Valley welcomes the ethanol era

The age of ethanol is about to arrive in the Valley. Pinal Energy LLC, a subsidiary of Arizona Grain Co., is putting the finishing touches on the state’s first ethanol production plant near the town of Maricopa in Pinal County.

The $70 million facility is expected to begin production late next month with a capacity to make 52 million gallons of ethanol a year, mostly from corn shipped in from the Midwest.

Initially the output of the plant will be used mostly in 10 percent blends to increase the oxygen content of gasoline and make that fuel cleaner burning. But some of the output also will go toward production of E85, a blend of 85 percent ethanol and 15 percent gasoline that is coming into its own as a separate fuel.

“The market will tell us how much is E85,” said John Skelley, general manager of Pinal Energy.

There is no shortage of vehicles in Arizona that could run on E85. Industry sources estimate that 100,000 to 150,000 flex-fuel vehicles are operating on Arizona roads and could run on either unleaded gasoline or E85.

But E85 has not been available to consumers anywhere in the Valley because of quirks in state and federal environmental laws that prevented service stations from offering the clean-burning fuel.

The Arizona Legislature fixed that problem last year by passing legislation that designates ethanol as a fuel that can be sold in Mari- copa County and gives it tax exemptions. And with the Pinal Energy plant ready to come on line, E85 should become available at Valley gasoline stations within a few months, said Bill Sheaffer, executive director of the Valley of the Sun Clean Cities Coalition, a group that promotes the use of alternative fuels.

“It looks like a couple of station owners will come on board in Mesa and Chandler,” he said. “It seems like the East Valley may be coming in first.”

In addition to the ethanol production plant, another important piece of the puzzle fell into place when Caljet of America, a fuel blending and storage company, agreed to blend the locally produced ethanol with gasoline at its storage facility in west Phoenix, Sheaffer said.

“The new mantra is “Send our fuel dollars to the middle west rather than the Middle East,’ ” he said.

EXCITED ABOUT ETHANOL

Keith Saunders, the owner of a Shell service station at Power and Guadalupe roads in east Mesa, said he hopes to offer E85 within two or three months.

“I’m excited about it,” he said. “I think the whole country should be excited about it. Producing our own fuels is something we have to do.”

Getting into the E85 dispensing business isn’t a sure thing, but he thinks he can overcome the hurdles within a few months. To hold down costs, Saunders probably will offer the fuel in place of high-octane gasoline so he won’t have to construct another storage tank at the station — a task that could cost up to $100,000.

He hasn’t determined how much he will charge for E85, but he anticipates it will be competitive with gasoline.

Jon Van Bogart, director of western region sales for Clean Fuel USA, a Texas-based company that makes dispensers for E85, anticipates about 20 service stations will be offering the fuel in the Valley by the end of this year.

“Fifty would be aggressive, 25 would be reasonable and I think 20 is a conservative and realistic expectation,” he said. “We have received some orders from folks in Arizona, and all we’re waiting for is a couple of more shoes to drop.”

Service station owners have to do a little groundwork such as cleaning out tanks and changing some of their plumbing and components before Clean Fuel USA can set up the dispensers, he said.

FUEL FOR TUCSON

Most of the state’s experience with E85 has been in Tucson, where service station owners have had more freedom to offer alternative fuels.

Five stations dispense E85 in the Tucson area, and a sixth is available in Sierra Vista.

C & T Oil, an independent service station operator, has been selling E85 at one of its Tucson stations for 18 months and has just opened pumps at two other stations. Owner Tim Cooley said E85 has been outselling diesel fuel and premium unleaded grades at his stations.

“We don’t sell a ton of it, but it is our second-highest selling fuel (after regular unleaded),” he said.

He said sales of E85 have been increasing as the price of gasoline has risen in recent months. Today the price of E85 is about 30 cents a gallon less than regular unleaded, he said. However, at other times of the year when gasoline is less expensive, the difference is not as pronounced, he said.

“There have been times when E85 has been the same or even more than unleaded, and that’s when sales drop off,” he said.

He thinks the Pinal County plant will reduce the price of ethanol by cutting transportation costs. Currently the ethanol used in Tucson must be shipped in by rail car from out-ofstate producers, he said.

A lower price per gallon is crucial for consumer acceptance of ethanol because the fuel does not contain as much energy as gasoline. Therefore vehicles running on E85 don’t go as far on a gallon, and drivers have to fill up more frequently. That makes it less attractive to some customers, Cooley said.

“Everyone has an opinion,” he said. “Some won’t use E85 because you won’t get the mileage. But others say the performance is better. It is 105 octane versus 87 octane (for regular unleaded). ... They say it’s like driving a different car.”

ROADBLOCKS

Some service station owners face technical impediments to offering E85. Van Bogart said the best candidates are those like Saunders who have at least three storage tanks and can convert the tank they use for premium-grade gasoline to ethanol.

But some stations have converted their third tank to diesel, which also has become increasingly popular as a fuel for fleet vehicles. And some service stations have only two tanks and would face the high cost of adding another.

“I wouldn’t be selling E85 if I had to put another tank in,” Cooley said. “The sales aren’t there to warrant that expense.”

Also, some oil companies have been reluctant to allow E85 sales at service stations that sell their fuels, figuring that the ethanol would eat into sales of their gasoline products. Cooley said some oil companies do not permit E85 dispensing under shaded canopies but require separate pumps and separate cash-register systems.

Still, the Tucson retailer thinks Valley drivers and service station operators will be receptive to ethanol.

“We have had people from Phoenix come in to our stations to buy it while they’re down here, and they say they wish it was available there,” he said. “If I were in Phoenix, I would be jumping on board.”

The facts

• Many vehicles can run on E85, a blend of 85 percent ethanol and 15 percent gasoline.

• In 2006, the National Ethanol Vehicle Coalition estimated that 6 million flex-fuel vehicles had been sold in the U.S.

• There are more than 1,000 E85 fueling stations in the U.S., most in the Midwest.

• The fueling process for ethanol fuel is the same as with gas or diesel.

• Automakers usually offer E85-compatible vehicles at the same prices as comparable gas vehicles.

• Compared to gas-fueled vehicles, most ethanolfueled vehicles produce lower carbon monoxide (CO) and carbon dioxide (CO2) emissions and the same or lower hydrocarbon and nitrogen oxide (NOx) emissions.

• A gallon of commonly blended E85 has about 71 percent of the energy of gas; in actual use, drivers note a reduced range of 15 percent to 30 percent.

• Some automakers install larger fuel tanks, making the range of flex-fuel vehicles more comparable to gas vehicles.

Source: drivingethanol.org