Biofuel owner had Arkansas losses, fines

Thomas Wells | Buy at photos.djournal.com Only a couple of tanks were left standing at JNS Biofuels in New Albany after the explosions last week.

Thomas Wells | Buy at photos.djournal.com
Only a couple of tanks were left standing at JNS Biofuels in New Albany after the explosions last week.

By Dennis Seid

Daily Journal

The owner of the biodiesel plant in New Albany that exploded last week said his losses could exceed $500,000, but that he intends to rebuild.

“We’ll be right back here,” said Steve Bolin, who owns JNS Biofuel. He also said his insurance would not cover the loss of the plant, only the cleanup.

“I wished I had gotten insurance on the rest of it,” he said Sunday.

Bolin also said he invested “a couple million dollars” in the facility.

It’s an investment that Arkansas native Bolin has made before.

Bolin was president of Pinnacle Biofuels in Crossett, Ark., which produced biodiesel in 2008-09, but he reportedly lost millions on the project.

In addition, the plant was fined tens of thousands of dollars in July 2010 for violating several state environmental regulations related to storing and transporting glycerin, a byproduct of biodiesel production.

In testimony during an administrative law hearing related to the fines in February 2011, Bolin said Pinnacle was started in 2007-08 by five farmer and rancher friends, including himself, with no previous experience in the biodiesel business.

“I wasn’t the owner of that plant, I was only an investor in it,” Bolin said.

Documents show that Bolin was president of Pinnacle’s board of directors, along with four others.

Pinnacle was a new venture for Bolin, who also owns several businesses in Arkansas, including Ashley Land and Timber, S&R Wood Co. and Bolin Holdings.

He owned another company, JNS Equipment in Monticello, Ark., but sold the assets of the business to another company in 2004.

Pinnacle began operating in March 2008.

Bolin, in court testimony, said about $15 million was invested in the plant in the Crossett Industrial Park, but in three years, it never made a profit.

Bolin’s tax returns showed losses of $3.3 million in 2008, $2.3 million in 2009 and $1.6 million in 2010.

The plant ceased biodiesel production on Dec. 31, 2009, according to a court document.

Hazardous waste

It was revealed in the 2011 hearing that the glycerin produced at the Pinnacle plant was labeled a hazardous waste by the Arkansas Department of Environmental Quality because of its low flash poin – 74 degrees Fahrenheit. The flash point is the temperature at or above which a liquid gives off enough flammable vapor to form a mixture that can be ignited by contact with a hot surface, spark or flame. The lower the flash point, the greater the fire hazard.

ADEQ said Pinnacle at one point shipped the glycerin to Ash Grove Cement Co., which was certified as a treatment, storage, disposal facility, or TSDF. But ADEQ said Pinnacle had stopped shipping it to Ash Grove, and from March to December of 2009 shipped 17 5,000-gallon loads to Clearwater Paper Corp.

Clearwater bought the glycerin to use as fuel for its production process, but it was not a licensed or permitted TSDF.

In addition, ADEQ said two of the 17 loads were transported by a company that also was not licensed to carry hazardous waste.

The company also was fined for storing glycerin for more than 90 days without a permit.

Pinnacle, which was initially fined nearly $62,000 for the violations in July 2010, had argued that the company’s losses and its initial startup costs “negatively impact its ability to pay” the fine.

Companies fined

After the hearing in February 2011 and subsequent post-hearing briefs, the penalty in May was reduced to about $53,000.

“It’s all been satisfied. We didn’t have to pay the full amount; there’s nothing outstanding,” Bolin said Sunday.

In his ruling, the officer noted Pinnacle’s sale of its glycerin to Clearwater “while ultimately uneventful, could have been catastrophic.”

“Using a fuel with a low flash point in equipment that was not engineered for its use has the potential for serious consequences to the environment, and just as critically, the nearby public and (the company’s) employees.”

Including the fine levied by ADEQ, Pinnacle has been fined more than $72,000, according to the federal Environmental Protection Agency.

After the JNS Biodiesel plant explosion last Wednesday, the Associated Press reported that North Mississippi Biodiesel – the name of the plant before it was changed to JNS in 2011 – had agreed to pay a $1,500 fine in 2011 for violations that included failing to perform an emissions test within 180 days of initial startup, failing to perform weekly inspections, failing to submit semi-annual reports and failing to follow all regulatory requirements related to performance standards for equipment leaks, according to Mississippi Department of Environmental Quality documents.

North Mississippi Biodiesel was incorporated in August 2006, according to the Mississippi Secretary of State’s office. JNS Biofuels was incorporated as a limited liability corporation in September 2011, and essentially put its name on the facility then. Bolin was listed as the manager of the facility.

Chicken fat and oil

Like the Pinnacle Biofuels plant in Arkansas, the JNS Biofuels plant in New Albany used chicken fat, soybean oils and other oils to produce B100 biodiesel.

Construction on the plant in New Albany began in 2011, even as Bolin and Pinnacle were ordered to pay its fines in Arkansas.

Production at JNS Biofuels began a little more than a year ago.

In its permit to produce biodiesel in Arkansas, Pinnacle explained the process to produce the fuel includes a “flash removal” of any moisture in the feedstock oil. The feedstock oil is preheated by the finished biodiesel and heated further with an electric heat exchanger to about 170 degrees.

Other materials used in the process include methanol and sodium/potassium methylate – all of which were identified in the tanks at the JNS site by the Mississippi Department of Environmental Quality.

Robbie Wilbur, a spokesman for MDEQ, said the New Albany plant was equipped to store 8,000 gallons of methanol, 37,000 gallons of glycerin, 46,000 gallons of feedstock oil, 8,000 gallons of sodium methylate and 2,000 gallons of fuel oil.

State and federal officials continue to investigate the incident at the plant.

No one was injured in the initial blast Wednesday morning, two subsequent explosions and a fire that lasted two days.

Bigger tax credit

It isn’t clear if Pinnacle resumed production of biodiesel after it said it stopped production in December 2009, but the facility still has a manager.

Last year, the Arkansas Legislature was considering legislation that would amend the Arkansas Alternative Fuels Development Program by adding a 10 cents per gallon tax credit to alternative fuels produced in the state.

The Arkansas Alternative Energy Association pushed for the legislation, citing neighboring states like Missouri, Mississippi and Texas providing “generous state incentives” to biofuel producers.

Mississippi provides a 20-cent-per-gallon tax credit.

Brad Dobson, identified as the plant manager for Pinnacle, told an alternative energy magazine, “Bordering states with production credits are causing Arkansas producers like Pinnacle to lose revenue and jobs. It’s very important to our company and the surrounding area to get this legislation passed.”

The amendment died in the state Senate.

Pinnacle’s plant reportedly could produce 10 million gallons of biodiesel a year; it’s not known how much the JNS Biofuels plant in New Albany plant could produce, but it had been operating for about a year when it exploded last week.

Plant sold

Pinnacle, meanwhile, has been getting federal money through the U.S. Department of Agriculture’s Bioenergy Program for Advanced Fuels. It has received at least $148,000 in grants from the program since 2010, according to information from the USDA.

Since 2008, the USDA has set aside nearly $800 million to promote and support bioenergy projects across the country, while the U.S. Department of Energy has set aside nearly $700 million in loan guarantees.

Earlier this month, Pinnacle Biofuels was sold for an undisclosed sum to Delek Renewables, a Brentwood, Tenn.-based energy company. The deal closed on Jan. 2, and the plant now has the Delek name.

Bolin registered Pinnacle as a corporation, Advantage Bio-Blend Inc., in August 2007, but that license is “not current” according to the Arkansas Secretary of State’s website.

Bolin reiterated that he did not own the plant and that he was merely an investor.

“All diligence was done over eight months and another company bought it,” Bolin said “But I’m not here to talk about all that because it’s done. If you want to talk about New Albany, I’ll talk about that.”

dennis.seid@journalinc.com