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Webster Co. possible site for biorefinery

By Staff | Nov 12, 2010

Dennis Plautz, director of Fort Dodge business affairs and community growth.

FORT?DODGE – A new cellulosic biorefinery capable of producing 50 million gallons of ethanol could be coming to Webster County. The Fort Dodge agriculture park and a site in Story County are both in the running for possible locations for the project.

Project Blackhawk is the creation of DuPont Danisco Cellulosic Ethanol LLC. Company representatives took the project before the Iowa Office of Energy Independence at a Due Diligence Committee meeting in August. There, DuPont and Danisco requested approximately $19.8 million from the Iowa Power Fund to pay for building construction and manufacturing machinery and equipment, according to the application submitted to the IPF board.

DuPont and Danisco presented its full application to the IPF board Wednesday. The oversight board voted in favor of negotiations to assist in a $32 million overall incentive package. The $19.8 million would be a part of that.

Now the Office of Energy Independence will work with DDCE to prepare a term sheet to be approved by the IPF board prior to contract development and approval.

If the project’s backers can come up with the approximately $272 million it needs, it could translate to millions of dollars in vitalization for the Iowa communities in the area.

John Kramer, president of the Development Corporation of Fort Dodge and Webster County.

Community impact

According to DDCE documents, a facility of this size could generate between $33 million and $53 million a year in the two-year construction time frame alone. The ongoing patronage by the company to area businesses after the facility is operational is estimated at as much as $4 million per year, the company claims.

“Every hotel and restaurant will be full,” said John Kramer, president of the Development Corporation of Fort Dodge and Webster County. “It would also draw a lot of international attention to it, and we’re excited about that.”

DuPont and Danisco predict Iowa will continue to lead the way for second generation biofuels in coming decades, according to its application.

“In 2009, Iowa’s farmers produced more than 2.4 billion bushels of corn grain as well as about 58 million dry tons of stover,” the application reads. “This makes Iowa an ideal location for Project Blackhawk, which will be the first – or one of the first – commercial biorefineries for cellulosic ethanol in the U.S.

“The biorefinery will attract a great deal of positive attention from industry, policymakers, environmental advocates, the agricultural community, media and the general public,” the application reads. “It will mark a major milestone in commercializing biofuels from crop residues and offers Iowa another showcase for its continued leadership in advanced biofuels.”

Job creation

The application also claims a facility of this size could boost the local job market. According to the application, Project Blackhawk would generate 65 full-time jobs, five part-time and 125 contracted employees. It states 135 positions would pay $40,000 a year or less, 50 would pay as much as $80,000 per year and 10 jobs would yield more than an $80,000 annual salary.

In addition to the estimated annual payroll and benefits offered, DuPont and Danisco claim other direct financial impacts on the immediate community include:

  • Between $30 million and $50 million to an estimated 250 construction-related employees.
  • Approximately $1 million to $3 million of construction-related equipment and parts.
  • Between $2 million and $3 million in parts and services after construction.
  • $1 million in other miscellaneous local purchases after construction.
  • About 125 to 175 seasonal jobs for biomass management.
  • Revenue potential for farmers with an amount to be determined – as well as the applicable tax revenues that would be generated via the income stream.

Due to its “significant community impact” both Kramer and Dennis Plautz, director of Fort Dodge business affairs and community growth, are working with the Iowa Department of Economic Development in order to determine what the company is looking for in its site selection process.

Local incentives

Kramer and Plautz said the local development corporation is trying to alert DuPont and Danisco to the resources at the agriculture park near Valero Renewables west of Fort Dodge.

“A facility like this is an opportunity to bring many ancillary businesses to an ag park like we’re creating west of town,” Plautz said. “Valero allowed us to extend the water lines, and Tate & Lyle allowed us to extend the sewer lines. Both extensions are important to serve an industrial park like we’re trying to create. Had those lines not already been extended to the park, it wouldn’t even be a consideration. It made us a viable location.”

“We’re offering tax increment financing and other incentives in order to get them to come here,” Kramer said. “That includes rail and sewer and water extensions. We’re going for broke on this one.”

But it is still unknown exactly where the company will site the project.

“(DuPont and Danisco) are being very confidential about that, but we do know they have sewer, water and rail requirements,” Kramer said.

Dupont and Danisco cite growing conditions, ability to secure growers, available labor talent, adequate storage and infrastructure as the criteria by which its site selection team is making its decision. According to the application, the site selection team representatives hail from the business, engineering, feedstock supply and real estate management fields.

“We are also waiting on potential federal, state and local grant and incentive offerings before a final determination will be made on final site selection,” the application states. “Initial high-level environmental screenings have been performed for the sites being evaluated, with no identified show stoppers. Initial financial evaluations will be completed once the grants and incentives results are received.”

State Rep. Helen Miller, D-Fort Dodge, said Project Blackhawk is “absolutely a good thing” for Webster County and for Iowa.

“I believe this county still grows more corn than any other county in Iowa, and within a 100-mile radius, there is a lot of corn available,” Miller said. “I’m certainly hoping our farmers could benefit from it. If it grows to the point where other folks start getting into the game we can hope it’ll have staying power and truly grow and develop the industry.”

Mark Laurenzo, with the Iowa Department of Economic Development, told the Due Diligence Committee at its August meeting that people from the Department of Economic Development Alliance are working with several communities to make proposals to Dupont and Danisco to get them to locate in their communities.

Future feasibility

Not only is the exact location still unknown, but there are questions of financing at the state level as well. That’s why DDCE is applying to the state for Iowa Power Fund dollars.

Regarding the $242 million balance needed for the project, Laurenzo told the Due Diligence Committee at its August meeting: “These are well-capitalized companies and they do not need our help funding the $242 million.”

After funding and location are confirmed, the project is slated to start construction sometime next year, according to Iowa Power Board Chairman Fred Hubbell. The completion date has been set for early 2013, he said.

“Future growth will be determined based on increasing demand for cellulosic ethanol in the United States,” Hubbell reported at the August committee meeting.

The biorefinery facility is being built to help meet federal Renewable Fuels Standards mandates, as well as meet the increasing regional, national and global market demands, according to Hubbell. He said if demands increase accordingly, the facility has the potential to expand its output to 100 million gallons per year.

In addition to the 60-plus operation management positions created by the biorefinery, the project will open opportunities for growth in related industries including biomass development and logistics, the application states.

“DDCE is already working closely with Iowa State University, and the company and its members have been involved in several research projects and are looking forward to continuing and enhancing that relationship in the near and long-term future,” the application reads.

The DuPont and Danisco Iowa Power Fund application will be reviewed by the IPF board Nov. 10 at an open meeting at Grand View University in Des Moines. The board can vote to approve, negotiate, table or deny the application at that time.

“I think it’s absolutely a good thing,” Miller said. “We have a lot of corn growers here. That’s why other ethanol plants, processing plants and elevator companies are here. This could really push the economic development in this area and get jobs up and going.”

Contact Amber Williams at (515) 573-2141 or awilliams@messengernews.net

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