Start up of Osage plant a concern for Hopewell, Va, officials

By Holly Jessen | May 19, 2011

Nearly a year after Virginia’s first ethanol plant was scheduled to be producing ethanol, the grounds of Appomattox Bio Energy stand quiet, with very little activity. In fact, the rumor going around town is that the employees have been laid off, said Thomas Lacheney, Hopewell’s city attorney. “All we really know is rumors,” he told EPM.

Appomattox Bio Energy, which utilized Katzen International technology, was commissioning in September 2010 when an explosion damaged the regenerative thermal oxidizer at the plant. At first, officials of Osage Bio Energy, the plant’s sister company, told EPM the problem would be corrected quickly, but the length of time needed to complete repairs was extended several times. In mid-February city officials were told the plant would start up in March or April, but that didn’t happen.

The plant’s delayed start up has posed a budgeting problem for the City of Hopewell, which was counting on tax revenue from the 65 MMgy ethanol plant. Hopewell is receiving real estate taxes but wouldn’t receive any machinery and tools tax revenue until the plant started producing. “Our budget figures are based at least somewhat on anticipated revenue from this plant opening,” Lacheney said, “so it’s messing up the budgeting process (a bit).”

According to its contract with the city, however, the company has until Sept. 30 to post a $5 million letter of credit—whether the plant is producing ethanol or not. The contract allows the city to withdraw $1 million for missed tax revenue immediately. In all, the city expected to receive at least $2 million in taxes yearly from the ethanol plant. If the company doesn’t post the letter of credit Hopewell will be left with no recourse but to sue, he said.  

Lacheney sent a letter to Osage’s legal counsel, asking for a detailed update on the status of the plant and a timeline when it would start producing. So far, that letter has not been answered. "There is more than a little concern on the part of the citizens Hopewell with respect to the fact that Osage has not yet commenced production at the plant despite the fact that construction appears to be completed," the letter said.

Calls to multiple numbers at the plant have been repeatedly busy and multiple emails from EPM have gone unanswered. “Everybody seems to have the same problem in getting a hold of them,” Lacheney said.