Riverview Seen As Mecca for Alternative Energy

By Palmateer, Paige

FULTON – Eric Will II, the co-owner of Riverview Business Park, is still enthusiastic about the ethanol plant currently under construction at the site of the former Miller Brewing Company plant.

“There is a unique opportunity here to create something that hasn’t been done before,” Will said in a presentation at the Syracuse Technology Garden on March 28. “One of the lessons I’ve learned is to have more than Plan A in mind, and that Plan C isn’t such a bad idea either.”

Will refers to the chain of events following his and partner Thomas Denney’s purchase of Riverview Business Park in 2000. The co- owners planned to sell the brewing equipment in the Miller facility at a huge auction featuring buyers from all over the world. The auction would have fetched “…millions of dollars,” Will says. Unfortunately, the auction was scheduled for three weeks after the Sept. 11, 2001, terrorist attacks.

Will and Denney went to plan B: emptying the facility and commencing leasing activity. During the process and in the midst of an alternative-energy boom, the partners decided that the Miller facility could be converted to brew ethanol instead of beer.

Ethanol, an alternative fuel, is produced through the fermentation of corn.

Riverview Business Park is a 420-acre campus located at 1800 Route 57 in the town of Fulton. The park has 1.3 million square feet of buildings.

A strategic partnership with Canadianbased global biofuels company Permolex International L.P. resulted in the creation of Northeast Biofuels L.P. (NEB), the company that would run Will’s prospective ethanol plant and in which he is a minority partner.

Over a decade in the making

NEB commenced construction at the Fulton site on July 13, 2006. The piping,’ bottling, and palletizing operations in the brewery have been removed and all the cooking vessels will be re-used for the fermentation of corn into ethanol, Will says.

As a “destination plant” making ethanol in the area in which it will be used, Will says NEB will enjoy between a 9-cent and 14-cent advantage per gallon over the ethanol plants in the Midwest.

At more than 100 million gallons of capacity, NEB is among the five largest ethanol plants nationwide, Will says. By reusing the existing brewery equipment, NEB has avoided $25 million in capital costs, according to Lurgi Inc., a global construction firm and one of the partner/ suppliers retained by NEB.

NEB’s other partnerships include Perdue, Permolex, BOC, CSX, Noble Americas, O’Brien & Gere, Jeffiies, and Citigroup.

Will describes NEB as a logistics challenge. The plant will consume 41 million bushels, of corn annually, consequently producing ethanol, carbon dioxide, and distillers’ grains.

The carbon dioxide will be sold to The BOC Group – a subsidiary of The Linde Group, a global supplier of industrial gases. BOC is building a $10 million to $15 million plant on the property, to liquefy and sell the carbon dioxide. The grains will be sold to dairy farmers as a high-protein feed for dairy cows, Will says.

“We are investigating extracting oil out of the distillers’ grains which makes it attractive feed because it’s less fatty,” Will says. “The oil we can sell elsewhere.”

Eight months after construction commenced, it is ramping up and engineering is well under way, according to Will. “There are currently 75 workers onsite and we anticipate 600 union workers on the premises in June, putting this thing together,” Will says.

Lurgi is subcontracting a lot of work to local companies, including Hueber-Breuer Construction Co. Inc.

“Without that local partnership and help, this doesn’t get built,” Will says.

If everything proceeds as planned, Will hopes to eventually call his property the Riverview Energy Park.

“There are lots of interesting opportunities presenting themselves to us,” Will says.

GS Fulton Biodiesel LLC, a subsidiary of GS AgriFuels Corp., is leasing a small building from Will to build a 10 million gallon-a- year biodiesel plant on the campus, the square footage of which is yet to be determined.

“We could buy the biodiesel to drive the biodiesel generators on the site for NEB,” Will says.

Will and Denney are also overseeing a comprehensive study to investigate the possibility of producing coal gasification, wind energy, bio-digestion, and synthetic gas on the property.

How it works

Bio-digestion captures the methane from cow manure and uses the gas to generate electricity.

“The biggest expense involved is the tanks, but we have 12 million gallons of tankage sitting empty which could be used,” Will explains.

A group from the United Kingdom demonstrated the creation of synthetic gas to Will.

“They call it ‘incineration’ which means zero emissions,” Will says. “They say the feedstock is shredded tires.”

In two years, Will anticipates making ethanol from wood chips from a separate facility on the site.

In 2004, Will and Denney met with rating agencies on Wall Street to get financing for NEB.

“They had no idea what ethanol was about,” he says.

Citigroup came in and provided the lead equity to Permolex International, which in turn invested in NEB.

Back home, out of time and money, Will asked the labor unions in Oswego County for help. They loaned him $300 million to keep the project going and he gave them a project-labor agreement in return. The unions do not have an equity share in NEB.

“Their motive was just to put their people to work,” Will says.

Will also challenged Goldman Sachs to find a way to hedge the project.

“Corn comes in and ethanol goes out and these things are not linked and no one had been able to figure out how to link them,” Will says. “Goldman Sachs did and we bought ourselves an insurance policy that is fully hedged and allowed us to proceed with the project and get the highest credit rating.”

NEB closed on the financing June 30, 2006. The agreement featured three debt facilities, including a $60 million, fully funded letter of credit that guarantees the plant’s performance under the hedge agreement.

As for aid, Will says New York State has helped NEB immensely. Former Governor Pataki appropriated $2 million for the project, federal grants totaled $250,000, and state Senator Wright donated $2 million from the New York State Senate.

“Our project is also a great indicator of how the Empire Zone should be used,” Will says. “Without it, we never would have survived.”

Will says that the window for financing ethanol projects that opened on Wall Street in the middle of 2006, is now closed. The reason: the federal renewablefuels standard that mandates 7.5 billion gallons a year of renewable fuels into the fuel supply.

According to Will, the existing ethanol plants already have the capability to produce 7.5 billion gallons of ethanol yearly.

“Wall Street thinks there will be an over capacity,” Will says. I believe that in the not-so-distant future, we will see an ethanol mandate stronger than the current standards.”

Lessons learned

“This entire project has validated the idea of thinking regionally in my mind and not burning bridges,” Will says. I would suggest anyone trying to arrange something like this have a lot of availability on their personal credit cards.”

Will also advises potential entrepreneurs to be prepared not to meet any deadlines.

“We didn’t meet one deadline in the past five years,” Will says. “We had incredibly dark days,. but if you believe in what you are doing and the people you’ve surrounded yourself with, you’ll succeed.”

When asked about the backlash surrounding ethanol lately – the claims that it takes more energy to create ethanol than the alternative fuel produces – Will remains a strong proponent of the product.

“The rap you read about ethanol isn’t true,” he says. “Research says ethanol creates two-thirds more energy than it takes to make.”

Will says that yield – or the number of gallons of ethanol produced from one bushel of corn – isn’t discussed enough.

He says that four years ago, one bushel of corn produced 2.65 gallons of ethanol. Today, because of enzyme improvements, one bushel of corn produces 2.8 gallons of ethanol.

“On 41 million bushels of corn, that is immediately $6 million added to your bottom line,” Will calculates. “There is a lot of good research going on to improve the energy yield of ethanol.”

NEB is adding two 500,000-bushel silos on the ethanol plant site and will begin buying corn from local farmers and from Perdue in the fall.

Will doesn’t think the viability of ethanol plants is hurt by high corn prices because when the cost of corn increases, the value of distiller’s grains goes up, Will says.

“So when oil is high, the price of ethanol goes up as well and everything is balanced out,” Will says.

NEB has several key dates to meet: Nov. 7 marks the interim completion date at which the plant will be operating at 75 percent of the expectation level.

The plant is expected to reach substantial completion, or a 95- percent operating level, in early January 2008.

There are currently four NEB employees at the ethanol plant. NEB, BOC, and Perdue will ultimately employ between 75 and 100 full-time workers at the Riverview Business Park, Will says.

Copyright Central New York Business Journal Apr 06, 2007

(c) 2007 Business Journal – Central New York, The. Provided by ProQuest Information and Learning. All rights Reserved.