Biodiesel in the Pacific Northwest

Update: The Pacific Northwest biofuel boom went bust two years after the article was published. Both Washington and Oregon based biofuel companies filed for bankruptcy.

The biodiesel industry in the Pacific Northwest offers several choices for case studies about the successful commercialization of biodiesel today. Recent growth in the Pacific Northwest biodiesel industry owes much to the research on biofuels spurred by the twin oil price hikes of the 1970s.

Low oil prices throughout the 1990s slowed, but did not totally halt research and development efforts. Today's successful companies turned that research into practical applications employing several different production technologies and distribution plans.

Two companies currently in production and distribution, Sequential Biofuels, based in Portland, OR, and Imperium Renewables, based in Seattle, WA, demonstrate the scalability of biodiesel business models, making them amenable to rural and urban locations.

Sequential Biofuels represents a successful small scale biodiesel production and distribution network, with production in the million gallon per year range. The company's use of recycled cooking oil as a primary fuel stock highlights one end of the production market. Recycled cooking oil facilities have the market advantage of low operating costs, compared to facilities that rely on crop production for feedstock. The availability of recycled oil in any market necessarily limits production. However, it can be increased by including non-recycled stocks such as seeds in the production process.

Sequential compliments its biodiesel production with a chain of retail stations located at strategic exits on the I5 corridor in Oregon and Southwest Washington, with a heavy concentration in the Portland metropolitan area. Their customer base ranges from local small businesses and consumers to visiting travelers approaching from the inter-state.

Imperium Renewables, a Seattle based company, provides a good example of a larger scale production facility. Their 100 million gallon per year production facility located on the coast in Aberdeen plans to open in late summer 2007. When you consider that government estimates put biodiesel production at 75 million gallons in 2005, Imperium's production scale comes into focus.

Large scale production improves biodiesel competitiveness with diesel fuel prices in theory. In practice, operating costs are typically higher because of the need for more expensive feedstock. The company plans to implement a cost control strategy of using a combination of local, domestic and foreign feedstock as its raw materials.

The larger scale business model also expands marketing opportunities. Imperium Renewables operates a distribution network in the Seattle metropolitan area, similar to the Sequential model. Fuel from the Aberdeen facility is intended to meet expected growth in biodiesel demand throughout the region. Imperium also plans to market its production technology.

Washington state also has a few smaller scale biodiesel producers. Debate on the issue of scale often hinges on the merits of using local versus imported feedstock. Smaller scale operations can produce biodiesel from feedstock grown in local markets.

State support for biodiesel in both Oregon and Washington state is one factor contributing to the success of both business models. Legislative packages in these states include provisions mandating minimum biodiesel requirements in all diesel fuels sold, as well as financial incentives for investment and production facilities.

The biodiesel industry is also priming for take off on the a bit further north in British Columbia. The province hosts the largest biodiesel pilot project in Canada. BC Fleet intends to use over 2 million gallons of biodiesel to fuel the municipal fleets of six municipalities between the years 2005-2010, with Vancouver the population center. Plans for a competitive commercial production and distribution facility in the region are dependent on pending Canadian legislation.

© 2007 Patricia A. Michaels