Monday, October 24, 2005

Coors ramping up production of ethanol from beer waste

By Robert Sanchez / The Denver Post

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GOLDEN, Colo. -- One answer to lessening the country's dependence on foreign fuel imports might be hiding in the six-pack you carry home from the liquor store.

At the Coors brewery here, the brewer and Merrick & Co. of Aurora, Colo., are using beer waste to process 1.5 million gallons a year of the gas substitute ethanol.

The 9-year-old plant that distills the residuals from beer making has been such a success, officials from the brewer and the engineering company said, that a second, $2.3 million plant will open later this month on the same site.

The second plant will double ethanol production at the brewery, partly by gathering millions of gallons of spilled beer and putting it directly into the process via an underground pipeline.

"With the demand high and the need even higher, it seemed like a great time to expand," said Steven Wagner, the Merrick vice president who helps lead the Coors ethanol project. Under a 15-year agreement, the company leases land from Coors, buys the residuals from the brewer and owns the plant.

The ethanol -- made in a maze of stainless steel pipes in much the same way as moonshine -- is sold under a contract with Valero Energy Corp., which distributes the ethanol to Diamond Shamrock stations.

"We've basically taken a waste stream and turned it into a revenue stream," Wagner said.

The beer waste accounts for only a fraction of the expected 4 billion gallons of ethanol sold nationwide next year, but supporters say the plan illustrates the growing demand for gasoline substitutes as the country battles skyrocketing fuel costs and attempts to expand existing gasoline supplies.

Merrick and Coors officials declined to provide financial details of the deal. Ethanol at the plant generally is sold near wholesale-market value, which on Wednesday hovered near $2.55 a gallon in Denver.

The ethanol agreement, Coors officials said, is a perfect fit for the company.

"We've always produced low-grade ethanol, so this was a logical step," said Rick Paine, the co-products process manager at the Coors facility, referring to the alcohol-heavy grains and yeast used in beer-making. "The fact that we can do it all here is just an added bonus."

Alternative fuel sources are especially welcome in Colorado, where clean air laws mandate that ethanol be blended with gas during the winter to reduce vehicle emissions. About 100 million gallons of ethanol are used in the state each year.

Ethanol demand -- already at an all-time high nationwide -- has increased threefold since 1996 and will expand further after federal energy laws that mandate more use of alternative fuels go into effect in the near future.

At least 7.5 billion gallons must be used in the U.S. by 2012, fueling nationwide interest in ethanol production.

Nationally, at least 83 plants are currently in operation, more than 20 are being built and dozens more are in the planning stages.

In Colorado, three ethanol plants are in development in Evans, Sterling and Windsor. The plants will push Colorado from having virtually no ethanol production to being one of the nation's top 10 producers by late next year.

But ethanol is hardly free from criticism.

Opponents say ethanol can be costly -- its price has jumped 40 percent in two years -- and the market could bottom out if oil prices decrease significantly.

Ethanol opponents also argue that the fuel substitute reduces gas mileage and wouldn't be economically feasible without federal tax credits for producers.

David Pimentel, an ecology and agriculture sciences professor at Cornell University in New York, released a report on ethanol production this year that calculated everything from the amount of fertilizer needed to grow corn to the fuel needed to haul ethanol to refineries.

The report showed that ethanol production expended more energy than it created.

"It's a boondoggle that takes taxpayer money," said Pimentel. "Some day we'll wake up and realize what's going on, but that's not happening right now."