Environmental Engineering Reference
In-Depth Information
Pacific Ethanol purchases feedstock from third-
parties and resells ethanol to various customers in
the Western United States. Pacific Ethanol also
arranges for transportation, storage and delivery
of ethanol purchased by its customers through
its agreements with third-party service providers
(Pacific Ethanol Inc., n.d.).
lower operational costs in processing and trans-
portation of both ethanol and its byproducts. This
provides the company with an advantage over
other national producers and imports from ethanol
powers like Brazil. Pacific ethanol designed an
entrance strategy consisting of three phases.
Low Risk Production
Policy and Market Drivers
Pacific Ethanol started operations in Oregon by
opening a plant that uses the same proven and
reliable corn-based technology that has been
implemented before by other companies and in
other Pacific Ethanol facilities. The implementa-
tion of this process poses practically no risks due
to lack of uncertainties in the production process.
Their goal was to create a corn-based ethanol in-
vestment to create a profitable business modeled
after the successes in the Midwest (Davis, 2008b).
The primary market driver for Pacific Ethanol was
the Renewable Fuels Standard (RFS) signed into
law August 2005 which mandates use of renew-
able fuels (ethanol & biodiesel) in all motor fuels
sold in U.S. (7.5 billion gallons by 2012). With
this reform the US Senate expects a demand of
36 billion gallons of ethanol by 2022 which will
account for depending of fossil fuels
In Oregon, Governor Kulongoski signed the
Renewable Fuels Standard in July 2007 requiring
E10 in Oregon (ODA Measurement Standards Di-
vision, n.d.). With these regulations all production
stays local and there is still market opportunity
to reach the amount of supply needed to meet the
demand of E10. Furthermore studies on Ethanol
blends by the University of Minnesota have shown
that current models and brands of cars, with a
regular gasoline engine, can actually achieve
better performance using blends greater than 10%
(Aulich et al., n.d.); this study could provide an
extra incentive for government to further increase
regulations for the use of ethanol.
Production Process Improvement
A second phase of their strategy, currently un-
der implementation, is to explore alternative
feedstocks for integration into their existing
facilities. One technology for consideration uses
conventional sugar/starch materials, however at
the moment the company has no plans of imple-
menting a project with these feedstocks (Pacific
Ethanol Inc., 2007).
The other technology is cellulosic ethanol for
which Pacific Ethanol is building a pilot plant
in its Columbia facility located in Boardman,
Oregon. This plant will be built using the cel-
lulosic technology developed by BioGasol AgS.
Support and consulting are being provided by the
Joint Bioenery Institute as well as 23.4 million
dollars in grants from the DOE. This is in addition
to Pacific Ethanol's own investment (Ruggiero,
2008; Davis, 2008b).
Business Strategy
Pacific Ethanol's motivation for entering the Or-
egon market was greatly influenced by a change
in the state policies regarding the use of ethanol
in gasoline; this practically created a market with
no local suppliers and no direct competition, the
perfect opportunity for an early provider (Davis,
2008b).
The company's strategy is based on building
