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Small Colorado town develops biodiesel

By Jay Mashburn, Rural Community Assistance Corporation rural development specialist

A largely poor, struggling, rural town discovers economic development and develops green energy through an incredible process that took six years and resulted in a successful biodiesel plant, which produces fuel for vehicles. Costilla County residents discovered that the area has some ideal conditions which contribute to biodiesel success. Additionally, the project created jobs in the community. 

Overview

Private sector capital is difficult to attract in rural Costilla County, Colorado, especially with a project that has a number of unknowns, plenty of risk and modest to moderate profit potential.

According to the 2000 census, Costilla County’s median household income is $19,531. The population of 3,663 is 67 percent Hispanic, and more than 20 percent of the county's families fall below poverty level.

So it is amazing that Costilla County this spring began operating a new, cutting edge, biodiesel plant. The plant, which was conceived six years ago, but took this long to develop, is located in south-central Colorado, in the very small town of Mesita, just nine miles north of the New Mexico border.

Costilla County is sparsely populated with a mostly agricultural economy. This predominantly Hispanic area of Colorado has roots back to the state's first settlers, who emigrated from Mexico. The county seat is San Luis, Colorado’s oldest town.

Project background

RCAC has provided technical assistance to Costilla County to address various community issues for at least 10 years. In 2001, RCAC received funds to develop a partner community program to provide holistic and comprehensive services in select communities, and Costilla County was identified as a partner community. RCAC first organized and conducted a prioritization needs forum. Funders, local elected officials and interested citizens, especially those connected with local groups, such as churches and nonprofit organizations, participated.

The forum identified 12 top priorities and biodiesel was one of the 12. Community leaders looked into alternative energy options that could bridge their strong agricultural past to sustainable future economic development. Biodiesel was identified as one of the most promising energy sources because of the county’s abundant use of diesel fuel and the success of oilseed crops first tested in the area in the mid-1990s. RCAC helped find funding from USDA Rural Development to support developing a biodiesel plant.

The Costilla County commissioners launched the biodiesel project in 2002. The idea was to create a successfully operating community-scale facility to demonstrate biodiesel feasibility to the private sector. County Commissioner Joe Gallegos and Dan Quintana, a retired chemist, created a concept, project scope and conducted design research. Costilla County successfully requested financial assistance from USDA Rural Development in 2004. The project price tag was $400,000. A visit to the Iowa State University biodiesel demonstration plant in Ames confirmed that the project was moving in the right direction. The County Commissioners used a portion of land that they already owned, on which to build the biodiesel plant. Project construction started in early 2004. When the project began, most residents had never heard of biodiesel. Public outreach and education began with defining and explaining the concept. It took time and energy to make residents comfortable with the idea of powering vehicles with crushed seeds.

The project ran into early resistance during the local planning and zoning application process, which caused a half-year delay. The resistance originated from some residents’ belief that local government should not be involved in economic development because it is a solely private sector activity.

"If biodiesel is a good idea, then a private company will come and do it," said one planning and zoning board member.

"The project’s viability was much harder to argue, back then when diesel fuel was cheap and had been cheap for as long as people could remember," said Project Manager Ben Doon.

Untaxed petroleum diesel was selling for about $1 per gallon in early 2003. The project payback did pencil out, but the fuel price increases during the past couple of years have made this project even more appealing. Current fuel prices and future predictions have shifted the balance in biodiesel’s cost benefit ratio.

Challenges

Costilla County’s community-scale biodiesel production is 400 gallons per day, which is much smaller than commercial plants. Commercial plants tend to cost millions of dollars and produce millions of gallons of biodiesel per year. This size provides them with economy of scale on everything from labor, to developing needed technology, to selling by-products. Many large-scale options and solutions were not available for a community- scale project. For example, Costilla County was forced to shop internationally to find reliable appropriately-sized processing equipment. Biodiesel equipment or equipment that could be used to produce vegetable oil from oil seeds had to be imported from far flung places such as India, China and South America.

Doon said, "We were the first in our region of the state to begin working with smaller scale commercial biodiesel production." Facility design professionals from Denver lacked biodiesel hands-on experience and knowledge specific to the agriculture sector. The project engineering firm first took a very conservative approach to categorizing the plant’s explosion zones. This approach would have made the project much more expensive and somewhat less functional. It took extra research time and effort to convince designers to use a more balanced approach.

The biodiesel processing technology available was changing so fast during the project design and construction phases that it made decisions even more difficult. For example, the project went through four iterations of weighing benefits and costs and then deciding upon a biodiesel cleaning technology. At first, water washing looked most feasible. However, new ion exchange technology resolved many of the water washing difficulties. Then, appropriately- sized centrifuges became available that were much more affordable to purchase and operate. The Costilla County plant is now using a filter and centrifuge to reach the American quality standard specifications for biodiesel.

RCAC was helpful in this process. The organization provided a good deal of technical assistance to the project, mostly in the form of advice and encouragement from its two professional engineers working in Colorado, this article's author (Jay Mashburn) and William Hogrewe, RCAC rural development specialist.

Favorable factors

Costilla County has some factors that make biodiesel a good fit. The county is at an elevation of 8,000 feet, and the high elevation creates temperatures ideal for canola crops.

The word "canola" is derived from "Canadian oil, low acid," according to Wikipedia. "Canola is a rape plant of an improved variety having seeds that are low in erucic acid and the source of canola oil," per the Webster online dictionary. Canola, soy beans and sunflowers all work well for biodiesel stock. However, canola produces nearly twice as much oil as the common biodiesel feedstock –– soybeans.

The biodiesel demand for edible oil is not forcing out other crops or reducing food production. There are 450,000 acres of crops harvested each year in the San Luis Valley. The Costilla County biodiesel plant requires about 1,000 acres of land to produce enough canola for a year’s production. In fact, the biodiesel project provides education and outreach to farmers on cultivating canola for both food and fuel. Canola is not always a primary crop, but it is an excellent rotation crop for farmers.

The biodiesel process produces cakes of pressed canola seed. The seed cakes can be fed directly to livestock and are high in protein and fat. The San Luis Valley has a long tradition of small, family-run ranches and livestock operations. Area cattlemen and women purchase the seed cake directly from the biodiesel plant in one or two ton quantities. The biodiesel plant staff members package the canola cakes in 100 pound sacks and sell them directly to the residents. This helps the biodiesel plant get a better price for the feed meal and saves the cattle grower money with a locally available protein feed that is below retail prices.

The project provides employment for four people. Some of the work is only seasonal with the seed crop. In a county with high unemployment though, this is more than just a side benefit. Doing something environmentally friendly is much easier when it also creates a tangible benefit.

The Costilla County commissioners' vision, commitment and hard work were significant factors in the project success. The commissioners provided real leadership each step of the project, moving the vision forward to gain public support and assist with design, construction and commissioning.

In addition, Quintana's assistance, with his chemist and engineering management experience, was substantial. If Costilla County had needed to find and retain outside professionals with Quintana’s skills, it would have greatly slowed progress and increased the headaches and costs for the county.

The biodiesel plant is a welcome neighbor in the San Luis Valley because of a strong farming and ranching tradition. The community impacts are limited to some additional farm truck traffic that hauls canola seed to Mesita, and the visual impact of the plant’s seed storage silos and bins.

Doon said, "Most folks here welcome the sight of new grain silos as a good sign."

Technology

The Costilla County biodiesel plant produces biodiesel in batches. Large commercial facilities use a continuous flow process where things are always going in and coming out of the plant. The Costilla County plant is much more like your local baker, cooking in batches. The plant is able to produce four 100 gallon batches each day. However, the plant is not yet operating at 100 percent capacity as operators work on operation efficiency. The biodiesel produced can be used straight in vehicles during the summer months as B100 grade.

"Much of the world uses a system known as the ‘B’ factor to state the amount of biodiesel in any fuel mix," according to Wikipedia. During cold weather, the biodiesel is blended on-site with petroleum diesel to lower the temperature at which it congeals. Once biodiesel and petroleum diesel are thoroughly blended, they will stay in suspension and require no additional mixing or special handling. (For a visual representation of the biodiesel process, see the process flow chart on the next page.)

Your turn

• RCAC offers a myriad of assistance to rural communities for economic development.
• RCAC helps communities identify and build consensus, particularly around alternative energy projects.
• RCAC helps communities identify and apply for project funding.
• RCAC can mention interested communities to alternative energy networks and advise them on places where they can participate in these special interest projects.
• RCAC helps with the strategic planning needed for a project like this.
• RCAC also helps with the public participation needed for such projects.

For a diagram of the biodiesel process, refer to the Pacific Mountain Review, v. 25, number 3, 2007, page 11.