REGION Official promotes ethanol production

Demand for ethanol as a fuel additive is expected to triple over the next decade.
By HAROLD GWIN
VINDICATOR SHARON BUREAU
MEADVILLE, Pa. -- The president of the Crawford County Farm Bureau thinks that building an ethanol production plant will be a major boon to the economy of northwestern Pennsylvania and northeastern Ohio.
"We've been talking about ethanol for years," said Doug Gilbert, who also owns a farm in Guys Mills, Pa. "I seriously feel that this facility could be a plus for the whole area."
The farm bureau was one of the sponsors of a public informational meeting on ethanol plants held at the Days Inn here last week.
Larry Johnson, business development manager for Delta-T Corp. of Williamsburg, Va., was on hand to discuss the pros and cons of building such a facility.
Delta-T designs and builds ethanol plants.
About the facilities
Most U.S. ethanol plants -- there are more than 70 -- use field corn as the fuel source. A production facility would typically use between 7 million and 15 million bushels of corn per year, Johnson said.
Crawford County's total corn production is only 2 million bushels a year, which would mean corn growers in the entire region would benefit because they would have a new market for their crop.
Johnson said corn prices generally rise in the vicinity of an ethanol plant.
Ethanol is a clear, colorless liquid used primarily as an additive to boost the octane of gasoline and clean up vehicular emissions because of its clean-burning nature. It's found in about 30 percent of all gasoline sold in the United States, and demand is expected to triple over the next decade, Johnson said.
Distilling ethanol from corn produces some byproducts that can be sold to help make a plant more profitable, Johnson added, such as distillers grains, which can be sold as feed for livestock, and carbon dioxide, which can be sold to the beverage and other industries.
Ethanol produced locally probably would be sent to the East Coast, where refineries would blend it with gasoline, he said.
About three dozen people turned out for the seminar, most of them from Crawford, Mercer and Jefferson counties, to learn more about ethanol production.
Giving an example
Johnson offered an example of what a 42 million-gallon-per-year plant might cost.
Construction alone would be about $54 million, and that would increase about $5 million if the plant includes a carbon dioxide recovery system.
It would cost about $60 million a year to operate (including debt service) but should produce more than $65 million in revenue in the form of ethanol and distillers grains sales.
Adding carbon dioxide sales would boost that by about $2.8 million, giving the plant an annual profit of around $9 million.
That's only an example, Johnson stressed, pointing out that the cost of corn and other materials as well as the price of ethanol, distillers grains and carbon dioxide could change the numbers.
Construction costs also could differ greatly from the estimate, he said.
Location requirements
Plants need a water source -- it takes 3 gallons of water to produce 1 gallon of ethanol -- and should be near good highways. They also should have rail access, Johnson said.
Gilbert said such a location exists at the Keystone Industrial Park (site of the former Keystone Ordnance facility) in Greenwood Township in southern Crawford County, just west of Interstate 79 and U.S Route 19.
The site also has rail access and is a state-designed Keystone Opportunity Zone, which affords special breaks on state and local taxes as well as priority consideration for state grant and loan programs for any company locating there, he added.
Doug Riley, executive director of the Greenville Area Chamber of Commerce, said the Reynolds Industrial Parks off Pa. Route 18 just south of Greenville in Mercer County also would be a likely site.
The parks have 300 acres of KOZ-designated land.
Location might not be a problem, but financing would be, Riley said.
Johnson said plants typically secure about 60 percent of their financing through banks. The bulk of the rest is raised by lining up investors who will support the project, he said.
Gilbert said a lot of industrial jobs have disappeared from the region over the past two decades, and an ethanol plant would produce employment.
Johnson estimated that a 42 million-gallon-per-year plant would provide 30 to 40 permanent high-technology jobs and hundreds of temporary construction jobs.
There also would be spinoff employment in the form of service jobs, including trucking and other businesses, he said.
Johnson said most groups developing such plants form a limited liability corporation to finance, build and operate the facility.
One of the first things to have done is a feasibility study to determine if there is a market for the product as well as sufficient corn production to supply the plant.
Gilbert said the project is too big for the farm bureau to undertake on its own. He plans to approach the local chamber of commerce and regional development groups to determine if there is sufficient interest in pursuing the idea.
"I think it's a very doable thing," he said.