Land of milk and biofuel - East Valley Tribune: Business

Land of milk and biofuel

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Posted: Sunday, May 13, 2007 7:34 am | Updated: 8:05 pm, Fri Oct 7, 2011.

Milk and biofuel might seem an odd combination, but a Phoenix-based company is planning to produce both at a proposed dairy/biorefinery in western Arizona.

When fully built, the $260 million ag-industrial complex planned by the XL Dairy Group will produce 100 million gallons of ethanol, 25 million to 30 million gallons of biodiesel fuel and 21 million gallons of milk a year.

The concept is to use waste produced by the dairy cows to make energy that would be used to turn corn into ethanol and biodiesel, said Dennis Corderman, chief executive and chairman of XL Dairy Group. Byproducts of the ethanol and biodiesel production will be cycled back to produce internal energy for the biorefinery and to provide feed for the dairy cows, he said.

“The biggest difference between us and other ethanol plants is we will use waste streams from the dairy to produce our own energy,” he said. “It will provide the electrical and heat and steam energy for the entire facility.”

Because the plant will supply its own power, the operation will have an energy efficiency ratio of 10-to-1, he said. That means for every one British Thermal Unit of energy put into the process — including indirect energy consumption such as fuel needed to grow corn — the equivalent of 10 units of energy in the form of ethanol and biodiesel will be produced.

Conventional ethanol plants have an energy efficiency ratio of about 1.2-to-1, he said.

One similar cow-power facility exists in the United States — the E3 BioFuels Genesis plant in Mead, Neb., which has an ethanol plant attached to a dairy/feedlot. It became fully operational a few weeks ago.

XL Dairy Group has completed construction of the first phase of the dairy on a 307-acre site near Interstate 10 and Vicksburg Road, about 100 miles west of Phoenix. The firm will move in the first of 2,500 dairy cows in about three months to begin milk production, Corderman said. Also within three months, the company plans to begin construction on the second phase of the dairy, which will eventually house about 7,500 milk cows.

It is scheduled to begin operations at the end of this year.

Then construction will begin on the biorefinery and an internal energy plant, or “energy island,” with completion of both expected by the end of 2008, Corderman said.

A second phase that would more than double the output of the biorefinery could be running in about five years.

APS Energy Services, an unregulated division of Phoenix-based Pinnacle West Capital Corp., will operate the internal energy island.

The result will be an efficient process without the need for outside electricity or natural gas to produce the fuels, said Project Coordinator Michael McCloud.

“We will be tied to the utility for redundancy, and we can use electricity from the grid for the startup,” he said. “But at full operation we will not need any fossil-based fuels — natural gas or coal-fired power.”

Corderman estimates the efficiencies will allow the Vicksburg Biorefinery to produce ethanol about 30 cents a gallon cheaper than conventional ethanol plants.


But Corderman believes that real efficiencies will start after the second phase goes into action. Instead of corn shipped in by rail from the Midwest, it will use algae as the feedstock to produce both ethanol and biodiesel. XL plans to grow algae on 2,400 acres of adjacent state land, using manure water, carbon dioxide produced as a byproduct of the ethanol process and sunlight.

The company will propagate algae in a patent-pending system of horizontally mounted clear tubes, Corderman said.

“We feel that we have developed and are patenting the first commercial methodology to produce algae on a large scale,” he said. “There is no question about the biology and efficiency of algae to produce fuel. The problem has been doing it cost-effectively, and we think we have resolved that.”

But he said it will take 12 to 18 months to prove the efficiency of the algae system and another three years to have a facility producing fuel.

The reason algae are a potentially efficient fuel source is that huge amounts can be grown in a relatively small area. Algae grown on 2,400 acres could produce as much fuel as 115,000 acres of corn, Corderman said.

Another benefit of algae farming is that it consumes carbon dioxide, a greenhouse gas, produced in the ethanol-making process. Carbon dioxide also will be captured for other applications such as beverage carbonation, cooling and the production of dry ice.

The ethanol will be used primarily as an additive to gasoline to make it burn cleaner, not as a primary fuel known as E85 — a blend of 85 percent ethanol and 15 percent gasoline. The plant’s service area — Arizona, Las Vegas and Southern California — demands so much ethanol that it will absorb all of the plant’s production just as an additive, Corderman said.

“This region has a huge ethanol deficit,” he said.


Leonard Byrd, project manager for APS Energy Services, believes the project is economically and technically feasible. He said it uses existing technologies, although in a different combination than has been tried anywhere else.

“Right now all the preliminary numbers say we should be able to make all of the power and all of the steam that will be needed,” he said. “And we’re hoping to have surplus energy that could be put back in the market.”

APS Energy Services has had preliminary discussions with other dairies and feedlots in Arizona to produce renewable energy from manure, he said. But some of them may wait to see how the XL Dairy project turns out first, he said.

“To some extent, people are wanting to see the actual product work.”


Opposition to the XL project surfaced last fall when the company applied for a special use permit from La Paz County. Neighbors in Vicksburg and Salome complained about potential traffic, smells, safety, environmental and other problems they believed the facility would generate. As a result of those concerns, La Paz County supervisors placed 23 stipulations on the project as conditions for receiving the permit.

Among the requirements are that the company coordinate with local fire districts and police to ensure the safety of the plant and surrounding area and draw up hazardous material and emergency response plans.

The county also required the company to comply with air-quality laws, implement a county-approved landscaping plan, pave access roads and parking facilities and submit periodic water-use reports.

La Paz County Supervisor Mary Scott, who represents the Vicksburg area, said she supports the project because of the economic impact it will have on the largely rural county.

The dairy/biorefinery is expected to create about 400 construction jobs and 175 permanent jobs once it is operating.

“We’re a smaller county, so that’s a big shot in the arm for our tax rolls,” she said.

Steve Owens, director of the Arizona Department of Environmental Quality, said the biorefinery will require an air-quality permit and possibly a water-quality permit. Although the factory plans to recycle many of its materials, it still will produce some emissions, he said.

He declined to discuss details because final plans have not yet been submitted to the department. But on the basis of verbal discussions, Owens said it appears the operation will be “pretty clean.”


Some of the technology to be used at Vicksburg is already operating at the E3 BioFuels plant in Nebraska. It employs an anaerobic digester to transform cow manure to biogas, which is used as a substitute for natural gas in converting corn to ethanol at an attached biorefinery. It also involves a closed loop system, using byproducts from the ethanol process as feed for the animals.

However, the Nebraska project is not independent of the local power grid.

“They could become self-sufficient, but electricity is so cheap in the Midwest that it doesn’t pay to set up an internal generating plant,” said Peter Kelley, a publicist for the fuel factory.

Still, the operation is more efficient than conventional ethanol production, he said. The biorefinery produces 46 BTUs of ethanol energy for every one BTU of outside energy put into the process, he said.

Eventually, the developers hope to use cellulosic material from the corn plants to increase ethanol production by about 20 percent, Kelley said.

The major obstacles to getting the plant operating have been weather related, including tornadoes and heavy snow during the past winter, he said.

“It is working,” he said. “It’s all proven technology. The novel thing was linking it in a closed loop.”

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