CAPITAL REGION — As oil prices keep skyrocketing, alternative energy entrepreneurs say their gamble on fuels created from agricultural or waste sources may soon pay off.

At Maple Hill Farm in Carlisle, Caroline Foote and Victor Putnam plan to expand and improve small-scale production of their own biodiesel fuel, made from used vegetable oil collected from local college dining halls.

Capital District Transportation Authority buses as well as all city of Oneonta buses and other vehicles already use biodiesel-blended fuels.

Schoharie County supervisors voted 12 to 3 Friday to soon begin trying out biodiesel with a few county vehicles. The pilot project would likely start with a county dump truck and a frontloader, according to county Public Works Commissioner Thomas Fagnani.

Creative Energy Group co-owner Rob Rieber said he and his wife, Sue, last year turned an old Bainbridge building into a commercial biodiesel production plant selling to farmers in the region between Oneonta and Binghamton.

It was a tough start-up. “We sold everything we could sell … and we financed everything we could,” Rieber said. “No banks would touch it,” he said. Even the New York State Energy Research and Development Authority wasn’t interested in helping, he said.

Rieber said they kept costs down, but still invested nearly $500,000 in the start-up project.

Rieber said his Bainbridge plant is making about a million gallons of biodiesel fuel a year from raw soybean oil. The plant, which is heated by biodiesel, employs five people.

Rieber is now working with Auburn Biodiesel Corp. to build a larger plant on a multi-use alternative energy site in Montezuma, near Syracuse.

After risking their life savings and struggling with rising virgin soybean oil prices, in the first year, Rieber said it’s been hard to keep afloat. He tried to sell the plant for a while, but had no takers, he said.

Rieber buys his virgin soybean oil through Perdue Farms in Salisbury, Md. A lot of the raw soybeans used are likely grown on Midwest fields. But, like corn grown for ethanol instead of food or feed, futures trading and speculation has driven up soybean prices, he said.

About a year ago, Rieber paid 40 cents a pound, plus 6 cents for delivery. Last Wednesday, the soybean oil price was 63.5 cents a pound, plus delivery. “That works out to $5.26 per gallon delivered,” he said.

Rieber said Thursday he was selling diesel, for use only in vehicles or equipment not used on public roads, for $4.32 per gallon.

Most of Rieber’s customers are farmers, who bring their own tankers to pick up 100 percent soy-based biodiesel at his plant, then blend it with regular diesel on the farm.

Selling for farm vehicles that stay off roads avoids the complications and cost of federal and state excise taxes for on-road fuels, Rieber said. “As soon as those tires hit the road, you owe the government,” he said. Federal and state excise and road use taxes add 56 per gallon to the base cost for on-road use, he said.

Increasing global demand for food and fuels, especially from China and India, combined with droughts, have contributed to spiraling farm and fuel prices, according to Lee Pratt, agriculture marketing specialist for Schoharie County.

ethanol’s little problem

Meanwhile, the spotlight appears to be fading on corn-based ethanol, production of which has been blamed for diverting corn from food to fuel production.

High corn prices and limited supply are driving up prices for food and livestock feed. Critics also cite inefficient production methods for corn-based ethanol, and lower gas mileage for vehicles burning ethanol/gasoline blends.

Rieber said he rejected going into the ethanol business after about three months of research. “Drunken third-graders could have seen that,” he said of the problems associated with ethanol production. “Anybody should have seen what it would do.”

“I don’t support corn-based ethanol technology,” said state Assemblyman Pete Lopez, R-Schoharie. “When farmers are growing a crop and using it in a way that hurts other farmers, to me that’s backwards.” Lopez is optimistic fuel made from oil soybeans or canola rapeseed, or recycled vegetable oils is a better bet than ethanol.

On a small scale, that’s what Maple Hill Farm in Carlisle is doing to fuel their trucks and forest and farm equipment.

The single processing facility, built inside an unheated, 40-foot container, has the capacity to make up to 1,000 gallons of biodiesel a week, according to Foote. Summer production is about 250 gallons to 500 gallons per week, she said.

Their used oil comes from SUNY-Oneonta, which has paid Maple Hill to remove its waste canola oil from the dining hall since August 2006, Foote said. An additional and closer source is now available from SUNY-Cobleskill, after a contract this past April 30 to pay the farm to collect waste oil.

micro-refinery

Just as refiners using raw plant oils, they mix the vegetable oils with lye and methanol to make biodiesel fuel. The glycerin by-product that settles to the bottom of the tank can be used to make soap, Foote said.

The biodiesel motor or heating fuel created emits no toxic chemicals, Foote said.

“Like the moonshiners of old, there are tens of hundreds of these entrepreneurs across the country using waste vegetable oil” to produce motor fuels, heating oil and lubricants, Lopez said.

Although legal to recycle vegetable oils for private off-road use, getting certification and sorting out the tax requirements to sell it retail can be a confusing maze, according to Pratt, the county agriculture marketer.

“People are trying to get it started,” Pratt said, “and we promote it as much as we can … but how much vegetable oil is out there?” he asked. “Alternative fuels is a good direction to go, and I think we’re still trying to pick which path.”

area pumps

A retail pump to provide soybean-based biodiesel is expected to soon open at the Ottman & Enders fuel company in Schoharie, according to Ken Ray, president of John Ray & Sons in Troy, who will be supplying the biodiesel fuel.

If a pump in his hometown opens, Lopez should have an easier time fueling his biodiesel 2005 Jeep Liberty to drive to Albany and through his mostly rural, seven-county 127th Assembly District.

Lopez said he can travel about 500 miles on a tank of fuel. Currently he has a choice to fill it with a 20 percent biodiesel mix from the John Ray station at 2900 Sixth Ave., Troy, or the Mirabito Fuel Group station at 10 Carbon St. in Oneonta.

With all the Oneonta bus fleet fueling up at Mirabito, “I’ll take my little Jeep in there sometimes and the buses are lined up,” Lopez said.

The only other Capital Region biodiesel stations listed on the national biodiesel.org Web site are Doheny Oil Corp. in Ballston Spa and Doheny’s Exxon in Glens Falls.

For the 5 percent biodiesel blend that CDTA uses to fuel its buses, an advance contract with Mirabito Energy Products of Albany has proven economical, according to CDTA spokeswoman Margo Janack.

“Months ago, CDTA fortunately locked in a year’s purchase of [B-5 blend] fuel at the price of $2.97 a gallon,” Janack said.

The bulk rate CDTA pays for its regular diesel is approximately $4.05 per gallon, while the current price for a B-5 biofuel mixture is approximately $4.48 per gallon, according to Janack.

The long-term price outlook for commercial biodiesel is still an open question.

“There are a lot of issues in selling fuel that have to be dealt with,” Pratt noted. “People have to be convinced of the quality.”

fleet solutions

Although diesel vehicles can generally use biodiesel without any significant modifications, sometimes fuel filters can gum up because the fuel is so efficient at cleaning existing gunk out of tanks, users say.

Quality issues are particularly important when the source is used oil, according to Rieber. Producers must certify their fuels with lab tests to determine the oxidative stability of the fuel.

Bolstered by the confidence, enthusiasm and advice of Oneonta city Fleet Supervisor Paul Patterson’s use of a blended petroleum-based diesel and 20 percent soy-based diesel, Schoharie County officials are also planning to try it out in a county dump truck and frontloader.

Oneonta has had good results using 20 percent biodiesel year-round in all its 60-vehicle fleet, Patterson said.

The city’s fleet uses about 100,000 gallons of fuel per year, including 16 buses and a trolley, he said.

Biodiesel cost has varied from about 15 cents above or below that of regular diesel, according to Patterson. “I’d rather pay American farmers than Arabian sheiks,” he said.

In addition to burning cleaner and more than doubling the time between engine oil changes, Patterson said “it’s vegetable oil, if you spill it, there’s no environmental impact.”

Lopez said he is also working with groups in the Mid-Hudson Valley and the Chenango County Farm Bureau to pursue efforts by local farmers to use on-farm seed crushers to extract oils from crops such as canola plants, or even algae, then turn it into fuel for equipment.

“It’s beautiful,” Rieber said of such small-scale efforts, including the Maple Hill Farms facility. “The farmers are in a perfect position to take advantage of this.”