California’s second biodiesel plant sets up shop in Gonzales.
Thursday, September 28, 2006
Shortly after Sept. 11, 2001, Richard Gillis was sitting with some friends in a Guadalajara, Mexico hotel talking about how the terrorist attack would affect America.
“Suddenly we realized we were talking about power,” Gillis says. “I remember saying, ‘Maybe we should get into the biodiesel business.’”
“America uses 40 billion gallons of diesel every year. California alone uses 4.4 billion.”
At the time, Gillis was an associate dean at Gilroy’s Gavilan College, running both the Small Business Development Center and the Applied Biotechnology Department. When he returned from his trip to Mexico, he began looking into the viability of building a biodiesel plant.
Five years later, his company, Energy Alternative Solutions, Inc. (EAS, Inc.), will begin producing biodiesel in a roughly 10,000-square-foot complex off Alta Street in downtown Gonzales, with a second plant in Watsonville to follow.
“We’re hoping to begin production in either late October or early November,” Gillis says. “We sort of flew under the radar until we’d actually gotten a permit from the city of Gonzales. We were actually issued the permit on Sept. 11, 2006.”
Derived from vegetable oils, animal fats, or waste fats and oil such as “yellow grease” from renders and restaurants, biodiesel is made through a chemical process called transesterification, whereby the glycerin is separated from the fat or vegetable oil. The process leaves behind two products: methyl esters (the chemical name for biodiesel) and glycerin (a valuable byproduct usually sold to be used in soaps and other products).
“Also road workers use it to keep dust down,” Gillis says. “When it’s blended with water, the glycerine is highly effective in keeping dust down on roads. Plus it’s organic so there’s no impact.”
EAS, Inc. will import tallow, a clear liquid derived from animal fats, which will be supplied by local companies such as Salinas Tallow, San Jose Tallow and industry giant the Darling International Inc., which has plants in Fresno, Stockton and the Bay Area.
Although tallow will be the primary raw material at EAS’s plant, which was designed by industry pioneers Bob and Kelley King of Pacific Biodiesel, it will also be capable of processing virgin vegetable oil and yellow grease.
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Gillis’ plant will produce B-100, the industry’s designation for product that is 100 percent biofuel. According to Gillis, San Jose-based Coast Oil has already provided EAS, Inc. with a letter indicating they will buy all the B-100 the young company can produce as long as it meets industry standards and is comparable in price to the going market.
In addition to an initial output of a half-million gallons of B-100 and the glycerine byproduct, the plant will also produce a high protein, organic meal prized as feed by dairy farmers that’s created when the seeds are crushed in the oil removal process.
“These byproducts, the meal and the glycerine, they’re not tremendously profitable, but they help,” Gilles says. “And we like the idea of using everything.”
After producing the raw biofuel, EAS, Inc. will sell their 100 percent pure product to “blenders” that mix in petro diesel. Shortly before leaving office, President Bill Clinton signed an executive order requiring all government agencies to convert as many of their vehicles as possible to B-20 fuel, meaning fuel that consists of 20 percent biofuel and 80 percent petro diesel.
According to Gillis, rendering waste like tallow is similar to virgin vegetable oil in the government’s eyes as they’re both considered “first use” raw materials. That translates into tax incentives.
“As the producer, we only get a flat 10 cent tax credit,” Gillis says. “But the blenders get a one dollar tax credit for using first use raw material and a 50 cent tax credit for second use raw material.”
Yellow grease, or oil gathered from restaurants, is considered “second use” material. It takes 7.3 pounds of yellow grease to make one gallon of biodiesel.
“The yellow grease we buy needs to meet certain specifications,” Gilles says. “They need to remove as much of the free fatty acids in the used oil as possible, if not all. Up to 6 or 7 percent is fine, we can get that out. Any more than that and it’s no longer cost effective.”
According to Gilles, the other problem is moisture. In order for the yellow grease to be usable, there needs to be 2 percent or less water in the oil.
“If you drive a diesel vehicle, you don’t want any water in your fuel,” Gillis says. “It looks like an easy process, but it’s not.”
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By the looks of things, the industry is about to explode. Currently, there’s only one operating plant in the whole of California located in Coachella Valley, although there are reports of as many as three to five new biodiesel plants. Meanwhile, out in Galveston, Texas, Chevron is building a 100 million gallon plant.
“People ask me, ‘Well how can you compete with a 100 million gallon plant?’” Gillis says. “The fact is that America uses 40 billion gallons of diesel every year. California alone uses 4.4 billion. There’s a huge demand.”
But Gillis says his company has no plans to build massive plants like Chevron’s in Galveston. Instead their business plan is “community oriented.”
“We want to create a closed loop in the community,” Gillis says. “Eventually we want to work with the renderers to collect all the yellow grease from local restaurants. Then we’re going to buy that processed oil and sell it back to the community it came from.”
Currently, the availability of oil-based crops and yellow grease is not sufficient in quantity to meet the demands for biodisel. Experts agree it will take many years for biodiesel fuel production to seriously penetrate and acquire increased market share. As a result, Gilles is putting out the word to farmers interested in experimenting with oil-based crops.
Interested farmers are encouraged to contact Alternative Solutions at 359-4499 or visit bioeasi.com.