Natural gas prices are increasing with demand, but the dairy industry can help

The digesters at Drumgoon Dairy in Lake Norden.
The digesters at Drumgoon Dairy in Lake Norden.

As South Dakotans continue to battle a 7.4% inflation rate, and with the cold winter months settling in, heating costs can be a real challenge for some. Natural gas prices are also expected an increase by 10 to 20% in cost this year. But relief in natural gas prices comes to South Dakota from a surprising new source - the dairy farm.

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Natural gas plays a significant role in South Dakota. According to the South Dakota Oil and Gas Association, nearly half of all South Dakotan households rely on natural gas as their heat source. Natural gas is also heavily depended on by the industrial and agricultural sectors within the state.

Less than 1% of crude oil is produced in the state, and there are no refineries, so the vast majority of natural gas is piped in from North Dakota. This is a resource that the state depends on but is not something that South Dakota is sufficiently producing on its own.

A rendering of the completed Drumgoon Digester Renewable Energy in Lake Norden.
A rendering of the completed Drumgoon Digester Renewable Energy in Lake Norden.

Dynamic Renewables, a waste recovery solutions company out of Wisconsin, is working to change that by creating anaerobic digesters that will take a common waste product, methane, and turn it into natural gas.

“Historically, anaerobic digesters were primarily used on the farm to create electricity,” said Karl Crave, a project specialist with Dynamic Renewables. “But now they are being converted into natural gas and added to the natural gas pipeline.”

From farm to pipeline

The process of generating the gas is done by collecting manure and digesting it in a tank void of oxygen. Bacteria within the tank will break down this organic matter and produce biogas and digestate, a solid and liquid material that can become different things like animal bedding, nutrient-rich fertilizers, bioplastics and compost.

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According to the United States Environmental Protection Agency, roughly 248 anaerobic digesters are in operation at livestock farms across the nation. Thanks to the efforts and partnerships with investors and local dairy farms, Dynamic Renewables will give South Dakota the means to produce renewable biogas by next year.

“The digesters are in the startup phase and are just beginning the commissioning process and getting them operational. They are in the final stages of construction,” said Crave.

Victory Farms in Revillo will have two digesters and produce over 460 MMBtu of renewable natural gas per day
Victory Farms in Revillo will have two digesters and produce over 460 MMBtu of renewable natural gas per day

The first South Dakota digesters will be located at Victory Farms in Revillo, Drumgoon Dairy in Lake Norden and Tri-Cross Dairy in Viborg.

The Drumgoon Digestor Renewable Energy is a freestanding project, which means that the dairy, with its 6,500 head of cattle, is large enough that it can be in operation by itself, without the partnership of neighboring farms to truck in additional manure. The dairy will have three digesters and produce over 600 MMBtu of renewable natural gas per day.

Victory Farms Renewable Energy is also a freestanding project with two digesters and 5,000 head of dairy cattle. This operation is expected to produce over 460 MMBtu of renewable natural gas per day.

Tri-Cross Renewable Energy, freestanding with two digesters and 5,000 head of cattle, will produce over 454 MMBtu.

There are plans for additional dairy operations to partner with Dynamic Renewables along the I-29 corridor in South Dakota. Farms across the border into Minnesota also contribute to the renewable natural gas supply.

“Every project is a little different, but they benefit the farm with how we share our revenue and profits,” said Crave. “Ultimately, Dynamic Renewables develops and constructs the system. We own the system and operate it independently on the farm. All the farm has to do is supply the manure. We focus on what we are good at and let the farmer focus on their dairy operations.”

Building a renewable gas operation is costly, with a digester system ranging from $20 to $40 million to construct, so the larger the dairy operation, the more cost-effective it is.

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“We like to build projects with local support. Right now, eastern South Dakota is a prime area for us. That’s where many of the large dairies are, and that’s the main feedstock for renewable natural gas,” said Crave.

These dairy operations are large enough to produce enough organic waste to collect and turn into biogas, helping to supply South Dakota homes with a renewable alternative heating option without residents having to do anything more than turn on their thermostats.

Putting South Dakota on the map for natural gas production

This new source of natural gas cannot come at a better time as the industry struggles to meet the rising demand and increase in cost.

“There is a big demand for natural gas,” said NorthWestern Energy Community Relations Manager Tom Glanzer. “Some of the supply routes have not gone as planned. The shipping and production of natural gas have been impacted.”

Glanzer stated that there are several things to blame, from increased global demand to COVID-19 related issues.

“Liquified natural gas is one of America’s biggest exports,” said Glanzer. “NorthWestern Energy does have different abilities to circumvent supply issues with our storage abilities in South Dakota and Montana.”

This has allowed the energy company to pre-purchase natural gas credits, with 75% of those credits already purchased in preparation for heavy use in the winter months.

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NorthWestern Energy will purchase these renewable natural gases from South Dakota and Minnesota dairy farms to ensure enough natural gas is available to supply its customers and keep households heated.

“We are part of what could be a game changer,” said Glanzer. “Methane captured and turned into natural gas will be injected into our systems. That is right around the corner to becoming a reality.”

Dynamic Renewables is confident that this alternative option in natural gas can help curb demand and rising prices.

“Having smaller, distributed producers into the natural gas pipeline balances their systems,” said Crave.

Any organic matter can be broken down and turned into biogas, said Crave. Different types of digesters worldwide are already turning food and landfill waste into biogas and electricity.

As the technology takes hold in the United States, the cost of construction will decline, and more opportunities to build digesters at places outside the dairy farm, like at a water treatment plant, may become a reality.

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“Europe has been doing this for some time and has a market of vendors that sell the parts needed for these biogas operations,” said Crave. “It’s still a relatively new but growing industry. But as the technologies become more efficient and more vendors start opening their operations within the United States, the cost of that technology will decrease.”

There is an added benefit to turning methane into natural gas, which is the positive impact it has on the planet. Methane harvesting decreases carbon density by reducing natural gas derived from fossil fuels and by putting methane gas to use instead of being a waste product.

“Ultimately, this renewable fuel source can heat homes and even fuel a vehicle. The public transportation industry is going toward biogas fuels, which will reduce emissions,” said Crave.

This article originally appeared on Watertown Public Opinion: Demand for natural gas is high, local dairy farms could provide relief