Ethanol production to start in western Pa.

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MEADVILLE, Pa. — “Someone is still talking about ethanol?” That is the response heard from one observer upon learning of a producer meeting in Meadville Aug. 27.

The Crawford County Farm Bureau sponsored the informational meeting about the Clearfield, Pa., ethanol plant currently under construction by Bionol Clearfield LLC, a unit of Bio Energy International of Quincy, Mass.

The plant is expected to start taking corn in November and to be operational in January.

Uneasy economics

The response is understandable, given the current noneconomic state of most ethanol production plants.

One of the largest ethanol companies, VeraSun, has been auctioned out of bankruptcy to Valero, an oil refiner. Four Ohio plants have closed, and two have construction on hold. Six are listed by DTN as planned, but there is no construction in sight. The Fulton, N.Y., plant operated briefly, then failed.

After a two-year run up in production, the current economics of ethanol have idled a huge percentage of the production capacity that was created.

Still, there are positive signs in the energy economy. POET, one of the successful national companies, has opened Ohio plants in Fostoria , Leipsic, and Marion this year. The Andersons recently reported profits on their ethanol operations, including their plant in Greenville, Ohio.

Pa. plant

At the Pa. meeting, Rudy Fogleman, Bionol Clearfield LLC vice president of operations, promoted the plant to the crowd at the William Douglas Corporate Conference Center in Meadville.

The group included farmers from the western tier of Pa. counties and the eastern tier of Ohio. Also present were an elevator owner, an elevator operator, a cross-country grain trader, and two feed processors.

Fogleman contended that the Clearfield plant was clearly different. The design was a proven one, a replication of many successful operational plants designed by ICM Fagan. The operations would be by his company, which currently operates plants in Louisiana, and he invited the group to check out Bional’s and ICM’s history and operations online.

Why western Pa.?

Fogleman cited several specific reasons for the Clearfield plants being built. They included economic incentives by the state of Pennsylvania; a site in Clearfield County that was encouraged by the state for economic development purposes, and which was convenient for markets; and he confirmed a five-year takeoff contract with Getty Oil that would guarantee a profitable market for ethanol.

The plant represents an investment of $240 million, and is unique in the business in that the money was all committed before construction began, according to Fogleman.

He said $180 million is already spent, and there are currently 400 workers on-site.

Bionol Clearfield will produce 300,000 gallons of ethanol a day, and 400 tons of Dried Distillers Grains with Solubles (DDGS).

Reality check

Fogleman was frank about recent failures in the ethanol business. He told the group that the plant in Fulton, N.Y., operated sporadically, and was reduced at one point to paying farmers to spread the mash for manure when the bacterial culture failed to convert the mass to ethanol properly.

But, he informed them, the plant was designed by a company that built 16 plants, and none of them are currently operating.

Fogleman confirmed the Fulton plant has been purchased by Sunoco, but he suggested that it could be a long time before they decide what retrofitting it needed to reopen. He said they bought the assets for $7.6 million, but had no incentive to produce, as long as they could continue buying ethanol in the current market from cooperatives at less than the cost of production.

Corn market

Grieg Dougherty and Dick Damaske, representatives of Lansing Trade Group in Auburn, N.Y., introduced themselves as the buyers of grain for the facility. Lansing trades more than 400 million bushels of corn a year.

Dougherty addressed the challenge of originating the 38 million bushels of corn needed each year for Clearfield. Lansing’s Long Island, N.Y., office will originate unit trains, while the Auburn office will originate truck grain.

Damaske encouraged producers to visit the company Web site to get more information.

The DDGS will be marketed by Land ‘O Lakes, which provided literature, but had no representatives present.

A similar meeting was held in Indiana, Pa., Aug. 26.

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