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November 5, 2003

Group sets deadline for investing in ethanol plant

By DAVE KOLPACK, Associated Press Writer

FARGO -- A group seeking to build a new ethanol plant in Valley City is extending the investment deadline after falling about $15 million short of its original goal.

About $3.1 million was raised before the Oct. 31 deadline, which has been moved to Jan. 16, said Duane Dows, chairman of the Dakota Renewable Fuels group. The group must raise about $18 million, he said.

"I expected this to happen," Dows said Tuesday. "When you expect something to happen, you can't be disappointed."

Last month, Barnes County Commissioners voted 3-2 against a request to invest $100,000 from the Valley City-Barnes County Development Corp., in the plant. The county earlier invested $200,000, and Commissioner Dale Maasjo said it would be unwise to invest more in a project that has had fund-raising problems.

Many of the investors have been busy with harvest and haven't had time to review the project, Dows said. More than $2 million was raised in the last week of October, he said.

"That gives us a good feeling that we have the momentum," Dows said. "I'm confident that we will reach our goal. It's typical for plants to go through this in the equity drive process."

Bobby Koepplin, one of the group's board members, said not everyone knows that investors can get a tax break from the state.

"If a husband and wife both invest, they can both take the tax credit, which could mean up to $6,000 per person," Koepplin said.

The $40 million Valley City plant would employ about 40 people, with a $1.5 million payroll, said Mike Clemens, vice chairman of Dakota Renewable Fuels. It would use 11 million bushels of corn each year to make about 30 million gallons of ethanol.

"The current economics of ethanol plants are very good right now," Clemens said. "In an ethanol plant, we have the opportunity to turn North Dakota corn into something profitable."

Seventy-three ethanol plants are in operation in this country and 16 are under construction, officials with the Renewable Fuels Association said. A record 190,000 barrels per day of ethanol were produced in the United States in September, officials said.

The demand is larger than the supply, Dows said.

"We need more plants," Dows said. "Somebody is going to take advantage of this opportunity. It might as well be us."

North Dakota has mandated the use of E10, a blend of 10 percent ethanol and 90 percent gas, for its state-owned vehicles. E10 is common and safe for use in all late-model, gas engine vehicles, Dows said.

A growing number of car makers are making flexible-fuel vehicles that can run on a blend of 85 percent ethanol and 15 percent gas, or E85, Dows said. Three stations in North Dakota now sell E85, and another dealer is expected in Devils Lake, he said.

The energy bill being debated in Congress includes a ban on the petroleum-based fuel additive MTBE because of water pollution worries, creating more demand for ethanol, Dows said.

 

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