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Corn Feedstock and Ethanol Production
Ethanol is a chemical produced by the fermentation of carbohydrates found in grains and other biomass. Ethanol can be
produced from a number of different types of grains, such as corn, wheat and sorghum, as well as from agricultural waste
products such as rice hulls, cheese whey, potato waste, brewery and beverage wastes and forestry and paper wastes. At
present, the majority of ethanol in the United States is produced from corn because corn contains large quantities of
carbohydrates, can be handled efficiently and is in greater supply than other grains. Such carbohydrates convert into glucose
more easily than most other kinds of biomass. Outside the United States, sugarcane is the primary feedstock used in ethanol
production.
Our plants use corn as feedstock in the dry mill ethanol production process. Each of our plants requires, depending on
their production capacity, approximately 20 million to 40 million bushels of corn annually. The price and availability of corn
are subject to significant fluctuations depending upon a number of factors that affect commodity prices in general, including
crop conditions, weather, governmental programs and foreign purchases. Because the market price of ethanol is not directly
related to corn prices, ethanol producers are generally not able to compensate for increases in the cost of corn feedstock
through adjustments to prices charged for their ethanol.
Our corn supply is obtained primarily from local markets. We utilize cash and forward purchase contracts with grain
producers and elevators for the physical delivery of corn to our plants. At our Iowa (except Lakota), Minnesota, Nebraska
and Tennessee plants, we maintain relationships with local farmers, grain elevators and cooperatives which serve as our
primary sources of grain feedstock. Most farmers in the areas where our plants are located have stored their corn in their own
dry storage facilities, which allows us to purchase much of the corn needed to supply our plants directly from farmers
throughout the year. At our Indiana, Michigan and Lakota, Iowa plants, we have contracted with third-party grain originators
to supply all of our corn requirements for ethanol production. These contracts terminate between November 2012 and
September 2015. Each of our plants is also situated on rail lines that we can use to receive corn from other regions of the
country, if local corn supplies are insufficient.
Corn is received at the plant by truck or rail, which is then weighed and unloaded in a receiving building. Storage bins
are utilized to inventory grain, which is passed through a scalper to remove rocks and debris prior to processing. Thereafter,
the corn is transported to a hammer mill where it is ground into coarse flour and conveyed into a slurry tank for enzymatic
processing. Water, heat and enzymes are added to convert the complex starch molecules into simpler carbohydrates. The
slurry is heated to reduce the potential of microbial contamination and pumped to a liquefaction tank where additional
enzymes are added. Next, the grain slurry is pumped into fermenters, where yeast, enzymes, and nutrients are added, to begin
a batch fermentation process. A beer column, within the distillation system, separates the alcohol from the spent grain mash.
Alcohol is then transported through a rectifier column, a side stripper and a molecular sieve system where it is dehydrated to
200 proof. The 200 proof alcohol is then pumped to a holding tank and then blended with approximately two percent
denaturant (usually natural gasoline) as it is pumped into finished product storage tanks.
Distillers Grains
The spent grain mash from the beer column is pumped into one of several decanter type centrifuges for dewatering. The
water, or thin stillage, is pumped from the centrifuges and then to an evaporator where it is dried into a thick syrup. The
solids, or wet cake, that exits the centrifuge are conveyed to the dryer system. The wet cake is dried at varying temperatures,
resulting in the production of distillers grains. Syrup might be reapplied to the wet cake prior to drying, providing additional
nutrients to the distillers grains. Distillers grains, the principal co-product of the ethanol production process, are principally
used as high-protein, high-energy animal fodder and feed supplements marketed to the dairy, beef, swine and poultry
industries.
Dry mill ethanol processing potentially creates three forms of distillers grains, depending on the number of times the
solids are passed through the dryer system; wet, modified wet and dried distillers grains. Wet distillers grains are processed
wet cake that contains approximately 65% to 70% moisture. Wet distillers grains have a shelf life of approximately three
days and can be sold only to dairies or feedlots within the immediate vicinity of an ethanol plant. Modified wet distillers
grains, which have been dried further to approximately 50% to 55% moisture, have a slightly longer shelf life of
approximately three weeks and are marketed to regional dairies and feedlots. Dried distillers grains, which have been dried
more extensively to approximately 10% to 12% moisture, have an almost indefinite shelf life and may be stored, sold and
shipped to any market regardless of its proximity to an ethanol plant.