it remains associated with the solid material leftover from fermentation that become dried distillers grains (DDGS). According to Wang, this extra oil in the DDGS is bad for cattle and can lead to swine putting on softer fatty tissue that is undesirable in the meat. In this way, Wang could down two birds with one stone if he is successful in eliminating excess oil from DDGS and is able to make money off of the oil by producing biodiesel.

Wang and Iowa State University are working with FEC Solutions, a Des Moines based energy company that specializes in the research and implementation of technologies for ethanol and/or biodiesel plants. Currently a lot of research going on in the United States related to ethanol has to do with the idea of valuable co-product generation in order to boost revenue. Co-products can involve anything produced of value during the production of ethanol and include DDGS, biodiesel, carbon dioxide (for use in the beverage industry), starch, and high-fructose corn syrup. Typically ethanol plants are divided into two categories -- 'wet mill' and 'dry mill' ethanol plants. The definition of a dry mill ethanol plant, which is by far the most numerous type, is a plant that take dry corn and grinds it into flour. The flour is then used in the fermentation process to make ethanol and DDGS are the solid co-product. A wet mill ethanol plant separates several products from the corn in a liquid phase that results in co-products such as starch, high-fructose corn syrup, protein, and of course ethanol and DDGS. Although a wet mill ethanol plant would sound like the way to go for most companies, the capital costs in building a wet mill ethanol plant are much higher than a dry mill plant because of the intricacies in separating the various valuable products. For this reason, even if a wet mill plant would be profitable after selling its coproducts, it is too costly for most people to acquire the number of investor willing to take a risk in such a plant. This is why currently in the United States only around 1% to 2% of the total ethanol plants are wet mill plants.

My personal comments are that what Wang is doing at Iowa State University is a good idea. The search for new markets is what drove entrepreneurs to ethanol in the first place and it could result in a large boost for ethanol producers. However if he doesn't develop a system that can be used in existing ethanol plants or in a way that will avoid large capital costs, the idea will have trouble getting off the ground -- particularly in the current situation where new investors are hard to come by for new ethanol plants.

1 comment:

mtman said...

A great story. Several others are already investing in corn oil extraction.

Verasun has started construction on the first corn oil plant. Another ethanol plant in New York will soon use corn oil extraction.

A definite win/win situation.