US biodiesel firm may open up to 12 terminals

11 November 2008 18:20  [Source: ICIS news]

HOUSTON (ICIS news)--US biodiesel producer Renewable Energy Group (REG) plans to open up to a dozen domestic blending and distribution terminals throughout 2009, the company said on Tuesday.

Jon Scharingson, director of marketing for the Iowa-based company, said REG is confident that the fledgling domestic biodiesel market will grow significantly in the coming years.   

“A lot of REG plants are located in the midwest, but as we expand our sales and marketing reach, it requires us to branch out in our terminal efforts. We identified eight to 12 strategic locations in the country where we want to set up terminals throughout 2009,” he said in an interview.

The company, the largest biodiesel supplier in the US, entered into a partnership last week with Kellerstrass Oil to sell B99.9 (0.1 percent petroleum diesel and 99.9 percent biodiesel) from a 30,000 gal (114,000 litre) tank at Kellerstrass’ terminal in Ogden, Utah.   

REG will seek similar terminals along the west, east and Gulf coasts, where biodiesel consumption is highest, Scharingson said. The terminals can cost anywhere from $300,000 (€234,000) to a couple of million dollars and will be created through a mix of acquisitions, new construction and partnerships, he said.

The company’s move reflects its wider push to kick start domestic biodiesel demand. The worsening global economy and Europe’s increasingly aggressive stance against US biodiesel has caused demand to dry on the continent, which has been the destination for about 70% of US biodiesel.

Confronted with flagging foreign demand and the US federal mandate that 500m gal of biodiesel be produced in the US next year, US suppliers are forced to turn inward in their marketing.

Distribution terminals will become more crucial to increase biodiesel availability in the US, as the renewable fuel - along with ethanol - is too corrosive to be shipped in existing fuel pipelines.

Grapevine, Texas-based biodiesel refiner GreenHunter Energy said in October it paid $27m to acquire L&L Holdings to gain access to the Louisiana company’s network of marine terminals in the Gulf coast region. It is also mulling building a refinery in Florida to accompany the one it runs in Houston. 

Scharingson said REG is “bullish” that domestic biodiesel demand will increase, pointing specifically to President-elect Barack Obama’s pledge to invest $150bn on alternative energy in the US.

“It’s clear the Obama administration is a very strong supporter of alternative fuels. And I’m sure you remember that in the presidential debates, he specifically mentioned biodiesel,” he said.

REG has a biodiesel capacity of 300m gal/year. Fellow producers include GreenHunter Energy and Imperium Renewables in Seattle, Washington.

($1 = €0.78)

Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels.
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By: Ben Lefebvre
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