East Kansas Agri-Energy

(Jim) Good morning folks, welcome to That’s My Farm! I’m Jim Shroyer your host and we’ve got a treat for you. We’re normally talking to farmers and that sort of thing but today we are talking to the folks at East Kansas Energy Center near Garnett, Kansas. We’re going to be talking about what goes into this ethanol plant and talking about renewable diesel here in just a moment. So folks, don’t go away we’ll be right back.

Closed Captioning Brought to you by the Kansas Soybean Commission, the Soybean Checkoff, Progress Powered by Kansas Farmers.

(Jim) Good morning folks. I’m Jim Shroyer, host of That’s My Farm. And we’re in luck today because we’re at the East Kansas Agri-Ethanol Plant outside of Garnett, Kansas and In Anderson County. And we have the Vice-Chair of the Board, Scott Bergdahl. And Scott this is a really interesting plant here. And can you kind of tell us the history of it and where we are today? (Scott) Well, the history of this plant actually goes back to 2000 with the Anderson County Economical Development Board that wanted to do a project in Anderson County around Garnett and hence an agriculture pursuit. It was turned over to a steering committee in 2001 and East Kansas Agri-Energy LLC was formed in the fall of 2001 and we went into a money raising mode for about three years. And we broke escrow on the project in January of 2003. And started…broke ground in the fall of 2004, started production of the plant in June of 2005. (Jim) OK, OK. So, today…well let’s go back, when you started what was the capacity of the plant at that time for ethanol? You’ve been breaking records on production ever since you started until today. So, what’s your production of ethanol per year basically? (Scott) Well the plan is designed with a 35 million name plate capacity and today we’re producing approximately 47 million. So, we’re well over name plate capacity and that had to do with some upgrades on our process, tweaking the process and then added some project upgrades to the plant that increased production. (Jim) OK. Let’s go back to, you’re the vice chair, so how many members are on the board and what’s the makeup? And what’s the makeup of the owners of this plant? (Scott) Well, currently we have 11 board members and it ranges from five or six that are in agriculture, whether it be row crop production or livestock production, which I’m in. And we have members on the board that … one is an executive with H&R Block, we’ve got a young lady that’s in the extension service in south central Kansas, we’ve got business men, insurance guys, bankers. So, we’ve got a range of professionals on the board. (Jim) The unit holder makeup, we have approximately 700 unit holders and they range from about half of those unit holders are in agriculture and about half of them are non ag. And they range from base, most of them are based in Kansas, live in Kansas, but we have unit holders in many other states including as far away as Minnesota and Texas. (Jim) So, how many bushels come in… you mentioned 47 million gallons, how many bushels come in of corn, where does that corn come from? (Scott) Well we’ll take in about 17 million bushels to produce 47 million gallons. And we buy corn… our range of influence on buying corn is about 11 counties surrounding this plant. (Jim) OK, Scott I gotta stop you there. We have to take a word from our sponsors here. So folks, stay with us. Scott you don’t go away. We’ll be right back.

(Jim) Welcome back folks to That’s My Farm, I’m Jim Shroyer, and we have the Production Manager, Jacob Debolt. And Jacob kind of take us through the operation of how you get a bushel in and how we get a gallon of ethanol out. (Jacob) Well, we are a dry grind ethanol facility. We grind approximately 16 to 18 million bushels of corn a year. On occasion we will grind a little bit of milo but we are predominantly in a corn area. The process is pretty simple. We take the corn, we grind up the corn and then we cook it. In the cook process we’re breaking down starches into various kinds of sugar. After that point we cool the mash off, which is what that process ends up with. And it goes into fermentation. In fermentation we want to break down those complex sugars into glucose which is good for the yeast. During fermentation yeast will metabolize the glucose into carbon dioxide and ethyl alcohol. After that process we become distillation. So we will take the alcohol out of that beer and in turn we will distill it up to 190 and then we will use molecular sieves to take it up to 200 proof. The last stage for that product is denatured alcohol, so we will add a littleĀ bit of gasoline or petroleum distillate in order to make it non-consumable. (Jim) So Jacob, what are some of the co-products besides the actual ethanol. (Jacob) Well, we make distillers grains, both wet and dry. We make approximately 190 thousand tons of wet a year and about 72 thousand tons of dry. Most of our wet product goes to a domestic market. And our dry product has the ability to reach an export market. So, we also make corn oil. Currently our corn oil is used for bio-refineries and animal feed. In the future we will use it to supply our renewable diesel plant that will come on line in 2015. (Jim) OK. So, where are we? (Jacob) We’re in the control room. This is kind of the heart of operations. Everything that we see in terms of the plant is mimicked here on the screens. We have external camera views so we can see where trucks are at any one given point in time. And we have our DCS Control System that is our interface to the machines out and about in the plant. So, a team leader sits here and monitors what we call the boards and then directs the other operators to where they need to be. (Jim) OK, so as I look at these screens here, my question is, I don’t know if it is obvious or not, but it is to me, so when a bushel of grain comes into the plant and a gallon of ethanol goes out, about how many days? (Jacob) About three days. (Jim) It takes three days and you have a finished product. (Jacob) Three days and you have a finished product. (Jim) And the distillers grain at the same time? (Jacob) Same time. An approximately same time. So, it is a continuous process with batch fermentation. But most dry grind plants are. So, it’s pretty static in terms of time frame between start to finish for process. (Jim) Thanks for giving us a little over view. (Jacob) I appreciate it. (Jim) I appreciate it. And folks stay with us, we’ll be right back after these words.

(Jim) Welcome back folks to That’s My Farm and with us we have the Plant Manager Doug Sommer. And Doug you know, this is a state of an art plant here, so kind of tell us the improvements, the efficiencies that you’ve… that the plant has in place. (Doug) Well Jim, we’re always looking to maximize the value out of a kernel of corn. For example, East Kansas has integrated some processes that help improve on our efficiencies and yield per bushel. For instance, we have added a pre-condensing process in which we are capturing alcohol vapor that would other… (Jim) It would be lost. (Doug) It would be lost to the atmosphere. (Jim) Right. (Doug) You know that’s increasing our daily yield by approximately 1,500 gallons. (Jim) Really? That’s not chicken feed. (Doug) Other examples… That’s not chicken feed. When you add the value of a bushel of corn, the value of a gallon of ethanol, that’s a bottom line increase. (Jim) Sure, sure. (Doug) Right away. You know we also are constantly looking at expanding heat exchangers for instance, to transfer more of that heat without having to increase the production. (Jim) Because when you go from that…when you buff that up, that beer mash operation, you go from 180 degrees to 220. And you bring it back down, the steam’s gotta go somewhere. (Doug) That’s right. That material has to be re-cooled, we try to take that temperature drop we need to achieve and drop it to a material that we need to reheat before distillation. So, we’re constantly looking at maximizing those efficiencies. We also here in the last few years have introduced corn oil extraction here at the facility. We are constantly producing probably three quarters of a pound of corn oil per bushel of corn. (Jim) Right. (Doug) Again, that is another bottom line increase, we’re maximizing that value through a corn oil product. (Jim) Well, now that steam we were talking about a second ago, that steam runs a turbine and so what does that turbine do, what does that do to your electrical use? (Doug) Through the turbine, through that steam we’re generating roughly 18 percent of the electrical demand for the facility. (Jim) Obviously you use a whole lot more. (Doug) Absolutely, but that’s a huge savings in the whole scheme of things when it comes to the demand of the facility. That gives us a little bit of a competitive edge over other plants that particularly don’t have those types of savings in house. Just again, that’s another example of things that we’re looking at. We’re continuing to look for those opportunities. (Jim) Anything else? Any other ideas? (Doug) As we mentioned earlier, we are looking at a renewable diesel facility, here in the near future. In which again, we’re going to continue to add value to an existing product here at the plant in the corn oil. (Jim) Doug, I really appreciate you taking the time to… I know you gotta get back in there to get the plant going, so thanks a lot. (Doug) Thanks Jim. (Jim) Folks stay with us. We’ll be right back after these words.

(Jim) Welcome back folks to That’s My Farm. We’re on Glen Caldwell’s farm, just south of the plant where we’ve been. And Glen I know you’re on the board, so obviously it’s been an investment for you. And it’s in your backyard basically, you can see the plant just right there every morning. So tell us a little bit about how you got involved, why you got involved and obviously how you market it to the plant. (Glen) I got involved because we’ve never had an end user in our area. All of our corn is exported out of here, went to Missouri and Arkansas to feed chickens. And this was an opportunity to have an end user here which then we could make up that freight difference and get a better value for our corn just selling it to the plant. And then by investing in it, we could even get more out of that dollar invested in our crops. So, that was my interest in getting an end user right here. (Jim) OK. So of your neighbors… you’ve got a bunch of neighbors, they’re involved with this as well as stakeholders? (Glen) Oh absolutely. There are several farmers that, in fact there were about 20 or 30 of us that got together to begin with that same idea. (Jim) Back almost 14 years ago. (Glen) Exactly. And out of that group the original board members went ahead to drive this forward to get to where we are. So yeah, there was a lot of people in this county that invested in it. (Jim) Yeah. And obviously it has turned pretty well so far. But I know you’ve got a lot of bin storage over here. Some of your neighbors probably don’t have that much storage. And so there’s a whole range of how people market to the ethanol plant. So, I mean there’s a lot of people that just take it straight from the field. So how do you basically market your corn? (Glen) Well I forward contract to the plant for one thing. But as a result of the plant being developed, I put in my own storage. I always had a little bit of storage, but not very much because there was just no place to use it here. No reason to keep it on the farm, work through the elevators and they market it. So, I built storage. I know how many bushels I’m gonna have. I can forward contract some and then I’ll see what happens during the year with the price of corn. (Jim) Well, you don’t want to over forward contract cause you don’t know how much you’re gonna have at the end of the season. And then some of your neighbors probably just take it straight from the field right in and more of a spot, drive in spot market type of thing. (Glen) And we’ll do the same thing on occasion too. This year with the way yields are, we may have to do a little bit more of that. (Jim) OK. (Glen) Which is a wonderful position to be in. Have that opportunity to do it. I know that the plant’s gonna be giving us a better value than if we had to drop that load some place else. (Jim) Just the cost of hauling it. (Glen) That’s right. (Jim) And then you’ve got the empty truck coming back. (Glen) Exactly. (Jim) OK. So you talk about use a little bit, just real quickly here, I mean you’ve got almost Iowa like corn yields here in Anderson County don’t you. (Glen) It’s been a phenomenal year here, we’re gonna have yields that are gonna be in excess of a 150, I think my personal yields might even push 180 overall. And that’s tremendous when you consider the average yield for the farm is only 105. So the weather’s been ideal for it this year. (Jim) So, just one last thing, since I’m a wheat guy. Your Everest wheat did pretty darn well this year too. (Glen) Yeah, that’s another success story. Last year was 60 bushels per acre and I thought that was the greatest I’d ever seen. This year it was 70 bushels to an acre. It’s just a wonderful year to be a farmer here. (Jim) Glen thanks for taking time and to talk about the plant and how you market your corn. Folks, stay with us. We’ll be right back after these words.

(Jim) Welcome back to this last segment of That’s My Farm. With us we have Jeff Eastman, he’s the President and CEO of this facility. (Jeff) Correct. (Jim) So, this is big business here for eastern Kansas and the farmers of eastern Kansas. But you’ve got plans for something else. (Jeff) Yeah, it’s actually…we’re doing some amazing things here at East Kansas Agri-Energy, besides the ethanol and the wet distillers, dry distillers. We make a product called corn distillers oil. We decided we wanted to add value to that corn oil. And one way to add value was to produce renewable diesel. And we looked at both biodiesel and renewable diesel and made the decision to go with renewable diesel because of the premium it receives in the market place. So, we’re pretty excited about that. We made an announcement here about a month ago. And we’ll be starting construction here probably in another month. Hope to be finished in a year. (Jim) And up and going. So, tell us real quickly here what is the difference between renewable diesel and biodiesel? Cause there are some distinctions. (Jeff) You know, bio diesel and renewable diesel, the similarities are the feedstock. Both can use corn oil, soybean oil, used cooking grease, you know animal fats and greases. So, there’s a number of feedstocks you can use. But that’s where the similarities stop. Where biodiesel is a chemical process called transesterification, they make a diesel like product. But what we are doing with renewable diesel is we’re using a petroleum process called hydrocracking. With hydrocracking actually we’re able to produce an identical diesel product. So, it is true drop end product, it’s molecularly identicalĀ to diesel. (Jim) So, if you were to take petroleum diesel and your corn based diesel, renewable diesel, wouldn’t be able to tell the difference. (Jeff) You wouldn’t be able to tell the difference. They are an identical molecule. And our customers who we’ve got great relationships with, have been asking for stuff like this. This is the kind of stuff the government and other entities have been pushing in our industry. So, you know we’re one of the first to get out there. And we feel lucky. We’re excited about it. Real excited. (Jim) So, how’s that going to change your facility? Obviously you’re going to have to build a new one. And is that going to allow you to take in more corn, or what? (Jeff) Actually that’s really the neat thing about this, is we’re going to produce two biofuels one being advanced, the renewable diesel and our current ethanol with the same kernel of corn. So, we aren’t going to.. we are bringing in the same amount of corn that we always have, we’re just going to produce two fuels out of it now. So, really, really neat stuff. And you know on a side note, we’re looking at about adding 12 to 15 new jobs to the facility which will be great for the community. (Jim) And right now you already have, what, 35 or 40? (Jeff) About 38 employees. (Jim) Full-time employees. (Jeff) Full-time employees. We work 24 hours a day, seven days a week operation. Have a couple day shut down in the spring. But we’re… we hit a doubt every day. (Jim) Well, that sounds good. Jeff, I tell you what I really appreciate you taking the time. (Jeff) Appreciate that, thank you. (Jim) Letting us into the facility and see this. Cause this is really important for agriculture and business in general in the eastern part of the state. (Jeff) Absolutely. We’re excited. (Jim) So, thanks a lot. And folks thank you for staying with us, even though we got a little bit wet here. And don’t forget to stay with us next Friday. We’ll be back again next Friday. So we’ll see you then. Thank you.

Closed Captioning Brought to you by the Kansas Soybean Commission the Soybean Checkoff Progress Powered by Kansas Farmers.

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