HAVE A GREAT SUNDAY READERS!

HAVE A GREAT SUNDAY READERS.......REMINDER THAT I DO NOT POST ON SUNDAYS.

"Pete"

JUST 8 MORE DAYS TIL SOME "FOOSBALL"!

ONLY 8 MORE DAYS BEFORE OUR BELOVED LSU TIGERS TAKE THE FIELD TO BEGIN THE 2012-2013 QUEST FOR ANOTHER NATIONAL CHAMPIONSHIP.   I don't know if readers have seen the "Death Valley" night lighting system just completed with purple and gold lighting on the arches on the stadium North End Zone?  Here is a pic..........just beautiful at night!  And, the facelift on the outside of the stadium is gradually restoring it to what it used to be, and of course, the addition to the South end zone to wrap it to the existing east and west sections will bring the stadium to a little over 100,000 capacity!  Look at this pic...........

                                                 GEAUX TIGERS!!

                                         
                                           Tiger Stadium North End Zone Night Lighting


Back to ethanol business.........yesterday, I posted an article on a company that has just secured a government backed loan to build a plant to demonstrate a new process to make ethanol from grass and other materials instead of corn.......sounds refreshing and worth looking into.  But, today, I ran across this article which is not so optimistic about this new technology.........here is the article:

HAVE A GREAT WEEKEND READERS.................

"Pete"
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Before there was Solyndra, there was cellulistic ethanol
Posted by Travis Fain on Friday, August 24, 2012 at 4:15 pm

The U.S. Department of Agriculture's official announcement this week of a $99 million, 80 percent loan guarantee for a new cellulistic ethanol plant in Sampson County, reminded me in tone of the otpimism we heard down in Georgia, when a similar project was announced back in 2007.

That optimism turned out to be mis-placed, as did various loan guarantees, government grants, tax incentives, employment expectations and private investments. From my former colleagues at The Macon Telegraph:

In 2007, the Colorado-based Range Fuels was awarded a $76 million grant from the U.S. Department of Energy under the Bush administration, plus the loan guarantee and a state grant, in order to build and start operating the country’s first cellulosic ethanol plant. Cellulosic ethanol is made from the woody or fibrous plants -- in this case wood chips -- rather than from food crops such as corn.

But the plant, which was scheduled to open in 2008, never scaled up to full operation and shuttered early this year after making one test batch of fuel. About 30 workers were laid off, said John Lee, executive director of the Treutlen County Development Authority.

The plan for Sampson County is much the same as the plan was in Georgia - a private company (in this case Chemtex, with U.S. offices in Wilmington, but owned by the Italian company Gruppo Mossi and Ghisolfi) is relying on government seed money and promising jobs in a rural area. Chemtex plans to use switchgrass to generate biofuel, as opposed the the wood chips at issue in Georgia.
As in 2007 Georgia, the state's biofuels office says the state is perfectly suited to producing the building block of this natural fuel in abundance (see paragraph 8).
Obviously cleaner domestic energy is a laudable goal for the U.S. government to pursue. Inarguably failure is an important part of progress. Perhaps Range Fuels' failure in Georgia (and this additional ethanol plant bankruptcy here in North Carolina) helped pave the way for success in Sampson County.

But let us ask: What has changed? The USDA's answer to that question, provided by its communications department, is below:

Over the past 3 years, USDA has taken a number of steps to improve the processes to mitigate the risk and improve the prospects for success for investments in the 9003 program.

For example, in 2011, USDA, incorporating public comments, proposed and implemented a stringent new rule (Federal Register Vol 76 No. 30). In addition, the agency developed policies to further strengthen the program such as:

• Provided an additional level of application processing by including state Rural Development officials.

• Strengthened the application review by adding an Independent Score Review Team.

• Improved the underwriting process and analysis by requiring additional technical operating data and validation prior to issuance of loan note guarantees and establishing a Debt Service Reserve Account.

• Increased frequency and depth of loan recipient financial status and construction monitoring. Construction monitoring requirements increased from quarterly to monthly 

reviews. Agency management updates are now provided on a weekly basis.

Those sound like significant changes. But they won't accomplish much if the technology doesn't work, and that has been the problem with cellulistic ethanol.

ETHANOL FROM GRASS??

"TGIF READERS"!

Here's another proposed for an "Advanced Biofuel Plant" to produce ethanol from non-food products, but instead from "grass"!  The technology for doing this is in the early stages and has a way to go before it can become commercial on a large scale.  The good thing about this new design is that it WOULD NOT use corn as feed stock.

"Pete"
=================================================

Chemtex lands $99M USDA loan guarantee for North Carolina cellulosic biofuels project

Jim Lane | August 23, 2012

In North Carolina, Chemtex announced that it has received a $99 million conditional loan guarantee from USDA, under the USDA’s 9003 Biorefinery Assistance Program for the engineering and construction of “Project Alpha.”

Chemtex is in discussions with the State of North Carolina to locate Project Alpha, a 20 million gallon per year cellulosic ethanol facility, in the Sampson County area, with a projected start-up date in 2014. Project Alpha is planning to use dedicated non-food energy feedstock crops, which can be grown on low-value and marginal land such as hog lagoon sprayfields.

Branch Banking & Trust (“BB&T”) will be the Lender of Record for the Project – and the Stern Brothers Group have been acting as investment bankers for the deal. The USDA’s loan guarantee approval is subject to conditions that Chemtex must meet prior to closing of the loan.

Processing technology

Chemtex will use Beta Renewables’ PROESA technology to produce cost-competitive ethanol using non-food biomass as its feedstock.  This is the same technology that will be used at the world’s first commercial-scale cellulosic ethanol plant in Crescentino, Italy, expected to start operations in the fall of 2012, and also in a series of plants to be built by GraalBio in Brazil.  Because PROESA Technology enables the use of multiple types of feedstock, farmers gain flexibility in choosing which non-food crops to grow.  Project Alpha has received additional support from the USDA in the form of a Biomass Crop Assistance Program (BCAP) Award that will help farmers and land owners with start-up costs of planting new energy crops.

Chemtex is a global engineering and technology company wholly-owned by Italy’s Gruppo Mossi & Ghisolfi.  Chemtex specializes in delivering value-added project solutions for its clients in the bio-fuels, renewable chemicals, energy, environmental, petrochemical, polymers and fibers industries.

Beta Renewables is a unique $350 million (€250M) joint venture formed by Chemtex, TPG and TPG Biotech.  Beta Renewables has invested over $200 million (€140M) in the development of the PROESA Process.

Feedstocks

In partnership with the Biofuels Center of North Carolina, Chemtex has identified nearby farmland that is currently growing Coastal Bermuda grass to manage swine lagoon effluent. Conversion from Coastal Bermuda to high yielding energy grasses, including miscanthus and switchgrass, will provide Chemtex a cost effective biomass feedstock for cellulosic ethanol production and area swine farmers with increased economic opportunity as well as the land stewardship benefits of enhanced effluent management.

In June of this year, Chemtex was awarded $3.9 million by the USDA, under its Biomass Crop Assistance Program, to support the establishment of over 4,000 acres of miscanthus and switchgrass across eleven counties in North Carolina.

The feedstock will be part of the biomass supply for Chemtex’s facility. The net increased revenue to local growers is projected to be $4.5 million per year. Chemtex is working with local farmers and producer organizations to begin growing energy grasses for the facility. About 30,000 acres will be required to supply the facility with sufficient feedstock.

Reaction from Washington

“Today’s announcement supports the Obama Administration’s ‘all-of-the-above’ energy strategy to embrace alternative American-produced feedstocks that support our nation’s energy independence and provide jobs in rural areas,” said Vilsack. “At USDA we are focused on the production of renewable energy from a wide variety of non-food sources, including energy grasses. The facility we are announcing today will help create more than 300 jobs in North Carolina and is a perfect example of how producing home-grown energy is good for the economy and good for our energy future.”

GET READY TIGER FANS - 9 MORE DAYS!

READY FOR SOME FOOTBALL?  ONLY 9 MORE DAYS UNTIL LSU's FIRST GAME OF THE NEW SEASON IN "DEATH VALLEY"!  Coach Les Miles was VERY complimentary of new QB Zachh Mettenberger after the last full practice.........he is the new REAL new team leader and apparently relishes the opportunity.  He sure seems to be "THE REAL DEAL"!  We'll know more after the first several early season games for sure.

By the way, I keep forgetting to put in a plug for Scott Long of "DandyDon.com".  He produces a GREAT site following on his recently deceased Legendary Dad (Don Long) who was one of the most ardent LSU fan ever!  If you don't currently read Dandy Don, you should check it out.  I put a shortcut on my computer desktop and read it every morning.  He puts up stuff about LSU that not other site has.........check it out.

Here's another article from a critic of corn ethanol.  He does have some very interesting points.

"Pete"
======================================





Ethanol From Corn Is A Dumb Idea!
By Gary Hunt  |  Commodities  |  Aug 20, 2012 08:19AM GMT  |  

There is a lot of hot air blowing in Iowa and across the US Midwestern states—and I am not just talking about politics or wind energy production. The combination of an extended drought plus the ethanol mandate plus the weak economy plus the 2012 Presidential election cycle has combined into a ferocious debate over all of these issues. 

On August 10, 2012 The US Department of Agriculture released a specialized crop forecast sure to send corn prices higher than their already record setting $8 per bushel. The USDA report said corn production would be “sharply lower” down 22.6 bushels per acre to 123.4 bushels per acre making the current harvest the lowest forecast since the 1995-96 growing season. The number of acres of corn expected to be harvested for was also reduced by 1.5 million acres reflecting USDA’s estimate of failed crops due to drought conditions. 

Lower corn production hits home with higher food prices. It also hits hard because US Renewable Fuel Standards require blending ethanol into gasoline. For 2012, 13 billion gallons of ethanol is required to meet the target but that requirement gradually increases each year from 9 billion gallons in 2008 to 36 billion gallons by 2022. The RFS also requires the use of cellulosic ethanol made from non-food crops except none is produced commercially in the US since it is uneconomic so refiners must buy credits or pay a penalty for not using it.

To maintain supply lines in the face of reduced domestic corn production, imports are forecast to increase this year by 45 million bushels to 75 million bushels. USDA said total US corn supply for the growing year would likely be at a nine year low falling by more than 2.0 billion bushels. As a result USDA expects total US corn use to also fall by 1.5 billion bushels to 11.2 billion bushels—the lowest corn use in 6 years. 

The first sacrifice in corn short years is feed for livestock. Ranchers have already begun to cull the herds. In a campaign stop in Iowa August 13, 2012 President Obama announced that USDA would step up its purchase of meat buying $170 million in pork, chickens, lamb and catfish as the culling of the herds will create a short-term glut in the market with falling prices. The US will use the meat it hopes to buy at bargain prices for US food programs. Economists predict longer term spikes in meat and other food prices as supply shortages ripple through the supply chain. 

US EPA could waive the RFS ethanol use, but don’t count on it. Because of the ethanol mandate available corn supplies in shortages follow the price higher with the ethanol mandate, driving up the cost of gasoline refiners who are required to buy it at any price unless EPA issues a waiver. So far it has shown no indications it will do so. Last year, US EPA denied a waiver requested by the State of Texas in the face of its severe drought conditions. 

USDA has a spotty record of forecasting these things but the conditions on the ground suggest a worst case scenario this year in the absence of rain and the scorching hot temperatures. And the worst case is exactly where the ugly politics of ethanol are taking us for the rest of this election cycle. Even environmental groups which once favored ethanol production have soured on it claiming it uses more energy to produce than its saves in imports and emissions reduction. But ethanol is the poster child for artificial markets created by government mandates and subsidies that are tough to stop once constituencies are in place. 

As is true on many issues during this election cycle, facing reality about our economy, job creation, taxes, subsidies and pet causes is causing angst. Ethanol mandates should be causing a lot more angst than they are. Politicians campaigning in Iowa are unlikely to be truth-tellers on this subject. A healthy election debate on the pros and cons of the renewable fuel standard and the unintended consequences of ethanol mandates is good for the country and might even lead to a consensus on a way forward to pull our economy out of the ditch, but a lot of mud-slinging is going to happen getting there.

Have a GREAT Wednesday readers!  I continue to search for articles that may shed some light on this continuing saga of corn vs food.  It is a very complicated issue, compounded this year largely due to the HUGE drought in the corn producing States, the worst drought in nearly 50 years.  The crop damage is already estimated at 35% or so and likely go higher.  Plus, the EPA ethanol mandate that 12+ billion gallons of ethanol to be produced soaks up nearly 40%+ of the corn grown.  SO, what's left for corn for food products when the drought has taken much.  That's what has driven the corn prices from $6.25/bushel to now $8.30/bushel.

Here's yet another article which debates that corn prices CAN be brought down if the EPA's mandate is reduced significantly.  In an election year, I personally believe there is a proverbial "snowball's chance in hell" that this will happen.  SO, those "pricey" steaks will likely become unaffordable for many people and they will be forced to switched to tortillas.......but, oops, I forgot that those are made from corn also!

"Pete"
============================================

Study: U.S. could put a big dent in food prices by relaxing ethanol rules

Posted by Brad Plumer on August 21, 2012 at 3:59 pm

The worst U.S. drought in half a century has hampered the country’s corn production and caused plenty of worry about the rising cost of food worldwide. But the spike also raises a policy question.  Should the United States now suspend its rules that divert a hefty portion of the U.S. corn crop—40 percent, by some counts—into ethanol fuel for cars and trucks?

One top U.N. food official, José Graziano da Silva, has already called for an “immediate, temporary suspension” of the U.S. ethanol mandate in order to ease the pressure on world food prices. But how much would this actually help? Here’s one possible answer. A new paper (pdf) out from three agricultural economists at Purdue University finds that even a partial relaxation of the mandate could reduce corn prices by up to 20 percent next year. (It’s probably too late to seriously affect prices this year.) But, as always, there are complications involved that make these estimates uncertain.

Currently, the EPA’s Renewable Fuel Standard requires refiners to blend a certain amount of ethanol in with their gasoline. In 2013, this will require about 13.8 billion gallons of ethanol. Since corn ethanol is the most viable form of ethanol in the United States at the moment, this creates a hefty—and fairly inflexible—market for corn. And that causes corn prices to rise higher than they otherwise would.

What would happen if the EPA relaxed this mandate? As the Purdue authors note, a lot depends on how quickly refiners and blenders could switch away from ethanol. That’s not as technically easy as it sounds—these refiners have already made preparations for blending ethanol. What’s more, under the EPA program, the producers of ethanol can carry over credits from year to year, giving them some flexibility to deal with shortages. That complicates matters further.

So the Purdue authors modeled a couple of different situations to determine how the price of corn might be affected in 2013. Roger Pielke Jr. has created a very handy graph that shows different options under a “strong drought” scenario:

Let’s break this chart down: In the first option, the EPA doesn’t alter its ethanol program at all. Corn prices remain elevated next year — staying around $8.57 per bushel. Under the second option, the EPA doesn’t alter its program at all, but ethanol producers use as many of their existing credits (RINS) as possible to deal with the shortage. Corn prices drop about 7 percent. In the third case, the EPA allows a little more flexibility in its rules, say, by partially relaxing the mandate or by allowing U.S. refiners to use imported sugarcane ethanol. Prices drop by about 13 percent.

Under the fourth option there, the EPA allows a fairly big relaxation of the ethanol rule next year. (A waiver this year is unlikely.) Refiners are required to use 25 percent less ethanol. And ethanol producers can carry over their credits from previous years. In that case, corn prices could drop more than 20 percent, to $6.56 per bushel. That’s about where corn prices would have been if we only had a “weak drought” this year. In other words, by relaxing the ethanol rule, the EPA could essentially turn a “strong drought” into a “weak drought” as far as prices are concerned.

Still, the Purdue authors note that there’s no simple solution here. The drought has already hurt the corn crop this year. That corn isn’t coming back. At best, by relaxing the ethanol rule, the EPA could redistribute the pain a bit:

In considering a waiver, EPA cannot change the loss, but can only redistribute it among the affected parties—ethanol producers, livestock producers, corn growers, and ultimately domestic and foreign consumers. To the extent that the refining and blending industry has flexibility, issuing a waiver helps livestock producers and livestock product consumers, and it hurts ethanol producers and crop growers.

So far, the Obama administration has shown no indication that it will relax the ethanol mandate, although the EPA just announced it would take public comments on a waiver proposal. In the meantime, the Department of Agriculture has tried to assist livestock producers by buying up millions of dollars worth of pork, chicken, and beef. That might help meat producers. But it doesn’t change the fact that the combination of a drought and tight ethanol rules will hike corn and other food prices—particularly for developing countries overseas.

* Updated to note that the EPA is preparing to open a 30-day comment period on requests to waive the ethanol mandate.

EPA seeks input on ethanol mandate waiver requests

Do hope all readers had a GREAT weekend.  College football is just 12 days away folks!  LSU's first game is on Saturday, August 31st in "Death Valley"!  Glad the first 3 games will be at home, even they're against rather weak opponents, except Washington, so it will give the team a chance to get their timing down.  Folks, I've seen videos and read reports of some who have seen some of the practice sessions, and new QB Zack Mettenburger is the "REAL DEAL".   The offense loves him and he has apparently earned the team's respect as their leader, a role which he said he relishes.  He has an arm like a "rocket" as quoted by a couple of his receivers.  In one video I saw him throw, with a very quick "flick of the wrist" a 65 yard pass and hit the receiver on the numbers.  His passing is VERY accurate per his receivers.   His receivers have given themselves a nickname..........."The Fab Five"!  For the first time in nearly 5 years, LSU finally has a QB!  It's a shame Les Miles didn't let him play more last year.........but, his time is NOW!

The EPA today put out a notice that they will post a request for comments in the Federal Register (as required by law) on the request for waivers on their "Ethanol Mandate".  Several State Governors have petitioned for a waiver and the list is growing.  Below is one of several articles I've read on this subject today.  Maybe, just maybe, their may be a ray of hope in scaling back this terrible mandate to hopefully stop the runaway price increased in food costs?  Making ethanol for gas with food is NOT a very smart idea to begin with.

"Pete"
======================================

EPA seeks input on ethanol mandate waiver requests                                        Reuters - 6:11 p.m. CDT, August 20, 2012


WASHINGTON (Reuters) - The U.S. Environmental Protection Agency on Monday said it has begun weighing requests to suspend the U.S. ethanol mandate, which requires refiners to blend ethanol into gasoline, and is seeking public feedback.

The governors of North Carolina and Arkansas asked the agency last week to temporarily waive the U.S. quota on ethanol made from corn, because the worst drought in 50 years has driven corn prices higher and hurt livestock producers who depend on the grain for feed.
The EPA asked on Monday for public comment on the need for an ethanol waiver. The 30-day comment period will begin once the notice is published in the Federal Register.

"This notice is in keeping with EPA's commitment to an open and transparent process to evaluate requests the agency receives under the Clean Air Act, and does not indicate any predisposition to a specific decision," agency spokeswoman Alisha Johnson said in a statement.

By law the agency has until November 13 to make a decision on the waivers, meaning EPA could act on the requests after national elections on November 6.

Aimed at reducing U.S. reliance on foreign oil, the Renewable Fuels Standard, or RFS, would require 13.2 billion gallons of ethanol to be made from corn this year.

The EPA is seeking input on whether the RFS would severely hurt the economies of Arkansas, North Carolina or any other part of the United States and what effect a waiver would have on ethanol demand and corn prices.

The agency is also asking, if a waiver is needed, how much should the mandate be eased and when should it apply.

A petition by Texas Governor Rick Perry in 2008 was rejected when the agency said waiver requests had to show the mandate itself was severely harming a region's economy and not just contributing to economic damage.

U.S. livestock groups have argued that complying with the mandate at a time of historic national drought is causing major economic harm to meat and dairy producers.

It is unclear that a waiver would weaken corn prices. Refiners will likely continue buying almost as much ethanol even without the mandate since they use it as an additive to make cleaner-burning fuel required in much of the country.

Ethanol industry groups say the mandate offers some flexibility for fuel blenders responsible for complying with the RFS, including the ability to buy bankable credits if blenders cannot buy enough physical ethanol to meet requirements.

(Reporting by Ayesha Rascoe; Editing by Gary Hill and Jim Marshall)

Court dismisses challenge to EPA's introduction of E15

WOW, what a wet and soggy weekend.  I don't know how widespread the rain was in Louisiana, but in LaPlace we had 8 inches in 3 days!  Thought I'd have to take my boat out of my boat shed to use it at one point..........

Well, a US Appeals Court in Washington D.C. dealt a blow to all litigants in lawsuits asking the courts to stop the 15% ethanol to allow auto manufacturers to complete their long term testing.  The court by a 2-1 margin dismissed the lawsuits.  I've read about 15 articles on this from many different papers, but none indicated if the dismissal will be challenged in a higher court or not.  If it is not challenged to a higher court, we may be stuck with E15!  However, the one thing on consumers side, that is if you oppose E15 and the way EPA approved it in "partial waivers", is that auto makers have warned customers in their owners manuals and even on gas caps of some newer cars NOT TO USE GAS WITH GREATER THAN 10% ETHANOL, and, if they do, and their engine is damaged, their WARRANTY WILL BE VOID!  And, this includes 2001 and newer cars and light trucks that the EPA said it is safe to use E15 in!  Retailer stores that sell gas are also opposed to it and many have said they will not sell it even if offered (it is OPTIONAL for retailers to sell it).......their biggest concern is the potential liability involved.  So the "saga" continues...........all I have to say about E15 is SELLER AND BUYER BEWARE!  As far as my study shows, the ONLY vehicles that can use this new fuel safely are the vehicles which bear the "FLEX" decal........these vehicles were designed with different fuel pumps, fuel lines, injectors and other components to attempt to reduce the corrosion from the higher ethanol blends.  And, of course, the added cost to manufacture these autos were subsidied by us the taxpayers through government tax credits to the auto manufacturers!   E15 should NOT be used in anything else.....PERIOD!  It is most CRITICAL that it NOT BE USED in marine engines, motorcycles, jet skis, 4 wheelers, chain saws, home generators, and all gas powered lawn and garden tools, PLUS any vehicle that is not a FLEX vehicle.  It will destroy these engines (proven by tests) and warranties will NOT cover damages!  I have an article on this E15 issue on the "Articles" page of my website.

HAVE A GREAT MONDAY READERS!  

"Pete"
=========================================

Court dismisses challenge to EPA's introduction of E15

WASHINGTON, DC, Aug. 17

08/17/2012

By Nick Snow - OGJ Washington Editor

A federal appeals court dismissed a legal challenge to the US Environmental Protection Agency’s introduction of gasoline with a higher ethanol blend into the marketplace. The three-judge US Appeals Court for the District of Columbia ruled 2-1 that the petroleum industry and two other groups did not have legal standing in the matter.

The attempt by refiners and product importers to draw a causal link between the waivers they challenge and costs they would incur introducing the 85% gasoline-15% ethanol blend (E15) “ultimately rings hollow,” the Aug. 17 decision said.

“If anything is ‘forcing’ these entities to incur the costs of introducing a new fuel, it is the obligations set by the [federal Renewable Fuel Standard], competitive pressures, or some combination thereof,” it continued. “EPA’s partial waivers simply provide a new choice of fuel for manufacturers to produce. There is not a cause of these costs providing the petroleum group with standing.”

It also denied standing to engine manufacturers, who warned that introducing E15 could harm their products, and food businesses which produce, market, and distributed products requiring corn.

Officials from the American Petroleum Institute and American Fuel & Petrochemical Manufacturers immediately criticized the ruling.

“AFPM members want to ensure that all fuels sold into commerce are safe for consumers, effective and reliable, but today's decision confounds our ability to do so,” said Charles T. Drevna, the association’s president.

“Vehicle testing has confirmed that E15 damages certain engines,” he continued. “In fact, vehicle manufacturers have begun to include warnings on their gas caps that E15 could void vehicle warranties. This decision will harm every American who owns a car, truck, or small engine equipment.”

API Downstream Director Bob Greco separately said that it was astounding the court found that refiners, who must comply with the federal ethanol mandate contained in the 2007 Energy Independence and Security Act, don’t have legal standing.

“EPA approved E15 before vehicle testing was complete, and we now know that the fuel may cause significant mechanical problems in millions of cars on the road today,” he said.

Contact Nick Snow at nicks@pennwell.com.