Fate of Riverland Biofuels plant still unclear

By Holly Jessen | July 15, 2010
Posted Aug. 17, 2010

Aventine Renewable Energy Holdings Inc. recently purchased the Riverland Biofuels ethanol plant in Canton, Ill., for a purchase price of $16.5 million. "This is an exciting opportunity to acquire a 38 million gallon facility at a favorable price," said Aventine CEO Tom Manuel in a press release. "When operational, we will leverage the proximity of the Canton facility to our Pekin, Ill., facility to gain marketing and operational synergies."

The people of Canton aren't celebrating just yet, however. "There has been no clear indication to us that it will be up and running as an ethanol plant," Chrissie Peterson, Canton's city attorney, told EPM.

The 38 MMgy ethanol plant has had a complicated and difficult history. It started out as a farmer co-op called Central Illinois Energy, which filed for bankruptcy in 2007 before construction was even completed. Some farmer shareholders lost everything, Peterson said. The ethanol plant was then revived as Riverland Biofuels, with production happening intermittently between December 2008 and March 2010.

Canton officials have had a few brief communications with Aventine, she said. For one thing, a contract with Riverland for fire protection will be up at the end of August. Aventine indicated it would like to continue that contract on a month-to-month basis for the next 30 to 60 days.

The city also has contracts with Riverland for water and wastewater treatment. However, Aventine is aware that Canton won't continue any wastewater treatment for the plant until issues with contamination, including 2.3 million gallons of wastewater stored at the ethanol plant, are resolved, Peterson said.

Those problems are related to a March investigation by the Illinois Environmental Protection Agency. The agency has asked the Illinois Attorney General's office to proceed with an immediate enforcement action against the owners of the ethanol plant and an adjacent grain operation/storage facility owned by Green Lion Bio-Fuels and is leased by the Andersons. It alleges that Riverland, Green Lion and The Andersons violated the Illinois Environmental Protection Act by allowing the discharge of runoff from rotting corn condensate and leachate, stockpiled ash (from the power station) and corn milling products.

After an anonymous complaint, Illinois EPA staff conducted inspections at the site in March and found that contaminated stormwater had been discharged into a small lake. Conditions in the lake were described as containing "odorous black solids and sludge deposits and a delta of distillers grain solids," according to an Illinois EPA press release. In addition, after an ethanol plant employee removed a beaver dam that had been blocking an outlet to a larger lake, contaminated water entered the larger lake. About 50 dead turtles were found in the small lake and a fish kill happened in the larger lake.

Aventine has had its own difficulties in the past, although things seem to be going better in recent months. In March, the company announced it was emerging from Chapter 11 bankruptcy and would resume construction at ethanol plants in Aurora, Neb. and Mt. Vernon, Ind., after construction stopped in 2009, just short of completion. Aventine Renewable Energy-Aurora West LLC and Aventine Renewable Energy-Mt. Vernon LLC, when completed, will be 110 MMgy ethanol plants. "The construction of our new facilities in Aurora and Mt. Vernon continue to move forward on schedule and on budget," Manuel said. "We expect these facilities to be complete in the fourth quarter of 2010."

A press release regarding the company's second quarter results showed a mixed bag. Net loss for the three months ending June 30 was $9.3 million, or $1.06 per diluted share. That's an improvement from that same time period in 2009, when net loss was $48.9 million, or $1.14 per diluted share. Revenues were down, at $96.9 million in the second quarter of this year compared to $118.1 million in the second quarter of last year. The company sold a total of 46.5 million gallons of ethanol, compared to 52.8 million gallons in the second quarter of 2009. "The reduction in equity production between 2010 and 2009 is primarily attributable to differences in the timing and length of plant maintenance shutdowns," according to a company press release. "A decrease in the average sales price of ethanol also contributed to the decrease in net sales. Ethanol prices averaged $1.62 per gallon in the second quarter of 2010 versus $1.70 in the second quarter of 2009."

Revenues were also down in the area of coproducts. Aventine had coproduct revenues of $21.5 million in the second quarter of this year, a 19 percent decrease from coproduct revenues in the second quarter of 2009. This was due to significantly lower sales volumes, the company said. On the other hand, with corn costs down, coproduct revenues, as a percentage of corn costs, increased to 35 percent, compared to 34.2 percent in the second quarter of 2009.