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Originally published Wednesday, April 9, 2008 at 12:00 AM

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Standard Biodiesel turns frying-pan grease into fuel

At Pike Place Market, the fat used to deep-fry one man's piroshki will become someone else's renewable fuel. Every two weeks or so, in the...

Seattle Times business reporter

At Pike Place Market, the fat used to deep-fry one man's piroshki will become someone else's renewable fuel.

Every two weeks or so, in the dead of the night, a truck collects as much as 1,000 gallons of waste cooking oil and hauls it to Standard Biodiesel's roadside facility in Arlington. Standard pays about 10 cents a gallon for the muck.

"We had so much of the stuff; it was really producing a strong smell," said Jeffrey Jarvis, the Market's facilities manager. The arrangement with Standard "has given us nothing but benefits," he said, because the Market's 75 restaurants previously had to pay a rendering company to pick up their waste oil.

The Arlington firm has carved itself a space in the competitive biofuels business by gaining access to a rare commodity: cheap raw material.

Biodiesel enthusiasts have been making fuel from waste oil in their garages for years. But doing so on an industrial scale is rare.

Moreover, Standard, which has been producing biodiesel for the past year, says it expects to become profitable this month — another rare occurrence in biofuel circles.

Soaring prices for soybean and other vegetable oils have squeezed the profits of biodiesel makers nationwide, forcing some producers to suspend operations.

Ambitious local startup Imperium Renewables, which runs the nation's largest biodiesel plant at Grays Harbor, had to cancel its $345 million initial public offering in December due to the industry's deteriorating economics.

The raw materials, or feedstock, represent more than 80 percent of the manufacturing cost of most diesel derived from vegetable or animal fats.

Standard has focused instead on collecting waste oil from an extensive regional network of restaurants, at a fraction of the cost.

Making diesel out of cooking oil is a grimy art.

Three GPS-equipped trucks bring in the grubby sludge — much of it containing food scraps — from kitchens all over the region. A barnlike structure houses the distillery where the cooking oil is purified and turned into fuel.

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Potpourri of smells

Into one end goes the cooking oil, which looks like goulash and has a heady mix of smells ranging from fried chicken to coconut oil. Out the other comes a transparent yellowish liquid.

The remaining food particles and wastewater are shipped to the Vander Haak Dairy in Lynden, Whatcom County, where they feed an "anaerobic digester" that produces methane for making electricity.

Standard collects its feedstock from 2,600 restaurants. They range from neighborhood joints like Paddy Coyne's in South Lake Union to Qwest Field.

Microsoft, which has plenty of cafeterias for its thousands of worker bees, has contributed 833 gallons a month to Standard's biodiesel factory since September.

Standard President John Schofield said the company's founders decided very early that "we should do it with waste vegetable grease and do it with restaurants so we are in charge of the oil supply."

Pickups stretch from Chehalis to Blaine, and the company produces more than 85,000 gallons of biodiesel a month, all sold within the region.

Standard's biodiesel currently retails for $3.99 a gallon, about the same as petroleum diesel. Seattle's Propel Biofuels sells its 99 percent biodiesel blend, made with virgin vegetable oil, at $5.23 a gallon.

The company plans to replicate itself in other hubs Eastern Washington, Portland and Sacramento.

Standard's approach — sourcing, production and distribution all within a particular metropolitan area — could improve the sustainability of biofuels, a sector under pressure from market forces and critics worried that the rush for energy crops is disrupting food prices and the environment.

"Think of it as a regional model," said Schofield.

But the model has its limits. First, there's only so much cooking oil.

Standard executives estimate the Arlington plant serving Seattle could produce up to 3 million gallons a year. That's a fraction of Imperium's 100 million gallon-a-year plant, and an even small slice of the state's diesel consumption — about 1 billion gallons a year.

Also, purification costs are high, ranging from $2.50 to $2.70 per gallon.

Nevertheless, the company says it can sell its diesel cheaper than either virgin-oil-based biodiesel or petroleum diesel at current prices while racking up a healthy profit.

The dirty business of cooking oil is not for everybody — certainly not for the bigger players. But it's certainly a "viable feedstock," said Imperium's founder, John Plaza.

"Collecting waste oil from disaggregated sources throughout the region is not practical for our company," said Plaza. He added that "Imperium will continue to investigate potential new feedstock and may use [waste vegetable oil] at some point in the future."

Economics change

But the high cost of more traditional feedstocks is helping the case for alternatives, said Amber Thurlo Pearson, a spokeswoman for the National Biodiesel Board. "Soybean is at an all-time high right now, making it less economical for biodiesel producers to make soy-based diesel," Pearson said. "We're pushing to have a diverse and plentiful feedstock supply for biodiesel."

Standard Biodiesel plans to increase its output to 250,000 gallons a month by the end of the year as it expands its production capacity and its network of restaurants. Meanwhile, it hopes to raise $2.5 million to finish building its Arlington facility and to clone itself into other markets.

The company, founded by biodiesel enthusiast John Wick, has been financed since 2006 by a group of local investors. It declined to disclose the amount invested so far.

"We keep it a very efficient model so we can replicate this plant fairly inexpensively in other regions," said Schofield. "We think in terms of regional sustainability."

Ángel González: 206-515-5644 or agonzalez@seattletimes.com

Copyright © 2008 The Seattle Times Company

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