Home > Wells Ethanol Plant Aimed

May 12, 2005

Wells Ethanol Plant Aimed

ETHANOL PLANT LEADER -- Ron Fagen, nationally-noted fuel ethanol plant building-launching  leader, meets with Wells County group in Bluffton April 26.

By JIM BARBIERI

A large economic breakthrough for Wells County may be on the horizon.

The largest-ever industrial project attempt in Wells County history and a milestone in a leading American industry with huge economic potential for Wells County and Indiana, also serving the national interest,  has advanced to the brink of achievement, it was revealed openly here Wednesday.

In the works for many months via sessions here and over several states, it involves investments already made by a dozen in Wells County and a giant financial undertaking.

It is a project for a new 100 million gallons per year dry mill ethanol plant that will cost $125 million to build, equip and provide for adequate working capital.

Approximately $110 million represents the cost of goods and services, much of which will be spent in the local area community.

Noted by Indiana Bio-Energy LLC, the company formed for the enterprise, was that construction, which could start this fall or at least by spring of 2006, typically takes 12 to 14 months, and “the spending it pumps into the economy will generate a one-time local economic boost of somewhere between $275 million to $350 million in final demand,” it was projected.

Pointed out was that the most significant value of building a new ethanol plant comes from the year after year spending from operations.

Ethanol, as most know, is a fuel or fuel additive made from corn.

A 100 million gallons per year ethanol plant in Wells County will spend more than $130 million annually for goods and services, almost all from local area suppliers, the disclosure statistics related.

“These dollars will multiply as they are circulated through the community,” Indiana Bio projections included.

On an annual basis, a 100 million gallons per year ethanol plant in Wells County, Indiana, will generate the following benefits, as projected:

-- Expand the economic base of the community (which was indicated as the county and adjacent surrounding supplying counties) by $250 million to $275 million.

-- Generate additional household income of over $50 million.

-- Support the creation of about 1,500 to 1,700 jobs throughout the entire economy.

-- Provide 50 to 60 good-paying jobs directly at the new ethanol plant in Wells County.

-- Increase the price of corn somewhere between $0.05 and $0.10 per bushel.

The project is to be the eastern most ethanol plant in the corn belt and country, with excellent rail access to what has been cited as the largest and fastest-growing ethanol markets, the northeastern states.

The breakthrough for today’s disclosure came with the receiving Tuesday and review Wednesday of a  conditional preliminary letter of intent from Fagen Inc.

Pictured and referred to a March Wall Street Journal major account on ethanol was Ron Fagen, who heads Fagen Inc. in its leading development of ethanol.

Fagen and Steve Core, company vice president, visited here and met at the Wells Arts, Commerce & Visitors Centre April 26 with the Bluffton area group then after other talks among leaders.

The Fagen letter of May 10 was indicated a first time preliminary letter of intent with conditions in this respect, thus encouraging the outlook and public word.

As noted by Fagen and others, Fagen Inc. has carried through all past projects on which ultimate letters of intent have ensued and has never begun a project that has not been completed and operated profitably, leaders here learned.

During the Fagen April 26 visit, it was emphasized that if the federal, state and local governments cooperate, “the most efficient, state of the art ethanol plant in the world in Wells County” will result.

This is expected to be the sixth 100 million gallons  per year ethanol plant that Fagen will have built. The prior five have been up and running enough to eliminate bugs and engineers are working on still greater efficiencies, the reports said.

The Wells County plant, Fagen related here, would incorporate all the upgrades and would be the most efficient dry grind ethanol plant in the world. Also noted was that by-product market -- DDGS for livestock feed -- is strong.

As committee members and investor representatives readily available for Wednesday’s meeting received the good news of the Fagen letter, there were updates on the strong federal support for the Wells County project from the state’s two   U.S. Senators, Richard Lugar and Evan Bayh, and from Congressman Mike Pence.

Wells County industrial leader John Roembke briefed the session on Bayh’s support and County Assessor-leader Connie Prible did so on the Lugar backing. Pence deputy district director Kim Bennett was on hand in Bluffton Wednesday and affirmed that Pence is “totally committed to the project.”

Steve Hogan and Troy Flowers, the two development specialists who have been spearheading the project for the Wells plant, joined with Wells County Chamber of Commerce and Economic Development CEO Garry Jones in pointing up the need for the new Indiana Agriculture Department and the governor to take on the state challenge and opportunity.

Cited were plans to obtain a session with new Indiana Gov. Mitch Daniels in this respect.

Investor Randy Plummer, also president of the Wells County Board of Commissioners, declared the Wells ethanol plant project as a high priority.

The hopes were for the kind of Daniels support that achieved the Colts stadium and Northwest Indiana projects amid other 2005 legislative successes.

While there were reported state qualms on industry commitments after setbacks in the state for steel plant supports, there was encouragement over the governor’s stated commitment to bio-fuels.

Hogan observed that Indiana had lost out on banks by waiting too long to act.

Roembke also led the discussion on the value of the Wells ethanol project to Indiana. Other observations were that some state guarantees would do a lot and not call for actual funding.

As Indiana’s higher corn prices were discussed, Plummer pointed out that the shipping volume to the south (southeast U.S.)  on the Norfolk Southern was a reason.

Ethanol project investor Mike Swinford of Briner Building inquired on the timetable, with the estimate of a 12 to 14 month cycle for construction then cited by the developers along with their projections for construction start next fall or the following spring.

Hogan brought out that Indiana was “getting in  on the cheap” as compared to investment made by state governments elsewhere.

In Addition…

Who?
THE INVESTORS:

(Each putting up $10,000 original high-risk dollars)

Bruce Barger

David Dale

Garry Jones

James Jackson

Jim Schriver

John Roembke

Keith Huffman

Mike Swinford

Randy Plummer

Steve Prible

Tom Jackson

Tom Longenberger

Committee leaders for the Wells County Economic Development Committee in targeting a fuel ethanol  plant as a priority for Wells County:

-- Garry Jones

-- Connie Prible

-- Brad Buening

(Jones is the Wells Chamber-Economic Development CEO; Buening is the Wells Area Plan Commission and GIS director; Prible is the Wells County Assessor.

Leaders for Fuel Ethanol Industry Here:

-- Steve Hogan

-- Troy Flowers

(Both with project development experience, Hogan chiefly on financial and Flowers chiefly on scientific and operations phases. Bluffton was Flowers’ prior hometown and analysis coincidentally pinpointed Wells County for an ethanol plant)

Fagen Inc.

-- Ron Fagen, ethanol plant industry leader industry.

-- Steve Core, Fagen Inc. vice president.

The Fagen Inc. May 10 preliminary letter of intent was considered a conditional encouragement for the public steps and disclosures to advance the project.

What?
A 100 million gallons per year ethanol plant in Wells County to produce fuel ethanol to be chiefly a gasoline additive or partial substitute, thus helping the nation as well. Ethanol further has environmental advantages.

With California, New York and Connecticut already having banned MTBE use as an additive and some seeing a move toward total replacement with renewable fuels, the outlook for ethanol is enhanced. Also making it timely is the rise in gasoline prices.

 The natural gas-fired ethanol plant also is to produce DDGS (Distiller Grains & Soluables) as a by-product -- a valued livestock feed.

Why?
Although the higher corn prices in the Eastern Corn Belt (Indiana) appear a disadvantage for competitive ethanol prices, the eastern-most Wells County, Indiana, location is the closest to the very big  Northeastern markets and other East markets. Going to a 100 million gallons per year plant instead of the more common 40 million gallons per year size is figured to provide efficiencies also making the plant here more competitive.

Where?
The committee has at least four available Wells County locations which the leaders have not disclosed to avoid breaking confidences by reporting at this immediate stage, but with the selection to be  completed soon.

When?
Expected is a plant construction start this fall or in the spring of 2006 with the construction cycle to be 12 to 14 months.

How?
-- Needed are federal, state and local cooperating steps for a project with huge potential economic  benefits. The offices of U.S. Senators Richard Lugar and Evan Bayh already are fully on board -- Lugar represented at Bluffton meetings by Phil Schaull and by Aaron Whitesell; Bayh by Hodge Patel. Congressman Mike Pence is also fully on board, represented by Kevin Shulz and Wednesday by Kim Bennett.

-- The state of Indiana has just created a Department of Agriculture and is facing both a challenge and opportunity to land ethanol’s big eastern corn belt plant.

--Working with Ice Miller attorneys and bond experts and Umbaugh & Associates financial specialists, the project’s  next level for  seed money is under way with expected achievement in June and then the large financing package projected as early as September. A combination of subordinated revenue bonds, sub-debt and grants totalling $25 million is the indicated key need and is expected by the committee and others to be in range for achieving.

-- The cited return on investment goal here has been stated at various meetings to be at least 20 percent.

-- Fagen Inc., industry leader, provider May 10 of a first-ever conditional letter of intent for a Wells County plant, would build the plant here for Indiana Bio-Energy LLC, upon conditions set. The company has built plants on a turn-key basis from design/build to plant management and corn purchasing and product sales, where desired. All Fagen Inc. launched projects have been completed and operated profitably, it was noted.

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