Cold weather cuts US ethanol production

Ethanol plants struggled with natural gas and power supplies today as a severe winter storm swept across the midcontinent.

Many producers had cut production by half as conditions strained power grids and boosted the price of natural gas, said Geoff Cooper, chief executive of the ethanol trade group Renewable Fuels Association.

"We have got a substantial share of the industry's capacity that is idle right now, or will be, because of this winter storm," Cooper said.

Cold temperatures curbed power generation and briefly triggered a request from the Southwest Power Pool, which operates a 14-state electric grid across the midcontinent, to cut power consumption in order to bring demand back in line with available supplies. The grid issued the request at 7:15am today and lifted it around 12:30pm.

Reports of blackouts concentrated in Nebraska and Kansas, Cooper said. But ethanol producers without committed natural gas supplies also idled production as costs for that fuel skyrocketed.

Severe freezing conditions can bottleneck natural gas pipelines and processing. Prices shot to more than $150/mmBtu from $3/mmBtu as short supplies met high power generating and heating demand. Some ethanol plants opted to sell the fuel rather than continue processing, Cooper said.

"We have heard from plants all over the Midwest. Every plant has been affected in some form or fashion," Cooper said.

By Elliott Blackburn