Biodiesel gains popularity with fuel oil distributors

Aug. 1, 2007
BIOHEAT is more than the latest green word being splashed about by the fuel oil industry. Witness a morning session at the New England Fuel Institute

BIOHEAT is more than the latest “green word” being splashed about by the fuel oil industry. Witness a morning session at the New England Fuel Institute Business Conference dedicated to the subject:

“Our customers are demanding it,” said Stephan Chase of Alliance Energy, who began delivering biofuel (a mix of biodiesel and fuel oil) to customers more than four years ago.

Bob Warren of Fisher Churchill said he has formed a separate company, Mass Biofuel, to deliver the product, and plans to have all his customers switched to bioheating in 2008.

“Biodiesel will go beyond a niche fuel in the next three years,” said Paul Nazzaro of the National Biodiesel Board.

Chase, Warren, and Nazzaro were members of a panel discussing bioheat at the June 12-13 conference in Boston, Massachusetts. Others taking part included John Huber of the National Oil Heat Research Alliance, Gary Haer of the Renewable Energy Group, Tim Keaveney of Sprague Energy Corp, Elliot Quint of Global Companies LLC, Edmund Burke of Dennis K Burke Inc, Victor Turk of R W Beckett Corp, and James Townsend of Townsend Oil and Propane.

General agreement

The panel was in general agreement about the bright future for biofuels, but emphasized the importance of marketing product that meets strict specifications. “Quality, quality, quality,” was the word from Chase.

One way to improve quality is by obtaining product from producers holding a BQ-9000 certification, said Huber.

BQ-9000 is a quality assurance program that includes procedures for manufacturing fuel storage, handling, and management to ensure fuel quality throughout the distribution system. The program is designed to create a comprehensive quality system so that fuel is consistently produced in accordance with ASTM International D6751 specifications. Product testing should be a regular procedure by distributors in addition to relying on certification, members of the panel agreed.

The product delivered to customers to fuel their heating systems is a blend of biodiesel with petroleum distillate, which can include heating oil and on-road diesel. Today, the majority of biodiesel is soy-based, but many other feedstocks are being considered. Fuel oil distributors typically use a blend of about 3% to 6% (B3-B6). The fuel may be blended by terminals or by distributors who have their own biodiesel supply.

The higher the percentage of biodiesel, the greater the problem of jelling at low temperatures. However, the 3% to 10% blends appear to avoid that tendency, Chase said of his experience.

Concerns were voiced by some on the panel and members of the audience about the ability of suppliers to provide enough product to meet market demand. Keaveney and Quint said they believed their terminals would be able to supply quantities needed. Keaveney pointed out that federal incentives are in place to encourage terminals to get on board.

Special handling

However, Quint noted that biofuels require terminals to make new investments in tankage. At the same time, product blending at the terminal will entail special handling to ensure quality standards are met. Keaveney added that the product supply has to be near the distributor in order for it to be cost effective.

“It's clear that we need to do some homework,” Turk, who has been working with ASTM and Universal Laboratories (UL) on biofuel standards, said. He advised biodiesel/fuel oil handlers to check storage tanks for sludge and water, and minimize contact with yellow metals, such as brass, bronze, and copper.

Burke advised distributors to consult their insurance agents for coverage information related to biodiesel handling. He noted that testing laboratories are available to examine product purity. “Just be careful,” he added, pointing out that the various blend percentages require specific handling measures.

Market value

As for the market, Haer said that in the last few months biodiesel feedstock value has been linked to petroleum products. But, he added, biodiesel prices can be hedged.

Quint predicted that the biodiesel price will be as volatile as that of petroleum products. In addition, supply is likely to be influenced by climate changes, such as droughts that damage agriculture crops used for biofuel feedstock.

Despite the downsides, panel members predicted biodiesel will become a viable fuel for fuel oil dealers and offers a means for enhancing customer relations because of the environmental pluses. Biodiesel blended with fuel oil gives fuel oil dealers an advantage in competing with natural gas as a clean product, Quint said.

There is more information available about biofuels on the Bulk Transporter Web site at, as well as the Web sites of the National Biodiesel Board (, National Oilheat Research Alliance (, and ASTM International (