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How to Thrive with Bioheat Blended Fuel

Fuel Oil News and REG held a webinar on Bioheat blended fuel, featuring Ray Hart, founder of Hart Home Comfort, a company that operates in Long Island and the New York metro area, and Barry Knox, director of the Northeast Region for REG. To hear audio of the complete webinar, go to www.fueloilnews.com, put your cursor on the “Webinars” pull-down menu and click on the webinar titled “How to Thrive with Bioheat Blended Fuel.” The following excerpts have been edited and condensed.—Stephen Bennett

 

Ray Hart: I started the company back in 1979. At that time, we were known as Hart Petroleum. I basically ran it out of the back of a couple of gas stations that I was operating. (Pictured: Hart Home Comfort EcoBlend delivery truck. Photo courtesy of Hart Home Comfort.)

As time went on we expanded the operations, continued to grow, and in 1998 we purchased the New Hyde Park oil terminal. In 2005 we entered a transportation business called Hart Trucking Company, and we also started to look into biodiesel. In the very beginning we were just making home heating oil deliveries on a COD basis. Along the way we grew into a   full-service company, now serving over five thousand full-service customers and several thousand COD customers. We’ve added an installation department. We sell service contracts. We also do cooling, and we became a Bioheat dealer in the 2006 time-period.

FON: When did you first hear of biodiesel and what drew you to getting involved with it—blending it with heating oil, making Bioheat blended fuel?

R.H.: It was 2005. My terminal manager at the time had brought up the subject of biodiesel, saying that we should look into blending it with heating oil. I really didn’t know much about it. I started doing some research on it and then we called a family meeting—took out the old folding table in the back of the terminal. We sat down and we talked about what the benefits would be, if any, in blending biodiesel with heating oil. At that time, there was really no economic advantage to it at all. It was going to cost me twenty cents a gallon more to purchase biodiesel. But we gave it a lot of thought and we decided to go forward with it anyway. There were two reasons why we did it, even though it was going to cost us more money. At the time, we felt it was better for the country. I felt that any way we could buy less product from other countries that we didn’t get along with—I wanted to do my part in that. And especially for environmental reasons. With the introduction of biodiesel and with ultra-low sulfur heating oil coming along, I thought we’d have a great, cleaner product for our future as a family and for our future as a business.

FON: Once you made that decision did you have to make equipment changes either at your company or with your customers? Did you have to train your technicians and your delivery personnel?

R.H.: There were really no changes we had to worry about on the heating side of it, the servicing. We did make some changes at the terminal. At the time we had a 42,000-gallon buried tank that was used for kerosene. And there was a rail spur [dating from] when I bought the property. It was pretty buried. We re-activated the rail spur so we could take in rail cars and we emptied the kerosene tank, we cleaned it and we started using that as our biodiesel tank. We spent, probably, a couple hundred thousand dollars making infrastructure changes at the terminal. We put an injection system in so we could in-line blend with our heating oil.

But on the retail side of things there was really very little that we had to do. We started delivering Bioheat as a B5 blend in July of 2006. We actually tied it in to the week of July Fourth as freedom from regular oil heat—that we were going to be delivering Bioheat. At the same time, we were using an additive. We were afraid to do both because if there was going to be any type of a problem we wouldn’t know where to look. So, in Suffolk County [on Long Island] we used the additive to stabilize the heating oil, and in Nassau County [on Long Island] we started blending Bioheat. We started off with B5. I was constantly asking my technicians, ‘Are there any problems? Do you notice anything different in the way the equipment’s operating?’ I was speaking to my customer service people. ‘Are there people complaining? Any complaints about any odors? [Is anyone saying] Oh, I smell French fries?’ After about a week or so there were no complaints. Everything seemed to be running fine. We went up to a B10, and about a week or two later we went to a B20 and we’ve been delivering at least a B20 since 2006.

FON: You also offer Bioheat at your terminal. How was that received by other heating oil companies and what are the advantages for them?

R.H.: We wholesale to some companies. We’re not a very large wholesaler. Our terminal is primarily for our use. We also provide through-put for some of the major companies on Long Island. We have a handful of companies that we wholesale to. We offer [access] to anybody who wants to use the terminal. We didn’t want to be so-called pigs at the trough. We wanted to give anybody who really wanted it an opportunity to get into Bioheat because we felt there was a significant economic advantage.

The first year or two it was more expensive for us. Now it’s priced, at least in our location, cheaper than heating oil. It’s given us an opportunity. We offer it to anybody who wants to use it, whether they want to buy it directly from me or they want to buy from our supplier. We’ll sell it to them any way they want. The advantage to them is that they’re getting a cleaner fuel at a cheaper price. To me, it’s a no-brainer.

FON: Was there any kind of an improvement in how customers’ heating systems run on Bioheat?

R.H.: In 2014 we had made two acquisitions. One of the technicians from one of the companies that we had acquired came up to me and said, ‘Ray, can we ask you about your heating oil?’ He said, ‘We’ve never opened up cannisters for filters that were so clean.’ That was like a moment of truth for me. I knew that what we were doing all along was better for all the reasons I have said.  But I think the combination of blending biodiesel into heating oil, using an additive to stabilize and then the introduction of low-sulfur heating oil has really cleaned up the systems a lot. Most of the service calls we get now have nothing to do with fuel oil. They are not oil-related calls. Most of the calls are [about] equipment failure—the control goes bad or maybe a nozzle is bad or it’s just about normal preventative maintenance. We don’t have those type of oil sludge calls that we had many, many years ago.

I’ve been involved in service since the early 80s, and to handle oil-related problems we changed from small filters to big filters so they didn’t collect more garbage. That’s not the case any more since we made these changes.

FON: New York offers a tax rebate for residential users of Bioheat. Do your customers respond to that? Is it influential?

R.H.: Yes, I believe it is. We communicate to our customers through email blasts, newsletters, and other forms. The New York State bioheat tax credit is that for every percent of biodiesel you use, you get a one cent per gallon tax credit. So, if my customers are receiving a B20 Bioheat blend, they get twenty cents a gallon as a tax credit. If they get a thousand gallons that’s two hundred dollars.

And we do know for a fact that people apply for this because we’ve had people call us, asking us what form to use. It’s on our website, but people call anyway. We think [the tax credit] is very successful.

 

Biodiesel in the Northeast

Barry Knox of REG talked about trends in the heating oil industry, how the Northeast is supplied biodiesel, the infrastructure to get it to dealers and the positive economics of Bioheat blended fuel. The following excerpts have been edited and condensed.

Under the Renewable Fuel Standard, Knox said, “We’ve got a growing demand for biodiesel.” He cited a 2015 Oilheat Consumer Research Study whose findings showed, “Customers are ready for bioheat education and the benefits of what a Bioheat fuel can do for them.” As heating oil’s market share decreases, Knox said, biofuel is a means for marketers to differentiate their business.

“In the future, as I see it, having a better logistics footprint to enable transloading, using the railways and key strategic tankage to ensure distribution is going to be critical,” Knox said.

Marketers must weigh carefully who they choose as a biodiesel partner, Knox said. “Quality is important for biodiesel. Know the quality of what you’re blending. There is an overall program called BQ9000 that helps add oversight.

“As the industry progresses and matures I think we’re going to see most products will be distilled and at the very least will have undergone cold filtration to take out impurities and improve on how the products blend. That’s a cold weather operability concern in the Northeast and that will never change.”

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