Plants change hands, reorganize financials

By Kris Bevill | August 27, 2010
The summer of 2010 has been a busy one for many ethanol producers, with several plants acquiring new owners and others reorganizing.

In June, petroleum refiner Sunoco Inc. began operations at the former Northeast Biofuels LLC plant near Fulton, N.Y. Sunoco purchased the 100 MMgy facility in 2009 for $8.5 million through a bankruptcy auction and hired ICM Inc. to install upgrades worth $25 million. Sunoco Fulton Ethanol Facility may soon be operating at full capacity for the first time since its initial construction. Sunoco expects the plant will supply up to 20 percent of the company's gasoline blending requirements.

On June 29, Poet LLC completed the purchase of a 90 MMgy plant near Cloverdale, Ind., previously operated by Altra Biofuels, increasing Poet's total capacity to 1.7 billion gallons per year. Poet now owns and operates 27 ethanol plants throughout the Midwest. The company plans to spend $30 million in upgrades, including its patent-pending fermentation process, a water recovery system and new pollution control equipment. Poet expects to reopen the facility by April 2011. "This plant has all the ingredients we need to put together a top operation: a steady corn supply, rail access, a great workforce and productive farmers," CEO Jeff Broin said. "The ample corn supply in the area includes significant quantities of agricultural waste, making the plant a likely location for cellulosic ethanol production in the future."

REX American Resources Corp., a relative newcomer to the ethanol industry, acquired a 48 percent ownership interest in the 100 MMgy NuGen Energy LLC plant near Marion, S.D. The former electronics company, which just last year switched its focus to alternative energy, now has interests in seven ethanol facilities representing a total annual nameplate capacity of 632 million gallons. The company owns 191 million gallons of annual nameplate capacity. "The NuGen investment furthers REX's strategy to prudently deploy its strong balance sheet for new investments in ethanol production facilities or other attractively valued renewable resources or industrial project opportunities," REX CEO Stuart Rose said. REX acquired the ownership stake in NuGen for $9.2 million with a commitment of up to an additional $6.5 million based on the plant's profitability.

Hawkeye Renewables LLC also received new ownership interests, but under less ideal circumstances. The company announced June 18 that it had successfully emerged from bankruptcy with new equity owners for the Hawkeye facilities in Iowa Falls and Fairbank, Iowa. The names of the new owners are not being publicly disclosed, according to spokeswoman Victoria Weld. However, the equity owners have no plans to sell the facilities and Hawkeye will continue to manage operations at both plants. "It is important for farmers and producers who sell corn to Hawkeye Renewables to know that both plants are emerging from this process with significant working capital, minimal debt and a new balance sheet," said Jim Continenza, Hawkeye Renewables board chairman. "We believe the financial future of the two plants has been stabilized and the two plants will continue to make positive contributions to their local communities." Hawkeye Renewables continues to own and operate its remaining ethanol facilities in Menlo and Shell Rock, Iowa.

On the East Coast, Bionol Clearfield LLC, which brought its 100 MMgy plant in Pennsylvania on line earlier this year, has been working through a breach of contract issue with its marketing contractor. Bionol claims Getty Petroleum Marketing Inc., a subsidiary of OAO Lukoil, defaulted on its billion dollar ethanol contract with Bionol in June. The companies had entered into a five-year contract in which Getty was to purchase all of the Clearfield plant's ethanol for a set price. Bionol said that after just two months, Getty began paying less than the agreed-upon price for the plant's ethanol, claiming that the contract price is not valid. The dispute will be taken to arbitration with a decision not expected for months. In the meantime, Getty continues to distribute ethanol from the facility.

Further down the coast, Praxair Inc. has signed a 15-year contract with Osage Bio Energy to purchase CO2 from the company's Appomattox Bio Energy ethanol plant near Hopewell, Va. Praxair is constructing a $15 million industrial gas facility to be co-located with the 65 MMgy barley-to-ethanol plant to capture 190,000 tons of CO2 annually, beginning at the end of 2011, for use in food processing and beverage applications.