Companies line up to make ethanol

Ethanol rush - Too many contenders?

Competition to build the state's first ethanol production plant is heating up in Eastern North Carolina, with the contenders now up to five.

But don't expect them all to be built, said Ian Horowitz, a Soleil Securities analyst who tracks the ethanol industry. "The proposed production is built on a lot of hope," he said.

The rush to ethanol, which is made from corn, is part of an up-and-coming industry that is betting millions that rising oil prices and a Democratic Congress will push up demand for the fuel.

The Midwest is home to most of the existing 110 ethanol production plants, but entrepreneurs are now focusing on the East Coast.

About halfway between Boston and Miami, Eastern North Carolina is an ideal transportation hub to supply population centers up and down the East Coast.

Ports in Wilmington and Morehead City allow for ethanol exports to countries with high demand, such as Brazil. Also, the state has many industries that use byproducts of ethanol production, giving ethanol producers another ready source of income.

Hog and poultry growers use corn leftovers as feed. Another byproduct, carbon dioxide, is used to clean pharmaceutical laboratories and preserve packed meat.

Mark Dassel, senior vice president of E85 Inc., calls Eastern North Carolina a great strategic location. The Seattle company announced two weeks ago that it intends to build a large plant near Fayetteville.

E85 plans to produce about 100 million gallons of ethanol and fuel the plant with methane gas from the many area hog and chicken farmers. But the company has yet to buy land or get necessary permits.

The other four facilities are proposed for sites south and east of the Triangle.

* Agri-Ethanol of Raleigh picked 161 acres near Aurora, a town about 30 miles northeast of New Bern, for a $200 million facility to produce about 110 million gallons a year.

Terry Ruse, Agri-Ethanol's chief operating officer, said the company has all its permits and has all of its supply contracts for the byproducts signed. A connection to nearby Norfolk-Southern railroad tracks will allow the plant to bring about half the needed corn from the Midwest.

Ruse expects plant construction to begin in the first quarter and take about 14 months.

* Solv-It Technologies of Marietta, Ga., announced this week that it wants to build a plant next to the Robeson County landfill near Lumberton. The plant would produce about 4 million gallons of ethanol a year and be fueled by methane gas from the landfill.

Robeson County is considering using a $690,000 state grant to install a gas collection system at the landfill. A public hearing is planned Jan. 29.

* Clean Burn Fuels of Chapel Hill plans a small plant near Raeford. The company has obtained all permits, but has run into trouble getting financing.

* In August, Xethanol of New York bought a former fiberboard plant about 40 miles east of Raleigh near Spring Hope. It plans to make ethanol from wood chips.

Xethanol did not return calls. According to the Renewable Fuels Association, remodeling of the fiberboard plant has not begun.

Four of the proposed plants would make ethanol from corn.

Those plants could be a boon for corn farmers, but production would have to rise. Producing 100 million gallons of ethanol a year -- as the facilities in Aurora and Fayetteville each propose -- requires about 40 million bushels of corn. That is nearly half of the state's corn for grain production in 2005.

And growing more could be an issue. Land suitable for corn is limited in North Carolina.

Getting corn from the Midwest would be possible but a ramp up in ethanol production nationwide is increasing the price of corn. At the same time, ethanol wholesale prices have fallen. Horowitz suggested that ethanol prices will continue to erode, which would foil the plans of many industry newcomers focused on the East Coast.