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Ethanol plant having a gas

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Stacy Vogel
March 16, 2009
— United Ethanol investors gathered two weeks ago among alarming developments in the ethanol industry:

-- Falling gas prices and a nationwide recession have reduced ethanol demand.


-- The state's largest ethanol plant, Renew Energy in Jefferson, has filed for bankruptcy.


-- Plans for at least six ethanol plants, including one touted by former Gov. Tommy Thompson, have been put on hold.


But United Ethanol is staying afloat by increasing efficiency and finding new sources of revenue, plant officials said.


The plant produced 40.9 million gallons of ethanol in 2008, close to its original capacity of 42 million gallons, according to a news release following the plant's second annual meeting held March 2.


The capacity was raised to 55 million gallons after installation of a new regenerative thermal oxidizer in fall, but the plant is aiming to produce 40 million or more gallons in 2009, President and CEO David Cramer said.


Randy Fortenbery, UW-Madison professor of agribusiness, estimated the average Wisconsin ethanol plant is losing 8 to 10 cents per gallon produced. Plants that contracted for corn at fixed prices last summer, when corn prices were high, probably are doing worse, he said.


United Ethanol is not buying corn months in advance and so isn't under the same squeeze as some plants, spokeswoman Dori Lichty said.


Smart business decisions have kept the plant profitable as other plants falter, said board member Bob Weiland, Menomonee Falls.


The plant will increase its fermentation time, producing more alcohol per bushel, Cramer said. It also will try to shorten the time it takes to acquire corn and ship ethanol after it's been produced. It has restructured its management structure, eliminating a few positions, he said.


Officials announced a new revenue source at the annual meeting. GS Clean Tech, Chicago, Ill., will begin building a corn oil extraction unit on the site in early summer. It plans to extract 1.6 million gallons of corn oil a year for biodiesel production, according to the news release.


The plant already sells carbon dioxide and wet and dry distiller's grain, byproducts of ethanol production.


Milton city staff will work with the plant to determine if any permits or approvals are necessary for the extraction unit, City Administrator Todd Schmidt said.


The city agreed to pay $811,000 plus interest in tax incremental financing money to the plant between 2008 and 2020. The agreement is linked the plant's guarantee to reach $15 million in property value, Schmidt said.


In 2008, the plant was assessed at $10.7 million, so the city reduced the amount it owes to the plant instead of making a payment. The plant was assessed at $16.9 million for 2009, Schmidt said.


Weiland said the plant turned a small profit in 2008. It would have been more if the plant hadn't spent $2 million on a larger regenerative thermal oxidizer to replace an inadequate one, he said.


Weiland said he's satisfied with the plant's operation, especially compared to other investments he made or could have made in recent years.


"Matter of fact, I wish I had invested more in it," he said.



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