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Industry Report: Energy & Utilities
Your QUICK Briefing on One Big Industry
Friday, December 07, 2012 7:00 AM
Waste Management invests in cleaner recycling vehicles
For anyone who has ever pondered the environmental incongruity of a recycling truck belching diesel smoke, Waste Management of Iowa is on the same page. By year’s end, the company will have converted nearly a fifth of its recycling fleet to cleaner-burning compressed natural gas (CNG) trucks, with plans to operate a totally CNG-powered fleet locally within five years.
“It seems very suitable that we’re picking up recyclables in trucks that are cleaner and quieter,” said Kent Harrell, area vice president for Waste Management of Iowa, a subsidiary of Waste Management Inc. “It’s all part of making the program better.”
Waste Management, which is the contracted recycling hauler for Metro Waste Authority, has invested approximately $3 million to build a CNG fueling station and about $6 million to purchase an initial 19 trucks. Twelve of the trucks are already in service, and the remaining seven are expected to be delivered by the end of the year. Each CNG truck will save an estimated $16,000 annually in fuel costs compared with diesel and will reduce emissions by nearly 25 percent.
 Because fuel represents about 18 percent of Waste Management’s operational costs, the trucks should help in the company’s efforts to keep recycling rates level, Harrell said.
To fuel the new trucks, Waste Management is finishing a second CNG fueling station in Greater Des Moines, which will begin operating this month on Des Moines’ south side. Waste Management plans to make that station available to local businesses that have CNG-fueled vehicle fleets as well.
Metro Waste Authority helped make Waste Management’s long-term investment possible by extending the existing seven-year “Curb It!” recycling collection contract by another six years, giving Waste Management assurance it would recoup its costs.
“We thought it was a win-win because it’s better for clean air emissions,” said Tom Hadden, Metro Waste’s executive director. “These trucks are quieter, and their design is improved so that they don’t allow paper and other loose items to fly out as easily.”
Squeezing more value out of corn
 Des Moines-based FEC Solutions LLC is close to commercializing a system that promises to give ethanol producers a significant new source of income – from corn oil.
The patent-pending system, called Corn Oil ONE, will enable ethanol plants to economically extract difficult-to-manage constituents of corn oil from the distillers dried grain, a byproduct of ethanol production. The payoff: The corn oil that a small ethanol producer could generate would add substantially to the bottom line in a year where ethanol and other coproducts alone are near break-even, said Joe Riley, general manager of FEC Solutions.
“It’s a huge value-added,” Riley said of the Corn Oil ONE process, which he expects will hit the market within three to six months. The system is designed to easily integrate into the existing plant as a “bolt-on” technology that will be “actually quite elegant and simple” for producers to add, he said. His company’s product will be able to be used by a wide array of biodiesel producers and other high-value markets.
A key part of the process is reducing the level of free fatty acids and moisture in the corn oil to less than 1 percent. Traditional processes required removing an amount of oil approximately equal to the amount of fatty acids taken out, Riley said. “Our process has a very low amount of loss,” he said. “If we had to do it the traditional way, it wouldn’t make sense.”
A subsidiary of Feed Energy Co. in Des Moines, FEC Solutions was launched in 2006 to develop and deploy synergistic technologies between the feed, ethanol and biodiesel industries.
A number of ethanol companies across the country, among them Sioux Falls, S.D.-based Poet LLC, have developed similar processes to coax more corn oil out of ethanol production. Poet has installed its own technology at 14 of its Midwest ethanol plants.
Riley projects that 80 percent of ethanol producers will be extracting corn oil from their distiller dried grains by the end of this year. The return on investment for the process averages between six months and one year, he said. “It’s one of the fastest-adopted technologies in the ethanol industry,” he said.
Water utilities discuss collaboration
The Des Moines Water Works met recently with the West Des Moines Water Works to discuss possible collaborations.
 William Stowe, the new CEO and general manager of the Des Moines Water Works, said the goal is to improve service and prices for both communities. Des Moines Water Works provides water to many Des Moines suburbs, including West Des Moines, but West Des Moines also has its own water supply.
Veenstra and Kimm Inc. has been selected as a consultant to coordinate a review for possible collaboration. Des Moines Water Works anticipated that a resolution supporting the process for collaboration would be on the agenda at the Dec. 18 Board of Water Works Trustees meeting.
“It is our priority to conduct this evaluation of potential improvements that can benefit our communities in a thoughtful and objective manner,” Stowe said in a release.
All Energy reworks small oil wells
 Dean Sukowatey left a career as a hedge fund trader seven years ago to launch All Energy Corp., a Johnston-based company focused on buying ethanol produced in the Midwest. However, high corn prices, oversupply of ethanol and subsequent plant closures led him to restructure the Johnston-based company and bring on new investors and an unusual business model for an Iowa energy firm: investing in and reworking small oil fields.
In October, All Energy sold its first load of oil produced at its first domestic well outside Abilene, Texas. The company now is seeking additional investors through a private placement offering and has begun drilling a second well near the first location. All Energy also owns a minority stake in an oil field in Belize, with options to purchase additional shares.
Sukowatey’s company is among a growing number of small producers focusing on reworking viable smaller wells as the big oil companies turn their attention to major new discoveries such as the Bakken fields in North Dakota.
“I think the market is phenomenal because major players like Chesapeake (Energy Corp.) are shedding all of their smaller production,” he said. “They only want to focus on their big projects. So there is plenty of opportunity for multiple players; there are others in this space that are doing something quite similar to what we’re doing, but there is a tremendous supply of wells that can be reworked.”
Though they were not economically feasible when crude oil was selling for $20 per barrel or lower, wells that are producing between 10 and 100 barrels a day are now profitable with prices that have ranged from $75 to $110 per barrel in the past year, Sukowatey said.
“Any well that will produce anywhere from 10 to 100 barrels per day is certainly within our scope, depending on how much money we have to put into it to rework it,” he said. Depending on the royalty fees on a lease, a well producing 20 barrels a day could generate about $40,000 a month in revenue. With lean operational expenses and minimal debt, “all of the additional production that we bring on board sequentially will go toward our bottom line,” he said.
Each well operates as its own limited liability company. Sukowatey said he anticipates the first well should become profitable within the next 12 months and anticipates average payback periods on reworked wells of 18 to 24 months.
New program hopes to improve energy and water efficiency
The Iowa Economic Development Authority (IEDA) in December received a $74,110 grant from the Environmental Protection Agency (EPA) Pollution Prevention Program to launch a pilot statewide industrial energy and water efficiency recognition program.
The new Iowa EDGE (Economic Development by Gaining Efficiency) program is a statewide recognition program that will engage industrial stakeholders in undertaking energy and water efficiency projects to lower energy costs. The IEDA will provide a one-to-one match of the EPA grant funds.
The program aims to provide technical assistance and also enhance a company’s use of existing resources to help it improve management decision making on efficiency issues.
Iowa EDGE will also work to connect stakeholders such as Iowa Energy Center, Iowa Association of Municipal Utilities, Iowa Industrial Assessment Center, Iowa Department of Natural Resources and other industrial companies.
The program has three main goals:
1. Create a highly visible recognition program that recognizes industries that have undertaken significant energy efficiency initiatives to reduce energy and water usage.
2. Establish a statewide data tracking mechanism that showcases the collective progress in industrial energy efficiency in Iowa of the industries that participate in this program.
3. Make significant progress in reducing energy and water consumption and greenhouse gases by bringing process efficiencies to Iowa’s industrial and manufacturing plants and encouraging forward-thinking design for new industrial construction.
For more information contact:
Shelly Peterson | (515) 725-0418 | shelly.peterson@iowa.gov
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