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Ethanol production capacity over 14 billion gallons
November 29, 2011 / 7:44 PM / 6 years ago

Ethanol production capacity over 14 billion gallons

(Reuters) - The U.S. biofuels industry has more than 14 billion gallons in annual production capacity for fuel ethanol, according to new industry and government data, but growth has hit a plateau and experts see steady but slow capacity growth going forward.

A government report issued Tuesday shows fuel ethanol industry maximum sustainable capacity at 193 plants capable of churning out 14.2 billion gallons a year or 929,000 barrels a day. The data, issued as a first-ever report by the Energy Information Administration, is nearly a year old, based on information as of January 1, 2011.

Still, data reported by the industry as of November 16 showed 209 plants producing about 14.2 billion gallons a year, less than the estimated capacity of 14.7 billion gallons.

“You’re essentially in the plateau stage of the ethanol boom,” said Linn Group analyst Jerrod Kitt. “There are a few expansion projects under way ... but we’ve essentially boomed out. Now we are just tottering along.”

RFA spokesman Matt Hartwig said that the rate of expansion was slowing as the domestic market neared the saturation level and approached the mandate set by the Renewable Fuels Standard which requires oil companies to use 15 billion gallons of ethanol by 2015.

An uptick in export demand is notable but not enough to drive the double-digit rates of expansion in capacity seen in past years, Hartwig said.

Neill McKinstray, vice president of The Andersons Inc ethanol division, said ethanol supply and demand are in balance and margins are strong.

Domestic demand is expected to slip in early 2012, however, and export demand likewise was seen softening, he said.

The vast majority of the U.S. ethanol refineries use corn as their feedstock. Corn prices have fluctuated sharply this year but have been in decline over the last several months.

A few plants also use barley, milo, sugarcane, beer, potato waste and wood waste. Some plants in Minnesota, Wisconsin and California use cheese whey.

“Corn ethanol is in good shape to meet demand,” said Jim Stark, a spokesman for Green Plains Renewable Energy, the fourth-largest U.S. ethanol producer.

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