Cost of Ethanol
Cost of Ethanol
At $4.00 Corn ethanol is not feasible in most plants. Kansas is the grainbelt of the US with corn, wheat and hugh feed lots. I grew up on a farm and live in a farm community (with no manufacturing) totally dependent on Ag. Most of the grain produced in this area ship out of our town due to a key location on the railroad. My friends and family raise corn and I grew up in NW Kansas in an area that is irrigated with the highest yields in the nation often over 250 bussel/acre.
Remember corn will not grow just anywhere. And the input cost are very expensive and interrelated to natural gas and oil prices. We can not grow enough corn to run our transportation. If you put all the current corn & oil seed crops to energy, you would have no corn food products or livestock.
Wind generators run an average of 45% of the time in Kansas and we are a windy state. Each windmill generates the equivalent BTUs of a 20 bbl/day oil well. Thus you would need 14 million windmills to equate the BTUs of gasoline and diesel we use each day. This does not include home use. We have a
wind farm near our town that generate 3.3 mkw per tower at a cost of 3.3 million each. That is a national $42,000,000,000,000 investment with 8 year payout excluding repairs and a 20 year life. We can't print that much money. Plus the fact the electric companies must maintain the ability to run full capacity and must charge customers for this capacity.
But you can not run trucks on electricity and Boone Picken's idea of running trucks on LNG is wild. There would be no sleepers on the trucks as you would need a very large LNG tank and larger engines. And remember Boone owns natural gas pipelines and reserves.
We are surrounded by ethanol and biodiesel plants. I have friends that work in
Colwich Ks designing most of the ethanol plants across our nation.
Corn ethanol economics do not work with corn above $4.00. At that price only the plants that have been built years ago and are paid off can make a profit. Below is links to one of the few ethanol plants that make money. Their news letters are extremely informative in simple terms and should be read by those interested in the process.
Prairie Horizon Agri-Energy, LLC (PHAE) was founded in November of 2003
Learn how the plant runs via features in the newsletters.
I know the guy that built the plant below. He is from the oil industry. E3 proposed building a plant near out town with the same concept of making methane via a digestor from cattle waste. The digestor design failed and did not produce the amount of methane required to run or suppliment the plant. I believe he knew this from the beginning as he still owns natural gas pipelines.
E³ BioFuels
Dennis Langley, CEO
E3 Biofuels-Mead LLC filed for bankruptcy protection
However, farmers do need to come to grips with their dependency on the economy, says Swanson. “They need $4 corn to pay rents. They better have a plan B in place with some type of hedge if they're going to make it.”
Corn needs to be below $4.00 for ethanol plants to make a profit.
OFFICIALS AT E3 say that “decreased production levels due to mechanical/equipment failures coupled with the high cost of corn and low price of ethanol made for difficult economics at the plant and have taken a toll on our business.”
Beatrice Biodiesel, LLC announces its intent to construct a 50 million gallon biodiesel
The parent company of the 50 Mgy Beatrice Biodiesel plant in Beatrice filed for Chapter 7 (liquidation) bankruptcy.
Related Ethanol Bankruptcy Stories
• CarbonGreen acquires one of former VeraSun ethanol plants from AgStar; production restart in 30 daysIn Michigan, Carbon Green Bio Energy and AgStar Financial Services have entered into an agreement for Carbon Green to purchase the 40 Mgy Woodbury ethanol plant that was aquired by AgStar in the VeraS...
• Green Plains Renewable Energy to acquire two bankrupt VeraSun ethanol plants for $123.5 millionIn Nebraska, Green Plains Renewable Energy announced that it will acquire two of the bankrupt VeraSun Energy ethanol plants from a group of lenders led by AgStar Financial Services, for $123.5 million...
• One third of US biodiesel plants idled; Nebraska biorefinery fails to find a buyerIn Nebraska, the Chapter 7 bankruptcy trustee for the idled 50 Mgy Beatrice Biodiesel plant in Beatrice said that he has not found a buyer for the biodiesel plant, despite seven months of searching. T...
• AgStar group buys six VeraSun plants for $324 million: creditor will resell, restart in 60 daysIn Minnesota, the AgStar lending group purchased six plants in the VeraSun bankruptcy for a credit bid of $324 million and will dispose of the plants to what it called numerous interested parties. ...
• Minnesota’s Otter Tail defaults on loans for Fergus Fall ethanol plant; restructuring debt, raising fresh equity, say ownersIn Minnesota, Otter Tail Ag Enterprises has defaulted on its $31 million master loan with Agstar Financial Services and is behind on payments for two other debts including a 19.2 million construction ...
• Northeast Biofuels aims to sell assets in April in bankruptcy moveIn New York, Northeast Biofuels has requested bankruptcy court to approve its plan to sell its facility to pay down debt. The $200 million Northeast Biofuels plant never reached full operating capacity...
If the point is
ethanol is a good replacement for oil.
Tell me how the economics can work, not how people feel it should work. I believe in conservation as do all my fellow geologist in Oil and Gas. We spend our whole life studing the Paleo-Ecology of the earth and looking from the molecule to the universe scales. 85% of the U.S. oil companies are small independents that have 2 geologist or less. There are 20,000 Petroleum Geologist. We explore for oil and gas, drill our ideas, and if we fail, we are out of a job and the company goes bankrupt. It is a risky business and not for the weak hearted as we put our jobs on the line each time we drill. The individual companies are not big business, and we have no control over price. We can only do our best and contribute to the supply side, the same as a wheat farmer. Currently we are not exploring and mostly drilling offshore as there are no dollars for investment. There will be much less drilling when we get with new taxes. This will bite us big time if the economy turns as illustrate by recent gas prices.
You can't grow enough energy. It can be supplimental at lower grain prices But you can make major changes with nuclear energy which is the basic source of energy to all the universe. Putting the cart before the horse, hammering the oil industry without developing nuclear, will destroy our economic strength, and spiral us into unemployment and a depression. At that point you need less energy.
Larry