BIOX Acquires Toronto Biodiesel Plant, Jumps into US Market

By Tina Caparella

BIOX Corporation of Hamilton, Ontario, Canada, has acquired a 50-million-liter-per-year (13.2 million gallons) biodiesel facility in Sombra, Ontario, Canada, from Methes Energies Canada Inc. for $4.5 million (US). The facility is located on 21 acres near Sarnia, Ontario, with beneficial logistics, including onsite rail.

Originally constructed in 2009, the plant has not achieved maximum capacity due to working capital and market challenges, and is currently not in production. BIOX will spend an additional $5 million (Canadian) over the next 12 months on upgrades to the facility that will improve its efficiency and enable the use of a broader range of feedstocks, specifically lower carbon-intensity feedstocks such as animal fats and recycled cooking oils. The Sombra acquisition represents a 75 percent increase in BIOX’s production capacity.

“We believe the Ontario market will play an increasingly important role in our distribution network,” said Alan Rickard, chief executive officer at BIOX. “The implementation of the Greener Diesel program in Ontario, with its increasing blend rates and move toward lower carbon intensity fuels in 2017, made Sombra an attractive asset.”

The province of Ontario implemented the Greener Diesel program in April 2014 based on biofuel percentage and carbon intensity. The program escalates the biofuel percentage for all petroleum diesel sold in the province from three percent in 2016 to four percent in 2017 and onward. The regulation requires the use of an estimated 240 million liters (63.4 million gallons) of biobased diesel on an average greenhouse gas (GHG) adjusted volume basis in 2017.

“We are already seeing with the increase in the Ontario mandate for 2016 that distribution of biodiesel from our Hamilton facility is shifting quickly from dependence on the US market to fulfilling the demand in Ontario,” continued Rickard. “We expect this shift in distribution away from the US market to continue as the Ontario Greener Diesel mandate increases for 2017.”

Shortly after the Methes Energies acquisition, BIOX and World Energy entered into a joint venture to acquire and operate a 90-million-gallon-per-year biodiesel production facility in Houston, Texas. Each company has committed $10 million (US) to the World Energy BIOX Biofuels joint venture.

The facility, formerly known as Green Earth Fuels, is located within the Kinder Morgan Liquids terminal on the Houston Ship Channel and is the third largest biodiesel production facility in North America. Plant commissioning and start-up will ramp up over the third quarter of this year.

The joint venture will provide BIOX an opportunity to significantly expand and diversify its production capacity in the US market, according to Rickard.

In order to fund its $10 million contribution to the joint venture, BIOX has secured funding from a group of its existing shareholders comprising Clearwater Fine Foods Inc., T. Robert Beamish, and William Lambert. Beamish and Lambert are also directors of BIOX. With the establishment of the World Energy BIOX joint venture, Beamish has retired from the BIOX Board of Directors and Gene Gebolys, chief executive officer at World Energy, has been appointed to the board. In addition, Rickard also now serves on the BIOX Board of Directors.

Florida Men Plead Guilty to Fraud

Thomas Davanzo and Robert Fedyna, both from Florida, have pleaded guilty for their participation in a multi-state scheme to defraud biodiesel buyers and United States taxpayers by fraudulently selling biodiesel credits and fraudulently claiming tax credits.

Davanzo and Fedyna operated several shell companies that were used to facilitate the scheme. As part of the scheme, the two operated entities that supposedly purchased renewable fuel, on which credits had been claimed making it ineligible for additional credits, produced by their co-conspirators at Gen-X Energy Group, headquartered in Pasco, Washington, and its subsidiary, Southern Resources and Commodities, located in Dublin, Georgia. They then used a series of false transactions to transform the fuel back into feedstock needed for the production of renewable fuel and sold it back to Gen-X or Southern Resources, allowing credits to be claimed again. This cycle was repeated multiple times.

In addition, both Davanzo and Fedyna laundered funds received from the scheme through various shell entities’ bank accounts to perpetuate the fraud scheme and conceal its proceeds.

Davanzo and Fedyna also directed and participated in the generation of false paperwork to give the impression the renewable identification numbers (RINs) created and claimed by co-conspirators were legitimate. The paperwork included false invoices from Gen-X or Southern Resources to shell entities that claimed to show sales of renewable fuel, false invoices from shell entities to Gen-X and Southern Resources that supposedly showed the purchase of feedstock, and false bills of lading that claimed to show the transportation of fuel and feedstock by tanker truck.

From March 2013 to March 2014, the co-conspirators generated at least 60 million RINs that were based on fuel that was either never produced or merely reprocessed at the Gen-X or Southern Resources facilities. The co-conspirators received at least $42 million from the sale of these fraudulent RINs to third parties. In addition, Gen-X received approximately $4.3 million in false tax credits for this fuel.

Sentencing had not been announced as of press time.

Millions in Biofuels Payments

The United States Department of Agriculture (USDA) is investing $8.8 million to boost the production of advanced biofuels and sustain jobs at renewable energy facilities in 39 states. The funding is being provided through USDA’s Advanced Biofuel Payment Program, which was established in the 2008 farm bill. Payments are made to biofuels producers based on the amount of advanced biofuels produced from renewable biomass, other than corn kernel starch. Examples of eligible feedstocks include crop residue, food and yard waste, vegetable oil, and animal fat.

To date, USDA has made $308 million in payments to 382 producers in 47 states and territories through this program. These payments have produced enough biofuel to provide more than 391 billion kilowatt hours of electric energy.

Some of the biodiesel producers receiving part of the $8.8 million include:
RBF Port Neches LLC, $3.8 million
• Crimson Renewable Energy, $1 million
• Louis Dreyfus Agricultural Industries LLC, $683,648
• Owensboro Grain Company LLC, $623,825
• Ag Processing Inc., $486,725
• Diamond Green Biodiesel, $199,706
• White Mountain Biodiesel LLC, $175,365
• Deerfield Energy LLC, $158,081
• Sequential-Pacific Biodiesel, $110,420

Many smaller payments were also awarded, such as $13,165 to Scott Petroleum Corporation in Itta Bena, Mississippi, for the production of more than 2.6 million gallons of biodiesel from 3.0 million gallons of waste oil, poultry fat, and non-food grade corn and catfish oil. The biodiesel is distributed throughout Arkansas, Louisiana, and Mississippi.

Navy Uses Tallow-based Fuel

Participants in June’s international Rim of the Pacific (RIMPAC) maritime exercise in Pearl Harbor, Hawaii, used about 11.2 million gallons of a 10 percent alternative fuel blend, the United States (US) Navy said. The USS John C. Stennis Strike Group, also called the Great Green Fleet and the US Navy’s pioneer in fuel efficiency measures, took part in the exercise. The alternative fuel used during RIMPAC is derived from waste beef fat from the Midwest.

In 2012, the RIMPAC exercise met one of Secretary of the Navy Ray Mabus’ five energy goals, to demonstrate a Green Strike Group operating on alternative fuel. US Navy ships and aircraft used 900,000 gallons of a 50-50 blend of renewable diesel and petroleum diesel as a proof of concept. This year, participating countries will be using the same fuel the John C. Stennis Carrier Strike Group used during the first operational deployment of a Great Green Fleet strike group.

New Leaf Biofuel Recognized

San Diego, California-based New Leaf Biofuel was honored in late May by Assemblywoman Lorena Gonzales as Small Business of the Year for District 80. California Small Business Day recognized 85 small businesses for their contribution to the state’s economy. Small business contributes to 75 percent of California’s gross state product and over half of the state’s private sector jobs.

“New Leaf Biofuel is helping forge a cleaner, greener future in our communities with local jobs and innovative technology that are reshaping our local economy and pointing the way to healthier neighborhoods in the years to come,” said Gonzales. New Leaf Biofuel converts used cooking oil from local restaurants into biodiesel then sells the fuel back to the community, improving air quality in the region while providing good paying green jobs to San Diego’s Barrio Logan neighborhood.

“At New Leaf, it is our mission to make our community a cleaner place in which to live and work,” said President Jennifer Case. “We are honored to be recognized with this very special award for simply doing what we love to do, delivering an alternative fuel option through biodiesel.”

Baker Commodities Inc. acquired a controlling interest in New Leaf Biofuels in 2014.

Six Companies Sign up for New Zealand Biodiesel

Fonterra Cooperative Group, a farmer-owned cooperative dairy company in New Zealand, is one of six cornerstone customers switching to Z Energy’s biodiesel produced with tallow from the country’s meat industry.

Wellington-based Z Energy is currently commissioning its $21 million Wiri plant with production expected to start in mid-July. The plant can produce 20 million liters (5.2 million gallons) of biodiesel annually that could be doubled if the energy company spends another $4 million on the plant. Half of that annual production will be used by six large commercial customers including Fonterra, Air New Zealand, Transports Investment Ltd, Fulton Hogan, Downer, and South Fuels. Z Energy said the remainder of its production will be sold through select service stations in the upper half of the North Island.

Fonterra will be the first company to adopt the new fuel. Fonterra chief operating officer of global operations Robert Spurway said the shift to biodiesel is part of a move toward greater efficiency and sustainability across its operations. The alternative fuel has the potential to reduce emissions for Fonterra’s milk tankers by up to four percent a year, he said.

“Fuel burned for transport contributes up to 20 percent of New Zealand’s total greenhouse gas emissions, so given our scale, it’s important we play our part to help the environment,” Spurway added.

At current production levels, Z Energy’s biodiesel plant will only use 10 percent of the country’s available tallow. Z Energy said there is the potential to build more plants in other parts of New Zealand if demand warrants it. The technology was originally developed by biofuels producer Ecodiesel, which later went under when the country’s government ended the biofuel grants scheme. Z Energy bought the intellectual property and some of the early production four years ago.

Washington Backs Biodiesel

United States Senators Chuck Grassley (R-IA) and Maria Cantwell (D-WA) introduced a bill in late July with 12 co-sponsors that would modify the $1-per-gallon biodiesel blender’s tax credit to a domestic producer’s credit and extend it for three years. The move was applauded by industry groups.

In addition, 40 senators, led by Senators Roy Blunt (R-MO) and Patty Murray (D-WA), sent a letter to the Environmental Protection Agency seeking to increase the agency’s proposed Renewable Fuel Standard volume for blending biodiesel and renewable diesel into the nation’s fuel supply. They argued that the proposed volume for 2018 should be at least 2.5 billion gallons to capture the full potential of the two industries.

August 2016 RENDER | back