Flint Hills Resources has decided to close its 50-million-gallon biodiesel plant in Beatrice, Nebraska, pointing to tough economics as reason for the decision.
The 50-million-gallon plant that produces biodiesel using a variety of waste fats and oils such as recycled cooking oil, vegetable oil, tallow, and distillers’ corn oil, is at an unusual competitive disadvantage to plants that use soybean oil as a feedstock. That's because the recent drop in soybean prices has made it cheaper for soy-based plants to produce biodiesel, giving them a competitive advantage over plants that use corn oil, greases and other feedstocks.
Michael Wilhelmi, manager of communications and community relations in biofuels and ingredients at Flint Hills, said the company doesn’t expect to see a change in market forces.
The whole reason for being of the Beatrice plant, he said, was the competitive advantage it had in using corn oil and other greases to produce biodiesel.
"Corn oil was less expensive," Wilhelmi said. "We don't think conditions are going to change anytime soon."
The plant's fewer than 40 employees, he said, will be offered severance packages.
The company began taking down the plant on Tuesday, Wilhelmi said. "We're exploring our options" with the plant.
Although the biodiesel industry as a whole has seen falling demand as a result of EPA's issuance of small refinery waivers to the Renewable Fuel Standard, as well as continued uncertainty about the biodiesel blenders tax credit, Wilhelmi said it didn't play a role in the decision.
"Any government intervention on the marketplace is bad," he said. "It makes for volatility in the marketplace. Any mandate and subsidy, we oppose them. We are happy to compete."
The original $50 million plant built in 2008 didn't launch production initially. Flint Hills bought the plant for just $5 million at a 2011 auction and invested about $100 million to retrofit the facility to use corn oil and grease. The plant then started production in 2016.
In a 2016 news release, the company touted what was the first commercial-scale application of Benefuel Inc.'s ENSEL technology. The technology is used to convert lower-cost feedstocks into biodiesel.
In May 2013, Benefuel announced a joint venture with Flint Hills Resources, known as Duonix, LLC, to produce biodiesel. The Duonix joint venture was formed to leverage Benefuel's technology with Flint Hills Resources.
Todd Neeley can be reached at firstname.lastname@example.org
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