Are blender pumps in Minot’s future?
By WHITNEY PANDIL-EATON, Staff Writer wpandileaton@minotdailynews.comWith climate legislation making its way through Congress and researchers in the private and public sector conducting experiments on everything from switchgrass to hydrogen in an attempt to find a reliable, cost-effective renewable fuel source, biofuels have left the imagination of 19th century science fiction writers and into the gas tanks of American automobiles.
Or has it?
Concerns about fuel storage, cost, adequate supply and consumer demand has Minot-area service station retailers debating about a new program which aims to increase biofuel use in the state by replacing old fuel pumps.
Proposed by Gov. John Hoeven and passed by the 2009 Legislature, the Blender Pump Program is an incentive program that provides cost-share grants to fuel retailers for the installation of ethanol blender and biodiesel pumps.
The new blender pumps would blend E-85 and traditional gasoline to pre-determined levels, such as E-20 or E-30, that are chosen by the consumer. Proponents of the technology, which include the governor, several agricultural and ethanol organizations and fuel equipment manufacturers, say that the option to choose different fuel types will benefit the pocketbook of consumers and add to the state's economy.
Randy Schneider, president of the North Dakota Ethanol Producers Association, said keeping ethanol in the state to fuel its existing 29,000 flexible fuel vehicles could generate additional sales of 11 million gallons of ethanol at E-30, save producers $2.3 million in shipping costs, save consumers $1.9 million in fuel costs (at 5 cents per gallon) and could generate another $115,000 in state tax.
Through the $2 million the 2009 Legislature approved and the $500,000 provided by the North Dakota Corn Growers Association and Corn Utilization Council, service station retailers are able to get between $5,000 and $7,500 per blender pump or $40,000 per station.
"We have enough money for 400 pumps, so our goal is 400 pumps, but ultimately it's about increasing the use of biofuels," said Andrea Holl Pfennig, administrator of the program. "There's a lot of state incentives and federal tax cuts available so we encourage anyone who is interested in the program to visit our Web site (www.blenderpumps.nd.gov) or call for more info."
As of Tuesday, there were five applications, including one near Minot for the Express Mart, located on Burdick Expressway and County Road 19.
Russ Gohl, owner of Express Mart, did not respond to several phone calls and e-mails seeking comment.
While Gohl and other station owners in LaMoure, Klum, Edgeley, and Wyndmere have already signed up for the program, a vast majority of the estimated 600 service stations in the state have yet to take on E-85, biodiesel or other alternative fuels.
According to an Oct. 22 count by the federal Energy Department's Alternative Fuels and Advanced Vehicles Data Center, North Dakota has 58 stations that provide alternative fuels, categorized as biodiesel, compressed natural gas, E-85, electric, hydrogen, liquefied natural gas and propane.
Within a 50-mile radius of Minot, only five stations sell alternative fuels to the public. Behm's Truck Stop, located off U.S. Highway 2 and 52, sells soy-based biodiesel, while the Farmers Union Oil service stations in Garrison, Towner and Westhope sell propane. Cenex, located on Central Avenue, is the only service station in the city limits to sell E-85 fuel. Two other entities, Minot Air Force Base and the North Central Research Extension Center have alternative fuels in the form of biodiesel, E-85 and hydrogen, but they are for institutional use only.
Among local service stations, most voiced concern about available supply, consumer demand and the cost of the new blender pump, estimated at $25,000, nearly double the cost of a traditional fuel pump.
"We will certainly look at our options, but is it enough to make it worth while, we'll have to see,'' said Art Purdue, general manager of Enerbase. "We put in an E-85 pump (at the Central Avenue Cenex location) a few years ago to see the demand in the area and how consumers would react. It (the reaction) has been a lot less than we expected."
He added that Enerbase has no immediate plans for either the biodiesel or ethanol blender pumps at any of their Cenex Station locations.
Management at other stations, including Harley's Cenex and Simonson's, said they have not been informed of the program and currently have no intentions of participating. One official with Simonson's, who declined to be named, said the company had looked at the prospects a few years ago but decided it wasn't right fit for the company.
Although Behm's Truck Stop has offered commuters the option of biodiesel for three years, management said they will not be participating in the governor's blender pump program. Jason Behm, manager, said they began offering the soy-based biodiesel in the summertime after receiving requests from customers.
"I'm a big believer in biofuels because its helps the environment and the farmers and there's no toxicity with it, but we're not going to do the program because the amount of money it would take to upgrade to the blender pump is not feasible," Behm said. "It's not as easy as flipping them over and being done. It doesn't work like that. There's much more to it than that."
Aside from the heightened price tag, there are also fuel storage and system issues to consider.
"We supported the bill as it went through and became law because we support the increased use of biofuels, but our biggest concern is taking care of the potential problems because there isn't a (fuel) dispenser currently in the U.S. that is certified to handle these biofuel levels," said Mike Rud, president of the North Dakota Petroleum Marketers Association. "There is a fear of putting the cart before the horse and the potential risk to the environment and general public, so we want to make sure the equipment out there is compatible.''
Currently, there are no fuel systems that are UL-marked, meaning the products out there have not met the safety specifications of Underwriters Laboratories, a product safety and compliance company used by several industries.
Ethanol is more corrosive than traditional fossil fuels, making certain metal and non-metal components of a fuel system susceptible to corrosion, which could lead to environmental problems.
"Leaks are the primary concern because of the corrosive nature of the ethanol fuel," said Gary Berreth, manager of the underground storage tank program in the state health department. "The fitting or piping may corrode and if the fuel leaks into the ground it can create vapor issues or it could affect ground water, but these releases have to be reported and we take the necessary steps to clean up the contamination."
Berreth estimated that fewer than five fuel-related incidences occurred in the state each year.
State regulations in the 1990s required old tank systems to be either upgraded or replaced by 1998, Berreth said, and due to these regulations, he said a majority of existing facilities in the state should have compatible components.
"High-level ethanol blends like E-85 have been in existence for several years and we haven't seen any specific problems associated with them," he said. "We are not anticipating any problems with these either."
Retailers who plan to add the new blender pumps, Berreth said, will be required to certify that the fuel system components are compatible with the different biofuel blends and that any changes to the facility's infrastructure will be required to adhere to new safety elements such as double-walled piping and containment sumps for service islands, as well as labels which are accurate and easily seen by consumers.
These added safety measures can add thousands of dollars in costs to the new blender pumps being proposed, a fact that is a concern to service station owners.
But a new multilateral effort might help offset those costs.
In an agreement with manufacturers, the state commerce deptartment and others, retailers interested in new blender pump programs will have the opportunity to receive special pricing through March 2010, dropping the cost of a new blender pump from $25,000 to $15,000, which is comparable to traditional fuel pumps, said Duane Grippe, president of O'Day Equipment, one of approximately a dozen fuel equipment and service companies in the state.
"Anytime you can get 35 to 40 percent of a pump paid for it is a good thing but I think the bigger incentive relies on the return of the investment," Rud said. "You have to have the traffic coming in to take the pump in and make a profit, that's what it really comes down to and we can't control that. The general public needs to make the decision to buy flex-fuel cars, the car makers need to make a conscious decision to make more flex-fuel cars and there needs to be more action on the national level."
Currently, Rud said 60 percent of all fuel sales in the state contain a blend of ethanol, a figure that has remained constant for two years.
"Have we hit a peak? We don't know. What we do know is that there is pro-ethanol people and others who won't go down that road," he said. "It's about options. I think it's a good deal for consumers because they have more choices."
While the new blender pumps would give consumers more fuel choices, the availability of those choices is also a concern among retailers.
"We have one of the largest canola biodiesel plants in the nation, but not one drop of it touches the state. The local farmers grow the canola, they process it and then ship to the coasts or overseas," Behm said. "They (biofuel plants) say they are working for the farmers, but then why are the farmers unable to use what they grow?"
Behm added that he has to travel to Minnesota to get the biodiesel that they sell at their store.
Randy Schneider, president of the North Dakota Ethanol Producers Association, said it is true that nearly 95 percent of the 355 million gallons of ethanol currently produced in the state is exported via railcar, but he said that is due to existing business agreements and a lack of infrastructure in the state.
"There are agreements with these plants at the time of set-up for the product to leave the state," Schneider said. "And these are relatively young plants compared to other ethanol plants so the infrastructure wasn't there, but we knew there would be an opportunity in North Dakota in the future that would keep more ethanol in the state."
That opportunity, he said, is blender pumps.
"When the governor began talking about blender pumps a few years ago we knew to make a success we needed to be able to provide fuel to local petroleum retailers," Schneider said. "For the last couple of years, ethanol plants like Blue Flint and Tharldson have been creating the infrastructure that is needed to market our products to the retail petroleum markets in North Dakota."
Those infrastructure improvements, he said, include truck-loading capabilities and more accurate on-site blending practices.
"You know, there's an internal incentive for our producers to make these products available here. Not only does it save us 15 to 25 cents on every gallon that would have had to be shipped out, but it also helps the state economy and the communities around us, which benefits us," he said. "It took time as producers to build up the industry, the facilities and the infrastructure of the entire supply chain, but we've accomplished that now, so we are now looking to keep more ethanol in the state."
Schneider declined to say how much of the 95 percent of ethanol currently being exported would remain in the state, but he said the E-15 debate currently happening within the Environmental Protection Agency and the marketing of flex-fuel cars by the government and automotive industry would have a big impact on how much ethanol would be utilized in the state and how much would be exported.
To gain more retailer interest, Behm said, the state and federal government need to do more.
"I believe there should be tax breaks to service stations to provide biofuels. The federal government gives a tax break of one cent per gallon at wholesale, but if they gave more incentives they would get more interest in the product," he said.
With an expiration date of Oct. 31, 2010, for the state blender pump program, retailers still have ample time to research the topic and turn in applications, but early results have officials in the industry split.
"I've heard a lot of mixed reviews across the state, so it will be interesting to see how it plays out," Rud said.
"The program has received a very good reception and early applications are very dispersed across the state," Schneider said. "I think by the time things are done, big and small towns across the state will have the option to use more biofuels."
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tarkin
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11-08-09 7:48 PM
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ethanol is a BIG waste of money ANYTHING you gain in your pocketbook right away you MOST DEFINATELY lose in mileage and what a waste of time money WATER etc it takes to make a gallon try it out for mileage yourself.
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