Prices, Credit Woes Afflict N.C. Biofuel Plans
By Sabine Vollmer, The News & Observer, Raleigh, N.C.
Mar. 27–North Carolina’s plan to become an East Coast biofuels hub is slowly fading.
Of the seven projects announced over the past two years, only two are on track for construction. Three appear dead — with one sued by its investor, Richard Branson of Virgin Airlines. Two others are in limbo.
The most recent projects delayed are a $30 million biodiesel refinery near Wilmington and a $20 million biofuels park near Spring Hope.
Backers blame record prices and tightening credit.
The price of corn, which could average $6 a bushel this year, is raising operating costs for facilities that produce ethanol or biodiesel from corn or corn oil. At the same time, prices for some biofuels are under pressure and money is hard to come by.
That puts companies looking for investments or loans to build biofuels plants in a tough spot.
“Investors are not as interested in doing what they were willing to do six months ago,” Raleigh consultant Doug McCullagh said Wednesday.
McCullagh has been working with a group of investors and New York-based Xethanol to raise money for the Spring Hope biofuels park.
The future of the Spring Hope project is unclear; so is the future of the biodiesel refinery that Kreido Biofuels, a California company, had planned to build near Wilmington. The two facilities were projected to create a total of at least 80 jobs.
Last week, Kreido delayed construction of the refinery until it raises $25 million.
Kreido’s problems follow cancellations and delays of three other projects planned for southeastern North Carolina.
East Coast Ethanol of Columbia, S.C., backed out of building a plant near Selma a month ago. E-85 of Williamsburg, Va., dropped plans to build a plant near Fayetteville last summer.
The most ambitious biofuels project in the state, a $150 million ethanol plant near Aurora, also appears dead.
To build the Aurora plant, Agri-Ethanol of Raleigh was awarded $3 million in state funding. The company also announced it attracted a substantial investor of “worldwide acclaim,” which it did not name.
But a Wake County court filing shows that the investor was Virgin Fuels, an investment tool of British billionaire Richard Branson, founder of Virgin Atlantic Airlines. According to the records, Virgin Fuels was willing to loan Agri-Ethanol no more than $750,000.
In August, Virgin sued Agri-Ethanol over an outstanding $209,096 loan. The lawsuit was dismissed in October at Virgin’s request.
Terry Ruse, Agri-Ethanol’s chief operating officer, declined to comment. Efforts to reach David Brady, Agri-Ethanol’s chief executive and chairman, were unsuccessful.
That leaves only two projects still standing.
–Clean Burn Fuels broke ground four months ago on a $100 million ethanol production plant on 500 acres of donated farmland near Raeford, in Hoke County. To pay for the project, the Raleigh company has raised about $40 million from private investors. A bank loan, made possible by a federal guarantee, will pay for the rest.
–Solv-It Technologies of Marietta, Ga., plans to start construction of a small ethanol production plant in Robeson County next week, said Kenneth Windley, Robeson County county manager. The plant will go up next to the Robeson County landfill near Lumberton and be powered by methane gas from the landfill. Investors have committed to fund the plant’s projected $6 million in construction costs, Windley said.
sabine.vollmer@newsobserver.com or (919) 829-8992
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