By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
"You really almost can't build them fast enough," says Kuykendall, who's shooting to be one of the biggest—if not the biggest—ethanol players in Texas. Over the next few years, Kuykendall hopes White will grow to produce 500 million to 700 million gallons of ethanol annually with plants throughout Texas and along the East Coast.
A relief pitcher for the Cleveland Indians in the 1980s before he was benched by an injury, Kuykendall is a highly polished executive with a meticulously groomed beard—an unlikely candidate to hobnob with farmers and ranchers. But he has charm where it counts: on Wall Street and with capital markets. He sits in his spacious, ultra-modern office perched on the top floor of Two Galleria Tower explaining how over the last few months his company has raised nearly $500 million to develop a series of renewable fuel plants. Already operating a 45 million-gallon-per-year plant in Russell, Kansas, and with construction under way in Hereford, White plans to build or acquire three to five ethanol plants and two to three biodiesel plants over the next three years. His company is in the midst of buying another undisclosed 100 million-gallon facility in Texas.
For Kuykendall, who moved to Dallas from Maryland, where he ran a telecommunications company, Dallas is an ideal location to build an ethanol empire, and he and Panda's Todd Carter aren't the only ones plunging into the market. Americas Strategic Alliances, a Dallas-based merchant banking and investment firm, announced last month that its ASAlliances Biofuels Inc. arm filed for a $300 million initial public stock offering with plans to build three 100 million-gallon ethanol plants in Linden, Indiana; Albion, Nebraska; and Bloomingburg, Ohio. All three plants are scheduled for completion in 2007, right around the time the White and Panda plants go on line (ASAlliances Biofuels executives declined to comment for this story).
Kuykendall eschews the Midwest. Though it is where most of the nation's corn is grown, he says the Midwestern ethanol capacity is overbuilt. Putting ethanol plants in Texas makes more sense, since the state is the second-largest gasoline market after California. Locating capacity close to the Texas demand, currently estimated at 500 million to 700 million gallons of ethanol per year, is far more efficient because corn is cheaper to handle and ship than ethanol.
"There's also a lot of venture people here that make good money in oil," Kuykendall says. "So they're looking at 'How do I redistribute the profits that I made into the next big thing?' And renewables is big right now."
White's Hereford plant is being built adjacent to a 9.5 million-bushel grain elevator and 2.5-mile rail loop owned and operated by Decatur, Illinois-based Archer Daniels Midland Company (ADM), the nation's largest corn processor and ethanol producer. White will use ADM's elevator and rail line for its plant.
And White's plant, fueled by natural gas, is much further along in construction than Panda's manure-fueled plant, which accelerates the breakdown of manure into fuel gases such as methane by baking it. Jeff See, White Energy's vice president of construction and development, has been building these plants all over the country for nearly a quarter-century, cutting his teeth on corn-syrup-processing facilities. He says he built the nation's first two 100 million-gallon ethanol plants in South Dakota and Fort Dodge, Iowa.
"When I first started, it took more energy to make it than you got out of it," says See, who shouts over the blaring horns of locomotives that pull long trains—some 65 daily—just a few yards from his construction office trailer. In 1994, he says, his plants were squeezing 2.3 gallons of ethanol per bushel of corn (56 pounds of corn kernels). His new White plant will get 2.8 gallons per bushel thanks mainly to advancements in enzyme and fermentation technologies. He hopes to coax 3 gallons in a couple of years.
To get ethanol from corn, the starches in the kernels must be converted to sugar. Yeasts are added to eat the sugar, and they create carbon dioxide and alcohol as waste products. "It's just like making beer," See says. "We actually have a tank called a beer well."
Corn kernels are first ground into flour, which is mixed with water to form a mash. Enzymes are added to the mash to convert the starch to dextrose, a simple sugar. See pulls labeled samples of corn mixture from each stage of the refining process. Some of them have fluffy tufts of mold.
To control bacteria levels, the mash is processed in a high-temperature cooker before it's cooled and transferred to fermenters, where yeast is added to convert sugars into ethanol and carbon dioxide. The slurry is then transferred to distillation columns where the ethanol and water are separated—an energy-intensive process—and the alcohol is further dehydrated to roughly 200 proof.
Distiller's grain, the leftover solids, is dried and sold as a livestock feed. Ranchers buy it for less than the cost of corn, but it has all the nutritional value of corn plus some moisture. More important, it doesn't have the starch, which can't be digested by cattle. "Corn's already coming here," See says. "So the way ethanol producers see it, they're just processing the corn into a more nutritious, more easily digestible cattle feed. Ethanol is almost a bonus."