Osage Bio Energy to produce barley-based ethanol

By Susanne Retka Schill | May 09, 2008
Web exclusive posted May 13, 2008 at 4:41 p.m. CST

Barley-based ethanol may soon be a reality in the Southeast. In early May, Osage Bio Energy LLC announced a $300 million commitment from First Reserve Corp. to fund the construction of four barley-based ethanol plants. The financing package is currently under development for the first 55 MMgy plant planned for Hopewell, Virg., according to John Warren, the company's investor relations manager. "We've been keeping under the radar," he added, "trying to avoid NIMBYism [not in my backyard opposition.]"

In February, Osage Bio Energy cleared a hurdle when the Virginia Supreme Court blocked an appeal by opponents. While Hopewell, Virg., is an industrial town and the proposed plant will be on the site of a former manufacturing plant, local opposition emerged when the city was asked to approve the project.

With the land and local approval secured, the permitting process is underway and Osage Bio Energy hopes to break ground in September, Warren said. Jacobs Engineering will be the design/build team, with Katzen International Inc. providing the barley-to-ethanol technology. The Hopewell plant will pipe excess steam from two nearby power plants for its process heat. Osage Bio Energy has negotiated an agreement for exclusive use of the Katzen barley technology within a 200-mile radius of each plant. Warren says the company is trying to avoid two plants competing for the same feedstock in a given region.

Using winter barley addresses the food versus fuel issue, he added. "Each of our plants will require over 200,000 acres of barley which will give farmers an additional crop option," Warren said. The winter barley crop will not compete with summer food crops, and will provide additional environmental benefits. Many farmers already use barley as a winter cover crop to prevent nutrient loss and soil erosion, he explained, tilling it down in the spring. The option of harvesting it as grain will provide an additional revenue stream which will help keep farmers on the farm. "It's going to help keep land from being converted to residential housing complexes," Warren said, pointing out that urbanization permanently removes land from food production. Using barley as the feedstock will also give Osage Bio Energy's ethanol production a marketing advantage since it will qualify as an advanced biofuel under the current renewable fuels standard which defines anything other than corn starch ethanol as an advanced fuel.

In addition to the announcement of the financial investment, the company recently appointed three executives. Joel Stone joins Osage Bio Energy after 30 years in the ethanol and food ingredient industries to become its chief operating officer. He previously was COO for ASAlliances Biofuels LLC and worked for Abengoa Bioenergy Corp. Andy Weaver joins Osage Bio Energy as chief financial officer, bringing experience in financial management from positions at Krayton Polymers LLC, Reliant Energy Inc. and Coca-Cola Co. Patrick Simms, who has worked with Diversa Corp. (now Verenium Corp.) and Genecor International Inc., joins Osage Bio Energy to become its senior vice president of operations.

Osage Bio Energy is a sister company to Roanoke, Virg.,-based Osage Inc., an independent distributor of ethanol in the Southeast. First Reserve's equity investment makes it the primary owner of the start up ethanol company.