Ethanol plant hits another snag

The 108 million gallon per year ethanol plant being constructed by Agri-Ethanol Products in Aurora, N.C., has hit another snag, but the delay is only a temporary setback in production in the Southeast.

Originally scheduled to begin buying corn in the spring of 2007, the first corn procurement is now set for early 2008, according to Terry Ruse, vice-president of Agri-Ethanol Products LLC. The company is set to begin groundbreaking for the huge plant in Aurora in mid-September.

Ruse explains that procuring steel contract and compliance with local, state and national guidelines has delayed ground-breaking for the facility. Despite the delays, Agri-Ethanol Products now has two additional sites in North Carolina and four more in South Carolina, Virginia and Arkansas. Within the next 18 months, the company hopes to begin construction on up to 10 ethanol facilities in the Southeast.

“All these facilities will be cookie cutter replicas of the plant in Aurora, with 108 million-gallon ethanol production capability and comparable production capabilities for distiller's grain and CO2,” Ruse notes.

Each of these facilities will use approximately 40 million bushels of corn per year and Ruse says his company is committed to buying as much grain for local production as is available. All of the corn for the Aurora plant will either be trucked in from local farmers or come in via rail from the Midwest.

“It is in our best interest to buy as much corn from local growers as we can, but we know that approximately 50 percent of our grain stock will have to be delivered by rail. Though located near the coast, in Aurora, Ruse notes that there is no facility to handle grain being shipped in by barge.

If construction of the ethanol plants, planned in North Carolina, stay on schedule, the state would have three ethanol plants operational by summer 2009. This would create a market for 120 million bushels of corn per year for area farmers. In comparison, North Carolina currently produces 80-90 million bushels of corn per year.

In addition to ethanol production, Ruse says the 108 million gallon per year ethanol production will provide enough corn oil to produce 1.5 million gallons of biodiesel per year. Though still in the planning stages, biodiesel production capabilities may be built into all the planned production sites, he says.

Though still in the site location and development stages, additional Agri-Ethanol Products plants will likely be located in South Carolina and Virginia. Combined with opportunities in neighboring areas of North Carolina, this could produce a 50-60 million bushel per year market for corn grown in South Carolina and Virginia.

Like North Carolina, South Carolina and Virginia are corn-deficient states. South Carolina is forecast to produce 26,730,000 bushels in 2006 and Virginia another 48,100,000 bushels this year. With the continued decline in peanut and tobacco production in southeastern Virginia, corn is a viable option for most row-crop growers. If Agri-Ethanol and other ethanol plants offer a premium price for local corn, it is likely acreage and production will increase.

For farmers interested in supplying corn for ethanol production, a key is to be able to deliver off-season and to deliver it at 15 percent moisture or less. On-farm storage may become a critical issue for farmers planning to grow corn for any of the ethanol plants being planned in the Southeast.

A 108 million gallon ethanol facility, like the one in Aurora, N.C., will use a little over 100,000 bushels of corn per day. Each of the Agri-Ethanol plants will have 2.6 million bushel storage capabilities, but that is less than a month's supply, so a farmer's ability to sell corn to an ethanol producer at times when supplies are low, typically in the winter and spring, will be a bonus.

The United States currently uses approximately 140 billion gallons of fuel annually for transportation. Ethanol, biodiesel and other alternative fuel sources are expected to replace up to 15 percent of this total. Currently ethanol, primarily from corn, and biodiesel, primary from soybeans, replaces approximately four percent, or 5.6 billion gallons per year.

The government has set a requirement for using 7.5 billion gallons of renewable fuels by 2012. Biodiesel will play a key role, but for now, ethanol is the primary renewable fuel available to reach that goal. Producing 7.5 billion gallons will require nearly doubling current ethanol production, and industry growth is on pace to exceed that.

Still many professionals do believe that a major shortcoming of ethanol is its poor EROEI (Energy Returned On Energy Invested). The ratio today using corn as a feedstock for ethanol is only 1(in):1.5(out) at best. Although this is positive, Prof. Charles Hall (State University of New York) points out that, “expecting to run a country totally on liquid fuels of this low EROEI is almost laughable.”

NewGen Technologies, and its U.S. subsidiary, ReFuel America, is not laughing — they are expanding. In the spring of 2006 the company completed purchase of three fuel terminals located on the Colonial and Plantation pipelines from Crown Central LLC. The terminals, with a total storage capacity of over 10 million gallons and an annual throughput capacity of more than 500 million gallons, will be used for the storage and distribution of alternative fuels, including biodiesel and ethanol blends, as well as traditional hydrocarbons. Two of these terminals, located in Charlotte, N.C., and Spartanburg, S.C., are now operational.

A 60 million gallon per year biodiesel plant is planned for construction near Columbus, Ga.

Bruce Wunner, vice-chairman and CEO of NewGen Technologies says “While the process of building the plant in Georgia has taken somewhat longer than expected, we expect to break ground on it later this year. We are seeing a great deal of interest in our upcoming operations from potential customers, suppliers, and strategic partners,” he concludes.

Other sources of renewable energy must be developed to further offset growing demands for oil-based fuels. Perhaps the biggest opportunity is for biodiesel production. One of the biggest advantages of biodiesel compared to many other alternative transportation fuels is that it can be used in existing diesel engines without modification, and can be blended in at any ratio with petroleum diesel.

One of the important concerns about wide-scale development of biodiesel is if it would displace croplands currently used for food crops. In the U.S., roughly 450 million acres of land is used for growing crops, with the majority of that actually being used for producing animal feed for the meat industry.

A research team at the University of New Hampshire has put together a model for replacing all the U.S. transportation fuel needs by growing algae in the desert. Maybe a bit far-fetched, but it's evidence of the renewed interest in alternative fuels brought about by $3 per gallon gasoline and diesel fuel.

In the New Hampshire model, one quad (7.5 billion gallons) of biodiesel could be produced from 200,000 hectares of desert land (200,000 hectares is equivalent to 780 square miles, roughly 500,000 acres). To replace all transportation fuels in the U.S., we would need 140.8 billion gallons of biodiesel and to produce that amount would require a land mass of almost 15,000 square miles. It would take 15,000 square miles (3.85 million hectares) of algae ponds to replace all petroleum transportation fuels with biodiesel. At the cost of $80,000 per hectare, that would work out to roughly $308 billion to build the farms. Compare that to the $100-$150 billion the U.S. spends each year just on purchasing crude oil from foreign countries, with all of that money leaving the U.S. economy.

While the enthusiasm remains high, it seems every alternative energy facility has been plagued by slow-downs of some kind. Despite the lags in getting production facilities online in the Southeast, expectations remain high that biodiesel and ethanol plants will create new demand for corn, soybeans and other crops used as renewable, alternative energy feedstock.

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