Osage officials break silence, leave many questions unanswered

By Holly Jessen | May 24, 2011

A press release issued May 23 by Osage Bio Energy revealed that the company will try to sell the 65 MMgy barley ethanol plant. The Hopewell, Va., plant never reached full production and won’t, the company said, due to unfavorable market conditions.

City Attorney Tom Lacheney told EPM Hopewell officials hadn’t heard anything from Osage, save what was in the press release. The company has yet to answer his letter concerning the Sept. 30 deadline to post a $5 million letter of credit. “Not a peep,” Lacheney said.

The letter of credit is a guarantee that the city will receive tax revenue it expected to collect from the ethanol plant, Appomattox Bio Energy. According to a contract between Osage and the city, the company must post the letter of credit whether it is operating or not and Hopewell could withdraw $1 million for missed tax revenue immediately. “It basically works like a bond, it’s just assuring us that were going to collect these taxes,” he told EPM, adding that if the company doesn’t post the letter of credit, the city would be forced to sue.

A Hopewell City Council meeting is scheduled for the evening of May 24 and the news of the Osage plant may come up there. “I think everybody is still trying to digest what that means, that they are not opening and that they have the plant for sale,” he said. “I don’t know what kind of market there is for a barley ethanol plant.”

Osage was formed in 2007 to build a first-of-its kind commercial-scale ethanol plant that would process multiple feedstocks, including winter barley. Construction began in 2008 and the plant was mechanically compete in August. “The Appomattox Bio Energy facility is fully functional and production-ready for the new owners,” the press release said.

Something the press release didn’t address was an explosion that happened at the plant in September. Repairs to the plant’s regenerative thermal oxidizer took longer than expected. It isn’t known how largely the explosion factored into the decision not to bring the plant to full production. In response to a request for additional information, Heather Scott, company spokesperson, told EPM that the press release was the only information the company was releasing at this time.

The company did say it would immediately lay off workers effective May 25. However, “a core team of employees” will stay on maintain the plant and facilitate the sale. “Osage Bio Energy would like to recognize and acknowledge the efforts of the many employees, community leaders and supporters that came together to develop this project over the past few years,” Scott said in the prepared statement. “Appomattox Bio Energy is a first-of-its-kind facility in the United States and represents a unique opportunity for multi-feedstock ethanol production to its future owner.”