An ethanol blender pump in Baltic, S.D.

I spent a couple of days last week in Sioux Falls, S.D., where I had a chance to meet with some local energy contacts.

South Dakota has lots of wind potential, but not enough customers or transmission lines to fully capitalize on it.

A geologic formation in the state’s northwest corner might have potential for oil, but for now those hopes are speculative.

When it comes to home-grown energy, ethanol is king here. The state is home to 15 ethanol plants, and the industry directly employs nearly 900 South Dakotans.

My itinerary included visits to the South Dakota Corn Growers, ethanol producer POET, and the American Coalition for Ethanol, which is based in Sioux Falls.

A state grant program has helped make South Dakota a national leader in blender pumps, along with Minnesota and North Dakota.

Blender pumps let gas stations sell several blends of ethanol fuel, from E10 to E85, at a single pump. Flex-fuel vehicles can run on up to 85 percent ethanol, but some drivers prefer lower blends like E30 or E50.

The pumps help address another alternative fuel chicken-and-egg problem. Car dealers have a hard time selling flex fuel vehicles if there aren’t ethanol fueling stations around, but station owners don’t want to install them if there aren’t customers.

A blender pump can be used to dispense both E10, which can be used in conventional vehicles, or higher blends like E85 that can only be used in flex-fuel vehicles. Gas stations don’t have to commit space for a pump that can only be used by one type.

South Dakota announced in March that it had awarded $755,000 in first-come-first-serve grants to help gas station owners purchase blender pumps, which are more expensive than conventional pumps.

Another $200,000 was to be awarded on a competitive basis, and in July the program will be refreshed with $900,000 in new funding for the next fiscal year.

The current year’s funds have been awarded to 21 gas stations to install 44 blender pumps. The awards are up to $25,000 for the first pump, and up to $10,000 for each additional pump.

Gas station owner Bruce Vollan was among the early adopters in South Dakota.

Bruce Vollan, Vollan Oil Co.

“You’ve got to find what sets you apart from the guy down the road,” Vollan said.

In his case, the next guy down the road is a ways away. Vollan is co-owner of Vollan Oil Co. and Midway Service station, which sits along on a two-lane highway in rural Baltic, S.D.

Vollan was filling a tanker truck with a python-thick hose Friday morning as I asked about his experience with ethanol blender pumps.

He bought a blender pump in 2007 and upgraded to a better one in 2010 with help from federal stimulus money. Since then, fuel sales have tripled, he said, and the ethanol pump deserves some credit.

He’s not sure whether the blender pump would have the same draw in a city, but in rural settings he senses a connection with his customers.

“For small town folks, it’s a full circle scenario,” he said. Farmers sell their corn to ethanol producers, who sell fuel to gas stations, who sell it to farmers and their families and neighbors.

If the ethanol blending pump has been so successful for Vollan, why aren’t they at all of his competitors? There’s several reasons, but one big one:

“Money,” Vollan said, pinching the thumb and forefinger of his blue rubber glove together.

That’s where the Ethanol Infrastructure Incentive Program comes in, helping to bring down the expense for station owners and expand the market for the state’s home-grown fuel.

I’ll share more from my South Dakota visit in the weeks ahead.

Photos by Dan Haugen, Midwest Energy News