Ethanol plants have good, bad news in June

By Holly Jessen | July 15, 2010
Announcements from ethanol producers in June were mixed. AGP Corn Processing received grant money for a biogas project and Paladin Ethanol Acquisition Lima LLC plans to restart an idled plant in Ohio by the end of the year. On the other hand, the Tate & Lyle ethanol plant nearing completion in Fort Dodge, Iowa, will not be commissioned and Bionol Clearfield LLC will to go through arbitration with Getty Petroleum Marketing Inc. over its ethanol marketing contract.

In Hastings, Neb., AGP will use $275,000 in grant money from the Nebraska Energy Office and $50,000 of its own funds on a project to offset its natural gas use. The 52 MMgy ethanol plant completed renovating its anaerobic wastewater digester and will use the grant money to capture methane gas and pipe it over to a regenerative thermal oxidizer (RTO). Ag Processing Inc., which operates the ethanol plant, is a farmer-owned cooperative with business segments involved in procuring, processing, marketing, and transporting grains and grain products. It handles corn, although the bulk of the company's work is with soybeans, which includes two biodiesel facilities.

The former Greater Ohio Ethanol plant in Lima, Ohio, is expected to restart after standing idle since late 2008. Paladin Ethanol Acquisition Lima LLC said, in documents filed with the Allen Economic Development Group, it hopes to be operating by the end of the year, said Marcel Wagner, president and CEO of the county organization. In June, the tax abatement agreement for property taxes was modified, dropping from 50 percent abatement to zero. "The best thing that could happen for the plant and the community, is that they get the plant up and running," Wagner said. "Everyone here supports the project." The tax abatement was based on investment and job creation, Wagner said. With efforts to restart the plant, the company plans to hire between 31 and 35 people by year's end and have a total employment of between 40 and 44. "If and when the plant gets up and running again, we could reinstate the abatement," Wagner said. The Lima ethanol plant started producing in July 2008 and operated for five months before being shut down due to operational and mechanical difficulties. In February 2009 a federal judge approved the sale of the plant for $5.75 million to Paladin, a Washington, D.C.-based capital firm, which formed Paladin Ethanol Acquisition and invested $6.2 million in the entity.

Things went the other direction for the Tate & Lyle ethanol plant in Fort Dodge, Iowa. The company announced in June that it doesn't plan to complete start up. "The continuing depressed and volatile outlook for ethanol, and uncertain conditions in industrial starch and corn gluten feed markets, do not provide any basis to complete and commission the plant," said Javed Ahmed, executive officer for Tate & Lyle. Construction halted on the Fort Dodge plant last March, with very little left to do to get it producing ethanol. Since that time, it has sat idle, with only a skeleton crew. The decision not to start the plant was made, Ahmed said, after a detailed analysis of changes in the feed and energy markets. Another consideration was what the company learned in the course of installing new equipment at its Loudon, Tenn., plant. New technology, along with remobilization costs, the company said, would put completing the Fort Dodge plant at about $85.4 million. "Factoring in the risks associated with future returns from the plant, including the length of time to complete, regulatory uncertainty and a continuation of the current market conditions, we have concluded that the plant is highly unlikely to be completed or commissioned in the foreseeable future," he said.

Meanwhile, in Clearfield, Penn., Bionol Clearfield LLC, a 100 MMgy ethanol plant, is headed to arbitration to straighten out the details of a contract with Getty Petroleum Marketing Inc. Just over two months into a five-year contract, Bionol said Getty breached that contract. The Clearfield, Penn., plant is continuing to produce ethanol and Getty is still picking up and paying for it, said Samuel McConnell, vice president of Bionol. However, Getty isn't paying the agreed-upon contract price, claiming for a variety of reasons that the contract price is not valid. "Conversely, we're 100 percent confident in the validity of the contract and the contract formula price," McConnell told EPM. Getty has more than 2 billion gallons of gasoline sales annually and more than 1,000 retail sites in Northeastern United States. The company, which is headquartered in East Meadow, New York, is a subsidiary of Lukoil Oil Company, the largest oil company in Russia.