Minnesota Electric Co-Op Opens Ethanol Plant in North Dakota

Star Tribune

July 24, 2015

By David Shaffer

The nation’s first new corn ethanol plant in more than five years — in Spiritwood, N.D. — has gone into commercial operation, its owner said Friday.

Dakota Spirit AgEnergy, 78 percent owned by a Minnesota cooperative power company, is a 65 million-gallon-per-year ethanol plant built next to one of the ­electric utility’s coal-fired power plants. It supplies steam to produce the biofuel at significant energy savings.

The $155 million ethanol refinery, 12 miles east of Jamestown, N.D., came in on budget, with construction costs of $135 million and $20 million in financing costs and working capital, said Greg Ridderbusch, the Minnesota-based president of the ­ethanol operation.

“We have found a way by co-locating with industry to generate power more efficiently and with less environmental impact than an ethanol plant by itself or a power plant by itself,” said Ridderbusch, who also is a vice president at Great River Energy, the Maple Grove power cooperative that is majority owner in the North Dakota plant. “It is state of the art in the use of energy and emissions.”

The technology doesn’t reduce the release of greenhouse gases, but offers a lower rate of carbon emissions for the energy output. Roughly 60 percent of coal’s energy gets used at Spiritwood, compared to 30 to 35 percent at a ­typical coal generator.

Most of the nation’s 212 ethanol plants were built in the last decade in response to federal policies encouraging blending of ethanol at the pump. But the biofuel building boom faded by the decade’s end. Three of the last corn ethanol plants were built in Minnesota in 2009. Other recently built ethanol plants are cellulosic versions that produce the fuel from corn cobs and stalks, but not the kernel.

The North Dakota plant will produce 20 percent of the motor fuel used in that state, the company said. Since motor fuel typically is a 10 percent ethanol blend, Dakota Spirit will need markets out of state. Ridderbusch said one unit train of 100 tank cars — similar to an oil train — likely will be loaded every 18 to 20 days and head to eastern markets on BNSF Railway. BNSF’s main line, the same one used by Bakken oil trains, runs through central Minnesota and the Twin Cities.

Dakota Spirit expects to purchase 23 million bushels of corn annually, the company said. Besides fuel, the plant expects to produce 198,000 tons of distillers grains used as cattle feed and 6,900 tons of industrial corn oil used mainly in feed and to produce biodiesel. The plant has 38 employees.

“The Dakota Spirit AgEnergy biorefinery is an important investment for North Dakota because it adds value to the state’s production agriculture industry, expands our renewable energy offerings, and creates jobs and economic opportunities for our people,” North Dakota Gov. Jack ­Dalrymple said in a statement.

It is the second ethanol plant developed by Great River Energy, a power supplier to 650,000 Minnesota customers in 28 local co-ops that own the utility. Its other biofuel plant, Blue Flint Ethanol, is next to the company’s Coal Creek power plant near Underwood, N.D.

Both ethanol plants take waste steam from their adjacent generators. The Spiritwood coal-burner also supplies steam to a nearby malt plant owned by Cargill Inc.

For Great River Energy, the investment in an ethanol plant came largely out of necessity. As the utility planned its Spiritwood generator, it counted on steam sales to operate the power plant economically. When the $437 million generating plant was finished in 2011, another company’s plan to build an adjacent ethanol plant had fallen apart.

In an unprecedented step, Great River Energy immediately mothballed the new power plant, whose electricity wasn’t needed after a recession-driven drop in demand. When the power plant finally opened last year, the ethanol plant was under construction, with Great River Energy leading the ­project. The utility sold a 22 percent stake in all its ethanol operations to outside ­investors for $17 million in 2014.

The older Blue Flint plant produced record profits last year, adding $28 million to the utility’s bottom line. Now, the ethanol industry faces challenges because of lower fuel prices and higher corn costs. Unlike many older ethanol plants with paid-down debt, Dakota Spirit enters the market with the higher cost structure of a newly financed plant. But Ridderbusch said he has no ­concerns.

“In this industry, you can never time it,” he said.

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