Story - The Meade County Messenger


Vol. 115, No. 5	January 30, 2008

Agrifuel plant agreement close to signing

By LARRY SEE JR.
Messenger Staff

A locally-formed and registered LLC in Kentucky, Meade County Energy, has joined with AgriFuels to accomplish the goal of building an ethanol plant at the industrial park.

While the officer’s names of Meade County Energy LLC have not been released, pending the signing of the necessary contract documents, AgriFuels President Don Martin indicated they are interested in the community.

The contracts are being reviewed and a formal announcement, including the investor’s names, will be made once details are finalized.

“It is their intent to see the project continue on so as to provide for the continued economic development and jobs for the citizens of Meade County,” Martin said.

According to Martin, the plant’s creation is possible and the supply of corn necessary to fuel the facility is good, based on the results of a $146,000 study conducted by a Colorado-based Business Advisory Service.

The study revealed what most already know: the facility is at the southeastern edge of the corn belt and corn is grown locally within 50 miles of the area. Martin said over 19 million bushels are needed to produce ethanol, with the possibility of over 34 million bushels of corn growing locally within 50 miles of the area.

“As far as the corn being available, that is not a problem,” Martin said.

And as far as getting the fuel dealers behind his product, that isn’t an obstacle either, as the dealers receive a 0.51 cent rebate for every gallon of ethanol bought and blended.

“The gas stations get that,” Martin said. “Today (Thursday) the commodities market in New York was reporting crude was selling oil at $87.80 per barrel and the gas was selling wholesale for $2.26 per gallon. The price of ethanol was $2.18. That is only eight cents cheaper, but the stations also get a 51 cent rebate, so their net savings is 59 cents a gallon.”

Consumers pay more due to Federal and State taxes being added, in addition to additives used to meet clean air standards.

The second puzzle part, and one which Meade County Energy officials’ purchase of the land will be a key part of, is acquiring total project cost of $125 million, with about $49.550 million as equity needed in order to get the rest of the funds committed from a financial institution.

“The first thing is we have to figure out is to show investors what makes us different from anybody else and what we do when the gas prices and the price of ethanol goes down. We need to figure out how we are going to pay our bills and still make money for our investors,” Martin said.

“We need to do more things, develop more products and market approaches to stand above all the rest of the industry,” Martin said. “We need to do the things that give us the strategic advantage. In the eyes of the investors it is not good enough unless they make 36 to 40 percent return on their investment.”

Martin said this ethanol plant needs to do things differently in order to offer these investors a return, adding that could be done by reducing expenses which in turn moves the rate of return upward.

“We had to redevelop our strategy,” he said. “And part of that was to promote environmental stewardship.” Some of the ethanol by-products. Distillers Grain could be used to make biodiesel, for agriculture use, which reduces emissions. This continue by reducing their energy costs by nearly 50 percent and be able to pay for an additional $24 million in boiler work over a two to three year period, which would be a good return on their investment.

“When we produce ethanol we grind corn to create a mash and once the fuel or alcohol is separated what is left is called the thick stillage,” he said.

“There is a lot of water in that and the water is extracted and cleaned for reuse in production. Additionally, the additional solids left can be burned in biomass burners to create steam used in production, further reducing energy cost and the use of natural gas. With other renewable biomass such as wood chips, sawdust, ground used tires, the plant continues to reduce their energy costs by nearly 50 percent and be able to pay for an additional $24 million for a biomass boiler over a two to three-year period, which would be a good return on their investment.”

After this, according to Martin, the investors then can focus their attention what other things the plant can do. “We had their attention until the subprime mess hit,” he said.

“I have had conversations with other related companies in the energy field which have an interest in the work we are doing and in developing our project,” Martin said. “TDeveloping a consortium of several companies in energy production and amrketing helps to lessen the load on us raising our necessary equity,” Martin added.

The plant is expected to employ 43 people, according to Martin. But he has had conversations with supporting firms which would eventually locate firms, and bringing the total employment figure to 120 people. “There are a lot of different things they need to produce ethanol,” he said.

The importance of river, rail and road transportation still plays an important role in the ethanol plant’s future, including many other industr4ies. County officials are continuing to work the Meade County River port and AgriFuels in the construction of an access road that will serve both entities.

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