BY SUSAN ERLER, Times of Northwest Indiana
RENSSELAER | Work on Northwest Indiana's first ethanol production plant got underway this week, just as President Bush signed an energy bill sure to benefit makers of the alternative fuel.
The new law calls for 7.5 billion gallons of ethanol to be blended into the U.S. fuel supply by 2012, nearly double current production levels.
"I think the energy bill will firm up the market and make it a very viable operation, and hopefully promote some more plants within Indiana," said Keith Gibson, general manager of Iroquois Bio-Energy, the company building the 40,000-square-foot facility east of Rensselaer.
The $66 million Iroquois Bio-Energy plant will have capacity to process about 14.3 million bushels of corn a year into 40 million gallons of fuel-grade ethanol. It's expected to be up and running in 14 months.
Ethanol is a clean-burning, renewable fuel which has been touted as an alternative to Middle Eastern oil.
John Bryant, treasurer of the Iroquois Bio-Energy board of directors, said he expects the plant to pump $54 million into the local, mostly rural, economy.
"That will come from buying the corn, all the trucking involved, and everybody that supports the business," Bryant said.
Area farmers are expected to supply much of the corn that will be digested, cooked and fermented to produce ethanol. The plant is expected use about 35,000 bushels of corn a day and employ about 35 people.
The site for the plant, in Pleasant Ridge near the intersection of Indiana 114 and County Road South 125W, is close to a CSX rail line, an advantage for a product that is best moved by rail, truck or barge, according to Bryant.
Distillers grain, used as high-protein animal feed, and carbon dioxide, both by-products of ethanol production, will be part of the Iroquois Bio-Energy operation, Bryant said.
A Bloomington, Ind.-firm is expected to operate just outside the ethanol plant, processing cast off carbon dioxide into a liquified form. "Eventually they'll put in a dry-ice plant," Bryant said.
The dry-ice plant could employ up to 15 people, Bryant said.
The timing of the project this week was bittersweet for Bryant, who'd hoped to see the plant up and running by the time a federal energy bill, rejected in a similar form two years ago, was passed into law.
"It would have been a lot better if it had been two years ago," Bryant said.
Financing the project took more than four years and had its pitfalls.
Originally planned as a farmer owned co-op with investor farmers committing to delivering corn, the format was changed to a limited liability company in 2002 in order to open investment to non-farmers.
An initial public offering was launched in 2003, with the expectation of raising the $25 million needed to secure loans for a facility whose price tag, first estimated at $54 million, had risen to $63 million.
By late 2004, Iroquois Bio-Energy was forced to withdraw the initial public offering and refund $4.5 million to about 250 investors. The Securities and Exchange Commission had determined an amendment to the original offering changed it substantially.
By the time work got underway this week, Iroquois Bio-Energy had secured $24 million in private investments, which combined with $6 million in grants from the U.S. Department of Energy made up 45 percent of the financing package. A bank loan will cover the rest of the cost of the $66 million project, Gibson said.
The Iroquois Bio-Energy plant is one of a handful of new ethanol production facilities either planned or already underway in the state.
Demeter Enterprises, a holding company partly owned by Cargill Inc., is building a $125 million plant in Montgomery County in western Indiana.
Westmont, Ill.-based Putnam Ethanol LLC is building a $120 million plant in Cloverdale, southwest of Indianapolis, and Central Indiana Ethanol is planning a $60 million plant in either Grant or Miami counties.
New Energy Cop., in South Bend, is the only ethanol plant currently up and running in the state. It produces more than 100 million gallons of ethanol a year.
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