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November 18, 2002

Third N.D. Ethanol Plant Proceeds

Farmers planning to build a third ethanol plant in North Dakota say they’ve garnered enough investor interest to proceed.

The steering committee for Dakota Renewable Fuels LLC has received “significant” investor interest during state-wide informational meetings that ended Nov. 1, said Mike Clemens, a Wimbledon, N.D., farmer and committee member.

Clemens wouldn’t say how much potential investors have pledged. He said its too early to release investor information because Dakota Renewable Fuels hasn’t begun a series of meetings aimed at soliciting investors.

The organizers of Dakota Renewable Fuels want to build a $40 million plant that produces 30 million gallons of ethanol every year. They hope to raise about $18 million from investors.

In August, the steering committee narrowed its possible plant sites from 18 to two, choosing Valley City and a site near the ProGold corn sweetener plant in Wahpeton as the best locations.

The committee is still weighing the pros and cons of both sites, Clemens said.

But whether Dakota Renewable Fuels builds an ethanol plant in North Dakota will depend on the Legislature, he said.

The project hinges on the Legislature passing an incentive package geared toward new ethanol production, said Duane Dows, a Hope, N.D., farmer and the committee’s chairman.

Investors in a new ethanol plant need a state subsidy to better compete with plants in other states that receive subsidies and to weather initial downturns in the energy market, Dows said.

“The current legislation doesn’t really address new production and that’s what we need to move forward,” he said.

Gov. John Hoeven said he will forward a budget plan for the next biennium that includes an ethanol subsidy targeting new production.

“That’s what we’re doing right now – putting the budget together to figure out just how we’re going to get everything funded,” Hoeven said. “But we’re definitely going to restructure it. Clearly, I want to target it towards new development.”

Rep. Gene Nicholas, R-Cando, said he believes the Legislature would pass such an incentive plan as part of the 2004-06 budget.

In its last session, the Legislature increased the subsidies it gives the state’s two ethanol plants from $1.5 million to $2.5 million during the 2001-2003 state budget. The Alchem Ltd. plant in Grafton will receive $1.7 million and the larger Archer Daniels Midland plant in Walhalla will be given up to $800,000.

ADM must share its portion of the state subsidies equally with any other ethanol plant that would begin operating during the current biennium.

The subsidies do not extend beyond 2003.

Minnesota gives its ethanol producers up to $3 million for 10 years. South Dakota provides up to $1 million for 10 years and has passed a two-cents per gallon tax cut on all ethanol-blended fuels.

Hoeven said he’s also formulating legislation that would give service stations a cash incentive for selling large amounts of ethanol-blended gas.

Last month, the legislature’s interim Agriculture Committee endorsed a proposal to mandate regular gasoline be blended with 10 percent ethanol.

“As we get into the session, I think there will be a lot of interest for a mandate.” said Nicholas, an Agriculture Committee member.

“I think in the bigger context of things, since September 11, as we move toward more energy self sufficiency this is one area that we have to look at.”

-Jeff Zant
The Fargo Forum

Readers can reach Forum reporter Jeff Zent at (701) 241-5526