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Blender Pumps Opening the Way to Continued Market Growth
by Jonathan Eisenthal

In 2022, under the current Renewable Fuels Standard, ethanol could displace more than a fifth of the petroleum used in transportation fuels. Experts feel that the nation will soon reach the saturation point for E10, and while expansion of E85 infrastructure and numbers in the vehicle fleet could hold the key to a vast new market, it seems unwise to be too single-minded about any one approach.

But one strategy that is emerging as a bridge – mid-level ethanol blends made practical through the use of blender pumps – may provide a means for the continuous expansion of the ethanol market alongside the anticipated growth of production capacity.

Blender pumps offer the fuel consumer a push-button selection of gasoline-ethanol blends, typically E20, E30, E40 and E50 – in addition to E10 and E85. This infrastructure is currently found in eight states and appears to be spreading quickly.

“It’s important for us to pursue all of these avenues, all of these strategies, including the mid-level blends, if we want to assure the continuous growth of ethanol use in America,” said Ralph Groschen, a renewable fuels marketing expert at the Minnesota Department of Agriculture.

South Dakota and Minnesota are the early adopters of blender pump infrastructure. The technology has been in use for more than a decade for dispensing different diesel blends or different grades of gasoline. The typical setup includes two underground storage tanks, one loaded with conventional gasoline and the other with E85, or 85 percent ethanol. By the press of a button, the dispenser’s onboard computer draws the appropriate amount of fuel from each tank.

More than 80 locations offering mid-level blends can now be found across eight states: the majority in Minnesota and South Dakota, with a few each in Iowa, Kansas, Ohio, North Dakota, Michigan, and Wisconsin.

The American Coalition for Ethanol (ACE) has published an online map of blender pump locations through Google Maps. The map can be found by clicking on the “Mid-Range Blends” quick link on the right side of the home page at Ethanol.org.

At press time, 86 locations were listed on the map. ACE has been made aware of more blender pump locations, but not all stations have elected to be listed on the public map. Map updates should be sent via e-mail to Chuck Beck at cbeck@ethanol.org.

The experience at the Cenex Convenience Store in Ortonville, Minnesota provides a dramatic example of the potential of blender pumps.

The store installed its Gilbarco-brand blender pump in November 2007. Previously they offered only E85 and E10 blends at that location, but the new pump allowed consumers to choose one of four blends – E20, E30, E50, and E85. The store watched its ethanol sales climb from about 4,000 gallons a month to about 16,000 gallons a month, according to station manager Kim Sykora.

“We are in a farming community and there are two ethanol plants right in the area,” Sykora said. “People are very supportive of ethanol… E30 seems to be the break-even point for mileage – that’s based on customers’ and my own experience. I run it in both my cars and get very good gas mileage with the E30 .”

Sykora said her customers are very appreciative of the ability to test these different ethanol blends and find out through actual experience what works best for their cars. She notes that mid-level blends are only officially sanctioned by the EPA for use in flexible fuel vehicle, a fact presented to the consumer through obvious pump labels.

She also noted that mid-level blends have shown price sensitivity, and sales of ethanol have dropped off as the prices of gasoline and ethanol have come closer together. In her experience sales become brisk when the prices are 60 cents apart or greater. Sykora expects, long term, that ethanol will retain its economic advantage to the consumer and sales will recover along with the rest of the economy.

The American Lung Association of the Upper Midwest helped the Ortonville Cenex arrange its $10,000 federal tax credit to pay for the underground storage tank and the new pump. A number of organizations offer grants, and federal and state incentives exist. The 2005 Energy Act established a 30 percent credit for infrastructure costs, up to $30,000.

State infrastructure assistance can be obtained in Georgia, Idaho, Indiana, Iowa, Maine, Michigan, New York, Ohio, South Carolina, and Tennessee. Visit the American Coalition for Ethanol’s website, Ethanol.org, for more detailed information.

In early 2008, the South Dakota Corn Utilization Council started a matching grant program, and in conjunction with the Ethanol Promotion and Information Council (EPIC), they began putting $2,500 toward a grant program for station owners to install blender pumps.

Helping station owners take advantage of the incentives for ethanol in the federal tax code is a key part of the program, according to Lisa Richardson, executive director of South Dakota Corn.

“We’re teaching these guys to be their own blenders,” Richardson said. “They can take and utilize the blender tax credit and buy directly from the ethanol industry. We are encouraging these fuel retailers to pass along at least part of the savings to the customer. Our main goal is to get the infrastructure in place, to give consumers the choice.”

South Dakota Corn represents 12,500 producers and has around 2,000 members active in its grassroots organization.

“Long term, we think blender pumps will increase the demand for ethanol and so, long term, it will also increase the demand for corn,” Richardson said. “It’s a win-win for ethanol producers and corn producers, and ultimately, it is a win for the consumers. They are going to get a better product and at a savings compared to gasoline.”

The blender pump helps places like Jet Service Center, Inc., in Beresford – a town of 2,200 in southeast South Dakota – put ethanol within reach for the drivers in its region. Once they had the infrastructure, which Jet Service added in September, the challenge became getting the word out to a widely dispersed customer base.

“We got a grant from the Ethanol Promotion and Information Council, and that helped us with our open house and getting the ethanol blends promoted in our advertising,” said Darla Jacob, who owns Jet Service along with business partner Tom McKee. “We did radio, newspapers, and handed out gift certificates for ethanol. We’ve been pleased with the response and we’re happy we put it in.”

Two farmers proved to be the key influence in Jacob’s and McKee’s decision to install the blender pump. One farmer, a member of South Dakota Corn Growers Association, and connected to the POET ethanol plant in the area, told Jacob he had used E30 in his pickup without difficulty for the past three years. Another farmer complained to Jacob that he had to drive 45 miles to the nearest E85 outlet to put into his new flex-fuel pickup truck.

“I started looking around and no one else in the area was providing the E85, so it seemed like a smart business decision,” Jacob said. “Now with the crunch on the economy, we can’t really judge how well it is doing, but have seen an increase in our gallons. I am picking up customers. People off the Interstate are telling me they are not finding a lot of E85 places, so they are glad I’ve got it. “

Jet Service calls attention to its ethanol offerings on its new digital price sign, and bright yellow pumps and hoses further set it apart from conventional gasoline, so drivers won’t be confused about what they are getting.

Kansas’ first blender pump location opened this summer in the university town of Lawrence, the decision to offer mid-level ethanol blends along with E85 and biodiesel appearing to be a function of environmental concern more than anything else.

The coffee shop at Zarco 66 has a roof covered with grass that does not need to be mowed and efficient compact fluorescent lighting illuminates the fuel pumps. Plans are in place to install solar panels and a wind turbine on the property, according to a report in the Lawrence Journal-World. Regional EPA officials bestowed an award on station owner, Scott Zaremba, and declared his approach worthy of national attention and emulation.

“Blender pumps provide the consumer with choices,” said Ron Lamberty, marketing director for American Coalition for Ethanol. “ The car owner can try the different blends and see which works the best for their vehicle and how much renewable energy content they want, based on economics or the desire to benefit the environment, their local economy – where the ethanol is produced – as well as concerns about national energy security. Based on the first year or so that mid-level blends have become available, the consumer response is exciting.”

ACE has worked with fuel retailers to defray costs and help promote the availability of blender pumps, and the ethanol advocacy group has also supported research in venues across the country. National Renewable Energy Laboratories (NREL) in Golden, Colorado completed a battery of tests to see how “legacy” vehicles perform with the first two levels of mid-range ethanol blending, E15 and E20. The state of Minnesota has also helped move the process of EPA approval of E20 forward.

All the research so far has green-lighted the process.

The NREL study found: “None of the vehicles displayed a malfunction indicator light (MIL) as a result of the ethanol content of the fuel.

• No fuel filter plugging symptoms were observed.

• No cold start problems were observed in 75°F and 50°F laboratory conditions.

• No fuel leaks or conspicuous degradation of the fuel systems were observed.”

The testing of the 13 vehicles that ranged in model year from the 1990s through the 2000s, showed that E20 improved a number of emissions compared to conventional gasoline, and slightly increased a few others – though nothing to raise serious obstacles to the approval process.

Groschen feels that the process of gaining approval for E20 as a regular gasoline blend can work in complementary fashion with both the spread of blender pump infrastructure and the increased size of the nation’s fleet of flexible fuel cars.

“The U.S. Department of Energy has put about $30 million into researching these increased blends,” said Groschen, who is shepherding the approval effort forward on behalf of the state of Minnesota, which passed its increased ethanol requirement in 2005. The state’s regular blend will go from E10 to E20 in 2013. To date, Minnesota’s research has shown the higher blend of ethanol causes no materials or drivability problems in cars with conventional equipment.

“There’s a whole slew of DOE research on both E20 and E15 going on,” Groschen said. “Right now DOE is conducting durability tests on catalytic converters – engineers expect a higher temperature from burning E20 compared to E10. We need to make sure this wouldn’t wear the converters out any faster than using conventional gasoline or E10, or that the heat would make the converter non-functional. There are a lot of vehicles that need to be tested, and they need to be tested in particular kinds of laboratories, all of which are booked up. It could take until the end of 2010 to finish that work – to submit the data along with the application.”

In order to meet all the regulatory deadlines and ensure that Minnesota meets its goal of using E20 by 2013, the vehicle testing would have to be completed in the spring of 2010, Groschen said.

In the meantime, blender pumps provide another viable avenue for reaching out to more consumers and offering ethanol at higher blends than E10.

Research sponsored by ACE has shown that, far from paying a mileage penalty, higher ethanol blends may even increase miles per gallon in some cars.

Last year’s “Optimal Ethanol Blend-Level Investigation” proved that mid-range blends can outperform E10 and conventional gasoline. The research into mid-level blends in conventionally equipped cars continues and is zeroing in on “an optimal blend” which could range between E20 and E30, depending on the make and model. The tests shows vehicles getting better mileage than predicted, and in some cases even topping gasoline.

“E20 offered a 15 percent mileage improvement over gasoline in one of the four vehicles, and E30 offered a 1 percent mileage increase in two of the vehicles,” according to ACE reports.

Performance metrics like these cannot possibly surprise anyone who follows professional racing and has seen IndyCar Racing switch to pure ethanol because of its high octane rating and other performance characteristics. Blender pumps provide a seamless way to offer higher ethanol blends once they are approved for conventional cars, while preparing for a far more extensive national fleet of flexible fuel vehicles.

 

© American Coalition for Ethanol, all rights reserved.
The American Coalition for Ethanol publishes Ethanol Today magazine each month to cover the biofuels industryís hot topics, including cellulosic ethanol, E85, corn ethanol, food versus fuel, ethanolís carbon footprint, E10, E15, and mid-range ethanol blends.
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