Northwest Pa. group still pushing for ethanol plant

April 3, 2008

SALEM, Ohio — One feasibility study said building an ethanol plant in northwestern Pennsylvania was a bad idea.

So the group gunning for the development, Keystone Ethanol Energy Producers LLC of Mercer County, hired its own consultant to take a closer look at the plan.

And that consultant says the whole thing is a good, workable idea for the area.

Two opinions

KEEP spokesman Bruce Wolff of Greenville said the initial feasibility study got a bad reputation and widespread attention as a no-good option for northwest Pennsylvania because the study was approached with the Midwest state of mind.

“They looked at the whole thing like a traditional Midwest plant. They didn’t consider biomass as a fuel energy source, only natural gas. Ignored it completely,” Wolff said, noting KEEP has plans to use biomass as a fuel energy source to power the facility.

Currently natural gas costs twice what biomass does, Wolff said.

The study also dismissed the use of coal power, but KEEP has also dropped that idea due to environmental permitting, he said.

In addition, the 2006 study also worked costs and returns using lower prices than what ethanol now sells for on the Chicago Board of Trade, Wolff said.

“To decide if it’s feasible when you’re using the wrong numbers just doesn’t make sense.”

Planned

There’s been talk about building an ethanol plant in northwest Pennsylvania since at least 2004, when local farmers, economic groups and government officials sat down to discuss the possibilities after a plant proposed for nearby Ashtabula County, Ohio, fell through.

The Crawford County Farm Bureau set up a committee to explore the idea. That group pushed for the first feasibility study, and some of that group’s members are now affiliated with KEEP, records show.

That first study came back with results described as “favorable, but not as much as plants located closer to corn production,” according to a 2006 media release. That’s when KEEP hired Larry Johnson, an ethanol consultant out of Minnesota, to pick apart the study, Wolff said.

Johnson’s analysis said the plan is viable, since the production site is close to major metropolitan areas and the East Coast — areas of consumption — and that both sites considered for the plant were ‘good,’ Wolff said.

The sites under consideration are in the Keystone Industrial Park and the Greenville Reynolds Industrial Park.

The area’s location also made it a good candidate as far as corn supply goes, with planners anticipating half of the needed corn coming from a 75-mile radius, and the rest shipped in from the western Corn Belt.

“We’re going to press forward,” he said.

In the works

The group is currently pushing its plan through detailed engineering design and trying to determine what size of facility works best for the region, Wolff said.

Planners are considering a plant capable of outputting either 25 or 40 million gallons of ethanol.

“It’s hard to get solid numbers from a company until you’ve signed a contract with them,” Wolff said.

Wolff said both sizes would have roughly the same labor costs and site size. The larger facility would have more economy of scale in production.

KEEP is also looking into how it would finance the project, but that can’t be decided until other decisions are made.

“If we had the money at this point, we’d be very well set for a successful plant,” he said.

Timeline

KEEP plans to have a design and engineering contact finalized within six to 12 months, and it will likely take another year to secure funding to build the facility.

If all goes as planned, construction would begin “well into 2010,” Wolff said.