Osage, Perdue develop barley feedstock market

By Kris Bevill | August 10, 2009
Report posted Aug. 12, 2009, at 1:50 p.m. CST

Osage Bio Energy, which is constructing a 65 MMgy barley-based ethanol production facility in Hopewell, Va., has partnered with Perdue AgriBusiness to develop a local barley contracting program to supply its plant with feedstock. The plant will be the first of its kind on the East Coast and will consume up to 30 million bushels of winter barley annually.

Craig Shealy, Osage Bio Energy founder and CEO, said the Perdue partnership is a unique agreement. Area farmers can easily double-crop winter barley with soybeans, but because there is currently no market for the barley a contracting program is necessary to convince farmers to plant it. "We're much more involved in the grain development than what you typically might see," he said. "Having that partnership with Perdue is really a critical piece, because if farmers are going to put in, for example, 1,000 acres of barley, [they] are going to want to know who's going to buy it, where to deliver it to, who's going to store it, that type of stuff. That's what Perdue will be doing with us."

Perdue will be responsible for signing up acres for the contract program, as well as managing and maintaining the contracts. Shealy likened the program to many of the energy crop programs that are beginning to develop in various regions of the U.S. "It's not just a corn procurement agreement," he added. "It's much more in-depth and significant to the region." Osage plans to procure all of its feedstock from within 100 miles of the production facility.

The company is on track to begin operating its Hopewell facility in June 2010 and will begin receiving barley immediately before start-up. Because barley is more difficult to process than other grains, the cost to build the facility is slightly higher, but the plant will also be truly multi-feedstock capable, according to Shealy. "If you equate grain-based biorefining to crude oil-based refining, barley is sort of your nastiest, heavy, sour crude," he said. "It's the toughest to process. It has a lot of viscosity issues, it's abrasive and if you have a plant that's uniquely capable of running barley end-to-end, you don't have any problem running any number of other grains through that plant as well."

Coproducts of Osage's barley-to-ethanol production process will include renewable fuel pellets and a high-quality barley protein meal animal feed. Shealy said several coal-fired industrial facilities near the Hopewell plant are candidates to become pellet customers and Osage plans to eventually use its own pellets in a combined heat and power system in its facility.

Osage also has plans for a 65 MMgy barley-to-ethanol facility in Carlisle, S.C. Shealy said the project is shovel ready but work will probably not begin until the Hopewell facility is up and running.