Spiritwood, N.D., ethanol plant gets EPA’s RFS2 approval

Farm Forum

FARGO, N.D. – The planned 65 million-gallon-per-year Dakota Spirit AgEnergy LLC ethanol biorefinery near Jamestown, N.D., has been approved by the U.S. Environmental Protection Agency for Renewable Fuel Standard 2 certification.

Dakota Spirit AgEnergy’s RFS2 petition was originally submitted to the EPA in August 2011, says Al Christianson, director of government affairs and business development in North Dakota for Great River Energy, a shareholder in Dakota Spirit AgEnergy. After certification and financing, construction is expected to start this year.

The RFS2 puts the plant above other corn ethanol plants for availability of renewable identification numbers (RINs). After 2007, fuel from new and newly expanded plants is not considered a renewable fuel without this certification.

Great River Energy and Dakota Spirit AgEnergy will issue a Private Placement Memorandum to invite private equity to finance the project. That is expected to be finalized in April 2013. Construction on the ethanol plant could start as early as May 2013 and the plant would be operational in fall 2014.

The dry mill corn ethanol plant would cost $130 million, or $2 per installed gallon. It initially is expected to use about 23 million bushels of corn per year as its feedstock, when fully operational. About 90 percent of the corn will be trucked.

Expanding energy park

The ethanol plant will sit on a 40-acre tract west of the 551-acre Spiritwood (N.D.) Energy Park.

CHS (formerly Cenex Harvest States) is also planning a $1.4 billion fertilizer plant in the park.

Christianson says the ethanol plant will employ about 275 people in a construction phase and 36 people once operational. Great River Energy is developing a $400 million combined-heat-and-power plant in the park that will employ 25 people once operational.

The ethanol plant will be similar in scope to the Blue Flint Ethanol plant in Underwood, N.D. “It would be a sister plant, using the same process,” Christianson says.

The go-ahead is great news for the region’s corn producers, says Mike Clemens of Wimbledon, N.D., a former president of the North Dakota Corn Growers.

Clemens also is on the board of directors of Midwest Ag Energy, a limited liability company. Midwest AgEnergy will be the parent company for both Blue Flint and Dakota Spirit AgEnergy.

Great River Energy will be a part owner of Midwest AgEnergy.

High value

David Ripplinger, bio-energy economist for the state of North Dakota and an assistant professor at North Dakota State University in Fargo, says the RFS2 status currently is valued at about 15 to 30 cents per gallon in the market, much of which would go to the ethanol producer. At a 20-cent value, that is about $13 million per year.

Earlier, Dakota Spirit AgEnergy evaluated a 20 million-gallon-per-year cellulosic plant and determined it wasn’t immediately feasible in the “green field” application. That would have cost about $380 million, installed. The management will consider whether first generation corn ethanol production will be followed by a second generation cellulosic product made from corn stover.

Clemens notes that the U.S. uses 13 trillion to 14 trillion gallons of gasoline per year. Blended with ethanol at 10 percent, the market for ethanol is 13 billion to 14 billion gallons. “Now if you look at cellulosic ethanol, we’re talking just down to millions of gallons”– 20 million in 2012 to 50 million gallons of cellulosic ethanol in 2013, Clemens says.

“In the whole scheme of things, we’re only talking about a thousandth of a percent of the total fuel supply, but the benchmarks were set there for achievable goals for somebody to work toward. Without those goals, nobody would do it. Now we have reasons to do it, with those goals in place, and it’s going to happen.”