Wyoming biodiesel: Casper project would provide local market for oilseed

Casper – A new business led by two Casper entrepreneurs seeks to be the main market for increased oilseed production in Wyoming while creating opportunity for several industries in the state.

According to Bryan Aivazian, who is partnering with Max Meihak on the project, Wyo Biodiesel, Inc. will include an oilseed crushing operation and a biodiesel production facility in Casper – a central location for growers from Torrington to the Big Horn Basin.

“We think this is a great opportunity for farmers,” says Aivazian. “For the last few years the Wyoming Business Council has provided incentives to farmers looking for alternative crops, including oilseeds. The farmers have experimented, and like the crop, but right now it has to go to either North Dakota or Kansas for crushing, and that’s not a viable market.”

Aivazian says the company’s goal is to contract statewide with oilseed growers. “They can do either dryland or irrigated production,” he says. “You grow it, we buy it.”

He says Wyo Biofuels won’t offer commodity prices for oilseed, but rather will pay according to the price of petroleum diesel. “As the cost of petroleum diesel increases, there will be an incremental increase in the price we’ll pay to farmers. We won’t lock them into a price. That margin will be split between us,” he explains.

Current price estimates and reasonable returns are based on models the company has developed with assistance from the University of Wyoming and Extension agents.
“We think we’ve got a good business plan, where farmers can get $60 to $70 per acre profit on irrigated acres, and around $40 to $45 per acre profit on dryland,” says Aivazian, noting that’s based on current petroleum diesel prices.

“The biodiesel plant will offer a lot of opportunities for Wyoming – creating jobs in the biodiesel and crushing operation, creating alternative crops for farmers and producing meal as a by-product for in-state feedlots,” says Aivazian, adding that one-quarter of an oilseed’s mass is extracted as oil, and the rest is meal. “Right now feedlots buy meal from out-of-state, and a lot of their cost is transportation. If we can provide the product to feedlots at a lower price, they’re, in turn, supporting other Wyoming farmers, and that’s a good deal.”

“We’ve talked to a few growers who want to sell us the seed, buy the biodiesel and take the meal back,” he adds. “We’re creating a lot of opportunity for shared Wyoming industries to support each other.”

A few years into operation the company also hopes to have a refining process worked out to make the glycerin by-product suitable for animal consumption. “Right now feedlots mix molasses or other types of high energy supplements with their rations, and glycerin is also approved,” says Aivazian. “That’s another way we could take a product and turn it back to use by Wyoming agriculture.”

Aivazian explains making biodiesel is a relatively simple process, involving 10 parts oil and one part alcohol added to a catalyst, heat, and machinery, resulting in 10 parts biodiesel and one part glycerin.

“Making biodiesel necessitates a number of support industries, including grease collection from restaurants, farmers, trucking, crushing and sales of meal and glycerin,” says Aivazian. “We believe all of that is very good for Wyoming.”

Although construction has not yet begun, Aivazian says the company expects to open its doors in early 2011. “We have a location chosen in town – a couple acres, which is big enough for a 5,000 square-foot building to house the seed crushing and biodiesel machinery. We will also have a 50,000- to 60,000-bushel grain storage system outside to dry and store seed, which would feed directly into the crusher,” he explains.

Through the first year of production the facility would be able to house 100 days of oilseed supply, but when it gets going strong the storage would only last 30 or 40 days.

Aivazian says Wyo Biodiesel is seeking contracts for the 2011 growing season, including winter canola planted this fall. “The yields are actually coming out better for winter canola than spring varieties,” he adds. “If we can get growers to commit and plant this fall, then we would know what kind of acreage we have in the project and a higher amount of oilseeds per acre.”

Aivazian says he’s hoping to get the handful of growers who’ve experimented with the Wyoming Business Council to join with the project as a resource on how to best grow oilseed. He says the company is also looking for contract growers for landowners who may not want to produce oilseed themselves.

“We want to do everything we can to provide as much assistance to make the transition to a new crop as easy as possible,” he says.

“We’ll accept any type of oilseed, and at this point it looks like canola is the best crop for Wyoming,” notes Aivazian. “But the rising star in this area is camelina, as it’s very cold resistant, drought resistant and its total water requirement is only 10 inches per year. It grows on absolutely marginal soils, and it has a prospect of much higher yields per acre.”

However, he says there aren’t many products registered for camelina at this time, which he thinks makes canola a better bet for the next few growing seasons.

When comparing the processing of the two oilseeds, Aivazian says camelina has a much smaller seed than canola, and the two have to be crushed separately on very different equipment settings.

However, he says the decision on which seed will go into the biodiesel plant will be less what they want, and more which crop the farmers want to produce.

Of the benefits and incentives to use a biodiesel blend, Aivazian says the recent trend toward ultra-low sulfur petroleum diesel has left the fuel with little lubricity. “Straight biodiesel has many times the lubricant than petroleum diesel, so even a five percent blend bring the ultra low sulfur diesel up to what it has been traditionally.

“At a 10 to 20 percent blend, you’ve increased lubricity beyond what petroleum diesel ever was, so it’s better for wear and tear on engines,” he adds.

Of using biodiesel in cold temperatures, Aivazian says it does have a higher gel point than petroleum diesel, but Yellowstone National Park has used a 25 to 30 percent blend in the winter for the last several years with no problem.

“If you’re mixing five to 20 percent biodiesel with conventional diesel, you’re raising the gel point minimally,” he says. “And if you’re adding it to a Number 1 diesel, you’re still in a very healthy window of operability.”

In addition to oilseeds, used vegetable oil from Casper-area restaurants will also be a small part of the operation, with potential expansion to areas in the rest of the state.

Of the end user of the biodiesel, Aivazian says WyDOT has expressed interest, and school districts and trucking companies are also potential markets, as well as coal mines and agriculture.

“If you’re the farmer producing oilseed for us, we’d love to put some biodiesel in your tank,” comments Aivazian. “We see ourselves working directly with large end users or supplying bulk dealers.

At this point we don’t see ourselves opening a fueling station, but we’d hope a station in town would like to start offering biodiesel.”
This spring Wyo Biodiesel, Inc. is finishing up a grant through USDA Rural Development, filling out the rest of their investors and is looking for a Wyoming-based company to build the building.

“There are so many pieces that have to work together,” says Aivazian. “It’s been daunting, but exciting, because everyone we’ve talked to has been very supportive. Our goal was not to create a whole new set of interrelated industries for the state, but it’s kind of coming down to that.”

For more information on the Wyo Biodiesel, Inc. project, call Bryan Aivazian or Max Meihak at 307-234-1643. Christy Hemken is managing editor of the Wyoming Livestock Roundup and can be reached at christy@wylr.net.