Algae is the most promising source to produce oil in the quantities needed to displace any significant amount of petroleum. Can is Petrosun (Pink Sheets: PSUD) the company to fulfill this promise? I doubt it; follow the link to find out why.
Archive for Biodiesel
I asked my readers at Alternative Energy Stocks what companies they wanted to know more about, and the two most requested were a transmission and wind company (CPTC.OB), and a company looking to make oil for biodiesel from algae (PSUD.PK).
Click through the links to read the results of my research.
E85, but no biodiesel. That’s Parker for you. And I was just talking about an ethanol glut!
UPDATE: Thanks for all your help! The zoning comission upheld Co Bioenergy’s recycling permit, allowing them to get back to the business of taking used oil and trap grease and turing it into something useful again.
A local biodiesel company is in danger of losing its permit to recycle used vegetable oil in an industrial area of north Denver. Please send the following requests to anyone you know who might be willing to help out with an email of by showing up to the meeting tomorrow morning.
Doing any of the following will help!
When: Tuesday, October 2nd at 11AM.
Where: Web Municipal Office Building
201 West Colfax Ave. Room 2.H.14
2nd Floor ask for the Board of Adjustment Hearing Room
Who: BioEnergy of Colorado, LLC 4875 National Western Dr. (303) 887-6997
Opponent: Elyria Neighborhood Assoc., Tom Anthony, President
More information from BioEnergy of Colorado:
In February of this year, the neighborhood assoc prevailed at the 1st BOA hearing where the board ruled that the Zoning Administrator erred when, in October 2006, he issued BioEnergy a conditional-use-permit to make biodiesel. Of particular interest though, they also ruled that we could continue to operate until our permit expires on October 20th, 2007 (about 3 weeks from now).
As a back-up plan to achieve some utilization of the assets already in place, we decided to shift our business model. We applied for a use-permit to recycle used vegetable oil at this facility. In anticipation of this new application, we sought the help of the Denver Fire Department and they signed a letter of support on our behalf. We submitted the permit documentation for a ‘Recycling Facility’ about 2 months ago and we were awarded an ‘unconditional-use-permit’ which means that this activity is allowed in this zone district. No need for public hearings or special meetings with the Board of Adjustment.
Much to our amazement, the neighborhood association, once again, appealed this decision, saying that the zoning administrator erred. Their reason will astound you. In the technical paper work that we provided the Denver Fire Department, the term ‘esterification’ (not transesterferication) was included. Esterification is the chemical reaction that occurs in the recycling process.
Here’s the Neighborhood Association Statement;
The Zoning Code forbids a use not specifically authorized. The applicant’s filing documents stating “the waste oil recycling process is technically known as an ‘esterification process’.” “Esterification Facility” is not authorized as a use in the Zoning Code and therefore the administrator erred.
Denver’s Board of Adjustment decided to take this appeal and we need your support by attending this hearing in big numbers. The neighborhood association’s tact has been to attack us, our business practices, and even us personally. This is not a hearing about BioEnergy of Colorado; it is a hearing whether a recycling facility can be located in an I-2 Zone district. The next hearing could and probably will be about your expansion plans in the area.
What’s at risk: The most valuable resource, time, that we all have spent to pave the way toward a greater use of biofuels. The many million$ invested in technology, capital equipment, infrastructure and marketing trying to get the word out about our great businesses. The local market is at stake. The Denver Biodiesel Coop can buy fuel from out of state from someone who bought it, from someone else who made it, and pay all the foreign markups and transportation costs. Or, they can buy it directly from a local supplier….a neighbor …and, much more.
BioEnergy of Colorado, LLC
Cell (303) 887-6997
TommyFoley AT Comcast DOT net
I’ve been out of town a couple days, but the article I left to be published on AltEnergyStocks while I was gone is causing some controversy… I look at
what might happen to the biodiesel industry if Big Oil starts to use animal fats and oils in their refineries. At least one reader didn’t like what I saw. You may not like it, either, but you can read it here.
I’ve written an article for Alternative Energy Stocks on Blue Sun Biodiesel’s expected merger with M~Wave. The article begins:
On January 29th, M~Wave [NASDAQ:MWAV] and private vertically integrated Biodiesel distributor Blue Sun Biodiesel announced a merger between the two, with Blue Sun becoming a division of M~Wave, and the merged company being renamed Blue Sun Holdings. Managerial control will also pass to “certain directors and the officers of SunFuels.”
If this merger goes through as planned in the second quarter of 2007, US investors will have their first opportunity to invest in a stock focused on a biofuel which is much less controversial among environmentalists than corn-based ethanol. Estimates of the well-to-wheels Energy Return on Energy Invested (EREoI) for biodiesel range from about 1.93and up, depending on the feedstock, although few numbers are available. The most commonly quoted EREoI for biodiesel is 3 or 3.2, but I’ve never found a reputable reference for that, and it will clearly vary widely depending on the oil feedstock, with waste oil being “best.”
Click here to read the whole article.
Many of you know of Blue Sun Biodiesel from one of my more popular posts Why I Bought a Jeep where I talk about my decision to buy a Jeep Liberty diesel (which I run on biodiesel) as a cost effective alternative to a hybrid SUV. That article was first published in the Colorado Renewable Energy Society blog, which led Blue Sun cofounder John Long to contact me, I ended up doing due diligence for a client for a private placement with them.
I liked Blue Sun’s business model and management, but had reservations about the price they were asking… evidence for good management, because if they had been offering a price I liked, they probably weren’t asking enough… I’m very cautious when valuing private equity; there’s a lot that can go wrong and no exit if it does. My client decided to make a substantial investment despite my reservations. Events have now proven him correct.
On January 29, Blue Sun announced that they were merging with M-Wave in a move which essentially gives them a back door to a Nasdaq stock market listing. Sarbanes-Oxley, by making conventional routes to going public much more difficult, has made this route much more popular in recent years. Blue Sun shareholders will own 87.5% of the merged company and gain access to a much broader pool of equity to fuel their expansion plans. As the quality leader in biodiesel, they are one of the few stand alone companies that have a chance against agricultural giants such as ADM and Bunge.
Blue Suns’s other advantage over the giants is thier emphasis on quality. As Texas producers know, it’s very important to have biodiesel of consistent quality, and Blue Sun sets the gold standard. Unlike most biodiesels, Blue Sun’s actually reduces NOx emissions (along with particulates, VOCs, etc., and increased lubricity, which reduces maintenance costs like other biodiesels), as well as having a lower cloud point, due to their proprietary additives and use of higher quality oil as feedstock.
As a side note, there was a rumor going around the Colorado Cleantech Initiative last Tuesday night that this was the biggest private equity deal in Colorado history. Jeff Probst, Blue Sun president was there, but he didn’t know for sure how the deal stacked up to previous deals.
What do Willie Nelson, An evangelical with poor grammar in Wichita, a sustainable-everything store in Austin, and a pump and drilling supply company in Golden CO have in common? Read the rest of this entry »
When I wrote my post about green diesel last week, I neglected to mention one other very useful attribute of green diesel: it has a much lower pour point than biodiesel. According to an articlein NREL’s 2005 research review,
“Green diesel consists of paraffin molecules produced by hydrogenating triglycerides by means of a conventional petroleum refining process. Green diesel has a very high cetane number, so it ignites fairly quickly after injection, and a low pour point—the lowest temperature at which a fuel will pour. Thus, it is a high-quality diesel fuel and is totally compatible with petroleum diesel.”
This is in contrast to biodiesel, which is produced by trans-esterifying triglycerides with methanol, and has a much higher pour point… which is why I can only use B20 (20% biodiesel) most of the year here in Colorado. At temperatures below about 50F, biodiesel begins to “cloud” and will clog fuel filters, preventing the fuel from getting to the engine. Since I don’t like my car stalling on me, I only use B100 during the hottest summer months.
The closest source of biodiesel to me is a truck stop without a heated storage tank, and so in the winter they only have B5 available, while they have B20 in the summer (which means I make sure to fill up with B20 whenever I’m near one of the greater Denver areas 3 other biodiesel stationsI know about.) The availability of green diesel would mean I could use 100% all the time, not just in the summer.
I did some more searching and found this presentationon the subject from Michael J. McCall, T.L. Marker, J. Petri, and D. Mackowiak at UOP, a division of Honeywell, in collaboration with D. Elliot at PNNL, SCzernik at NREL, and David Shonnardat Michigan Tech. According to their lifecycle analysis, Green Gasoline and Green Diesel produced from oils in refineries would actually have lower lifecycle CO2 emissions.
In short, the economics, environmental characteristics, and physical properties of green diesel/gas/jet fuel blow biodiesel out of the water (just as biodiesel is much better than ethanol from corn.) The downside: limited feedstocks. Avialable oil and grease from conventional sources is could only supply a tiny fraction of our liqid fuels; we will need to turn to nonconventional sources of oils to make a real dent in our liquid fuel needs (as well as invest massively in the efficiency of our transportation fleet.)
Non-traditional sources of oil to look into: algae and pyrolysisoil. I plan to write more about pyrolosys in another blog; it is a quick way of converting all sorts of biomass into useful syngas, and has some useful byproducts as well, and pyrolysis a a relatively omnivorous process, able to process everything from old tires to corn stover to forest trimmings, there is a lot of potential pyrolysis oil out there.
On a recent tour of NREL‘s Biomass reserch lab, I learned about a new (to me) way to make biofuel. Plant and animal oils and fats can used in conventional petroleum refineries to make diesel and jet fuel. This idea has actually been around since the 1990s, when it was first demonstrated on a pilot scale.
Most of my readers are probably well aware of efforts to cultivate microalgae as a source of oil for biodiesel. This is to biodiesel production what cellulosic ethanol technology is to ethanol production: an up-and-coming technology that has the potential to increase the level of production to where it can actually provide a significant volume of fuel relative to our transportation needs (corn ethanol and biodiesel from conventional crops and waste oil both fall far short on this measure.)
Green diesel and jet fuel address two major problems for biofuels:
- Biofuels lack an existing distribution infrastructure (they must be moved around by train, and even if it were possible to use existing pipelines, they do not lead to where most biofuel is currently produced.) Conventional refineries, naturally, are already integrated in the existing infrastructure.
- Ethanol has a lower energy density than gasoline (about 30% less), and I know of no way to convert biomass into a high enough energy density fuel to power jet aircraft. This process produces jet fuel, neatly dealing with that problem, and holding out the hope eventually reaching a 100% transport (we’d still have to massively increase efficiency to reduce consumption to a sustainable level.)
Oil refiners are interested because bio-based oils contain little or no sulfur, and removing sulfur from diesel is an increasingly expensive process as more stringent standards go into effect. In fact, regulation for ultra-low sulfur diesel is partly behind the recent price rise in diesel vs. conventional gasoline. It used to always be cheaper than gas, but now it is more expensive.
I just got a comment from “goldguru” at the Gold Stock Bull Blog. My first thought was that he was pushing a particular penny stock as part of a “Pump and Dump” scheme… Reading his post, that seems not to be the case, but caution is warranted. He says: As always, you should do your own due diligence, especially with bulletin board stocks that carry a higher risk profile.
That’s good advice. While he says he does not own any Nova, there are many others out there pushing stock they do own, and caution is always warranted.
It was recently shown that spammers are actually able to move the price of the penny stocks they push when they send out email about how this or that penny stock is about to “explode.” The strategy is generally to load up on some ignored penny stock, send out a bunch of spams, and then sell as all the suckers buy. This leaves the spammers with a tidy profit, and the suckers with stock that is more likely to implode.
Check out this chart of Petrosun Drilling. On Aug 18 I received 3 spams from people pushing this stock, saying it was about to “explode” that same day. If I had bought on that tip, I probably would have gotten in around $1.70. The stock is currently trading at $.91, and never got that high in the meantime. I think I also got a spam around Aug 30, where you see that secondary little peak, but I admit I wasn’t paying close attention.
This is why I seldom recommend stocks in my blog, and when I do it’s because I like the company, but currently think it’s overpriced (e.g. Wal-Mart.) What I’m saying is “This one’s worth watching, but don’t buy it at current prices.” I also try to stick to stocks with high liquidity, so whatever I say won’t have much of an effect on the stock price. If I find a stock I like in my research, I buy it for my clients and myself.
The goal of this blog is to give you the tools to invest profitably for yourselves. To do that well, you need to do your own research (if you’re going to use any active investing approach.) Passive indexers can get slightly-below-average returns for very little effort, and, as unappealing as “slightly below average” sounds, it’s a lot better than the typical retail investor does. For those of you who do not have the time or inclination to invest for yourselves, I hope to give you some insight into my methods and character, in case you or someone you know is looking for a professional to manage their money.
So don’t come here looking for stock tips, and be very wary of any stock tip you come across in a public forum. The more people who see a tip, the less it is worth. That’s why you’ll probably lose money following Jim Cramer’s picks, despite the fact that he seems to be (in my opinion) highly intelligent, if highly annoying. There are just too many people following his advice.
The only useful information in the stock market is private information: things that the market is not yet aware of, or is currently ignoring. Do your own research, pay someone who only sells his advice to a few people, or use passive index investing.
If you’re wondering about how the US should deal with the looming oil crisis, Paul Notari wrote an excellent overview on RE Insider this week. His prescription for the US is exactly what we need.
High oil prices are starting to move us in the right direction, but not nearly fast enough. We need to take action before Adam Smith’s invisible hand forces action on us, through demand destruction. Demand destruction is a nice way of saying that when gas hits $20 a gallon, people will start taking their bikes to work because they can’t afford to do otherwise.
Economists who pooh-pooh peak oil becase “demand destruction will take care of the problem” are forgetting the human element: demand destruction is incredibly painful. We need to take proactive steps to solve the problem, such as those outlined in Paul’s article, or the problem will be solved for us… and it will hurt. A lot.
What are the limits on ethanol production?
According to NREL’s John Sheehan, at this months Energy Analysis Brown Bag, ethanol production from corn is set to reach 4 billion gallons this year, and 7.4 billion gallons per year by 2011, based on current and planned production capacity. (As an aside, on August 10, the Douglas County News-Press published a very pointed editorial from him on the travesty of IREA funding disinformation about global warming.) Given that a bushel of corn will produce 2.8 gallons of ethanol, that will make ethanol demand for corn in the
US 1.4 billion bushels in 2006, and 2.6 billion bushels in 2011. Since the annual corn production in the
US is around 11 billion bushels, ethanol production is already having a significant impact on the price of corn for food.
As Lester Brown, President of the Earth Policy Institute pointed out in the Aug 21 issue of Fortune(the particular article I’m referring to does not seem to be available online), the market is already setting the price of agricultural commodities at their oil equivalent value.
Unlike Lester Brown and John Sheehan, I think this will be a good thing for the world’s poor. Yes, food prices will go up, but the poor are not only consumers of food; they are also producers and potential producers. In the
US, the percentage of poor rural residents has been consistently higher than the percentage of poor urban residents throughout the last 50 years. In
Africa, the world’s poorest continent, farmers can often not make a living because they cannot compete with subsidized first-world farmers.
If world food prices rise because of demand for biofuels, this may at last reverse a great injustice, where subsidies for first world farmers have prevented third world development. Allowing myself to get wildly optimistic for a moment, if fuel demand permanently boosts agricultural commodity prices (which seems very likely), that might even open the way to removing subsidies for European and North American farmers. The Doha round of world trade talks failed in large part because of rich world unwillingness to cut agricultural subsidies, which is a great shame, because cutting subsidies would be a great boon to first world taxpayers, as well as third world farmers.
I think the best way to play the biofuels boom as an investor is by betting on the trend of rising agricultural prices. While large agricultural companies like ADM have already seen the benefits of this trend, the currencies of third world agricultural based economies should benefit, as well as the price of agricultural land in the US. Much US farmland may benefit twice from renewable energy, since land in windy areas also has the opportunity to gain income from wind leases. This was a large part of the theme of the Intermontain Harvesting Energy Summit I attended this spring.
On the downside, stimulating agricultural production can lead to deforestation. Greenpeace can push for all the moratoriums it wants on soy from deforested areas, but that won’t keep soy oil or ethanol from deforested areas going into our tree-hugging gas tanks. Global commodities, such as soy, corn, soy oil, and ethanol will just go to countries and companies who don’t participate in the boycott, removing their demand from the world market, and lowering the world price for everyone else. This is the same principle we use in our favor when we buy Green Power: the actual electrons running my laptop are probably from a coal fired plant, no matter if I pay for green power or not. What I’m actually purchasing with green power (in theory… may green power markets still have kinks that need to be worked out) is the fact that I’m stimulating green power production as much as I would if all my power actually did come from green sources.
Another worry about the rapidly rising biofuels capacity is distribution. John Sheehan’s estimate of 7.4 billion gallons of ethanol in 2011, and 700 million gallons per year of biodiesel would amount to a around 5% of gasoline consumption and less than 2% of diesel consumption. Since the current fleet of engines can run with no problem on 10% ethanol (in
Brazil “gas” typically contains 25% ethanol.), we would not need to use any E85 to use all the planned ethanol production. Similarly, B20 can be used in all but the coldest parts of the country year round, so converting just 2% of diesel consumption to biodiesel could also be accomplished through existing distribution.
I find it likely that the constraints on biofuel production will come in the form of the price of the feedstock, which will be driven by oil prices.
While ethanol and biodiesel will be necessary parts of weaning us off our dependence on oil, current technologies cannot go very far to getting us there without a much greater push towards more efficient automobiles. Raising average fuel economy by just 10% would reduce fuel use and greenhouse gas emissions over twice the amount the flat-out biofuels production we’re seeing will.
We can easily double the fuel efficiency of our current fleet with a combination of plug in hybrids (powered by cheap wind) and more efficient engines. Only when we’ve done that can we hope that cellulostic ethanol and biodiesel can start to supply our remaining fuel needs.
First published on the Colorado Renewable Energy Society Website in April 2006.
I started by looking at hybrids. After all, I love my Prius to a degree most people reserve for friends, family, and pets. While another Prius would not be big enough to haul the occasional sheet of plywood for my woodworking hobby, and lacked 4WD for
Denver snow, there are now four distinct hybrid SUVs on the market that would do quite nicely.
So my wife and I looked at the Ford Escape and the Toyota Highlander.
I did extensive web research.
We took test drives.
We got sticker shock.
Value for money is very important to me. In fact, it is a central passion in my life. As an investment advisor, I know that finding great companies is not particularly difficult. Great companies are all around us. Finding a great company that’s also a great value is another thing altogether, but that is where the real money in investment is made.
The problem with all the hybrid SUVs out there is that they are targeted at the luxury market. Rather than using hybrid technology to primarily boost efficiency, the makers instead decided to focus on power. The end results are fun to drive, but the relatively small boost to economy does not justify the increase extra $8,000 to $9,000 you can expect to pay when you leave the dealer’s lot.
At current gas prices, buying a hybrid SUV saves only about $0.02/mile, so the vehicle would have to last for about 450,000 miles to make back the extra cost of the vehicle, and that does not count the cost of replacing the battery pack once or twice in that time. I believe that gas prices will continue to rise, but not enough to make the miniscule savings from a hybrid SUV justify the sticker price.
But what about the environmental benefits? Were my wife and I doomed to squander our planet’s resources just because we wanted a roomy vehicle with four wheel drive?
Then I thought of diesel. Diesel engines are more efficient than gasoline engines to begin with, and the newer “common rail” diesel (CRD) engines start quicker and create less particulates than the old diesel engines we remember from the last gas crisis. Using B20, or 20% biodiesel, further reduces emissions, and since it comes from soy and canola, it is renewable, and the amount of energy necessary to make it is lower than the rather controversial ethanol.
While it is possible to cook up biodiesel from used cooking oil, I have neither the time nor confidence in my rusty chemistry skills to try that for myself. Fortunately, we have a local company, Blue Sun, (www.gobluesun.com) that pays farmers to grow soy and canola for use in biodiesel, and sells it through about 15 gas stations throughout
Colorado, including in Denver, Boulder, Golden, Fort Collins, Colorado Springs, and Pueblo. My only complaint about Blue Sun is that it’s private, so I can’t invest in it.
I would have to plan my fill ups (although I could use regular diesel in a pinch), but it would be quite possible to fill up with B20 most of the time, with a little planning. As an added benefit, I would know I was aiding the distribution of a renewable energy technology. My B20 purchases would encourage the expansion of the biodiesel-at-the-pump network, to the point where it wouldn’t just be compulsive renewable energy advocates like myself who fill up with B20.
I had a vision of a day when every gas station had a biodiesel pump, and diesel engines running on B20 were as popular as…, well, as popular as hybrids are today, with people paying way too much for them.
There was only one thing to do, and I looked up diesel SUVs on my favorite car research site, Edmonds.com, looked under diesel SUVs…And found the Hummer H1.
My heart sank… until I scrolled down the screen.
Below the Hummer, looking very out of place, was the Jeep Liberty. Apparently Daimler decided to equip a few models from its recent Chrysler acquisition with their diesel engines. It was a match made in renewable energy heaven, as far as I am concerned.
I ended up paying about $25K for my Jeep Liberty CRD, or about $8,000 less than I would have paid for a comparably equipped Ford Escape Hybrid (the
Toyota costs more.) I’ll be spending about 50% more for fuel for the Jeep than I would be spending had I bought the Escape, but it will be 100,000 to 200,000 miles (depending on how quickly fuel prices rise) before the extra fuel costs add up to $8K.
In addition, diesel engines last longer and need less maintenance than gasoline engines, and using biodiesel only adds to their longevity. Hybrids, on the other hand, need an expensive battery pack replacement around 100,000 miles.
How does the diesel Jeep Liberty compare to the base model? Fuel for the diesel engine costs about the same as gas for the standard V8, because B20 currently costs more than regular gas, although the diesel gets about 20% better mileage. There are some savings in maintenance for a diesel engine over a gas engine, and the vehicle will probably last longer, but unless diesel prices fall, it probably won’t make up for the extra cost (about $2000… the diesel option costs more than that, but the current high cost of diesel fuel meant that the salesman was happy to get it off his lot, and I had more bargaining power.)
I paid about $2000 over the base model Jeep so I could feel good. People buying Hybrid SUVs are also paying extra so they can feel good, too. I think that’s wonderful, but even when you’re paying extra to feel good about your purchase, it’s important to keep in mind how much extra you are paying.
Is my Jeep better for the environment than the Escape I didn’t buy? Probably not, but it’s not much worse, and I can leave that $8,000 I saved invested in one of my favorite renewable energy companies. The earnings may even pay for that extra $.04 a mile I’m spending on B20… it would only require a 5% return if I drive 10,000 miles a year.
A new study from the university of Minnesota comparing the lifecycle energy costs and emissions of corn ethanol to soy biodiesel is all over the press this morning.
The results are no surprise to any of us who follow the industry: corn ethanol yields 25% more energy than it takes to produce it; while soy biodiesel yields 93% more.
The numbers for ethanol ar not new: people have been arguing about the EROEI (Energy Return on Energy Invested) for ethanol for years, and the numbers have slowly risen with improving technology from about -10% to today’s 25%. What are new, are the EREOI numbers for soy biodiesel. I had only heard one number for the EREOI of “biodiesel” before – and no mention of the feedstock was made, nor was I able to trace it back to a reputable source… I suspect it was a back of the envelope calculation by a biodiesel advocate. That number was a 220% return, quoted to me twice, once by management at Blue Sun Biodiesel, and once by the person manning the booth for the International Center for Appropriate and Sustainable Technology, both of whom do good work, but who have an incentive to believe this highest number they hear. Disclaimer: I too have an incentive to believe the highest number I hear because I have a Jeep that I use biodiesel in to minimize my carbon emissions. Using the new numbers, my Jeep Liberty has about the same carbon footprint as my 2002 Prius, when running on B100. On B20, which I use in the winter, the Prius still looks much better. I’m pining for a plug-in hybrid diesel.
But I’m very happy to see reality injected into the whole biofuels debate. Neither ethanol not biodiesel (nor both together) is going to save the US from having to import petroleum: if our entire corn and soybean output were shifted to these biofuels, that would only replace about 12% of gasoline demand, and 6% of diesel demand… are we ready to start talking about massively investing in increasing the efficiency of our vehicles yet?
One other new note in the article, which I like given my affection for biodiesel, is that soy is a much less fertiliser intensive crop than corn, and so growing it has fewer local environmental impacts. I hope these authors continue their work, and expand the study to include other feedstocks for both ethanol (sugarcane, cellulostic) and biodiesel (canola, algae, recycled oil).