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Investors Planning Danville Ethanol Plant

Posted on: Friday, 14 April 2006, 21:00 CDT

By Karen Binder, The News-Gazette, Champaign-Urbana, Ill.

Apr. 13--DANVILLE -- Brent Myers knows ethanol.

This part-time Ogle County farmer sells his corn to not one, but two mills, and has closely followed development of Illinois' first ethanol plant in Lena from its inception in 1996. While he continues to sell some of his corn there, he also trucks a portion to another ethanol facility in Monroe, Wis.

He even drives a Buick fueled by the corn-alcohol distillate.

It's no wonder Myers has linked up with four other private investors to develop a plant of their own in "the best possible market."

Doing business as Danville Renewable Energy LLC, Myers and his fellow investors announced Wednesday, through Vermilion Advantage officials, their plans to build a $300 million dry mill ethanol plant generating 40 new jobs.

It would churn 40 million bushels of corn contracted from a 50-mile radius into 200 million gallons a year of what the industry calls "a renewable biofuel."

General plans would situate the DRE plant on the east side of Danville, south of the newly constructed railroad loop track. Development would progress in two stages, Myers said.

The first phase would tentatively see an initial $160 million investment in building the plant, but as these figures shift, so may the location for the plant.

Both Myers and Vermilion Advantage President and CEO Vicki Haugen declined to name a specific location, although they both cited the area's ready access to water, natural gas, dual electricity, dual rail sources and Interstate 74 as vital selling points.

"We looked at many locations throughout east and central Illinois, but Danville was unique in offering the most complete package," Myers said.

He also complimented Vermilion Advantage's economic development team, including Tracy Walhfeldt, which has worked with DRE since June to find a site.

"It was just a whole positive feeling. They always said, 'Yes, we can get that done.' It was so positive," Myers said.

"It's one thing to have all the pieces to put together," Haugen said, "but it's another to find people behind a project with this kind of energy. We're excited."

So, why now?

Myers pointed to two factors. First was President George W. Bush's recent comments about developing alternative fuels to ease the nation's reliance on petroleum, and second is the public's growing displeasure over high gas prices.

"As we did the economics, the idea of a plant looked very good. That's when we got real serious," Myers said. "We knew we were on the right track when the president said we're addicted to oil. -- Now's our time. The economy is right. The public's interest is right."

Some dozen other ethanol project developers agree the time is right, too. There are currently seven ethanol plants operating in Illinois that produced roughly 1 billion gallons of the stuff last year, said Mark Lambert, spokesman for the Illinois Corn Marketing Board. The U.S. production total was 4.5 billion gallons, a "great start" toward the 7.5 billion goal by 2012 mentioned by Bush, he said.

There are two currently under construction, six more starting construction within two years and "a good two dozen groups looking at building plants," Lambert said. "But we'll probably only see half of those progress to some kind of planning level, and only half of those able to get financing. -- It's a lot of hard work."

Helping that work along are small grants in the $2,000 range from the corn marketing board, which awarded one to the DRE group. Lambert said those grants typically help leverage additional state grant money, sometimes more than $20,000, for feasibility studies leading to business plans.

"It's a high opportunity industry; there's no doubt about it," Lambert said.

The presence of a plant tends to raise corn prices within a 50-mile radius by 10 cents to 15 cents a bushel. DRE's research indicates there's 100 million bushels of corn available to the plant.

DRE officials filed an air-emission permit application with the Illinois Environmental Protection Agency on March 30, putting it at the early review stage, said spokeswoman Maggie Carson.

Myers anticipates an approval by late September or early October. Once that's secure, construction would start under supervision of The Industrial Company of Steamboat Springs, Colo., a general heavy industrial contractor with ethanol plant experience. Myers said the 14-month construction job would employ local labor. The plant would open in 2008.

DRE's investors plan to carry the first phase with financing. They registered as an Illinois corporation in December. The five parties didn't know each other until investment connections were made, linking each other based on expertise, such as risk management and grain merchandising, Myers said.

But there may be an opportunity for public investment with the second phase, anticipated to start within the third year of operation. The plant is expected to open in 2008. Myers also said it's too early to know the feasibility of operating the plant as a cooperative.

The Danville announcement comes within weeks of an Indiana agribusiness company's plans to build a 100 million-gallon ethanol plant in Royal in Champaign County. A variety of ventures are considering projects in Gilman, Roberts, Tuscola and Champaign.

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Source: The News-Gazette

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