E3 Biofuels sues over faulty boiler, wet cake conveyor

By Holly Jessen | February 17, 2011

The former owner of an idle ethanol plant in Mead, Neb., filed lawsuits Feb. 8 in U.S. District Court in Nebraska, faulting four companies for its failure to  fully start up and operate as intended. E3 Biofuels LLC was working to build a closed-loop ethanol plant powered by methane gas from an adjacent feedlot, which in turn, would receive wet distillers grains from the 25 MMgy ethanol plant.

The company said the problem started during a boiler installation in Feb. 2007, according to court documents. When it would not fire, “certain control processes” were bypassed before reattempting to fire the boiler, which resulted in a major explosion. Several repair attempts were unsuccessful and though E3 Biofuels said it demanded a new boiler it never received it, resulting in diminished value of the plant, loss of revenue and resulting in bankruptcy for E3 Biofuels. The value of the plant, had it been fully started up, totaled more than $60 million, the company said.

E3 Biofuels is suing three companies it said contracted to supply, start up and warrant a boiler system as well as manage and integrate it into the solid waste management system and ethanol plant. Biothane Corp., a New Jersey company, Dilling Mechanical Contractors Inc., based in Indiana, and Perennial Energy Inc. of Missouri are named in the lawsuit.

In addition, E3 Biofuels said the wet cake conveyor system installed at the plant never operated properly. The conveyor was not equipped to handle the quantity of wet distillers grains produced at the plant and repeatedly failed, requiring the company to perform maintenance and purchase replacement parts, according to court documents. Again, E3 Biofuels demanded that the conveyor be replaced but it was not.

This resulted in additional expenses, operational cost, lost operating revenue and profits and attorney’s fees, estimating the amount of damages to E3 Biofuels at more than $225,000. The company is suing Dilling and Hawthorne-Seving Inc. of Ohio.

In November, Spectrum Business Ventures Inc. of Kansas City, Mo., and its affiliate, AltEn LLC of Kansas acquired the plant with plans to bring it into production.