Glacial Lakes Energy, LLC off to a clean start

Environmentally friendly design eliminates emissions concerns for Watertown, S.D. producer
By Tom Bryan | October 01, 2002
Project Manager Aaron Fagen, of Fagen, Inc., credits his company's timely completion of Glacial Lakes Energy, LLC to "good people and good weather," two factors, he said, that were critical in bringing the Watertown, S.D. plant online ahead of schedule and under budget.

Fagen, Inc., of Granite Falls, Minn., completed Glacial Lakes Energy in just 13 months and 11 days, starting July 13, 2001 and grinding corn Aug. 25, 2002.

Bearing a nameplate capacity of 40 mmgy, the $56 million plant will crank out well over 40 million gallons of ethanol and 130,000 tons of dried distillers grains per year at peak capacity, grinding 15 to 18 million bushels of area corn. The plant has the capacity to store up to 860,000 bushels of corn (a 15-day supply) on site in two 180,000-bushel silos and one 500,000-bushel steel grain bin. Glacial Lakes Energy markets its ethanol through Williams Bio-Energy and ships over 90 percent of it to market via rail. For now, all of the plant's distillers grains with solubles is marketed in the dry form (the plant does not market any wet or modified distillers grains at this time but is open to the option). All of the plant's DDGS is marketed through St. Paul-based Commodity Specialist Company (CSC).

In terms of stack emissions from the plant's two gas-fired rotary drum dryers, the facility has already earned a place among the most environmentally sound ethanol plants in the world, largely due to the installation of a regenerative thermal oxidizer, which almost completely eliminates odor and atmospheric emissions while producing steam energy for the plant.

Fagen/ICM project
Fagen, Inc. teamed with process-technology provider ICM, of Colwich, Kan., to design and build Glacial Lakes Energy. Fagen and ICM have worked jointly on many ethanol projects since the mid-1990s but never to the extent to which they collaborated in Watertown, said Dennis Vander Griend, ICM chief engineer.

"I consider this project another first for ICM and Fagen," Vander Griend said. "We've entered into a new category of ethanol plant design with Glacial Lakes Energy."

Vander Griend was referring to multiple aspects of the plant's design engineering, process technology and construction, including a sophisticated drying system and regenerative thermal oxidizer, entirely designed and manufactured by ICM.

Confident in emissions compliance
Glacial Lakes Energy is one of several new ethanol plants incorporating a thermal oxidizer into the initial process-design of the plant. In the past, thermal oxidizers had been retrofitted to ethanol plants required to attain significant reductions in dryer stack emissions, often under increasingly stringent government standards.

"Glacial Lakes Energy has come online comfortably within compliance guidelines, rather than attempting to meet those standards at a later time. "With the system we have installed at Glacial Lakes Energy, there's really no chance of being out of compliance. We will meet (EPA) standards without question," Vander Griend told EPM. "With most ethanol projects coming online from this point forward, you'll see this."

In fact, Vander Griend said, other Fagen/ICM projects have already taken the same preemptive approach. Badger State Ethanol, a new 40 mmgy plant in Monroe, Wis., also incorporated a thermal oxidizer into its original design, as will Little Sioux Corn Processors, a plant under construction in Marcus, Iowa. Likewise, Northern Lights Ethanol, near Big Stone City, S.D., a Broin-built and managed facility, installed a thermal oxidizer before startup as well.

The Business Structure
Glacial Lakes Energy, LLC was formed in May of 2001 (see the timeline for a detailed look at the group's history) and is owned and operated by Glacial Lakes Corn Processors (GLCP) and Glacial Lakes Capital, LLC. GLCP is a South Dakota Cooperative comprised of 827 members who have invested in Glacial Lakes Energy, LLC. Each member is responsible for delivering a minimum of 5,000 bushels of corn to the plant each year. GLCP is governed by a board of 11 directors, five of which serve on the Glacial Lakes Energy board.

Interestingly, GLC is an investment arm of VeraSun Energy, a privately held company planning to build a 100 mmgy ethanol plant near Brookings, S.D. The group is comprised of four investors, including VeraSun's own CEO Don Endres, who serves as vice chair of the Glacial Lakes Energy board. Currently, seven individuals who serve on the Glacial Lakes Energy board meet on a monthly basis.

Why Watertown?
Glacial Lakes Energy General Manager Tom Branhan said Watertown, a city of just over 20,000, welcomed Glacial Lakes Energy with open arms.

"Of course, there is always some of that ("not in my backyard") mentality, but overall we have received much more support than opposition," he said. "The people of this town overwhelmingly wanted us here."

At no time has that support been more evident than at Glacial Lakes Energy's ribbon cutting and grand opening ceremonies in mid-August, when an estimated 2,000 people took a peek inside the facility.

"We're really here because of economics," said Glacial Lakes Energy President Randy Frederick. "Whether you are an investor in the plant or not, you'll benefit from this."

After raising $20-$25 million in funds needed to obtain debt financing on the $54 million project, Glacial Lakes Energy's future was solidified. GLCP offered a minimum of 5,000,000 shares and a maximum of 12,500,000 shares of "common stock" at a purchase price of $2.00 per share. Shares were on a first-come, first-served basis and were offered only to South Dakota residents.

The site
While building the plant near Watertown was agreed upon from the beginning, GLPC had to choose between two sites in 2001: one site was located a few miles outside of town; the other just beyond the city limits within the Hanten Industrial Park. GLPC chose the later site in June 2001, when city officials agreed to annex the industrial park into the city.

"Our relationship with the city of Watertown is beneficial," said Glacial Lakes Energy General Manager Tom Branhan. "We utilize the city's water, electricity and natural gas and have fire (and police) protection available should we ever need it."

By mid-July 2001, Fagen, Inc. had begun preparing the site for construction. An official ground-breaking ceremony was held a month later, attracting the likes of Sen. Tom Daschle (D-S.D.), Sen. Tim Johnson (D-S.D.), Representative John Thune (R-S.D.), and Watertown Mayor Brenda Barger.

As tanks and structural steel work gave way to electrical work and process piping, Fagen's workforce on site grew to 155 people at one point -and that's not including subcontractors working on-site at the same time.

"It gets intensely busy on site," said Aaron Fagen, who essentially lived in Watertown with his crew for a year. "We coordinate the complexity of the project by breaking down the work into manageable two-week schedules."

Fagen told EPM 17 subcontractors worked on the project. Many of of Fagen's skilled craft workers travel with the company from one ethanol project to another. Fagen, Inc. is able to independently handle civil, structural, mechanical and electrical services.

Well-trained staffBy June 2002, Glacial Lakes Energy had a fully loaded staff of 34. The plant's operating team underwent extensive training at U.S. Energy, an ICM plant in Russell, Kan., used as a training center. The crew trained in Russell for two weeks before receiving on-site training in Watertown for an additional four weeks.

Over 90 percent of the plant's employees are area residents, Branhan said. In total, the facility employs 16 operators, five managers, seven grains handling personnel and six administrative personnel (See plant managers and administrative personnel at right) that keep the facility running at full-capacity 24 hours a day, 365 days a year.

"We get by with slightly fewer employees than other plants this size because of the design," Branhan said. "It's a major cost savings built right into the package."