Plans for three more ethanol plants have gone by the wayside amid rising construction costs, high feedstock prices and a sputtering economy. Developers of a fourth project are instead refocusing their efforts to buy a bankrupt facility.
Western Illinois Ethanol Project LLC scrapped plans to build a 55 MMgy dry-grind facility near Griggsville, Ill., three months after awarding $37 million in building contracts. WIEP is a subsidiary of Knoxville-based Heartland Ethanol LLP. "We're in a holding pattern right now," said Heartland Chief Executive Officer Walker Filbert. "The financial markets are so topsy-turvy that we decided to postpone the closing that we were going to have at the end of October [2007] because the terms were just not good. As much as we wanted to build our dream house, we didn't want to enter into a mortgage that was going to come back and bite us later."
Filbert said Heartland's contracts remain viable, and the company has $30 million in assets and cash on hand. "We're looking at $75 million in debt financing," he said. "We've lined up about $40 million of tax-exempt financing that's still available to us."
Another venture has stopped planning altogether. Kansas City-based Alternative Energy Sources Inc. let an option to purchase the Kankakee Industrial Park in Kankakee, Ill., expire after six months. "We're not planning to go forward in building that plant," said AES President Mark Beemer. "Obviously the financing of ethanol plants is much more difficult today because of $5 corn. The bigger reason is that our company is being acquired by another entity, so because of the transaction we can't really say much."
In Idaho, cost overruns approaching $13 million caused Renova Energy of Idaho LLC, a 21 MMgy plant under construction, to be put on hold in early 2008. In late December, share trading for London-based parent company Renova Energy PLC was halted on the London Stock Exchange as the company endeavored to clarify its financial footing. Although trading resumed three weeks later, Renova shares slumped 66 percent. Meanwhile, costs for the plant in Heyburn, Idaho, escalated to nearly $59 million.
The corn-based ethanol facility was slated for a March start-up. The company was also building an adjacent waste-to-energy facility that would use an anaerobic digester to burn manure from a local feedlot and power the ethanol process. Plans were to sell surplus electricity to a local power grid, ensuring an external income stream for the plant. "[Renova is] working with their bankers to arrange financing to get the project back on its feet," said Graham Browne, president of ADI Systems Inc., the New Brunswick company that built the anaerobic digesters in Heyburn. "[The waste-to-energy facility] was 98 percent complete. We were two weeks from finishing when we got the notice to stop work, so we would obviously like to see it finished and to become a producing plant. Our contract came in under budgeted costs."
The actual plant construction incurred the cost overruns, Browne said. He anticipates a two-month shutdown while Renova arranges financing. An outside firm examined the construction expenses and will issue a report for financiers.
In Omaha, Prime BioSolutions tabled a proposed plant in Nebraska to concentrate on bidding for the bankrupt E3 BioFuels facility near Mead, Neb.
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