Construction Continues at a Steady Pace

By Craig A. Johnson | August 04, 2008
Thanks to a stint of dry weather in July, especially compared with June, many project developers were able to make more progress than they had initially anticipated. Several projects on this list reported that construction was nearly complete and could be finished within a month's time.

Several plant and project managers have voiced concern over corn prices. Few, if any, expect significant adjustments in the next 12 months. One project manager admitted that construction of his plant was nearly complete, but it may not start production right away. "We're hoping the price of corn goes down or the price of ethanol goes up," he said. "It's going to take some time before we see any change."

Many plants are starting to assemble staffs, and three facilities on this list were in the midst of employee training. In particular, Edgar Seward and his team at Indiana Bio-Energy LLC traveled to the company's sister facility Green Plains Renewable Energy Inc. in Shenandoah, Iowa, for training. GPRE's similar design gave the new staff a firsthand look at how the plant in Bluffton will operate.

At press time, the ethanol industry was approaching a 10 billion-gallon capacity. Ninety-two percent of that capacity is corn-based, while milo or a combination of corn and milo make up approximately 7.5 percent. On the plant construction list, there are another two projects that intend to use a combination of corn and milo as their primary feedstocks.

However, Louisiana Green Fuels LLC intends to use sugarcane bagasse and sweet sorghum. Although interest in other unique feedstocks is growing, only this plant is currently planning to do so.

On a historical basis, it's evident that plant construction has slowed. So far this year, nine companies have started construction or announced groundbreaking. During this same time in 2007, 40 plants broke ground. Two facilities completed construction in the past month. Terra Grain Fuels Inc., a 150 MMly (40 MMgy) plant in Belle Plaine, Saskatchewan, is using wheat as a feedstock. VeraSun Hankinson also started production after halting start-up due to unfavorable market conditions. VeraSun continues to delay start-up at its facilities in Harley, Iowa, and Welcome, Minn. Including these two plants, 37 facilities have completed construction or announced start-up since January. Altogether, these 37 plants account for 2.63 billion gallons of additional production capacity per year. Compared with the same period in 2007, only 27 plants have come on line, increasing to 38 by the end of 2007.