| Aventine Renewable Energy: Corn-Fed Fuel |
| Energy Executive Spotlight | |
| Written by John Zorabedian | |
| Thursday, 31 January 2008 | |
 With legislation mandating a seven-fold increase in ethanol usage by 2022, Daniel Trunfio details how this company plans to capture a major market share.  Daniel Trunfio, Chief Operations Officer During the second half of 2007, ethanol prices were in a downward trend, due to the perception of supply exceeding demand. But Daniel Trunfio, chief operations officer at Aventine, expects demand to catch up fast. Aventine is currently constructing two new ethanol production facilities that will more than double its production capacity, from 207 million to 433 million gallons annually. The new production plants, in Aurora, Neb. and Mount Vernon, Ind., are expected to be completed early in the first quarter of 2009, with the ability to double the size of the facilities in the future should the company decide to do so. “We’re doing a lot of the underground work today to be able to expand both those facilities,” Trunfio said. “The logic behind it is to capitalize on the same assets and create synergistic value.” With an organizational vision to become the premier provider of ethanol in the industry, Aventine plans to capitalize on operational excellence, its proprietary distribution network to more than 50 ethanol terminals, and its success in partnering with organizations, Trunfio said. The company maintains its own network of more than 1,400 rail cars and 18 barges for transporting ethanol to terminals and refineries on the coasts, which is the foundation of the company’s marketing program. “We have the premiere distribution network in the United States for ethanol,” Trunfio said. “That gives us a competitive advantage.” It even allows Aventine to market and distribute ethanol from other producers, providing the company with a revenue stream independent of its own ethanol production, which Trunfio said is a strategic control point for the company. Technology agnostic Although corn-based ethanol is currently the major product for Aventine, the company’s strategic vision involves flexibility in preparing for other feedstocks and technologies to produce other types of ethanol. “If you ask me what the winning fuel will be, I’d say they’re all winning fuels—diesel, biodiesel, ethanol, and obviously petroleum,” Trunfio said. “The real future in energy security will be defined by a mix of all of these components.” The company has invested in research and development of cellulosic ethanol, which is produced from agricultural wastes such as wheat straw and switchgrass. Currently, cellulosic ethanol has proved to be a far more capital-intensive source of fuel than corn-based ethanol, but as the technology evolves, Trunfio said, Aventine will evolve with it. “We’re building the skills and capabilities to be flexible to technology and feedstock,” he said. “We’d like to be technology and feedstock agnostic, meaning that we can use any technology and any feedstock to produce ethanol.” The company is betting that the future of the industry will involve a mixture of cellulosic and corn-based ethanol, and companies that come out winners in the market will be those able to adapt to the second generation in ethanol production. “To get there, you’ve got to build on what you currently have,” Trunfio said. “We’re very good at partnering. We know how to produce ethanol. And we especially know how to distribute and market ethanol.” Operational excellence To maintain competitiveness in the crowded ethanol market, and in hopes of expanding its business to other lucrative biofuels, Aventine focuses on achieving operational excellence, Trunfio said. In this way, the company plans to remain standing as other ethanol producers fall by the wayside. “We’re building our organization around operational efficiency and measuring that through key performance indicators,” or KPIs, Trunfio said. “It’s an evergreen process. Once you achieve operational excellence, you continue to build on that to grow the business in other areas.” The company’s focus on streamlining its conversion rates, staff development, expense reduction, and inventory management, among other KPIs, will allow it to find the most efficient way to achieve its goal: producing as much ethanol as possible at the lowest possible cost. Aventine also creates synergies between different aspects of its business. The company produces and markets several byproducts from its ethanol production facilities, including corn gluten feed and meal, corn germ, and brewers yeast. And by selling access to its distribution and marketing channels, Aventine grabs a share of the profits from producers in the biodiesel market. Wall Street’s sky high expectations for ethanol have come down from the rush of investment in recent years. But Trunfio jumped at the opportunity last year to become Aventine’s operations chief after 23 years at the energy giant Royal Dutch Shell, where for several years he ran that company’s biofuels division. “I left Shell for this opportunity because I think the future of green fuels and the future of ethanol is very bright,” he said. |
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© 2008 American Executive - RedCoat Publishing. All rights reserved.
American Executive is a RedCoat Publishing publication.
American Executive is a RedCoat Publishing publication.
