UK ethanol project gains momentum with US plant acquisition

By Holly Jessen | April 09, 2013

A United Kingdom company hopes the purchase of Appomattox Bio Energy, a failed U.S. ethanol plant, will be the boost it needs to start construction on a 200 MMly (52 MMgy) ethanol plant in Grimsby, England. About two-thirds of the U.S. ethanol plant equipment will be dismantled and shipped overseas to be integrated in the construction of the U.K. plant.

“This development takes us a couple of significant steps closer to completion,” Dave Knibbs, CEO of Vireol told Ethanol Producer Magazine in an email. Vireol is the company that will operate the U.K. ethanol plant, Future Fuels LLP. The company expects to start construction in early 2014 and reach full production levels in 2016, he added.

Appomattox Bio Energy, a barley-to-ethanol plant built by Osage Bio Energy, was mechanically complete in August 2010. However, the plant never reached full production after a September 2010 explosion during start up and was put up for sale in May 2011.

In March, Appomattox Bio Energy was purchased for an undisclosed price. Although various amounts have been reported, Knibbs said Vireol’s understanding is that the ethanol plant was built for a cost of $183 million. All assets, including the ethanol plant itself and the land, were included in the share purchase agreement of Appomattox Bio Energy. The U.K. company expects to save money on the Future Fuels project by utilizing equipment from the U.S. ethanol plant. “It clearly makes a material difference to plant economics and will yield significant savings in the upfront cost of the build as well as on-going project economics,” he said.

According to the website, the Future Fuels facility will utilize U.K. wheat produced in the Immingham region of northeast England, one of the U.K.’s main wheat exporting regions. The facility is located close to a deep-water port on the Humber for the U.K. and has close proximity to the deep-water port on the Humber, a large tidal estuary on the east coast of England. This will allow the company to sell its ethanol for either domestic use or export.

The U.K. project has experienced delays in starting construction. In May 2012, Vireol announced it planned to begin construction on the U.K. plant in October. However, it never happened “mainly due to global capital markets where project financing conditions for all projects remain extremely tight,” Knibbs said. Now, with the purchase of Appomattox Bio Energy plus the acquisition of another 10 hectares of land and buildings in Grimsby, the start of construction is closer to becoming a reality, he added.

The technology provider, Katzen International, (also the technology provider for Appomattox Bio Energy) and De Smet, the engineering, procurement and construction contractor, have already begun work on integrating the U.S. plant equipment with Future Fuels’ existing plans. The process to dismantle the U.S. ethanol plant equipment, ship it overseas and reassemble it in the U.K. is expected to start in early 2014 and take about 18 months. “A further tranche of funding will be raised in the autumn to enable to deconstruction/reconstruction of the plant in 2014,” he said.

Some larger parts of the U.S. plant, such as storage silos, will not be transported to the U.K. because the company can build those more economically locally. Any assets not sent to the U.K. will be redeployed in the U.S. “We will seek to put them all back into good economic use, much of which is likely to happen on the current site,” Knibbs explained.