Virginia to get first ethanol plant

Ethanol production has blossomed in America's heartland, but entrepreneurs and investors in the Southeast haven't been too successful in navigating political and economical barrier to plants in the Southeast.

In late November ethanol production was dealt a heavy blow when the City Council of Chesapeake, Va., voted to block construction of a 235 million gallon per year facility that would have used 80-90 million bushels of corn annually and produced nearly a billion dollars in revenue for the area.

Virginia did rebound when on Dec. 4, the Hopewell, Va., City Council voted 4-3 for approval of a 55 million gallon per year plant. Though bitterly contested, the new facility will bring 50 full-time jobs and over $2 million per year in new taxes.

Though approved, the new facility faces serious legal entanglements just to begin construction. One of the leading voices against construction of the Hopewell plant is City Councilman Curtis Harris, who says he will file a multi-million dollar suit against the City of Hopewell and Osage Bi Energy, owners of the proposed plant.

In North Carolina, Agri-Ethanol Inc, which has had plans on the table for three years to build at least three 150 million gallon per year ethanol plants in the state is yet to begin construction on any of these facilities. Several leaders of the fledgling energy company have left to pursue other business interests and the future of the North Carolina plants is bleak.

International Bio Energy (IBE), the company that was denied permits to build the 235 million gallon per year facility in Chesapeake, Va. will seek an alternative location in another southern state.

The battle for and against the IBE Chesapeake project was bitter at best. The marathon city council meeting set to decide the fate of the IBE proposal began at 6 p.m. and ended with a final vote at 3:50 a.m. the following morning.

During the council meeting, there were 24 speakers in favor of the project and 50 against. There was considerable public opposition mostly stemming from misinformation on ethanol and corn production and scare tactics circulated on the ethanol production process.

Molly Pugh, who is executive director of the Virginia Corn and Small Grain Growers Association says, “this plant would have brought 4 million in annual tax revenue to the city and provided 150 jobs — plus would have added an additional market for Virginia corn. The Chesapeake plant proposed cutting edge technology and would have been the cleanest, most environmentally friendly plant built to date in the U.S. The outcome was extremely disappointing,” she adds.

Sydney Harrison, managing officer for International Bio Energy Virginia LLC, which is headquartered in Chester, Va., says “it would have cost about $500 million to build the plant, which, if it had been approved and construction started in late 2007, would have been operational in the first quarter of 2009.

The Chesapeake City Council had previously approved construction of a 75 million gallon biodiesel plant, which would have been built adjacent to the giant ethanol plant. Had it been approved and built, the Chesapeake facility would have been the largest ethanol producing plant in the U.S.

Chesapeake Mayor Dalton Edge was among the first proponents of the giant plant, having publicly called for the city council to approve it. Edge says he would have been happy to have the project, saying it would have relieved dependence on foreign fuel imports. Edge says he still has few concerns about the project. “I don't see any real environmental risks or health and safety risks,” he said.

Others did see the risk.

Chesapeake Councilwoman Ella Ward said she was troubled by the plant's need for 1.5 million gallons of water per day. That would have made the ethanol plant Chesapeake's single-biggest water customer. As the vote neared, International Bio Energy said it would use less and less water, which added to the skepticism of the company, according to Ward.

Harrison says International Bio Energy believed the site was a perfect spot for a plant because it was close to port and rail. A Hampton Roads ethanol plant would be an easy source of fuel for customers all along the East Coast, Harrison contends.

The approved plant in Hopewell is a multi-grain facility using corn, wheat, barley, hulless barley and sorghum in any combination. This will be a boost to all grains grown in Virginia as well as a boost to America's energy independence, according to Pugh.

Approval of the Hopewell facility didn't come without a fight, as Councilman Harris and other civic leaders contended the plant would benefit wealthy people living along the James River bluffs in and around Hopewell, but would deprive poor people living near the plant of their quality of life.

Though rumored plans to have the Rev. Jesse Jackson, Al Sharpton and other minority leaders come to Hopewell to lead the opposition failed to materialize, the council hearing was never-the-less emotion-charged.

In addition to the displacement of people, those leading opposition to the Hopewell plant contend high demands for water will jeopardize the city's water supply. Speaking at the Dec. 4, city council meeting in Hopewell, opponents of the ethanol plant said it will take 1.5 to 4 gallons of water to create 1 gallon of ethanol. Water for the plant will come from Virginia American Water, which supplies Hopewell's water.

To create 55 million gallons of ethanol, the plant will require 82.5 to 220 million gallons of water per year.

Though a less resounding victory than would have come from approval of both plants, Virginia's ag community stands to gain from construction of the Hopewell facility.

Virginia farmers planted about 400,000 acres of corn in 2007, with a total yield of 34 million bushels. Much of the grain produced in the state goes for livestock feed. If the Hopewell plant uses corn, as is projected for up to 85 percent of the production stock, that would provide a market for approximately half of the state's corn production.

Virginia growers also annually produce barley on 50,000 or so acres. Barley, especially hulless varieties, will be used at the Hopewell facility as an off-season stock for ethanol production. The competition for Virginia grain is expected to provide increased interest in grain crops in the 2008 season.

If construction of the plant begins, as expected, in August of 2008, it is expected to be operational in mid-2009. Though only a fraction the size of the proposed ethanol plant in Chesapeake, the Hopewell plant will provide a viable market for Virginia grain producers.

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