WINTER 2011 ISSUE


Squeezing More Potential From Corn



POET’s biorefinery near Hudson, South Dakota is now the first in the POET family to commercially produce corn oil from distillers grains.




About the time you’re reading this, POET Biorefining – Hudson will be commercially producing its first batch of a new co-product – corn oil – by separating it from an existing co-product, dried distillers grains with solubles (DDGS). By doing so, it is not only adding more value to corn and creating a new revenue stream, but is also creating a high-quality product that can be used in animal feed additive or biodiesel feedstock applications.


While the folks at the Hudson biorefinery are pleased to be the first in the POET family to be producing corn oil, it’s hardly the “first time they’ve been first.” The 55-million gallon plant, located two miles south of tiny Hudson (pop. 402) near the Big Sioux River in the gently rolling hills of corn-rich southeast South Dakota, opened in May of 2004. Since then, it has a history of being fast out of the gate in numerous ways.


Among the highlights: in its earliest days its founders set an impressive mark in fundraising speed, completing their entire equity drive in a mere five days; the plant was built in less than ten months – fast even by POET standards; it was the first to have BPX™ (fermentation without cooking) installed as original equipment; it was the second plant to have Total Water Recovery™ (eliminates all water discharge from the plant); the plant achieved its nameplate capacity in less than five days; it was the first within the company to do a commercial-scale corn oil separation trial; and it’s been a safe plant from the start, with NO lost time injuries in their entire history, now in its seventh year.


“In some ways we’ve been fortunate, in terms of timing and location,” says POET Biorefining – Hudson General Manager Joel Jarman of the plant’s track record. “But I give a lot of credit to our people – we’ve got a great group here.”


Separating Oil from Corn


Most people would hardly think of corn as an oil seed, but it does contain a limited amount of oil which winds up in the DDGS after processing. For a few years, some ethanol plants have used “back end corn oil extraction” to remove oil from the DDGS, but the process has been slow to catch on, with only an estimated 20 percent of the industry currently extracting corn oil.


In POET’s case, due to its proprietary BPX, non-cooking process, company researchers and engineers had to develop the company’s own unique method for separating the oil from corn. However, when that process was developed, the result was a superior quality corn oil which is lower in free fatty acids, easier to process, and higher in market value.


Removing the oil from the DDGS also changes the makeup of the distillers grains by increasing the protein content and reducing the amount of fat. As a result, the resulting nutritional value of the DDGS may be enhanced for some species.


Extensive testing at the POET Research Center in Scotland, S.D. followed by a trial period at the Hudson plant took place before construction began in November 2010 for full commercial production at Hudson. Commercial production of corn oil is scheduled to start in mid-January. Plans are for the new corn oil to be marketed under the Voilá!™ brand name. Early reviews from both potential customers and scientists have been positive.


Jarman is eagerly looking forward to adding the new co-product to his plant’s product mix.


“It will add a new revenue stream, but one of the really nice things about separating corn oil is the flexibility it gives us,” says Jarman. “We can either produce corn oil or shut off its production as needed – we don’t have to produce corn oil. That way, depending on what’s going on in the corn oil or DDGS markets, we can adjust our production accordingly, including separating out varying amounts by different species.”


Jarman anticipates that corn oil separation will be rolled out to other POET plants in the not-too-distant future.


“Who wouldn’t want an additional revenue stream, with the flexibility to turn it on or off as conditions warrant?” says Jarman. “It’s a relatively inexpensive capital expenditure with lots of upside potential.”


In a Sweet Spot


How has POET Biorefining – Hudson managed to enjoy a relatively smooth startup while also frequently being among the first to be equipped with new technologies and processes? A good part of the answer to that question lies in its favorable location – a sweet spot of sorts – in both time and geography.


When the idea for the Hudson plant was conceived in the early 2000’s, it was a good time for ethanol and establishing new plants was a much easier sell than a few years earlier.


“Those were the gold rush days for ethanol,” says POET Biorefining – Hudson board member Paul Shubeck. “We were able to complete our entire $24 million equity drive after only four or five meetings.” That era was also a time when major new ethanol technologies, like BPX and Total Water Recovery were being rolled out.


In addition to being launched at a relatively favorable time, the Hudson plant has also been blessed by location. In the case of corn oil separation, Jarman states that being chosen as the first plant was largely a matter of market access. Area beef cattle producers like the higher protein content of the DDGS after the corn oil has been removed. And by being one of POET’s westernmost biorefineries, the Hudson facility had a distribution advantage for sending DDGS to large dairies in California


“Some of the greatest things about working here are having those resources available to us,” says Jarman.


It’s All About the People


When Jarman came to work for POET in 2003 prior to the beginning of construction, his first office was in the old Hudson High School building. He fondly recounts those days in which he was able to hand-pick his first team.


“It was all about hiring the best, looking for those people who fit the culture of passion and commitment we were trying to form,” says Jarman. “That makes for a fun, comfortable work atmosphere, where people enjoy being productive and professional, where they respect one another, form good relationships and enjoy working well together.”


Jarman’s management philosophy is to hire the best, give them the tools to do their jobs, support them, and then let them do what they were hired to do – without micromanaging. He feels that approach has paid off.


“Our people have a real ‘make-it-happen’ attitude,” explains Jarman. “When there’s a problem, we don’t finger point or make excuses. And when we have successes, we try to stay humble.”

Hudson employees state that this approach and atmosphere works for them, and in turn, helps them meet their individual needs.


“POET’s been a good place for me to work, and has given me a lot of chances I wouldn’t have gotten other places,” says Dorothy Dodge, an original hire who is now a Lead Operator. “I was able to spend more time with my children before they left home, and now I have more time to spend with my grandchildren.”


For University of South Dakota grad Colin May, also an original hire who started as an operator and two promotions later is an Operation Supervisor, it’s turned into a great career opportunity.


“In the beginning, I was attracted because it was a steady, good-paying job,” recalls May. “But I really enjoyed the start-up atmosphere. There was so much to learn. Once I got into it, there was no turning back for me. Even after seven years, the more I learn, the more excited I get.”


All of which tends to suggest that with this type of atmosphere, corn oil separation is probably not the last “first” you’ll hear coming out of POET Biorefining – Hudson.


Heart In the Heartland


POET Biorefining – Hudson General Manager Joel Jarman grew up in nearby Sioux City, Iowa and graduated from the University of South Dakota at Vermillion. In his younger days he worked in South Dakota and Nebraska before being transferred by his employer to the East Coast for a few years. When the opportunity came open at the soon-to-be-built facility in Hudson, he jumped at it.


“They say you don’t really appreciate something until you lose it,” says Jarman. “After spending time out East, I really missed the Midwest. I think the greatest people in the world live in the Heartland.


One of the things I missed most was the Midwest work ethic. Trust me, if you want to build a team from scratch, this is the place you want to do it.”
Another thing he appreciates about the Heartland is his customers.


“Many of them don’t want to sell their corn to just any facility, knowing it will probably be exported,” says Jarman. “A lot of them have a passion for ethanol. For them, it’s not just about putting money in their pockets, but knowing they’re helping to create additional domestic fuels, keeping money in America, and helping reduce oil from countries that don’t care for us.”


Like a Barn-Raising


Paul Shubeck is a true believer in ethanol. He must be – he’s helped to start two different plants.


“I feel very blessed to have been on the board at POET Biorefining – Chancellor when it started, and then at Hudson,” says Shubeck. “I have a friend who used to be on the Hudson board, Reid Jensen, who said starting an ethanol plant was kind of like an old-fashioned barn-raising – all the farmers come together to build something, except this time it’s an ethanol plant.”


Shubeck who raises corn, soybeans, and cattle near Beresford, S.D., is pleased with how the presence of ethanol plants in the area has helped to raise corn prices for farmers. However he says he “can talk all day” about another aspect dear to his heart.


“I have a neighbor whose son is the same age as mine. He went to college and now he’s a manager at the plant,” says Shubeck. “I know of other similar situations. We’ve created some really good jobs for people who would otherwise have had to go elsewhere to work. That’s the beauty of it, the rewarding part.”


Shubeck is also fervent about protecting the environment and is quick to take issue with radical environmentalists who want to “beat up” ethanol. He recently had the opportunity to host the UN Roundtable on Biofuels on his farm and feels he was able to dispel as least some misinformation about ethanol.


“They’d never been on a farm or seen an ethanol plant,” says Shubeck. “They had some pretty misguided ideas and preconceived notions – like that all corn is heavily irrigated, and therefore environmentally unfriendly. But I showed them my irrigators that I hadn’t even used this year, and also showed them some areas I’d put into grass (conservation programs) and other environmental practices, both of mine and neighbors. They weren’t expecting what they saw, and I think it challenged some of their assumptions.”


Wanted to Be a Scale Master


Before construction ever started at POET Biorefining – Hudson, Barb Homandberg and her husband had invested in the plant and Barb really got interested in ethanol. She looked up what kinds of positions they would eventually have and thought the job of scale master sounded interesting.


“I wanted to get a better feel for it, so I went over to the POET Biorefining – Chancellor plant and they let me observe the job in action for a couple of hours,” says Homandberg. “I really liked it.”


After nearly seven years on the job at Hudson, Homandberg reports she still likes it.”


“It’s very much of a ‘people job,’” she says. “Between the other employees and the customers, I get to work with people from all different departments, of different ages, and from different communities. Plus we have a good group on the grains team. We have a great time here.”


Homandberg’s husband Tracy owns a gas station/convenience store in Hudson and has installed blender pumps for varying blends of ethanol and gasoline. Both Tracy and Barb are very active in the community and have seen first-hand the benefits an ethanol plant can bring to an area.


“POET has been very willing to volunteer and donate in the community about every chance they get,” says Barb. “It’s been a very good thing for Hudson, for farmers, and other towns in the area. I really hope ethanol continues to do well.”


Can’t Imagine Not Having Plant


Jeff Cole and his dad, Jim, farm near POET Biorefining – Hudson and Jeff appreciates what the plant has done for area farmers.


“Having POET plants in the area has really helped the price of corn the past few years,” says Cole. “The basis is not nearly as wide as it used to be. We’ve had pretty good crops this year and now I can’t imagine not having the plant here.”


Cole frequently swaps his farmer cap for a fireman’s helmet, serving as Hudson’s Fire Chief. In this role, he has likewise seen the benefits of the plant’s presence.


“They do some joint training operations with us every year, which is really helpful,” says Cole. “POET really tries to be a good neighbor. They participate in a lot of fundraisers in the community, and they’ve been good to our fire department. If there’s some piece of equipment we need, they always try to help us out.”


What’s In a Name?


According to the dictionary, the term “voilá” means “to call attention to, or express satisfaction with a thing shown or accomplished” – which fits POET’s new branded corn oil, Voilá!™, pretty nicely.


“We were looking at names to brand our new corn oil product that were creative, unique and memorable and the name ‘Voilá’ just kind of came to us,” says Greg Breukelman, POET Senior Vice President of Communications. “Besides, it has ‘oil’ right in the name.”


Breukelman continued that the people at POET are very excited about their new brand, which they see as a very high-quality, consistent product with excellent market prospects. Feedback from potential customers who have tried Voilá! backs up that claim.


Dave Elsenbast, Vice President of Procurement for the Renewable Energy Group of Ames, Iowa likes the lower pre-fatty acid content of Voilá!.
“We’ve been using the R&D-generated corn oil out of Scotland, S.D. (POET Research Center) as a feedstock for biodiesel production. It’s a very good product that works for us,” said Elsenbast.


While POET Biorefining – Hudson, S.D. will be the first POET biorefinery to commercially produce Voilá!, plans are to eventually roll out the technology, which consists of a patent-pending, two-stage centrifugation process with a pH adjustment, to other POET plants.


“How soon that happens depends on market development,” says Scott Weishaar, Vice President of Commercial Development. “In 2011, in addition to the biodiesel market, we’re going to be looking at a multitude of marketing possibilities – from edible to industrial applications – which will determine when the technology is made available. But the design and construction group is ready for very rapid deployment when the market signals to go.”


Breukelman explains that the conditions that gave birth to Voilá! are still very much at work for more products farther down in the pipeline.


“POET has always been about innovation and maximizing the potential of a bushel of corn,” says Breukelman. “So extracting corn oil out of DDGS was just a natural progression of our goal not just to be an ethanol and DDGS producer, but to develop multiple products – whether it be Voilá!, or specialty protein INVIZ™, or down the road, things like biochemicals and biopolymers. We have this plan for what a biorefinery of the future looks like, and Voilá! is another step in that direction.”





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