Blairstown Ethanol Plant Postponed

By David DeWitte, The Gazette, Cedar Rapids, Iowa

Apr. 12–BLAIRSTOWN — Development of a new ethanol plant in Blairstown has been halted as the owner struggles with high commodity prices and financial difficulties.

Xethanol LLC broke ground in 2006 for a 35 million gallonper-year plant adjacent to its existing small ethanol plant. It planned to begin operation in the second half of 2007.

But the company last month acknowledged in a regulatory filing that it has postponed the new plant indefinitely. It took a $2.6 million impairment charge against earnings to re flect its diminished expectations for the project.

The statement cited “the changing ethanol market and our inability to arrange debt or equity financing for our project.” The ethanol project is one of several postponed in Iowa, but others are going ahead, said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

“We’ve seen a few other projects that have said, ‘We’re pushing “pause” right now,’” Shaw said, though most were not as far advanced as the Blairstown project.

Shaw said banks have tightened the availability of debt financing to ethanol and other commercial projects because of turmoil in the financial markets.

Shaw said some of the issues stalling the Blairstown project might be specific to its owner, Xethanol, and the company’s changing priorities. It broadened its strategy last year from a focus on ethanol to other clean energy technologies.

Xethanol also disclosed that it was considering production cutbacks at the existing Blairstown plant because of the high cost of corn and natural gas. The plant was producing 5.6 million gallons per year, making it much smaller than most ethanol plants in Iowa.

The Atlanta-based company bought a 55-acre property adjacent to its current plant and completed site preparation. Design and engineering work had been completed, including the design for on-site cogeneration facilities that would have allowed the facility to generate its own energy from the plant’s waste byproducts.

Xethanol recently sold its only other Iowa plant, which has been closed for several years. The company acquired the Hopkinton-based Permeate Refining in August 2003. The plant used waste sugars from Chicago-area candy manufacturers and waste starches from wet milling operations in the region as feedstock.

The owner planned to upgrade the facility after ending operations in April 2005, but it dropped the upgrade plans in view of the plant’s small size and location in a residential community.

Xethanol in November 2007 agreed to sell the Hopkinton plant for $500,000 in cash after recording a $522,000 impairment charge on the investment in September.

Calls to the company’s Atlanta headquarters were not returned.

Xethanol reported a loss of $31.27 million, or $1.09 per share, in the year ended Dec. 31 on sales of $11.03 million. The company’s stock traded at 37 cents per share Friday.

Contact the writer: (319) 398-8317 or david.dewitte@gazcomm.com

—–

To see more of The Gazette, or to subscribe to the newspaper, go to http://www.gazetteonline.com.

Copyright (c) 2008, The Gazette, Cedar Rapids, Iowa

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

AMEX:XNL,