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Area Biodiesel Plant Takes Shape

Posted on: Wednesday, 27 July 2005, 00:00 CDT

Jul. 27--Race Miner initially scoffed at the notion of biodiesel, a fuel made from soybeans. Then, in 2002, he started pumping the stuff into his Ford F-250 pickup.

He was hooked. Three years later, Miner plans to build a commercial biodiesel plant in central Pennsylvania.

"Everything's lined up," said Miner, founder of Keystone BioFuels Inc., based at his home in Silver Spring Twp., Cumberland County.

Miner will use about 20,000 square feet in the former Quaker Oats factory in Hampden Twp. for this operation. He said Arnold Logistics is the anchor tenant in the building. He said he picked the site because of its existing infrastructure and access to rail lines.

Miner hopes to begin production this fall in a plant that can brew up to 1 million gallons of biodiesel per year. It would be one of the first biodiesel production plants in the state.

He plans to have five employees, including himself.

The cost of the plant will fall between $1.5 million and $2 million, Miner said. He is investing his own money, earned from previous business ventures in the Harrisburg area.

The plant would convert soy oil, extracted from soybeans, into biodiesel in a process known as transesterification.

Miner began using biodiesel while living in Colorado with his wife, Allison. The couple moved there after selling a Camp Hill-based technology company called Traffic Safety Solutions.

The Miners moved back to the Harrisburg area after the birth of their twin sons, Kyle and Ryan, now 2.

High petroleum prices are one reason Miner and other entrepreneurs are searching for alternatives, said Andrew Kleit, a professor of energy and environmental economics at Penn State University. However, the alternatives typically have trouble competing, he noted.

"There's a reason you use petroleum. It's the least-costly source of fuel," Kleit said.

Regular diesel fuel costs about $2.50 per gallon at the pump. For drivers who can find it, biodiesel generally is more expensive.

Jerry Clever of Chambersburg said he pays about $3.60 per gallon for pure biodiesel at a station in Maryland along the route of his commute to Washington, D.C. He uses the fuel in his Mercedes sedan, which also runs on vegetable oil.

The price of biodiesel should drop if production plants are built in Pennsylvania, said Dan Desmond, deputy secretary in the energy and technology deployment office at the state Department of Environmental Protection.

"I think the day's not that far off when it will become directly competitive with the cost of imported oil," Desmond said. "But we need some economies of scale. It's so hard to do when you're hauling it in from Iowa."

Nationwide, about 35 plants produce biodiesel for commercial use, according to the National Biodiesel Board in Jefferson City, Mo. Their annual output was about 25 million gallons last year. The total is expected to reach 50 million gallons this year with the addition of new plants, said Jenna Higgins, spokeswoman for the board.

Even at 50 million gallons, biodiesel represents a small fraction of diesel use in the U.S.

Vehicles used on and off the road consume 55 billion gallons of regular diesel every year, Higgins said.

Adoption of biodiesel is being fueled by a federal tax credit of 1 cent for each percentage point of biodiesel mixed in with regular diesel. A 100 percent biodiesel fuel would be worth a tax credit of $1. Most biodiesel is sold in blends starting as low as 2 percent.

The tax credit goes to the company that blends the fuel, Higgins said. The blenders are expected to pass their savings from the credit on to their customers.

The tax credit expires at the end of 2006, but backers hope Congress will move to extend it at least through 2012, Higgins said. Many of the plants are coming on line because of the credit, she said. "If that goes away, that would stifle production and use."

Companies in Pennsylvania that market and sell biodiesel must get the product from other states.

Worley & Obetz Inc., an energy company in Lancaster County, imports 1 million gallons of biodiesel a year from plants in Iowa, New Jersey and Virginia, said Len Zvorsky, compliance manager for the company. Worley sells fuel that is 5 percent biodiesel.

Zvorsky declined to disclose the prices at Worley's commercial fueling station, but he said they are competitive with regular diesel.

Worley & Obetz is participating in a venture to build a biodiesel distribution center in Lower Swatara Twp. The center, operated by a company called Independence BioFuels Inc., is expected to open in late August or early September, said Zvorsky, who consults with the firm.

Independence also is looking at building a production facility next year, he said.

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Source: The Patriot-News

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