Jun 5, 2020
Guardian Energy, Minnesota’s largest ethanol plant, restarted production this week as the state’s battered biofuels industry has begun rebounding.
After motor-fuel demand tanked as COVID-19 stay-at-home orders took hold, ethanol production also plunged this spring to record lows. Plants throughout the country — including four in Minnesota — were temporarily idled.
Three of those plants have now reopened, while other Minnesota biofuel facilities have increased production as ethanol demand and prices have risen from their April nadir.
“It’s not nearly what it was pre-COVID, but every week it is getting a little better,” said Jeanne McCaherty, CEO of Guardian Energy Management.
Guardian Energy in the southern Minnesota town of Janesville is the largest of the state’s 18 ethanol plants, with a production capacity of 149 million gallons per year. The plant, which employs around 50, closed April 2.
The Janesville plant gradually reopened this week and was running at 95% capacity on Thursday. “You don’t just turn a key and it jumps right back up,” McCaherty said.
Granite Falls Energy was idled April 3 and reopened May 18. The Denco II ethanol plant in Morris closed on March 30 and began reopening in the middle of May.
Only Gevo’s facility in Luverne, the state’s smallest ethanol plant, appears to remain closed. Gevo, which aside from ethanol makes isobutanol for jet fuel, was idled on March 31. The company could not be reached for comment.
About 20% of all U.S. ethanol plants remain idled Friday, down from 30% on April 21, according to the Renewable Fuels Association, a trade group.
Meanwhile, U.S. ethanol production has risen to 765,000 barrels per day for the week ending May 29, up from a historic low of 537,000 for the week ending April 24, according to data from the U.S. Energy Information Administration (EIA).
Ethanol production had been running more than 1 million barrels per day before the economic lockdowns prompted by the spread of COVID-19.
“We have seen some slight recovery in both prices and demand in the ethanol industry,” said Brian Kletscher, CEO of Highwater Ethanol in Lamberton and current board president of the Minnesota Bio-Fuels Association, a trade group.
“It has been very, very gradual,” he said. “The industry is still struggling through this.”
Highwater Ethanol had reduced its production earlier this spring to 80% of capacity and is now running at about 90%, Kletscher said.
At Al-Corn Clean Fuel in the southern Minnesota town of Claremont, production over the past two weeks has ramped up to full capacity. At April’s low point, Al-Corn was running at only 38%.
“The market is telling us, if you want to run, there is maybe a little bit of [profit] margin in it, or at least you will break even,” said Al-Corn CEO Randall Doyal. Ethanol producers were generally losing money earlier this spring.
Still, with transportation-fuel demand still considerably below normal, there’s a risk of too much ethanol production being added to the market too quickly, he added.
The ethanol upturn is pegged to a rebound in motor-fuel demand and production: Under the U.S. Renewable Fuel Standard, most gasoline is required to include 10% ethanol.
U.S. gasoline production stood at 7.8 million barrels per day for the week ending May 29, down 2.2 million from a year ago — but up from an April bottom of around 6.2 million, according to EIA data.
Read the original story here.