Pacific Ethanol Stockton (PES), which is one of four ethanol plants owned by its parent company, Pacific Ethanol, Inc., also has enhanced its production efficiencies by installing new technologies.

The strategic and logis-tical advantag-es are part of what Pacific Ethanol Co-

founder and Chief Execu-tive Officer Neil Koehler calls the company’s “Des-tination Model.”

California and other western states are at the intersection of a huge market for fuel and live-stock feed that grants the Golden State ethanol plant several advantages over Midwestern ethanol plants.

California’s ethanol demand totals more than 1.7 billion gallons a year and the Golden State is the largest dairy pro-ducing state in the United States. “PES was built to meet the market demand of the cars and cows with locally-produced fuel and feed,” Koehler told BioFuels Journal.

Pacific Ethanol’s Destination Model

Destination EthanolPacific Ethanol Stockton’s location in

central California gives the 60-million-gallon-a-year (MMGY) plant several significant strategic and logistical ad-vantages. It is able to procure a diverse array of feedstocks and sell its ethanol and co-products to local markets.

provides PES with five advantages over Midwestern ethanol producers:

• Transportation costs are lower be-cause the plant is closer to its markets.

• Access to two main rail lines at the PES site ensures com-petitive transportation pricing for the delivery of feedstocks.

• Being located on the Port of Stockton gives PES easy access to ocean freight and international markets to obtain feed-stocks and export its products.

• Energy use is lower because the plant sells wet distillers grains (WDG) to local livestock opera-tions, saving 30% in dry-ing costs.

• Using less energy means the Cali-fornia plant’s ethanol is among the low-est carbon-rated ethanol commercially produced in the United States, Koehler said, according to the California Air Resources Board (CARB). That gives PES a significant value advantage be-cause California’s Low Carbon Fuel Standard requires increasing the use of low-carbon ethanol.

California Location Gives Pacific Ethanol Advantages

Facility FeaturePacific Ethanol Stockton209-235-0375 | Stockton, CAwww.pacificethanol.net

Neil Koehler, CEOMichael Kandris, COOBryon McGregor, CFOChristopher Wright, VP, General

CounselJim Sneed, VP Supply and

TradingPaul Koehler, VP Corporate

DevelopmentJoe Teubner, Plant Manager

Employees: 35Capacity: 60 MMGYFeedstock: Corn/Sorghum

Neil Koehler

California Location Gives Pacific Ethanol AdvantagesDestination Ethanol

Reprinted from Fourth Quarter BIOFUELS 2013

Installation of new technology also has made PES more efficient and en-abled it to add to its co-product line.

Recently, PES installed Edeniq, Inc.’s Oil PlusTM proprietary corn oil extraction process and began producing corn oil in October at a rate of a half a pound of oil per bushel of corn.

Koehler said corn oil is a high value co-product with multiple markets, in-cluding animal feed and biodiesel. The addition of Edeniq’s technology is expected to increase the plant’s ethanol yields by 2-4%, he said.

Pacific Ethanol is working with Ede-niq on other technologies, such as its pre-treatment process for corn fiber that can be converted to cellulosic ethanol.

In May, Pacific Ethanol announced that it began using ICM Inc.’s Advanced Oil Separation System™ to extract corn oil at its 60-MMGY plant in Burley, ID. Koehler said the company decided to use corn oil extraction systems from two different companies so it can com-pare the systems. It also is working with ICM on potentially installing additional technologies.

Plant History PES was developed and constructed

during 2007 and 2008 and it began

operations in September 2008. Initial construction costs were $158 million.

It has a 30-acre lease from the Port of Stockton with the plant comprising ap-proximately 20 acres of the area leased.

The plant was built with a Delta-T design. Certain layout and process configurations have been added since construction. Lyles United, a California construction company, built the plant.

PES was idled in February 2009 for economic reasons. The plant was restarted in December 2010 and has operated at full capacity since.

Stockton was selected as the site of the plant for several key market and strategic reasons, Koehler said:

First, it is close to local feed and fuel markets. Second, the site is served by two railroads, the UP and the BNSF. Third, it is on the Port of Stockton, a deep water port suitable for both importing feed-stocks and exporting finished products. Fourth, it is near fuel terminals. Fifth, the facility is located in an Enterprise Zone, which provides some tax benefits. And sixth, Koehler stated, PES is located in a state that is leading the world in reducing carbon emissions through the California Low Carbon Fuel Standard.

There was no opposition from the local community to building the plant and the Port of Stockton is a great place to do business and is very supportive, Koehler stated. “We were able to meet the requirements of the California per-mitting process in a year,” he said. “The San Joaquin Valley Air Quality District is renowned for its strict regulations for environmental impacts. We were able to accomplish the permitting in about one year and built the plant to some of the highest air quality standards in the country.”

The Stockton plant is one of four owned and operated by Pacific Ethanol, Inc. The four plants have a combined production capacity of 200 MMGY.

Company OrganizationPES is a wholly-owned subsidiary of

Pacific Ethanol Holding Co., of which Pacific Ethanol, Inc. is an 85% owner. The other 15% is owned by former lend-ers of the original debt that financed the construction of PES.

Pacific Ethanol, Inc. is a public com-pany traded on the NASDAQ exchange

“My professional life has been dedicated to etha-nol because I wanted to do something about our country’s dependence on foreign oil.”

- Neil Koehler, Pacific Ethanol

under the symbol PEIX. The company’s headquarters are in Sacramento, CA, and it has 145 full-time employees.

Pacific Ethanol, Inc. was founded in 2003 by Koehler and former California Secretary of State Bill Jones, a farmer in the central valley of the state and chair-man of the board of directors.

“My professional life has been dedi-

cated to ethanol because I wanted to do something about our country’s de-pendence on foreign oil,” Koehler said.

He started a company that he sold in 1998 called Parallel Products that makes 12 MMGY of ethanol from waste prod-ucts in the beverage and food business.

Koehler also founded Kinergy Mar-keting, which is now a wholly-owned

c

Daniel Koch runs tests in the lab.

Jeff Unsinger checks corn oil production.

subsidiary of Pacific Ethanol. He saw a potential market opening for ethanol when methyl tertiary-butyl ether (MTBE) was phased out as an oxygenate in gasoline.

Jones and Koehler formed Pacific Ethanol in 2003 and took the company public in 2005. “We saw a great op-portunity to integrate the marketing of ethanol with production,” Koehler said. “That has been our business model ever since we founded the company.”

The company said it is the leading marketer and producer of low-carbon renewable fuels in the western United States. It also sells co-products, including WDG and corn oil.

In addition to the Stockton plant (60 MMGY), the other three ethanol

corn at ratios ranging between 30% and 60%, Koehler said. Importing sorghum is not economical at current prices, he said, and Pacific Ethanol will focus on sourcing its sorghum from California and other states.

In October, Pacific Ethanol pur-chased 167 million pounds of surplus raw beet sugar to be blended with corn at the company’s Burley, ID, and Board-man, OR, plants over the next year. The raw beet sugar will produce approxi-mately 12 million gallons of ethanol.

The sugar was purchased from the Commodity Credit Corporation, a division of the U. S. Department of Agriculture, through its Feedstock Flexibility Program. The purchase price represents a substantial discount compared to corn, Koehler said, and adds flexibility and diversity to Pacific Ethanol’s feedstock sourcing.

Marketing and Co-productsPacific Ethanol’s wholly-owned sub-

sidiary, Kinergy Marketing, LLC, mar-kets ethanol produced by Pacific Ethanol and two other plants in California.

In addition to marketing ethanol, Kinergy provides transportation, stor-age, and logistical services.

Another subsidiary, Pacific Ag Prod-ucts, markets WDG and develops markets for other value-added feed products. It also manages corn procurement and risk man-agement for the company and explores alternative, lower-cost feedstocks for incremental use in existing ethanol plants.

All of the WDG goes to dairies and the corn oil is sold for poultry feed and biodiesel feedstock.Transportation

PES is served by two main rail carri-ers, the UP and the BNSF, which gives it a key competitive advantage for sourcing corn from the Midwest, Koehler said.

Access to ocean freight through the Port of Stockton gives the plant another logistical and transportation advantage.

The FutureKoehler said that there are plans to

restart the Madera, CA, plant but no date has been set. Uncertainty in the market because of possible reductions in the amount of biofuel required by the Renewable Fuel Standard (RFS) in 2014 are clouding those prospects. “Until we resolve not being able to blend higher

percentages of ethanol, there is too much installed capacity in the industry,” Koehler said. “Ethanol needs more ac-cess to the market. I’m very confident that market access will be resolved eventually, but it needs to be sorted out.”

Expansion of ethanol production will come through efficiency upgrades at Pacif-ic Ethanol’s plants. Additional co-product sales such as carbon dioxide and the ad-dition of cellulosic bolt-on technologies are also being contemplated, Koehler said. “The industry is stronger and healthier than ever,” Koehler stated. “The long-term demand for ethanol will continue to in-crease due to its economic advantages as it continues to trade at a discount to gasoline, its position as the highest-performing fuel on the market, and the support of federal and state regulations.”

Jerry Perkins, editor

Ethanol produced at PES is distributed to blenders within 100 miles of the plant.

Pacific Ethanol Stockton produces 550,000 tons a year of wet distillers grains (WDG).

Plant Manager Joe Tuebner checks the cellunator.

plants are located in Boardman, OR (40 MMGY); Burley, ID (60 MMGY); and Madera, CA (40 MMGY). The Madera plant is currently idled.

Original funding for Pacific Ethanol came from approximately $250 million in debt and $250 million in equity to con-struct and operate the four ethanol plants.

Capacity/StoragePES has the capacity to produce 60

MMGY of ethanol and 550,000 tons of WDG. Its corn oil production capacity is 12 million pounds a year. Grain stor-age totals one million bushels and it has 1.24 million gallons of ethanol storage.

FeedstocksIn addition to corn, PES blends sor-

ghum with corn as ethanol feedstocks. PES imported three 30-metric ton

vessels of sorghum from Argentina and purchased sorghum grown in California last year. Koehler said PES bought the sorghum because corn prices were high and sorghum provided an economic advantage at the time.

PES blended the grain sorghum with