Biodiesel

Biodiesel is a highly desirable renewable motive fuel that can either replace or be co-blended with traditional petroleum diesel -- a refined fuel product with a daily demand in excess of 4,250,000 barrels per day in the United States alone.  Biodiesel has been proven in many industries and the actual quality of biodiesel as a motor fuel is significantly high.  Millions of miles have been driven on biodiesel with little or no quality problems, although until 2002 there was not even an ASTM standard for biodiesel produced.  Farm equipment, school buses and urban buses have long been operated successfully on biodiesel.  For several years now, some of the largest retailers and logistic companies have been using biodiesel in varying blends in trucks operating out their distribution systems with great success.  Biodiesel has also been proven to be an excellent and economical lubricity additive.  As the new sulfur standards reducing the maximum allowable sulfur content of petroleum diesel from 500 ppm to 15 ppm became effective in 2004, the role of biodiesel in this area has expanded tremendously. 

Current market driving forces for biodiesel sales are emission reductions, farm lobby support, national security by reduction of petroleum imports and federal mandates such as EPACT and its progeny.  Various types of fleet operators continue to purchase biodiesel based upon a combination of these factors. There are currently over 1,000 fleets using biodiesel.   These groups includes private fleets, state and local government, and federal government (military, postal service, GSA, etc) -- each of which have different parameters for their fuel purchase options.

The Energy Policy Act of 2005 established a target Renewable Fuels Standard for 2012 of >7 billion gallons per year, a number that continues to be adjusted upwards.  While a substantial portion of this will be met with ethanol for blends into gasoline, biodiesel is now mandated to make up five hundred million gallons of the total in 2010, with several hundred million gallon increases taking effect each year thereafter.  Exponential growth in capacity is therefore expected from the very low 2002 base.  An additional driver of demand for biodiesel is the EPACT Federal Mandate 13149 which requires any Federal fleet of >20 vehicles to replace 20% of their fuel consumption with renewable fuels.  Military fleets with large numbers of diesel vehicles are key targets for biodiesel.

Raw Materials

Biodiesel may be manufactured from any type of animal fat and plant oil.  Total domestic oil and fat production exceeds 4 billion gallons per year.  Those oils and fats which are potential feedstock for biodiesel include cooking oils (soy, canola, palm, peanut, and sunflower), off quality and rancid vegetable oils, animal fats (lard, tallow, poultry fat and fish oils) and used cooking oils from restaurants. 

The primary biodiesel feedstocks in the U.S. are soyoils, edible and inedible tallows, poultry fat and yellow grease.  The latter 3 feedstock (excluding soyoil) are chosen due to their relatively lower historical price and their match with the chosen biodiesel manufacturing technology being designed to handle higher Free Fatty Acid (FFA) feedstock.

Soyoil comes from soybeans, the most abundant and agronomically adapted oilseed in the USA.  Due to the broad applications of soyoil as a truly virgin oil, however, it commands a significantly higher price than other biodiesel raw materials, and does not always qualify as being sustainable.  Historically, the feedstock cost per pound of animal fats has therefore been significantly lower than soyoil, a pricing factor that continues today. 

Red River Biodiesel Project

The above core economic factors are the reason Red River Biodiesel, Ltd. has chosen to construct a multi-feedstock facility with animal fats as the primary raw material, with a focus on Stabilized Poultry Fat.  The New Boston, Texas location is within one hour of sufficient feedstock to comfortably produce the full capacity without delivery restrictions from rail service.   

In terms of sales, the Texas fuel market represents the largest single consumer of the nation’s annual petroleum diesel supply.  The majority of the military bases, with their federal renewable fuel purchase mandate, in Texas and Oklahoma are within four hours by truck.  Major distribution and fleet centers for several fortune 500 companies are within thirty minutes of the site.  Additionally, there are a number of major petroleum fuel distributors within two hours, each of which have begun work in the biodiesel area.  The Northeast Texas location provides access to Oklahoma, Arkansas and Louisiana, as well as Texas, each of which has its own biodiesel incentive programs.

In addition to the general availability and location of supply or transportation costs involved in access, the variance of government incentives must be included in the choice of feedstock.  The Energy Bill of 2005 and its extensions provide for a $1.00/ gallon tax credit for biodiesel which uses virgin vegetable oils, used vegetable oils (i.e., yellow grease) or animal fats as the raw material.  The affect on the ultimate product price point cannot be overstated, thus it is very important in the choice of feedstock.