Granite Falls Energy, LLC engages in the production and sale of ethanol and its co-products (wet, modified wet and dried distillers’ grains, corn oil and corn syrup) locally, and throughout the continental U.S.
As markets allow, the company’s products could be, and have been, sold in the export markets. Its revenues from operations come from three primary sources, including the sales of fuel ethanol, the sales of distillers’ grains and the sales of corn oil at its ethanol plant and Heron Lake B...
Granite Falls Energy, LLC engages in the production and sale of ethanol and its co-products (wet, modified wet and dried distillers’ grains, corn oil and corn syrup) locally, and throughout the continental U.S.
As markets allow, the company’s products could be, and have been, sold in the export markets. Its revenues from operations come from three primary sources, including the sales of fuel ethanol, the sales of distillers’ grains and the sales of corn oil at its ethanol plant and Heron Lake BioEnergy, LLC’s (HLBE’s) ethanol plant.
Facilities
The company’s business consists primarily of producing ethanol and its related co-products, including wet, modified and dried distillers’ grains, as well as corn oil. Its ethanol production operations are carried out at its ethanol plant located in Granite Falls, Minnesota and at the ethanol plant operated by HLBE located near Heron Lake, Minnesota.
The company’s plant has an annual nameplate production capacity of approximately 63 million gallons of denatured ethanol, but is permitted to produce approximately 70 million gallons of undenatured ethanol on a twelve-month rolling sum basis. The HLBE plant has an approximate annual nameplate production capacity of approximately 65 million gallons of denatured ethanol, but is permitted to produce approximately 72.3 million gallons of undenatured fuel-grade ethanol on a twelve-month rolling sum basis.
HLBE is also the sole owner Agrinatural Gas, LLC (Agrinatural), through its wholly owned subsidiary, HLBE Pipeline Company, LLC. Agrinatural owns approximately 190 miles of natural gas pipeline and provides natural gas to HLBE’s ethanol plant and other commercial, agricultural and residential customers through a connection with the natural gas pipeline facilities of Northern Border Pipeline Company. Agrinatural’s revenues are generated through natural gas distribution fees and sales.
Principal Products
The principal products from ethanol production at the company’s plant and HLBE’s plant, and from which it derives approximately all its revenue, are fuel-grade ethanol, distillers’ grains, and non-edible corn oil. In addition, HLBE’s plant also has miscellaneous other revenue generated by the sales of corn syrup, a by-product of the ethanol production process, and revenues from Agrinatural’s natural gas pipeline operations.
Ethanol: Ethanol is a type of alcohol produced in the U.S. principally from corn. Ethanol is ethyl alcohol, a fuel component made primarily from corn in the U.S. but could also be produced from various other grains.
Distillers’ Grains: Majority of the distillers’ grains that the company sells are in the form of dried distillers’ grains and modified/wet distillers’ grains.
Corn Oil: The company also extracts non-edible crude corn oil during the thin stillage evaporation process prior to the production of distillers’ grains. The corn oil that the company produces is not food grade corn oil and therefore cannot be used for human consumption. Corn oil is used primarily as a biodiesel feedstock and as a supplement for animal feed.
Principal Product Markets
The company markets and distributes all of its and HLBE’s ethanol, distillers’ grains, and corn oil through professional third party marketers.
The company’s ethanol, distillers’ grains and corn oil are primarily sold in the domestic market; however, as markets allow, its products could be, and have been, sold in the export markets. It focuses its ethanol and distillers’ grains marketers to explore various markets for its products, including export markets.
Ethanol Markets: The focus of the company’s sales efforts in the ethanol markets would depend primarily upon the efforts of Eco-Energy, Inc. (Eco-Energy), which buys and markets its ethanol. There are local, regional, national, and international markets for ethanol. The principal markets for the company’s ethanol are petroleum terminals in the continental U.S. The principal purchasers of ethanol are wholesale gasoline distributors or blenders. The company considers its primary regional market to be large cities within a 450-mile radius of its ethanol plants. The company focuses a majority of its ethanol to continue to be marketed and sold domestically.
Distillers’ Grains Markets: The company sells distillers’ grains as animal feed for beef and dairy cattle, poultry, and hogs. Majority of the distillers’ grains that it it sells are in the form of dried distillers’ grains. The company also sells modified wet distillers’ grains. Modified wet distillers’ grains are principally sold only to local feedlots and livestock operations.
Corn Oil Markets: The company’s corn oil is primarily sold to diesel manufacturers and, to a lesser extent, feed lot and poultry markets. It transports its corn oil by truck to users located primarily in the upper Midwest.
Distribution of Principal Products
The company’s ethanol plant is located near Granite Falls, Minnesota, in Chippewa County. It is served by the TC&W Railway, which provides connection to the Canadian Pacific and Burlington Northern Santa Fe Railroads. The company’s site is in proximity to major highways that connect to major population centers, such as Minneapolis, Minnesota; Chicago, Illinois; and Detroit, Michigan.
HLBE’s ethanol plant is located near Heron Lake, Minnesota. It is served by the Union Pacific Railroad. HLBE’s site is also in proximity to major highways that connect to major population centers, such as Minneapolis, Minnesota; Chicago, Illinois; and Detroit, Michigan.
Ethanol Distribution: Eco-Energy is the ethanol marketer for both the company plant and HLBE plant. Pursuant to the company’s marketing agreements, Eco-Energy purchases and markets the entire ethanol output of its and HLBE’s ethanol plants. Under the company’s ethanol marketing agreement, it is responsible for securing all of the rail cars necessary for the transport of ethanol by rail except for 59 rail cars leased to the company by Eco-Energy. Under HLBE’s ethanol marketing agreement, Eco-Energy arranges for the transportation of HLBE’s ethanol. The company’s marketing contracts were amended for an effective date of January 1, 2022, and an expiration date of December 31, 2023. The contracts would automatically renew for an additional two years unless either party gives written 90-day notice.
Distillers’ Grains Distribution: RPMG, Inc. (RPMG) is the distillers’ grains marketer for the company’s Granite Falls plant. Pursuant to its distillers’ grains marketing agreement, RPMG markets all the distillers’ grains produced at the Granite Falls plant.
Gavilon Ingredients, LLC (Gavilon) is the distillers’ grains marketer for HLBE. Under HLBE’s distillers’ grains marketing agreement, Gavilon purchases all of the distillers’ grains produced at the company’s Heron Lake ethanol plant in exchange for a service fee. The contract commenced in 2013 with an initial term of six months and would continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of approximately 60 days to the other party.
Corn Oil Distribution: RPMG is also the corn oil marketer for both the company plant and the HLBE plant. RPMG markets the company’s corn oil, which is used primarily as a biodiesel feedstock and as a supplement for animal feed. The contract for the company commenced in April 2010 and the contract for HLBE commenced in November 2013. Both contracts have an initial term of one year and would continue in effect until terminated by either party at its unqualified option, by providing written notice of approximately 90 days to the other party.
Customers
The company has exclusive ethanol marketing agreements with Eco-Energy. Additionally, it has agreements with RPMG and Gavilon Ingredients, LLC (Gavilon) to market all of the distillers’ grains produced at its plant and HLBE’s plant, respectively, and with RPMG to market all of the corn oil produced at its plants. The company relies on Eco-Energy, RPMG and Gavilon for the sale and distribution of all of its products; therefore, it is primarily dependent on Eco-Energy, RPMG and Gavilon for the marketing of its products.
Seasonality
The company experiences some seasonality of demand for its ethanol. Since ethanol is primarily blended with conventional gasoline for use in automobiles, ethanol demand tends to shift in relation to gasoline demand. As a result, it experiences some seasonality of demand for ethanol in the summer months related to increased driving. In addition, the company experiences some increased ethanol demand during holiday seasons related to increased gasoline demand.
Suppliers
The company’s plant obtains electricity from Minnesota Valley Light and Power Cooperative, and its HLBE plant obtains electricity from Federated Rural Electric.
Licenses
The company was granted a license by ICM, Inc. to use certain ethanol production technology necessary to operate its ethanol plants.
Competition
Some of the company’s competitors are owned by subsidiaries of major oil companies, such as Valero Renewable Fuels and POET Biorefining.
History
Granite Falls Energy, LLC, a Minnesota limited liability company, was founded in 2000.
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