Published: October 02, 2008 11:30 pm         

Officials: Ethanol plant falls victim to tight credit market

A planned ethanol plant that moved from Enid to Blackwell has fallen victim to the credit market, officials said.

Oklahoma Sustainable Energy and Chaparral Energy first announced intentions to build a plant in Enid, then in April 2007 decided to relocate the plant to Blackwell.

Oklahoma Sustainable Energy called the decision to pull out of Enid “strictly a business decision,” citing better incentives provided by Blackwell. The company also returned $250,000 in seed money to the city of Enid.

Now, tight market conditions are being blamed for a major partner in the project dropping out. Oklahoma Sustainable Energy LLC said in a letter to investors it isn’t surprising funding is at a standstill with Wall Street in a weakened condition.

The cancellation of the plant means the organization will return more than $8 million to investors, many of them Oklahoma farmers who contributed a minimum of $10,000 each hoping the ethanol plant would give them a new market.

When the plant was changed from Enid to Blackwell, company sources blamed Enid’s inability to provide infrastructure for the plant.

Jon Blankenship, director of the Greater Enid Chamber of Commerce, said this latest announcement is consistent with what is happening in the ethanol industry. Credit and finance issues are critical, in addition to some major trends working against it.

“With high corn prices, for traditional ethanol plants using corn that is a concern,” Blankenship said.

There also are uncertainties about ethanol subsidies and prices which have contributed to a down period in the industry.

“Rising interest in other investment in other alternative sources such as wind and solar have also contributed,” he said.

Chaparral Energy also is a partner in the proposed $100 million project to build a corn-based ethanol plant. Terry Detrick, president and chairman of Oklahoma Sustainable Energy LLC said the vision from the beginning was to make it an Oklahoma project and he still hopes that can be done.

Enid City Manager Eric Benson said he was sorry to see the ethanol plant leave Enid.

“The reason why neither ethanol plant is functioning now is the price of corn, the delivery problems and development and construction of the plant. If you’re not on line already and have a construction date set it will probably be three to five years from the start,” he said.

Benson said he has a high regard for the ethanol plant officials, particularly Mike Frickenschmidt, who worked tirelessly to overcome obstacles.

Orion Ethanol, a second plant that was planned for Enid, also has not come to fruition due to market conditions.