Firm plans to build ethanol plant at port

The Albany Port District Commission voted Monday to lease 18 acres at the port to a company planning

The Albany Port District Commission voted Monday to lease 18 acres at the port to a company planning to build a quarter-billion-dollar corn-based ethanol plant that could produce as much as 110 million gallons of the alcohol fuel per year.

The plan chosen by the commission, one of several proposed for the site, was submitted by Albany Renewable Energy LLC, a partnership of self-described ethanol production industry veterans from out of state. The port is looking for a minimum lease of $20,000 per acre per year for a deal at least 20 years in length.

“[This] is probably the largest development project in the history of the port,” Port Commission Chairman Robert Cross said. “It will be extraordinarily helpful to the port in terms of commerce. This may end up the largest [ethanol production] plant on the East Coast.”

Albany Renewable Energy President Ed Stahl said his company is now trying to raise $240 million to build the ethanol production plant, which he said could either contain 55 million gallons of production capacity or 110 million, depending on the level of financing investors put forward. He said the plant will be designed and built by Wichita, Kan.-based ICM Inc.

Stahl said his company is also looking to acquire the rights to build another smaller production facility at the port that, combined with the first, could give Albany Renewable Energy 165 million gallons of ethanol production capacity. The total cost of the two plants could reach $350 million.

“This project will be built on equity that has yet to be identified. We still have to raise our investment and our financing, but the preliminary work on that has already begun,” he said. “The ownership of the plant will be by a group of investors. We will be among that group and we will be the managing partners through the development phase and part of the management team as we move into operations.”

Before construction can begin, the plant will also need to receive permits to operate from the state Department of Environmental Conservation. Commission officials anticipate that if permits are granted the plant could be built and operational by the end of 2009.

Cross said building the plant will create 300 to 400 construction jobs, 90 percent of which he said will likely be hired from the Capital Region workforce, resulting in $71 million in benefits to the local economy. He said that when completed, the plant is expected to employ between 50 and 60 full-time workers with salaries of between $50,000 and $60,000 per year.

The commission chose Albany Renewable Energy’s plan after reviewing plans submitted after a request for proposals put out in December. Some of the other ideas considered but rejected by the commission included a 55-million-gallon ethanol production plant proposed by locally owned ethanol distribution company KNC Holding Inc., a garbage-processing plant proposed by the renewable energy group of Casella Waste Systems Inc. and a proposal from trucking company Coastal Distribution.

Cross said the commission liked the experience of Stahl and his team and the amount of maritime activity the plant is expected to generate.

“This past year, we had about 760,000 tons of cargo pass through the port. This project alone is going to add another 600,000 tons a year,” Cross said.

Albany Renewable Energy plans to send processed ethanol from its plant by barge to terminals at the major ports in Boston, New York City and Philadelphia. It will also ship out by barge distillers’ grains, a byproduct of the ethanol process often used for cattle feed.

Stahl said Albany Renewable Energy was attracted to the Port of Albany because it provides advantages that should make acquiring financing easier, such as its status as a deep water port, able to accommodate large barges, with railroad and highway access. He said his company has also entered into preliminary talks with food company Cargill to use its 13.5-million-bushel grain elevator at the port and Logibio Albany Terminal, which has 500,000 barrels of ethanol storage capacity at the port.

KNC Holding Inc. President Christian King said having ethanol produced locally will likely result in a drop in the price of ethanol in the Capital Region. King’s company distributes ethanol to many of the ethanol 85 percent fuel pumps throughout New York and he owns E85 pumps at gas stations in Albany and Warrensburg and plans to install another one soon on Route 7 in Latham.

“The conventional wisdom would be that we aren’t paying 10 to 15 cents [per gallon] to get it by freight from the Midwest anymore … but now you have to bring the corn in. I would anticipate there would be the effect of lowering the ethanol price 2 to 4 cents. It may be more. I don’t see it being any more than 6 cents,” King said.

King said that since his company was rejected in its bid to develop the 18 acres at the port, he has switched gears and begun negotiations to build a cellulose-based ethanol plant either somewhere on the Albany side of the port or in partnership with Besicorp-Empire Development Company, which is building a power plant on the Rensselaer side.

“Ours will be built before [Albany Renewable Energy’s] but it will be much smaller, probably around the 10-million-gallon range. [The ethanol] will be made cellulosically, out of wood, which is a lot more accepted right now. The corn is getting the crap beaten out of it,” he said.

Corn-based ethanol, once thought of as a “green” renewable alternative energy source to gasoline, has grown steadily more controversial since a report by Princeton University researchers was published in Science Magazine earlier this year. The report argues that ethanol production has caused land-use changes around the world that actually increase carbon dioxide emissions linked to global warming. Ethanol was once thought to have a net zero impact on CO2 emissions because corn plants absorb as much CO2 as burning ethanol emits.

Tim Searchinger, the lead researcher for the Princeton team, told The Daily Gazette in February that production of corn-based ethanol is worse for the environment than regular gasoline.

Cellulosic ethanol, which remains in the experimental stage and might possibly be made from wood or switch grass, may contribute to less carbon dioxide emissions because it can be developed on marginal-use land.

Stahl said his company is aware of the new scientific debate about the environmental impact of corn-based ethanol production but said he is convinced the corn-based ethanol business will be prosperous for at least the next 20 years.

“I’m just not aware of anything that suggests that what we’re doing has been conclusively proven to not be worth doing,” Stahl said.

He said the plant his company plans to build could not be easily converted to cellolosic ethanol production, if that product ever becomes commercially viable.

Categories: Schenectady County

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