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Optimism expressed on bio-diesel plant

Monday, December 3, 2007

Like agricultural energy industries across the country, Soy Energy LLC has been affected by the recent reluctance of financial institutions to invest in bio fuels. However, officers of Soy Energy are confident that construction on the bio-diesel plant near Marcus will resume during the first quarter of 2008.

Chuck Sand, chairman of the Soy Energy Board explained that construction on the plant was stopped earlier this month after the primary financial institution supporting the project became reluctant to go forward.

Individual investors, mostly local, have provided over 50 percent of the capital needed for construction. It was the need to protect these investors that led to the decision to interrupt construction, Sand explained."We're very optimistic that we'll get started again," Sand said.

The company is currently seeking a USDA federal loan guarantee that would bring in the financial backing necessary to complete the project. The initial part of the process of getting the USDA loan guarantee has been completed but it might take 30 to 90 days for approval to be finalized, according to Sand.

"The government works slowly," he said.

The nervousness by investors right now results from the low, possibly non-existent, profit margin expected when deducting the price of soy oil and natural gas from the revenue expected from the finished product.

Sand said that the plant under construction is less vulnerable to the effects of high soy oil prices than are other plants because the plant near Marcus will be flexible in the kind of raw material used. Besides soy oil, animal fats and corn oil can be used at the plant.

Soy Energy expects an anticipated fuel cost savings by using fuel pellets from trash, rather than natural gas, to heat boilers. However, the plans for using fuel pellets for boiler fuel has also had a setback, as Ron Wetherell, chairman of the Cherokee County Board of Supervisors, explained to fellow supervisors on Tuesday.

Wetherell also happens to be vice-chairman of the Soy Energy Board.

Wetherell noted that the DNR had previously verbally indicated approval of plans to use fuel pellets that will be manufactured at the Cherokee County Landfill after completion of the trash processing plant now under construction. Subsequently, a different department within the DNR decided that the soy plant would need to install a $1.5 million scrubber if fuel pellets are used to fire a boiler.

Wetherell expressed disgust at the bureaucratic foul-up and the about-face at the DNR. Both the landfill and the diesel plant boiler plans went forward based on initial approval by the DNR.

Wetherell explained that one option for reducing emissions from fuel pellets is to blend them with wood chips.

Despite setbacks, Wetherell also expressed optimism about the bio-diesel project.

"It is frustrating but I think it will work out," Wetherell said.



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