Okoboji area plant set to open amid rising corn prices
By Russ Oechslin Journal correspondent | Posted: Sunday, June 22, 2008
Great Plains Safety Officer Steve Duhn points out the hammer mill where production of ethanol begins by crushing kernels of corn into a flour-like consistency. (Photo by Russ Oechslin)
SUPERIOR, Iowa -- From its nearly full 500,000 bushel bin with a 10-day supply of corn, to the 100-plus new tanker and hopper cars sitting idle in the six sidings to the north, Green Plains Renewable Energy is preparing to bring its ethanol plant here online by the end of the month.
The 55-million-gallon plant orginally was supposed to open January or February, said general manager Doug Archer, "but weather took its toll on the project.''
"When we're enjoying 70 and 80 degree days its hard to remember that we had a couple months when we weren't able to do much outside -- due to temperatures and wind-chills that were often below zero,'' Great Plains CEO Wayne Hoovestol said in an interview from his office in Omaha. "That made construction all-but-impossible.''
The scheduled opening of the Okoboji area plant comes at a difficult time for U.S. ethanol producers, who are threatened by rapidly high prices for corn, their chief feedstock, and pressure from politicans and food manufacturers to roll back or eliminate ethanol's federal subsidies and mandates.
VeraSun last week announced that two plants it has under construction in Hartley, Iowa, and Welcome, Minn. will not be opening soon due to market conditions. The Hartley plant, about an hour's drive from Superior, was expected to compete for corn from areas between the two sites, most notably Clay County.
To make 142,000 gallons of ethanol, the Superior facility will consume about 50,000 bushels of corn per day more than 18-million bushels a year.
Hoovestol said "that's the reason for having the 4.5 million bushel storage capacity at the adjacent Green Plains Grain facility,'' which was part of the Great Lakes Cooperative before its merger with Great Plains.
Bruno Brown, who had been involved with the co-op in Superior for 29 years, says the co-op previously averaged about 8 million to 10 million bushels of corn per year.
Great Plains' ethanol plant, which will operate around the clock, sits on about 23 acres, in this eastern Dickinson County town of fewer than 150 residents and just 66 box holders. The balloon-shaped rail-yard to the north of the plant takes up several times that space to hold 300 tank and hopper cars for the liquid and dry products that will go to market.
The corn-processing factory plans to plant soybeans in the middle of the rail yard. Archer explains that beans can be air-seeded, while corn cannot, and the design of the rail system does not allow for the equipment necessary to plant corn to cross the tracks into the field.
Fuel from corn
The ethanol process begins in the hammer mill, where the corn is broken down into a flour-like consistency, said safety officer Steve Duhn, who has a 35-year history in construction. The simple description is that ''it gets mixed with chemicals to get the sugar out of it. The sugar is what makes the alcohol, along with heat,'' Duhn said.
But the process takes several days.
Corn mash is mixed at 185 degrees before going into the heat-exchanger (cooler) to bring it back to 92 degrees before yeast is added to it, Kutzbach says, ''cause anything over that kills the yeast and it lays dormant.''
At another point the mash is heated to over 260 degrees.
When the cook and ferment are completed a five-percent denaturant usually unleaded gasoline will be added to the product before shipping to insure that the alcohol will not be consumed by humans.
Ninety percent of the work at the plant is monitoring the flow from the control room computers, where operators watch 25 different areas on 12 screens. While all facets of the operation are controlled with a mouse, each operator will have to go into the plant to physically adjust valves even though there are automated.
More than 1,000 people worked on the different phases of construction. But there will be fewer than three-dozen full-time employees who work four days on, three days off, three days on, and four days off, when the plant is operating.
There is a cook, a dehydrating, distilling and evaporation (DDE) operator, a shift supervisor, and a utility person who helps the maintenance crew, on each shift.
Only three employees, Archer, production manager Todd Smith, and plant manager Al Meister had previous ethanol experience before joining Great Plains.
Shift supervisor Steve Davis, who has Sioux City roots and comes from a construction background, says he's "still learning just like everyone else, too.''
He's more philosophical about the situation than his co-workers.
"There's no secret recipe,'' Davis said. "It's really a simple process, but highly technical. It's just distilling ground corn, changing starch into sugar, having yeast eat sugar, and the by-product of the yeast consuming the sugar is ethanol, carbon dioxide and heat.''
Journal business editor Dave Dreeszen contributed to this story.
Great Plains agrees to merger deal
OMAHA, Neb. -- Green Plains Renewable Energy Inc. and VBV LLC have entered into a merger deal valued at about $383 million.
The transaction includes $212 million of projected debt, $60 million in equity investment, and $111 million in new equity issued.
Upon closing, the companies will combine to create a vertically-integrated ethanol company with expected operating capacity of 330 million gallons of ethanol per year. The deal, anticipated to close by late summer, is subject to various shareholder and equity holder approvals, and customary lender and regulatory consents.
''Both companies will benefit from the increased scope, scale and critical mass afforded by this merger, which will substantially increase revenues, add value to existing enterprises and create new opportunities for growth,'' GPRE CEO Wayne Hoovestol said.
VBV holds majority interest in two companies that have ethanol plants under construction: Indiana Bio-Energy, LLC of Bluffton, Ind.; and Ethanol Grain Processors LLC of Obion, Tenn. Both plants are expected to be completed by fall. Once operational, the plants are expected to each produce at least 110 million of gallons of ethanol per year.
When the merger is complete, VBV, Indiana Bio-Energy and Ethanol Grain Processors will become subsidiaries of Green Plains. Current equity holders of VBV, IBE and EGP will receive Green Plains’ common stock and options totaling 11.13 million shares.
Omaha-based Green Plains operates a 55-million-gallon ethanol plant in Shenandoah, Iowa, and is preparing to open a plant in Superior, Iowa.
VBV's equity holders include subsidiaries of NTR plc, an international renewable energy and sustainable waste management company; and Wilon Holdings S.A., an investment group based in Switzerland.
Simultaneously with the closing of the merger, certain of VBV’s equity holders are expected to invest $60 million in Green Plains’ common stock at a price of $10 per share, or an additional 6 million shares. This additional investment is expected to be used for general corporate purposes and to finance future acquisitions.
Hoovestol is slated to remain Chief Executive Officer for a transition period of up to one year. VBV’s Chief Executive Officer Todd Becker will initially serve as Green Plains' president and chief operating officer and then become Green Plains’ CEO.
Green Plains' corporate headquarters will remain in Omaha, and its common stock will continue to trade under Green Plains' existing ticker symbol, GPRE.
In adddition to ethanol plants, Green Plains also has grain storage capacity of about 19 million bushels, much of it as the result of a merger with the Everly, Iowa-based Great Lakes Cooperative earlier this year.
The 55-million-gallon plant orginally was supposed to open January or February, said general manager Doug Archer, "but weather took its toll on the project.''
"When we're enjoying 70 and 80 degree days its hard to remember that we had a couple months when we weren't able to do much outside -- due to temperatures and wind-chills that were often below zero,'' Great Plains CEO Wayne Hoovestol said in an interview from his office in Omaha. "That made construction all-but-impossible.''
The scheduled opening of the Okoboji area plant comes at a difficult time for U.S. ethanol producers, who are threatened by rapidly high prices for corn, their chief feedstock, and pressure from politicans and food manufacturers to roll back or eliminate ethanol's federal subsidies and mandates.
VeraSun last week announced that two plants it has under construction in Hartley, Iowa, and Welcome, Minn. will not be opening soon due to market conditions. The Hartley plant, about an hour's drive from Superior, was expected to compete for corn from areas between the two sites, most notably Clay County.
To make 142,000 gallons of ethanol, the Superior facility will consume about 50,000 bushels of corn per day more than 18-million bushels a year.
Hoovestol said "that's the reason for having the 4.5 million bushel storage capacity at the adjacent Green Plains Grain facility,'' which was part of the Great Lakes Cooperative before its merger with Great Plains.
Bruno Brown, who had been involved with the co-op in Superior for 29 years, says the co-op previously averaged about 8 million to 10 million bushels of corn per year.
Great Plains' ethanol plant, which will operate around the clock, sits on about 23 acres, in this eastern Dickinson County town of fewer than 150 residents and just 66 box holders. The balloon-shaped rail-yard to the north of the plant takes up several times that space to hold 300 tank and hopper cars for the liquid and dry products that will go to market.
The corn-processing factory plans to plant soybeans in the middle of the rail yard. Archer explains that beans can be air-seeded, while corn cannot, and the design of the rail system does not allow for the equipment necessary to plant corn to cross the tracks into the field.
Fuel from corn
The ethanol process begins in the hammer mill, where the corn is broken down into a flour-like consistency, said safety officer Steve Duhn, who has a 35-year history in construction. The simple description is that ''it gets mixed with chemicals to get the sugar out of it. The sugar is what makes the alcohol, along with heat,'' Duhn said.
But the process takes several days.
Corn mash is mixed at 185 degrees before going into the heat-exchanger (cooler) to bring it back to 92 degrees before yeast is added to it, Kutzbach says, ''cause anything over that kills the yeast and it lays dormant.''
At another point the mash is heated to over 260 degrees.
When the cook and ferment are completed a five-percent denaturant usually unleaded gasoline will be added to the product before shipping to insure that the alcohol will not be consumed by humans.
Ninety percent of the work at the plant is monitoring the flow from the control room computers, where operators watch 25 different areas on 12 screens. While all facets of the operation are controlled with a mouse, each operator will have to go into the plant to physically adjust valves even though there are automated.
More than 1,000 people worked on the different phases of construction. But there will be fewer than three-dozen full-time employees who work four days on, three days off, three days on, and four days off, when the plant is operating.
There is a cook, a dehydrating, distilling and evaporation (DDE) operator, a shift supervisor, and a utility person who helps the maintenance crew, on each shift.
Only three employees, Archer, production manager Todd Smith, and plant manager Al Meister had previous ethanol experience before joining Great Plains.
Shift supervisor Steve Davis, who has Sioux City roots and comes from a construction background, says he's "still learning just like everyone else, too.''
He's more philosophical about the situation than his co-workers.
"There's no secret recipe,'' Davis said. "It's really a simple process, but highly technical. It's just distilling ground corn, changing starch into sugar, having yeast eat sugar, and the by-product of the yeast consuming the sugar is ethanol, carbon dioxide and heat.''
Journal business editor Dave Dreeszen contributed to this story.
Great Plains agrees to merger deal
OMAHA, Neb. -- Green Plains Renewable Energy Inc. and VBV LLC have entered into a merger deal valued at about $383 million.
The transaction includes $212 million of projected debt, $60 million in equity investment, and $111 million in new equity issued.
Upon closing, the companies will combine to create a vertically-integrated ethanol company with expected operating capacity of 330 million gallons of ethanol per year. The deal, anticipated to close by late summer, is subject to various shareholder and equity holder approvals, and customary lender and regulatory consents.
''Both companies will benefit from the increased scope, scale and critical mass afforded by this merger, which will substantially increase revenues, add value to existing enterprises and create new opportunities for growth,'' GPRE CEO Wayne Hoovestol said.
VBV holds majority interest in two companies that have ethanol plants under construction: Indiana Bio-Energy, LLC of Bluffton, Ind.; and Ethanol Grain Processors LLC of Obion, Tenn. Both plants are expected to be completed by fall. Once operational, the plants are expected to each produce at least 110 million of gallons of ethanol per year.
When the merger is complete, VBV, Indiana Bio-Energy and Ethanol Grain Processors will become subsidiaries of Green Plains. Current equity holders of VBV, IBE and EGP will receive Green Plains’ common stock and options totaling 11.13 million shares.
Omaha-based Green Plains operates a 55-million-gallon ethanol plant in Shenandoah, Iowa, and is preparing to open a plant in Superior, Iowa.
VBV's equity holders include subsidiaries of NTR plc, an international renewable energy and sustainable waste management company; and Wilon Holdings S.A., an investment group based in Switzerland.
Simultaneously with the closing of the merger, certain of VBV’s equity holders are expected to invest $60 million in Green Plains’ common stock at a price of $10 per share, or an additional 6 million shares. This additional investment is expected to be used for general corporate purposes and to finance future acquisitions.
Hoovestol is slated to remain Chief Executive Officer for a transition period of up to one year. VBV’s Chief Executive Officer Todd Becker will initially serve as Green Plains' president and chief operating officer and then become Green Plains’ CEO.
Green Plains' corporate headquarters will remain in Omaha, and its common stock will continue to trade under Green Plains' existing ticker symbol, GPRE.
In adddition to ethanol plants, Green Plains also has grain storage capacity of about 19 million bushels, much of it as the result of a merger with the Everly, Iowa-based Great Lakes Cooperative earlier this year.
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