Published: February 27, 2007 10:50 pm         

2nd ethanol plant also on hold due to economic factors

Officials involved with a second ethanol plant planned for Enid say they are delayed in building the Oklahoma Ethanol project due to increasing construction costs and the price of corn.

“Certainly the same conditions face us both,” Terry Detrick, president of OKFUSE, said about his company and Orion Ethanol, which announced last week it would put an ethanol plant project on hold in Enid.

OKFUSE, which stands for for Oklahoma Farmers Union Sustainable Energy, was formed between Chaparral Energy and Oklahoma Farmers Union in an effort to build the ethanol plant in Enid.

Orion Vice President of Development Tim Barker cited economic factors as the reason his company is holding up construction.

Detrick concurs.

“We, too, are rebidding, (and) when we do that it affects other things — finance agreements — and it has strung out so long trying to get it worked out, that we had to redo all of our agreements,” Detrick said.

The price of corn is at record highs, and the price of crude oil has dropped. However, Detrick said he does not think the future of ethanol will be determined by the price of crude oil.

Detrick said the bottom line is Oklahoma Ethanol is “cautiously moving ahead,” running figures and trying to negotiate contracts that will allow the company to continue to be profitable.

“If we could have moved straight ahead when we first started, we could have built the plant for 20 percent to 30 percent cheaper than today,” he said.

Jon Blankenship, president of Garfield County Industrial Alliance, said recently there are a number of factors affecting the ethanol industry.

“Construction costs have increased 20 percent to 30 percent, and what was a $100 million plant is now $130 million,” he said.

There is a rising demand to build ethanol plants and a limited number of companies with the expertise to build them, he said.

Detrick believes the prospects for ethanol production still are positive. Currently, 31 states have outlawed the fuel additive methyl tertiary-butyl ether, or MTBE, which ethanol would replace. MTBE is used as an oxygen aid in gasoline and is proven to be carcinogenic and an irreversible contaminant if spilled, Detrick said.

Renewable Ener-gy Act of 2005 did not exempt users of MTBE from liability, and gasoline producers are moving toward an alternative, which Detrick believes will be a 10 percent blend of biodegradable, renewable ethanol.

The price of ethanol in the future will be determined by government mandates, which will say gasoline must contain a percentage of ethanol by a certain time, Detrick said. There was enough ethanol in the U.S. fuel system in 2005 to be the equivalent of removing tailpipe emissions of 1.8 million vehicles from the air, he said. He expects environmentalists to begin pushing for cleaner air, which Detrick sees as a positive.

“If we continue to move to cleaner air by using ethanol blends, and the government continues to mandate it, we could have $4 ethanol and $1.75 gasoline. With a 10 percent blend we could have $2.20 gasoline at the pump,” he said. “We would be cleaning up the environment and stretching our domestic oil supplies and hope to get to a point we are energy independent.”

While energy independence will take a long time, Detrick hopes the United States can pick from whom it buys oil and stop buying it from countries that don’t like the U.S.