Texas Firm to Build Three Ethanol Plants in Iowa

Even investors from oil-rich Texas are putting their money in Iowa ethanol plants.

On January 17 a company based in Dallas, Texas, announced plans to build three big ethanol plants in north central Iowa. The three plants when completed will be able to produce a total of 300 million gallons of ethanol per year.

Officials of the company, Harvest BioFuels LLC of Dallas, say construction of the first plant, near the town of Galbraith in Kossuth County, is scheduled to start in April 2007 and be completed by June 2008. Construction of plants in near Garner in Hancock County and Gilmore City in Pocahontas County will begin later this year, says Bob Payne, the company's chief executive officer.

"Harvest BioFuels has a well-thought out plan to build these plants and this is a very exciting development for those towns in northern Iowa," says Payne. "Announcing three plants at once is a pretty big step."

Three new ethanol plants for Iowa

Will they be built simultaneously or will one have to be done before you start the next? "Because of manpower constraints we're going to build them in a somewhat staggered fashion," he says. "The first groundbreaking for the plant at Galbraith will be in April this year. Garner will be roughly four months later—July or August. Gilmore City will probably be simultaneous with the Garner timing."

Why did you decide to pick those places to build in Iowa? They are not too far away from several other plants that are already being planned or where plants are already under construction. "We have a commitment to Iowa because Iowa is home to the most corn," says Payne. "We are very familiar with other strategies to build so-called destination plants, but because of the capacity for supplying corn, and the great work ethic in Iowa and because of the local communities, we believe these three we've selected are great locations.

"Harvest BioFuels LLC is owned by a small number of investors. We are at this point, a few small risk-equity investors," says Payne. "But that's going to be expanding in the future."

Too many plants in north central Iowa?

How many employees would you have after a plant is open and running in each of these locations? "We plan on 45 to 50 full-time employees per plant," he says. "These will be highly skilled, highly paid jobs. We're looking forward to hiring local people, offering great opportunities for local people who are qualified."

Construction of these three new plants in north central Iowa has some farmers worried about too much demand for corn compared to the supply of corn. Does Payne think that ethanol plants are being overbuilt? "We are very convinced there will be an adequate corn supply," he answers. "We're excited about our relationship with the local StateLine Cooperative up there in northern Iowa. They have grain elevators that will be supplying the corn to us.

"Corn grain is going to be the basic feedstock for U.S. ethanol plants for several years to come," says Payne. "Researchers are working on cellulosic based ethanol. Some of the processes have been demonstrated to work in laboratories, but on a commercial basis it might take at least six to eight years before we see the first commercially-based cellulosic plant in business."

StateLine Co-op will supply corn

When operating at full capacity, each of the three new plants will use about 37 million bushels of corn per year. Corn will be procured through StateLine Cooperative, which has headquarters at Burt, and 12 locations in Iowa. Each of these three new ethanol plants will be designed to handle train shipments of ethanol and distillers dried grain for livestock feed.

Payne says that Vogelbusch, an Austrian company recognized as a world leader in ethanol fermentation and processing, will supply the technology to run the three ethanol plants. About 100-ethanol facilities worldwide use Vogelbusch technology, including 14 plants in North America the produce more than 750 million gallons of fuel ethanol annually. The plants will be constructed by Austin Industrial, based in Houston, and engineered by Fru-Con of St. Louis.

Iowa is the No. 1 ethanol producing state with 25 plants producing 1.7 billion gallons in 2006. Counting a plant that just opened in Albert City in northwest Iowa a few weeks ago, Iowa now has 26 plants operating. According to the Iowa Renewable Fuels Association, another 21 plants are either under construction or being expanded and will produce an additional 1.6 billion gallons of ethanol per year when in operation.

Each bushel of corn produces about 2.8 gallons of ethanol. Producing 3.3 billion gallons of ethanol a year would require more than 1.1 billion bushels of corn per year. In 2006, Iowa farmers produced 2.05 billion bushels of corn, according to USDA's estimate.

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