innovate arkansas

Tommy Foltz, president of Patriot BioFuels Inc., had high expectations for the company when it launched. Those expectations are being borne out as the production of biodiesel hit the market at just the right time.

The price of a barrel of oil remains high — and Foltz thinks that will continue — while two of the three main ingredients the company is using to make biodiesel are priced low. And the company was able to get up to full capacity much faster than expected.

Biodiesel can be made from vegetable oils, such as soybean or cottonseed oil; rendered chicken or animal fat; and fish oil. While soybean oil prices have remained high, cottonseed oil and the glut of chicken and other rendered animal fat have kept the price low. Patriot primarily relies on soybean oil for its production, with cottonseed oil next and poultry fat last.

The potential for growth is now great enough that two of the company’s original financial backers, Farmers & Merchants Bank of Stuttgart and Arkansas Capital Corp. Group of Little Rock, are upping their support, which will allow Patriot BioFuels to qua-druple production by next planting season.

“I think we saw that the fundamentals of the biofuel market were strong,” Foltz said. And “we were confident from a technological standpoint that we could make it work.”

Still, to go from drawing up a business plan in May 2005 to getting the finances arranged, to getting production going and making sales by April 27 is pretty quick in anyone’s book, he said.

By the middle of September, production is expected to hit 1 million gallons.

Despite all the recent interest by politicians and businessmen who see a potential gold mine in biofuels, spurred on by news of Patriot BioFuels’ startup, only two plants are in operation in the state — Patriot at Stuttgart and Eastman Chemical Co. at Batesville, which announced last month that it was selling its Arkansas operations, including its biofuel operations, to Viceroy Acquisition Corp. for $75 million.

Right now, Patriot BioFuels is one of only 75 companies in the United States that is making and selling biodiesel, Foltz said.

Foltz expressed surprise at the growing number of biofuel projects being announced, but he also thinks it’s a lot like the dot-com gold rush of the ‘90s. “It’s takes more than just an idea,” he said, in predicting that seven to eight out of 10 will never make it off the ground.

Although he doesn’t see it happening, he said he would expect bankers would put the brakes on future biofuel operations if it appeared that so many were starting up that none could be profitable.

Sales are strong, Foltz said. An order placed last week, he said, couldn’t be filled before the first week of September.

“We’re that backed up,” he said.

Most of the current production — 90 percent — is going to farmers, but Foltz knows that will slow after harvest season comes to an end in October.

He said he’s working to get more biodiesel on the road with the trucking companies — what he called the Holy Grail. “It’s a potentially huge market,” he said. Although the American Trucking Associations has endorsed biodiesel, some truckers still don’t understand that if you buy biodiesel in Arkansas and head to California and can’t find biodiesel there that it’s OK to fill up with regular diesel, Foltz said. Some truckstops now being built will have biodiesel blends available. There’s a 1 billion gallon diesel market in Arkansas, and 650 million of that is in trucking, Foltz said.

Foltz said last year that he wanted Patriot BioFuels to be a regional player. Although the company would begin production at 2.5 million-3 million gallons a year, he hoped that eventually it could ramp up to 25 million-30 million gallons. The new funding enables the company to boost production up to 13 million gallons a year.

Patriot sells the biodiesel to established distributors, who will blend it with the diesel to dealers’ needs.

Investors and board members of Patriot BioFuels are Foltz; Cal Mc-Castlain, a Little Rock lawyer and general counsel for the company; Mike Shook and Steve Danforth, partners and principals in Agri-Process Innovations of Stuttgart; Mike Coulson of Coulson Oil in North Little Rock; Noal Lawhon of Delta King Seed Co. in McCrory; Wade Whistle of Osceola; Bobby Gammil of Tyronza; Mike McCarty of Blytheville; Richard Vincent of Houston; Bryan Fancher of Huntsville, Ala.; and Andrew Browning, director of government affairs for Methanex in Washington, D.C., the world’s largest producer of methanol, a critical ingredient to bio-diesel production.