6/05/01

By MARK POWELL

While New Jersey farmers are meeting yet again this week to get details on building a corn-fed ethanol plant in the Garden State and a Pennsylvania group explores ethanol production, Maryland grain producers have contract with a Minnesota firm to study the potential for a small grains ethanol plant.
The grain producers association picked Voudrie Business Development Inc. of Elk River, Minn., to study the feasibility of building a Maryland ethanol plant using barley and wheat. The $40,000 contract includes work to be done by Voudrie with Katzen International of Cincinnati. Voudrie is also subcontracting part of its work to a Cockeysville, Md., firm, SusTech Corporation.
Voudrie, formed in 1991, has successfully completed five ethanol plant projects worth more than $150 million.
Katzen, founded in 1955, is a group of chemical and mechanical engineers as well as biologists and plant designers. The firm was selected recently to design the world’s largest barley feedstock ethanol plant in Galicia, Spain. The company now has completed projects in 25 countries.
The two-phase study will break down this way:
In Phase I, Voudrie will do an economic evalution of the project, study capital costs, identify markets, study available incentives from the federal, state and local governments and evaluate the potential for the various feedstocks.
A Phase II study, which will receive $14,000 in funding from the Maryland Agro-Ecology Center, will involve preparation of a detailed business plan and work to secure financing.
“We are anxious to hear the results of this study,” said Bob Hutchinson, a Talbot County farmer on the Maryland Grain Producers Utilization Board. “Our board feels the timing is right to look at the possibility of an ethanol plant in Maryland.” Corn is not being studied as a feedstock for the plant because the state has a deficit of corn because of the large concentration of poultry operations. The poultry rations include corn, but not barley.
In Maryland about 1.9 million bushels of barley are grown on the Eastern Shore. The Western Shore’s farmers produce slightly less, about 1.6 million bushels (based upon 1998 figures). Delaware produces about the same amount as the Eastern Shore, while the Eastern Shore of Virginia produces about 200,000 bushels.
The feasibility study will explore the use of both wheat and barley. A plant engineered to handle barley could also take wheat.
The Maryland producers want to explore the potential for a plant which would produce between 15 and 25 million gallons of ethanol each year. To build such a plant would cost between $30 million and $50 million.
Lynne Hoot of the Maryland Grain Producers Association said the size Maryland is looking into is similar to those of cooperative-run plants in the upper Midwest. There are now 56 ethanol plants in 20 states, many in Minnesota and other states in the Midwest. Demand for ethanol as a gasoline extender, oxygenate and octane booster is expanding at a record pace. There are now proposals for 40 new ethanol plants around the country. The U.S. ethanol industry expanded its production by 15 percent in 2000. It is expected to expand by an additional 400 million gallons in 2001, according to industry analysts.
With the current energy price crunch, ethanol is increasingly attractive, despite stiff opposition to its use by many oil companies.
At 7:30 p.m., June 5, Larry Johnson of the Delta-T Corporation will meet with interested grain producers in Salem County, N.J., to give specifics on building a corn-to-ethanol plant in South Jersey. The New Jersey Farm Bureau, Rutgers University and the state’s grain and forage producers associaton have teamed to pay for two studies of the potential for an ethanol plant in the Garden State.
Observers say it is clear that a market for ethanol exists, and that now it’s a matter of farmers and other interested parties putting up the financing to build a plant. There has been no concrete decision on whether New Jersey farmers will commit to an ethanol plant. Several observers were increasingly optimistic going into this week’s meeting.
Connecticut consultant Lee Williams told New Jersey farmers in April, that profitability for an ethanol plant would be a gamble. But, hedging his statement, he said the indicators are that the days of cheap oil are over, increasing the chances for ethanol profitability. Also, members of Minnesota ethanol plant cooperatives said the financial benefit of such ventures goes to the investor-farmers. There does not appear to be an overall increase in commodity prices that would benefit all farmers.
A portion of the Maryland ethanol plant feasibility study is expected to be presented at the Maryland Commodity Classic at the Queen Anne’s 4-H Park in Centreville, July 26.