USDA offers to back ZeaChem's first commercial biorefinery

By Kris Bevill | January 26, 2012

On Jan. 26, the USDA announced it has approved a $232.5 million conditional commitment to support the construction of ZeaChem Boardman Biorefinery LLC, a 25 MMgy integrated biorefinery to be built in Boardman, Ore., along the Columbia River. The announcement is the USDA’s second conditional commitment offer to a commercial-scale cellulosic ethanol project in less than a week. On Jan. 20, the USDA announced it had approved a conditional commitment for a $25 million loan guarantee to build Fiberight LLC’s 3.8 MMgy municipal solid waste-to-ethanol facility in Blairstown, Iowa.

In announcing the conditional commitment for ZeaChem’s project, Secretary of Agriculture Tom Vilsack said the projects being offered loan guarantees from his agency will support the Obama administration’s goal of developing alternative energy sources to reduce the country’s fuel imports. “In his State of the Union address, President Obama outlined his vision for a new era for American energy—an economy fueled by homegrown and alternative energy sources that will be designed and produced by American workers,” Vilsack said in the news release. “This project and others like it will help to establish a domestic advanced biofuels industry that will create jobs here at home and open new markets in the Pacific Northwest and across America.”

Final approval of the USDA’s loan guarantee for ZeaChem is dependent upon the company meeting certain performance parameters, including the successful start-up and operation of its demonstration-scale facility. ZeaChem recently completed the core construction of its 250,000 gallon per year demo plant in Boardman and is using that portion of the facility to prove its ability to produce chemicals including acetic acid and ethyl acetate. Construction of the demo plant’s cellulosic ethanol portion is expected to be complete mid-year. ZeaChem President and CEO Jim Imbler said the project remains on track to produce 50,000 gallons of cellulosic ethanol this year as previously announced. Locally sourced hybrid poplar trees will be the primary feedstock at both the demo and commercial-scale facilities, but the company also plans to use some crop residues, including wheat straw and corn stover.

While work continues at the demo plant, Imbler said the conditional commitment from the USDA will be useful in closing financing for the approximately $390 million, 25 MMgy commercial plant. Construction of that facility is expected to in 2013, with a projected start-up time set for sometime in 2014. “The USDA loan guarantee is a significant validation for ZeaChem’s highly efficient, economical and flexible biorefinery technology,” Imbler said. “This commitment allows us to move forward with securing financing, beginning construction, creating jobs in the community and producing economical and sustainable products for the fuel and chemical industries.”

According to ZeaChem, the construction and operation of its 25 MMgy plant will create 188 direct construction jobs and 65 full-time operations jobs.

The USDA’s conditional commitments for the ZeaChem and Fiberight projects are being provided through the Section 9003 Biorefinery Assistance Program, which was established by Congress in the 2008 Farm Bill to assist with the commercial deployment of technologies used to produce advanced biofuels. ZeaChem has also received a number of other federal awards for its biorefinery project, including a $25 million U.S. DOE grant for the construction of the cellulosic ethanol project at the core project at the demonstration-scale facility.

The company was also part of a coalition which received a $40 million USDA grant through its Agriculture and Food Research Initiative last September to develop technologies that could produce biogasoline and jet fuel from hybrid poplar. ZeaChem’s share of that grant is $12 million over a five-year period, according to the company. Last July, the USDA also awarded a $17.1 million grant through its Biomass Crop Assistance Program for Oregon’s GreenWood Resources to establish 7,000 acres of intercropped hybrid poplar which will be used to supply feedstock for ZeaChem’s commercial-scale plant.