Renewable Fuel, Recycled Sites

On first thought, a great place to locate an ethanol plant seems to be where others have labored to lay the groundwork before—on a brownfield site. But the fact is most U.S. ethanol plants, both operating and under construction, choose the greenfield route to project development, effectively discounting the benefits of building brown.
By Ron Kotrba | May 01, 2006
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"Brownfielding it," a term that almost intuitively connotes the act of doing something sub-par, is what industry experts call developing a project on a former industrial site, such as an old refinery or brewery. Virtually every brownfield site is unique. One may come ready-made with perfectly solid structures and working, usable equipment, while another might offer little distinction between its own acreage and that of a greenfield site—except, say, maybe an active rail spur, a tank farm or grain storage.

When a developer takes the usual route—a prudent path—of turnkey process design and plant construction on undeveloped land, there aren't too many surprises expected along the way. And that's exactly how most prefer to develop mega-million-dollar projects: straightforward, predictable, cookie cutter-like. Brownfield projects aren't for these folks. Developing an ethanol plant in, around or on top of existing infrastructure is for investors of a different breed—risk-takers, penny-pinchers and outside-the-box thinkers who have the guts and ingenuity to take advantage of what already is. Building ethanol plants on brownfield sites can't be done on impulse and vision alone, though. It requires pragmatism, forethought and constant decision-making. Just the phrase "salvaging and retrofitting" sounds more complicated than "breaking ground and moving dirt."

According to Mark Yancey, vice president of BBI International Project Development, there's a reason almost every ethanol plant being built in North America today is being erected on a greenfield site. He says one of the biggest problems with locating a successful ethanol plant project on a brownfield site is that today's state-of-the-art ethanol plants are laid out in such a manner that trying to fit one into an existing facility or infrastructure, while matching the production efficiencies of modern turnkey designs, is hard to do. "The capital costs may be lower than that of a new plant, but that could be offset in what's being lost in plant efficiencies," Yancey says.

Greybull brownfield

In spite of what experts like Yancey advise, there are people investing in brownfield sites for ethanol production—folks like Ken Weekes, president of Big Horn Basin Ethanol LLC, a proposed ethanol project in Greybull, Wyo. Weekes' project, a 20 MMgy corn-fed ethanol plant, is locating on an old Amoco oil refinery site. "Our site is on the outskirts of Greybull," Weekes tells EPM. "We've been working with the city on getting the land and water arrangements, and everything is coming into play very well."

The Big Horn Basin Ethanol plant site is a brownfield site in the more traditional sense. Structures have been removed or leveled, and after serving as an oil refinery, degraded soil conditions and environmental cleanup will forever be a part of this land's history. "Amoco gave the land to the city years ago," Weekes explains, adding that the oil company has been required to handle extensive cleanup at the site throughout the years. Even still, BP remains liable for any future cleanup needed as a result of its actions, even though it no longer owns the site, Weekes says.

Even though the site does not have any existing structures—and Big Horn Basin Ethanol still doesn't own the land—Weekes says his company is committed to it. Despite the good intentions of some town leaders in Greybull who wanted to give the land to Big Horn Basin Ethanol free of charge, the well-wishers were outvoted. Now, Weekes and his partners hope to complete the purchase of the brownfield site by the end of May, and he remains confident in his plan. He is especially satisfied with transportation prospects. Greybull is a Burlington Northern Santa Fe rail hub location, according to Weekes, which means three things: access to corn, access to ethanol markets and access to distillers grains markets. "Obviously we're not in the Corn Belt," Weekes quips. "Our advantages are here though."

In addition to his site's access to rail, the plant would also be located near its source of energy: coal. "We're going to be bringing in our coal from less than 100 miles away—we're going to truck it in," he says, explaining that Big Horn Basin Ethanol would burn 150 tons of the domestically abundant fossil fuel per day to make its projected 20 MMgy of ethanol.

'Great White' brownfield

Across the United States' northern border in Barrie, Ontario, another proposed ethanol plant is hoping to take advantage of a used site, and this one has infrastructure in place. Northern Ethanol Inc. is in the planning stages of constructing a 380 MMly (approximately 100 MMgy) ethanol plant at the old Molson brewery in Barrie. This is one of at least three 100 MMgy plants the company is looking to build, with another plant in Sarnia, Ontario, and a third in upstate New York, says Gord Laschinger, CEO of Northern Ethanol. For Laschinger, locating his projects on brownfield sites offers several competitive advantages.

First, zoning and permitting are typically easier to accomplish on brownfield sites. According to Laschinger, most permitting processes are minimized greatly compared to the requirements usually associated with greenfield projects. "Then there's access to large amounts of water, which we have in Barrie," he says. "A plant the size we intend to build takes nearly a million gallons of water a day."

And there's more the Barrie brewery site can offer Northern Ethanol, Laschinger tells EPM.

There's the premium transportation access, both railroad and highway, leading to one of Canada's largest ethanol markets: Toronto. Another advantage to siting an ethanol plant in Barrie's old Molson brewery is the high-volume natural gas pipe on-site. This particular location lends itself to feedstock origination advantages too, where it has multiple sources of corn. Contingent on the hope that Canada's new US$1.65 countervailing duty on U.S. corn is not permanent, a big percentage of Northern Ethanol's feedstock could come from the Midwest via shipping across the Great Lakes. The plant will also bring in corn from southwest Ontario and from a 100-mile radius surrounding the old brewery.

Molson's on-site brewing equipment may come in handy for the ethanol plant conversion, Laschinger says. "We've got 120 stainless tanks of various sizes, the average size of which is approximately 20,000 gallons," he says. "Some of them will be used, and some won't, I imagine."

Being that there are similarities in making brew and producing ethanol, Laschinger doesn't overlook the advantages of a potential ethanol plant employee base right in Barrie. "The employee base is a definite advantage," he says. "With Molson operating a brewery on-site here for years, there's a similar skill base to draw on from the surrounding community, similar to what we'll need at Northern Ethanol."

All these advantages really boil down to one thing, which is saving money. "If you don't have access to these things—if you don't have rail, natural gas or access to large quantities of water—you're going to be spending a lot of time and money bringing those services to the site," he warns.

There will be some demolition work going on intermittently throughout this year while plans get solidified, and Laschinger expects full-blown construction to begin in early 2007.

A sliver of the Gopher State saga

All the pages in this publication combined couldn't provide enough room to tell the whole Gopher State Ethanol story that developed in St. Paul, Minn., over the past eight years. Gopher State Ethanol, which is no longer operating and has filed for bankruptcy, was infamously plagued with multiple problems from its inception, including continued complaints from St. Paul's residents.

Gopher State wasn't the typical brownfield site—again, they are all unique—but its tale consists of collocation and brownfield experiences, all in one.

In 1991, the Minnesota Brewing Co. bought an idle brewery in St. Paul, Minn., a brewery with a history as rich as the beer it produced. According to Don Mathews, a long-term consultant to Gopher State Ethanol and owner of Mathews Industrial Management Inc., the brewery's history dates back 150 years to 1855.

In 1998, the Minnesota Brewing Co. decided to put its underused west-side expansion of the brewery to other uses, namely making ethanol. "The big question, I believe, wasn't whether or not to build an ethanol plant there, but whether or not the west side should be leveled and built from scratch, or be modified to make ethanol," Mathews tells EPM. But there wasn't much time to contemplate what construction route to take—the plant needed to be operating by April 15, 2000, in order to secure its 15-cents-per-gallon state producer incentive, Mathews says.

"The brewery managers looked at a few proposals," he continues. "All but one suggested leveling the west side of the building and starting fresh at the cost of about $40 million, if I remember correctly."

Harris Mechanical put in a bid of construction at $18 million, using much of the existing on-site brewery equipment. The difference in cost was convincing, and the race to convert the west side of the Minnesota Brewing Co. into a 15 MMgy ethanol plant was on. According to Mathews, Gopher State Ethanol was up and running by its April 15, 2000, target date. Shortly after its start-up, Gopher State's plant manager at the time, Richard Hanson, hired Mathews as a consulting project manager.

Troubleshooting problems and fabricating solutions at a retrofitted-brewery-turned-ethanol-plant is sure to be challenging work. Mathews' favorite compliment came from the CFO of Gopher State, who once told him, "You save me money every time you walk through that door!" referring to Mathews' unique ability to solve the plant's various problems. "An ethanol plant built on a brownfield site isn't going to have the same problems as one of these cookie-cutter plants out there. The problems are unique, and unique problems require unique solutions." That's something Mathews calls "the uncertainty factor."

But uncertainty didn't keep Gopher State from reusing a good portion of the brewery. "Recycling is a good thing," Mathews says. "How many out there can say they make renewable energy from a recycled plant?"

From his memory, Mathews says Gopher State reused the beer fermentors, the beerwell tanks, two steam boilers that ran the downsized brewery and the 15 MMgy ethanol plant, and the existing building structure, which was able to house all processes except distillation—obviously the tank farm and the grain storage were located outside the building, too. Also, the brewery and ethanol plant's collocation allowed the sharing of resources like the laboratory, the labor pool and administrative services, among others.

According to Mathews, retrofitting a plant could be a time and money saver. But that word "could" isn't definitive enough for most, and the uncertainty factor comes into play. "You've always got to ask, ‘What could go wrong?'" Mathews tells EPM.

For example, Matthews tells a great story of an old on-site water softener. It was sitting there collecting dust and could have been put to use feeding soft water to the cooling towers. It was never considered for use because no one knew if the water softener would work. Mathews spent a little money to have it tested and discovered that the cost for repair was very affordable. The project had a three-month payback on chemical costs for the cooling tower.

Effectively, therein lies Mathews' answer to why more plants don't "brownfield it." Sure, Mathews successfully had that particular water softener repaired, but what if it turned out costing more money than it was worth? Multiply that concern by all the salvaged and retrofitted equipment in the plant, and the uncertainties and investments surpass the appreciable. "It involves taking risk," he says poignantly. "But most people just aren't comfortable with that level of uncertainty."

Mathews adheres to an old adage he believes originates from a famous, former prime minister, the bulldoggish but beloved Winston Churchill—a saying that really encapsulates the nature of building on a brownfield site. "If the odds are in your favor, it's an investment," he says. "If the odds are not in your favor, it's a gamble. If you don't know the odds, then you are a fool."

Ron Kotrba is an Ethanol Producer Magazine staff writer. Reach him at rkotrba@bbibiofuels.com or (701) 746-8385.