ACE Ethanol brings Wisconsin's first 15 online

Delta-T Corp. designed the plant for expansion
By Tom Bryan | September 01, 2002
ACE Ethanol General Manager Terry Kulesa may have said it best when he described the story of Wisconsin's first ethanol plant as a chronicle of "sweat and equity."

Indeed, ACE Ethanol, LLC, a 15 mmgy dry-mill located on the outskirts of Stanley, Wis., is the realization of years of ambition and toil for growers and investors in the Badger State, where the facility represents a milestone in value-added ag-processing.

Completed in early summer this year, the plant was brought online in June, a year from the start of its construction in 2001. According to its management team, the plant started up smoothly, producing the first shipments of Wisconsin-produced ethanol to market in early July.

"It feels absolutely terrific (to have finished construction and be producing ethanol)," said Alex Samardzich, president and CEO of ACE Ethanol. "It's a major triumph for the ACE investors, and for the state of Wisconsin."

The plant consumes over 5.5 million bushels of corn annually, much of which is purchased from area farmers. The plant can store up to 500,000 bushels of corn, or a 28-day supply, on site. The ethanol produced by ACE is marketed through Williams Bio-Energy and shipped to market via rail and truck (about 50 percent being transported each way).

First 'large-scale' Wisconsin ethanol plant
The current market for fuel ethanol in Wisconsin is about 150 million gallons per year, which had been almost entirely imported from neighboring states prior to the completion of ACE Ethanol. Today, ACE Ethanol expects to allocate much of its supply to meet this growing in-state demand. And due to its close proximity to the U.S.-Canada border, ACE Ethanol may also export some of its ethanol north to meet Canada's growing demand as well.

Although there were previously a couple of small ethanol plants in Wisconsin, ACE Ethanol is the first of as many as five large-scale ethanol projects slated for construction in the state, according to the office of Wisconsin's Governor Scott McCallum. (Note: Badger State Ethanol, a 40 mmgy plant in Monroe, Wis., held its grand opening Sept. 14 and is expected to be brought online in early October. See page 9 for complete story).

Local investors
"The construction of ACE Ethanol was unique because we (the plant managers, investors and community leaders) each took part in the construction process. We all built this plant from the ground up," Kulesa told Ethanol Producer Magazine. "That really makes a difference in the way you feel about the completion of a project like this."

In fact, several of the 65 investors in ACE Ethanol - mostly area business owners and farmers - ended up with construction contracts on the site, Samardzich said.

"Several of our business-owner investors also provided services during construction and development," he explained. "The electrical, concrete excavating, roadwork, scales and plant design were all done by companies that invested in the project."

Designed to expand
In terms of size and capacity, ACE Ethanol shares a likeness to the facilities constructed in Minnesota during the 1990s, before a wave of expansions transformed many of those plants into 30 and 40 mmgy facilities. Like the Minnesota plants, ACE Ethanol too has been designed for expansion, and will likely be expanded to at least 30 mmgy in the near future.

In terms of technology, ACE Ethanol is no throwback, however. The plant utilizes a state-of-the-art Delta-T process technology tailored to meet the facility's unique plans.

Williamsburg, Va.-based Delta-T, which also owns 8.5 percent of ACE Ethanol, is a full-service ethanol plant design-build firm. The company is well-known for pioneering many of the recent innovations currently in use by the newest generation of ethanol plants, including the commercialization of molecular sieve dehydration, zero discharge of process wastewater, and more efficient refining/purification systems to produce high quality alcohols. The company has provided alcohol production, dehydration, and purification solutions to more than 50 clients worldwide, including projects in Russia, India and Southeast Asia, Western and Eastern Europe, Africa, the Caribbean, and South America.

Inspiring ethanol dreams

The 15 mmgy plant is, by today's standards, considered small - perhaps even rare - compared to the growingly popular 40 mmgy models, but the quality of leadership that fueled the inspiration, organization, design and construction of the plant was anything but undersized.

The project was spearheaded by Samardzich and ACE Ethanol Vice President Norman Spooner, longtime friends and business partners who shared a dream of creating profitable, value-added ag-processing in Wisconsin.

Spooner, himself a farmer and feed producer, had teamed with Samardzich in the past, developing hotels in Wisconsin, Michigan and Florida. The two men said they were inspired to build an ethanol plant in Wisconsin after the state passed its incentive program in 2000.

"We began searching for sites in 2000," Samardzich said. "Stanley was the most progressive in its approach and we were encouraged by the town's economic development program."

Samardzich told Ethanol Producer Magazine that he was impressed by the town of Stanley, in part, because it had recently encouraged the construction of a privately owned prison in town, which displayed to him a strong willingness to develop local industry. The town also had major highway and rail access, he said, which, of course, is an important requirement for an ethanol plant.

After picking a site for the plant, the team choose Delta-T for the plant's process design and began searching for investors. After just two months, Samardzich said, they had raised over $13 million, 45 percent of the total amount needed to build the plant. The remainder of the capital was borrowed though Marshall Investments Corporation (MIC), a subsidiary of The Marshall Group, Inc.

"After reviewing several other transactions, ACE provided the ingredients that MIC felt would make a successful project, said Dave DeBauche, a representative of the lender. "The principals of the borrowing entity brought a tremendous amount of development experience to the transaction as well as knowledge of the local agricultural market. Delta-T provided the engineering technology and with the significant equity contribution and most of the necessary permits already in place, it was a logical financing to pursue."

Running their own show
Once the project was financed, Ace Ethanol acted as its own general contractor, under the leadership of Samardzich and Spooner.

"We didn't want the project taken out of our hands," Samardzich said. "Delta-T agreed to work closely with us to maintain the high technology standards we hired them for, yet still allow us to manage the plant's construction and operation."

Although Delta-T operates as a general contractor on ethanol projects, the company is also comfortable in the narrower role of technology and pre-engineered equipment provider, said Rob Swain, vice president and CFO of Delta-T.

"Although ACE wanted the flexibility to bring the combined construction skills and resources of the ownership team into a technology role, we stayed involved in every area of the project to the extent that we make sure the plant runs to our standards ar the end of the day," Swain said. "We obviously had a lot of trust and respect for the ACE owners, or else we would not have entered into this kind of scope arrangement. After all, the project still has the Delta-T name on it, and that is very important to us."

What ACE Ethanol needed, Samardzich explained, was a sure bet - an affordable, efficient and prosperous ethanol plant that used a proven process design technology. "We looked at several different process technologies, and for this particular project, Delta-T was the best fit for what we wanted to accomplish."

The Design
Delta-T designed the plant using the latest ethanol technology, including its unique zero process wastewater system. This eliminates the need for reverse osmosis or other wastewater treatment - removing the expense of treating the water and greatly reducing the amount of fresh water needed, while saving on initial capital construction costs, according to Delta-T's Alan Belcher, project manager on ACE Ethanol.

Samardzich concurred, "Ensuring an adequate supply of water was initially an issue for this project. Our water utility partner is very pleased that we are using a lot less water than they had heard was necessary for an ethanol plant."

ACE Ethanol also has Delta-T's latest generation of distillation, dehydration, and evaporation equipment. These technologies are fully integrated into a single system, which makes the plant easier to operate, reduces energy costs, and offers Delta-T seven-year guarantee on molesieve desiccant. The ACE plant also contains a new Delta-T option to recycle heat from the distillation system to dry the distillers grains at the back end of the plant. This feature will reportedly save the plant about 15 to 20 percent on its gas bill.

According to Belcher, "ACE Ethanol was on-time and on-budget, even with a fast-track decision-making process that required Delta-T to modify some of its typical engineering procedures and scheduling to fit ACE's business culture and construction plans."
Belcher added, "We tip our hat to the excellent job ACE did in constructing the plant, and in recruiting a top-notch operations management team to run it. We feel this will be a very successful ethanol business, and we are happy to be a substantial owner in the plant with our ACE partners."

All the extras
The plant will produce both wet and dry distillers grains with solubles, which is marketed through Land O' Lakes. Kulesa said feedlots within a 50 mile radius of the plant are providing a good outlet for the wet coproduct.

"Remember, this is Wisconsin," Kulesa said. "There's no shortage of dairy cattle to feed here."

Samardzich said the next phase of the business plan will be to finish the installation of a CO2 collection plant addition that's already underway, and to begin planning a plant expansion to 30 mmgy, which ACE hopes to move forward on within a year.

The ultimate decision to expand may hinge, in part, on the Senate's decision to restore full funding to the Commodity Credit Corporation (CCC) producer incentive program, Kulesa said. However, when the decision is made, Swain said, Delta-T will be ready for the task.

"All of our plants are pre-designed for expansion," Swain said. "Our designs are specifically laid out from the beginning to accommodate the optimal placement of future equipment and construction, which makes for very easy and cost-efficient expansion."

Already, the plant is running over capacity, Belcher said. "We've run it as high as 40 percent over capacity and, with minimal debottlenecking, it will run continuously as a 20 mmgy plant."

The staff

ACE Ethanol employs about 30 people, under the management of Samardzich. Kulesa and plant manager Joe Winkler came to ACE together from an ethanol plant in Minnesota. Both men joined the ACE project prior to the start of construction, which was advantageous for not only them, but for the designer as well, according to Swain.

"Having those top managers on site during construction was a big plus," Swain said. "If you can bring those people in during construction, it's always to the plant's advantage."

The rest of the ACE Ethanol management team includes process manager Sharon Sturm, production manager Tom Aumer, maintenance manager Joe Wild, utilities manager Brad Lerum, comptroller Lamae Mallo and commodities manager Gery Steinmetz.

Looking to the future
With the ACE Ethanol online, Samardzich, Spooner, and the other investors are taking time to reflect on their achievements, while also planning for the future.

"I look forward to the coming years and, hopefully, to an expansion of the plant sometime soon," said Samardzich. "We still have a long road ahead of us."