VeraSun Energy broke ground on a new facility last week that will tap into ethanol for oil.

VeraSun’s patent-pending Oil Extraction process is designed to yield 7-8 million gallons of corn oil annually from 390,000 tons of distillers grains currently produced at VeraSun’s ethanol production facility in Aurora, S.D. The corn oil will then be made available for sale into the biodiesel market, thus increasing the renewable fuel supply without an additional feedstock supply. The result of the process also includes enhanced distillers grains through the concentration of protein and the reduction of fat. One gallon of corn oil yields roughly a gallon of biodiesel.

According to VeraSun’s Don Endres, “With fuel prices where they’re at, with diesel prices where they’re at, we need more fuel, and this will go right into the biodiesel market, fit right into that fuel stream so it’s a much more highly-valued in the fuel stream then, what it is as oil in the fuel.”

VeraSun expects to start producing the corn oil later this year. The company also plans to use the process at two of its plants in Iowa next year.

Among those giving a hand at the groundbreaking were South Dakota Governor Mike Rounds, Reid Jensen with the South Dakota Corn Utilization Council and Matt Hartwig of the Renewable Fuels Association.