North America’s largest wholly-owned biodiesel manufacturing and marketing source, Renewable Energy Group
, is the first biodiesel producer and marketer in the United States to have developed product specifications for B100 that exceed ASTM D 6751 biodiesel specifications, regardless of feedstock.
The firm’s biodiesel manufacturing plants produce biodiesel in large volumes, and require a unique and sophisticated approach to finding the raw materials required to develop high-quality products. In his role as vice president for supply chain management, Dave Elsenblast
oversees a complex and intriguing materials procurement operation, which includes fats, oils and other triglyceride feedstocks. Dave recently sat down with Energy Digital to skim the surface of a multilayered and complex sourcing operation.
Q. What kind of materials do you source and how are they used?
A. The raw materials that we are sourcing would be vegetable oils, canola oil, and the various different types of soybean oil -- from refined and bleached soybean oil to crude soybean oil. We purchase a lot of animal fats and used cooking oil and waste vegetable greases, and we also use inedible corn oil that comes from ethanol facilities.
Q. How do you identify and purchase animal fats?
A.We deal with every category of animal fat and waste cooking oil that is out there. From the beef slaughter industry, you have edible tallow, technical grade tallow, and bleached fancy tallow; we trade in all types of grades. From the pork slaughtering industry we have edible lard, which, as it sounds, is the edible fat that comes off the pork slaughter operation. We have a product called choice white grease, which is an inedible pork fat, and a lower grade product called yellow grease. Each one of those has a varying degree of free fatty acids and a varying degree of moisture and insolubles.
We deal with all of the major slaughter companies in the United States. We also deal with the rendering industry, where non-slaughter companies collect various raw materials from different meat cutting industries and companies that collect used restaurant grease. They go around restaurants and collects the used cooking oil, clean it up, and then we buy that product from them.
Q. How are different oils sourced?
A. Soybean oil is produced here in the eastern and western Corn Belt. The soybean growers sell their soybeans to local elevators or crushing plants. We buy soybean oil from many of the large crushers in the United States, such as Archer Daniels Midland
. They have various crush facilities that are located advantageously to our biodiesel facilities and so we monitor their selling prices on a weekly and daily basis to find the best purchase price. Canola is purchased in a similar fashion, except that the geography of canola production is farther north and into Canada.
Inedible corn oil comes from the ethanol producers, generally from the Midwest. The inedible corn oil comes out of what is called syrup, which is in a liquid stage. The ethanol facility will run that through a centrifuge and extract the oil out of the syrup and you're left with an oil that some biodiesel producers can convert into biodiesel.
Every feedstock has a different unique operational yield within every category and between suppliers, because there are different yield characteristics based on the type of feedstock we’re purchasing. We understand the different yield results between the different fats, and we understand the different yield results between the different suppliers.
Q. Can you talk about the “B” factor – the amount of biodiesel blended into a petroleum product?
A. As we sell into the distribution channel, our product gets blended in by the petroleum folks at anywhere from B2 to B20. State mandates for biodiesel blends would be one factor that will determine what grade of biodiesel they're going to blend in. The economics and the temperature of where they are at that time of year will impact how much they put in, as well as the intended use. For example, underground mine operations may use a much higher percentage -- perhaps up to 100% or B100 -- to help control emissions in those areas.
Early on, we understood that we were going to be a multi-feedstock business. We've been the industry leader in the expansion of utilizing different feedstocks. We were a leader in the innovation of animal fat and of inedible corn oil. We understood that not all of our market was going to be using soybean oil. We arbitrage between the different feedstocks that are going to deliver us the best value as we convert triglycerides into BTUs.