Most stakeholders within the fuel ethanol industry have seen them. They come in the form of numerous press releases and the occasional news conference. They're companies touting a new, proprietary ethanol production technology which promises to revolutionize the industry. The claims often accompany the desire to "build multiple large-scale plants."

Many of those claims aren't backed up with action. After all, there's a reason only a handful of companies excel at building fuel ethanol facilities: they have the experience and expertise to do so.

"On occasion, we'll see companies in the design/construction arena that I have noticed in the past, yet I haven't seen many of them acquire significant projects," Broin Companies CEO Jeff Broin says. "I think this is evidence that groups interested in building are looking for experience."

The burgeoning North America ethanol industry is still largely dominated by the process technology firms and construction/detail engineering companies that laid its foundation. Of the 54 ethanol plants under construction or expansion listed in this magazine's Plant Construction List, only eight were being designed or built by companies other than Fagen Inc., ICM Inc., Broin Companies, Delta-T Corp. and its construction partner The Industrial Company. That equates to 85 percent of all process technology and construction in the ethanol industry being handled by five companies, which essentially amounts to three teams when strategic partnerships are taken into account.

Success attracts attention, however, and new players are getting in the game. Industry veterans are also ramping up their North American efforts. Companies like Vogelbusch, Katzen International and Lurgi PSI are involved in a growing number of projects.
As many new companies are finding out, it isn't as easy as just deciding to build an ethanol plant. There are serious fundamental challenges that face every prospective project. Meanwhile, there are a limited number of companies involved in plant construction. Waiting lists for greenfield projects are said to extend as far out as 2009. Most design/build companies tell EPM they've even turned away projects. "Consistently, the plants that are being built by Delta-T, Fagen and by Broin—those plants all exceed nameplate (see Production feature, page 82), exceed reliability and run time," ICM's Dave Vander Griend said at this year's International Fuel Ethanol Workshop & Expo (FEW). "All of that comes from experience. We do not wish to sacrifice quality to try and get out quantity."

While opportunities abound, new companies are finding challenges in fuel ethanol. Despite the hurdles, these companies make up a growing percentage of projects, and they are starting to impact the industry.

Growing Up
Twenty-three companies and/or partnerships are listed in the design/build and plant construction sections of the 2006 Fuel Ethanol Industry Directory. While this article won't detail each company exhaustively, it does highlight a handful of companies making a name for themselves in the business. However, before looking at some of these new and lesser-known outfits, it would be wise to understand why a majority of ethanol plants are being built by a handful of companies. As already stated, the key is experience.

Vander Griend and other industry pioneers didn't have the luxury of learning from others when they got their start. Much of what they accomplished was through trial and error. "[Between my brother Dennis and I], we've been at this for 25 years now," Vander Griend says. "It wasn't that we were so smart; it's just that we've made all the bonehead mistakes already."

Perhaps more eloquently, Vander Griend said at this year's FEW that experience means ICM is "not going to go out there and build the types of facilities that were being built in the early '80s."

Indeed, the learning curve for newer companies needs to be shorter in order to compete. Agra Industries has used some past experience to help it get up to speed. The Merrill, Wis.-based company is reentering the ethanol industry after going full circle from when it got its feet wet in the industry in the early 1980s. The company fabricated components for a Wisconsin plant. "The folks weren't very successful back in those days," Agra Industries President Pat Hinner says. "We ended up physically buying the plant itself to get our dollars and cents out of it."

Agra Industries is now involved in several successful projects. The company conducted fabrication for components at Ace Ethanol in Stanley, Wis., and Utica Energy in Oshkosh, Wis. Hinner says it also did a majority of the fabrication and erection of the Pine Lake Corn Processors plant in Steamboat Rock, Iowa. It is currently the general contractor of United Ethanol, a 42 MMgy plant in Milton, Wis., and it just signed on with Green Plains Renewable Energy in Superior, Iowa. With this momentum, in partnership with Delta-T, Agra Industries appears poised to land more projects.

"There are lots of good projects out there," Delta-T's Bibb Swain says. "We'd all like to do every job that comes to us, but there are realistic capabilities. I don't see the problem on the engineering side. … The big bottleneck is fabrication. Just getting tanks built is a huge bottleneck right now."

In order to alleviate that bottleneck, Delta-T has gone overseas to find quicker supply and lower prices. "It's trying to balance resources against the expectations of the marketplace," Swain says.

Synergistic Opportunities
Agra Industries is using its ag-industry fabrication capabilities to its advantage. So is Indiana's Dilling Mechanical. The industrial contractor is applying its food processing, heavy equipment and steel manufacturing background to use on Nebraska BioClean, a 20 MMgy plant under construction in Mead, Neb.

Dilling features an in-house engineering group. Together with Katzen International, Dilling is planning a 60 MMgy plant near Rushville, Ind., which recently had its air permits filed, according to Dilling Mechanical President Richard Dilling. He tells EPM he plans to eventually make biofuels up to 50 percent of his company's portfolio. Many of those projects will be "niche" plants, such as the closed-loop system in Mead, which will use cattle manure to create biogas to power the plant.

Despite the related experience, it hasn't been easy for Dilling. "Our challenge has been we're the new guy on the block," Dilling says. "We're proving ourselves that we have what it takes to get a plant to fruition."

In the end, an operating plant is what will decide whether a company has any long-term potential in the industry. A California company is facing the same issues.

W.M. Lyles Co. is developing Pacific Ethanol's Madera, Calif., plant, which upon start-up in fourth quarter 2006 will be California's largest ethanol facility. The Fresno, Calif.-based company is doing a complete design/build on the project, according to Chairman Will Lyles. Delta-T is partnering on that project as design engineer and equipment supplier.

Lyles considers his company a heavy pipeline infrastructure contractor with an opportunity in its backyard. He admits that the biggest initial challenge was understanding the ethanol process and how the plant functions. They visited several Delta-T and ICM facilities before building. "We had a learning curve," Lyles says. "But we also had resources for learning."

Lyles says the success so far has spurred the company to look at additional ethanol projects. Pacific Ethanol has plans to build additional facilities in the region, and Lyles hopes to retain them as a client. "With ICM and Fagen having a three-year backlog, we are getting calls from others out of state," Lyles says. "We have had some challenges. We've learned a lot. The job overall has gone well. We look forward to applying what we've learned to future projects."

Companies like Agra Industries, Dilling Mechanical and W.M. Lyles aren't alone, of course. KL Process Design Group of South Dakota, which specializes in the retrofitting of brownfield properties for ethanol production, announced in late July that it had become a development partner, design/build contractor and future plant operator for a proposed ethanol plant near Buffalo, N.Y. The company behind the project, RiverWright LLC, says the plant will have lower capitalization costs without sacrificing any engineering expertise. RiverWright officials claim the proposed site's existing infrastructure will enable the plant to be built for about 80 cents per gallon of capacity—or 30 percent below industry norms.

Similarly, Raleigh, N.C.-based Agri-Ethanol Products LLC (AEP) says it has completed a financing agreement that will enable it to develop up to 20 renewable energy facilities along the East Coast, from the Gulf States to New York. The agreement, AEP officials claim on their Web site, allows the firm to aggressively pursue "fledgling projects in need of process design, construction, and financing," as well as plant management expertise. While the company's Web site does not clearly state whether it offers its own design/build services or simply serves as a project developer, it does say AEP is expanding its Raleigh headquarters staff by hiring experienced engineering personnel to process the influx of new project submissions.

Partnerships
The Fagen/ICM connection is used so commonly that it might lead industry outsiders to think the two companies are one. The duo is teaming up on 23 ethanol plants under construction. "We are teamed up with Fagen in trying to meet the demands of the industry," Vander Griend said at the FEW. "It's still not an easy task."

Other companies are following the Fagen/ICM partnership model in forging alliances, usually with more experienced companies. Agra Industries has been working with Delta-T since 2001, according to Hinner. Agra Industries is also forming alliances with piping and electrical contractors. "What we call a ‘management team' has been working out really well," Broin says. "Certainly some of the smaller players are stepping up and taking on some of the load. The overall benefits to building with one of the most experienced players include operation above capacity, projects that come on line smoothly and projects that are profitable in a very short period of time."

Hinner says his company has commitments for another project, with plans for taking on as many as six projects at once. That's an impressive challenge considering Broin Companies plans to develop six to seven major projects annually. The Sioux Falls, S.D., company already manages over 1 billion gallons of ethanol production. Broin tells EPM he plans to expand his company's design/build capabilities (see sidebar at right).

"There is a lot of optimism in the industry right now," Broin says. "Some of the newcomers have not been in the industry long enough to see the difficult times along with the good times. The plants that are built with experience will have much better survivability in difficult times."

"I think without question the Broin, Fagen and ICM have really stepped up to the plate and handled much higher volumes of design and construction," Broin says. "Certainly some of the smaller players are stepping up and taking that load. The overall benefit to the group that wants to build an ethanol plant is that they are going to get a successful facility. It will operate above capacity, come on line smoothly and be profitable in a very short period of time." EP

Dave Nilles is an Ethanol Producer Magazine staff writer. Reach him at dnilles@bbibiofuels
.com or (701) 373-0636.