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Posted on  

May 2, 2003

Southwest Biofuels seeking investors, customers

With the rezoning of 300 acres northeast of Pratt from agriculture to heavy industry, Southwest Biofuels has taken another step closer to its goal of bringing an ethanol plant to the Pratt area.

Much remains to be done before all the plans are finalized, but Southwest Biofuels is cautiously optimistic that construction could start sometime in 2003.

"Our goal is to begin construction this year and it's a very ambitious goal," said Gordon Stull, one of the board of managers of Southwest Biofuels who also serves as attorney for the company and holds the office of secretary.

The plant is expected to have 36 employees and a $1 million payroll. The facility will cost roughly $60 million and construction is expected to take a year. Southwest Biofuels is currently exploring ways to raise equity capital for the project, Stull said.

"The plant is not totally funded yet," Stull said.

Capital for the project will be split with about two-thirds coming from loans and one-third from private investors, but those fractions are very general and could change, Stull said.

Design of the plant is closely tied to the search for funds.

"To secure a loan, banks want a contractor who knows what they are doing. They don't want a contractor who has to learn as they go," Stull said.

Designs are also important for the plant to meet the air and water quality requirements of the Kansas Department of Health and Environment and the Environmental Protection Agency.

The plant will have a thermal oxidizer to burn up air pollutants and control odor and will be relatively quiet, Stull said.

Besides funding options, potential ethanol markets are being investigated.

Currently, Kansas is not a big market for ethanol using only 2 million gallons in 2001. With a plant that can produce 40 million gallons of ethanol a year, other regional markets such as Iowa, which used 86 million gallons in 2000 and Texas, 59 million gallons used in 2000, are being examined for potential trade.

The plant will use 15 million to 16 million bushels of grain, corn and milo, per year. Southwest Biofuels is examining both local and regional market potential to meet the grain need.

"We're going to be on the open market. We're going to buy as much as possible from around here," Stull said.

Other factors currently under consideration are how to handle the distillers grain and C02 that are bi-products of an ethanol plant.

Every bushel of grain produces 2.65 gallons of ethanol, 18 pounds of distillers grain and 16 pound of CO2. That translates to at least 270 million pounds of distillers grain and 240 million pounds of CO2 a year.

Distillers grain is used as a supplement to livestock feed. Southwest Biofuels has had preliminary discussions with Pratt Feeders and Xtra Factors about using the distillers grain.

Pratt Feeders currently doesn't use distillers grain because of availability, said Jerry Bohn, general manager.

They have a capacity for 80,000 to 100,000 pounds a day or 36.5 million pounds a year. Because it is a wet grain, it would have to be stored in an outside bunker, which would have to be constructed and handled with a front end loader, Bohn said.

Ultimately, the decision to use the grain will be based on economics.

"It has to be economically viable. It would have to be priced right," Bohn said. "It would be something we would look at."

Xtra Factors currently uses 370 tons of distillers grain a month but it is dry grain and the ethanol plant produces wet grain.

"We don't have any way to dry it and we don't have any way to handle it," said Kent Smith, general manager and nutritionist for Xtra Factors.

The ethanol plant would have to dry the grain before Xtra Factors could use the product.

Buyers for the CO2 are also being investigated.

With 15 million to 16 million bushels of grain, corn and milo, coming in and 40 million gallons of ethanol going out plus the distillers grain and CO2, having railroad access was vital to site selection which sits next to the Union Pacific Railroad main line.

Trucks will handle some of the transportation but trucks can't handle the mass of product that will be produced by the plant. Rail service is vital for transportation, Stull said.

The facility site was also chosen because it had the necessary space, a Ninnescah Rural Electric power line runs through the middle of the site which can provide ample power, renewable water is available and over 110 million bushel of grain, corn and milo, are in an 80 mile radius.

A number of other sites were considered for the plant. The Prairie Parkway Business Park, located on the north side of Pratt Community College was not chosen because it was not large enough to support the facility and it had no access to rail service.

An industrial area north of the Union Pacific lines on the northern outskirts of Pratt also was rejected because it was too small and it would have increased truck traffic inside the city, Stull said.

Of the 300 acres for the plant site only 40 acres are needed for the actual plant. The rest of the acreage is a buffer between the plant and the neighbors and for water rights. The plant will use about 500 acre feet of water to run the plant for a year which is about the same as three irrigation systems.

The rezoning from agriculture to heavy industry has also been a concern for Southwest Biofuels. With heavy industry zoned just a couple of miles from town, the possibility of other types of industry moving in have caused worry for residents who live near the site.

"My biggest concerns are they rezoned 300 acres from agriculture to heavy industry," said Jack Blodgett, who lives on the west edge of the plant site. "What's to keep them from going in and doing more?"

Heavy industry includes salvage yards, ready mix cement plants, fuel storage, junk or salvage yards, petroleum refining, slaughter houses and land fill, Blodgett said.

Development of a hog farm on the site to help get rid of the distillers grain concerned Blodgett.

Southwest Biofuels has no plans to develop any of those heavy industries including a hog farm, Stull said.

Kansas already has ethanol plants in Leoti, Colwich, Atchinson, Garden City and Russell. Another plant is being planned for Hoxie.

By Gale Rose: of the Pratt Tribune Staff



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