Farmers will grow 'oil' for refinery
Renewable energy - A mobile unit destined for eastern Oregon will produce biodiesel from canola

By Gail Kinsey Hill

When a bright blue, 40-foot-long container rolls along Interstate 84 toward Pendleton later this month, it will carry an innovative addition to Oregon's growing renewable energy industry -- a portable biodiesel refinery.

"Essentially it's built around the idea of a mobile home," said Eric Price, chief executive of Imerjent, the Wilsonville startup that created the factory-in-a-box. "All it needs is electricity."

And, of course, "oil," added Price. "Nonpetroleum oil."

That oil, the key ingredient in generating biodiesel, will come from farmers in northeastern Oregon, who will grow canola for Pendleton Grain Growers. The co-op, which bought Imerjent's debut unit for about $500,000, plans to begin churning out the alternative fuel soon after crews ease the 25,000-pound container off the flatbed and onto an awaiting concrete slab.

Biofuels analysts often emphasize the size and centralized nature of factories cropping up across the country. Seattle-based Imperium Renewables Inc.'s facility in Hoquiam, Wash., will be among the nation's largest when it opens later this year with an ability to produce 100 million gallons of biodiesel annually. The feedstock -- the crop or waste cooking oil used to make the biodiesel -- will include palm oil imported from East Asia.

Imerjent's 500,000-gallon-capacity unit appears gnatlike in comparison. But the company is at the forefront of a trend that parallels the development of the megafactories, one in which the refineries are designed to tap predominately local crops and demand.

In other words, Imerjent is the farmers market to Imperium's superstore. Farmers in northeastern Oregon not only will grow the crop that makes the fuel, they will pump the processed product into their trucks, tractors and combines.

The self-contained model is well-suited to the Northwest where regional feedstocks are of limited supply, certainly more so than in the Midwest and South where soybeans, a popular biodiesel feedstock, are grown in abundance.

"The market is moving in two directions," said Robert Grott, director of Northwest Biofuels Association, an industry trade group. "You're seeing the very large plants for their economies of scale, and you're seeing niche markets, where smaller scales are favored, where they're a counterpoint to the big plants."

Biodiesel sales began jumping several years ago as a post-9/11 emphasis on national security and growing concern about global warming provided incentives to seek domestic, cleaner burning alternatives to gasoline and diesel.

This year, biodiesel consumption in the United States is expected to hit 350 million gallons, almost five times the 2005 figure. Even so, biodiesel use remains less than 1 percent of total diesel consumption of 55 billion gallons annually.

Federal and state subsidies also are driving the growth in biofuels, both biodiesel and ethanol.

Oregon offers a broad package of incentives aimed at the renewable energy industry, including tax credits and low-interest loans. The Legislature, moving into its final weeks of the session, is expected to expand those credits, establish incentives for the production and processing of biofuels feedstocks and set in place a renewable fuel blending requirement.

Many of the biofuels-related incentives are contained in House Bill 2210, which could face a Senate vote as soon as today. A similar version has passed the House.

Last summer, Portland became the first city in the country to adopt a renewable fuel standard. The requirement, effective next month, calls for a minimum 5 percent blend -- known as B5 -- of biodiesel for all vehicle diesel fuel sold within city limits. Gasoline must contain at least 10 percent -- B10 -- ethanol.

When the Senate Revenue Committee passed the biofuels bill early this week, "We were giving each other high-fives," said Tyson Keever, manager of SeQuential-Pacific Biodiesel, the state's first commercial biodiesel production plant. "It provides significant incentives."

SeQuential-Pacific, which began making biodiesel from a 1 million-gallon capacity plant in Salem in 2005, plans to expand to 5 million gallons annually by next spring. Country singer Willie Nelson, a biodiesel advocate and Sequential-Pacific investor, will roll into town in his biodiesel-powered tour bus for the July 6 groundbreaking ceremony.

Company executives expect Oregon biodiesel consumption to double -- from 4 million to 8 million gallons annually -- once the Portland mandate kicks in. The statewide standard, linked to local feedstock production, would add another 8 million gallons to annual sales.

SeQuential-Pacific uses primarily recycled cooking oil from the likes of Burgerville and Kettle Foods to makes its biodiesel. It uses some canola and is experimenting with another crop, camelina.

One of the biggest obstacles to quick expansion of biodiesel production is the availability of these stocks, especially if they are to be gathered regionally. Cooking oil is the cheapest, but supplies are limited. Canola is receiving more attention, but some farmers and agriculture experts worry about its ability to cross-pollinate.

Pendleton farmers see nothing but benefits from canola, which they say serves as an excellent rotation crop for their mainstay, dryland winter wheat.

"It's a wonderful crop for us," said Fritz Hill, a longtime farmer with several thousand acres of wheat spreading north from Pendleton.

Canola, a broadleaf plant that stretches down with a deep tap root and up with brilliant yellow flowers, helps clean wheat fields of disease and adds nutrients to the soil.

Hill sees promise in the biodiesel plant, not only because it produces an alternative to fossil fuels, but because it gives farmers the chance to bring in a little more income. Until now, he's been selling the seeds to Canada, which crushes out the oil.

"If you can create a market that wasn't there before, all the better," he said. "Agriculture needs to be viable."

Al Gosiak, president of Pendleton Grain Growers, said eastern Oregon wheat farmers have tried for years to supplement their wheat with other crops, but nothing proved a money-maker for long.

"We tried lentils, garbanzos, barley, Austrian winter peas," he said. "We'd grow pot if we could."

Even now, with the biodiesel venture, he's looking at a brief stall. Wheat prices, at $6 a bushel, are at near-record levels and farmers aren't eager to plant much canola.

Gosiak expects wheat prices to slide in the next year or two. Once they drop by about a dollar, "canola as an alternative for us will be very, very attractive." And, with the factory in that blue shipping container, "we'll be ready."