Greene County is location for company turning wood chips into fuel

  http://www.tuscaloosanews.com/article/20120506/NEWS12/120509887?p=3&tc=pg

Published: Sunday, May 6, 2012 at 3:30 a.m.

By Patrick Rupinski
Staff Writer 

 

Just days before Christmas, Coskata Inc., a young company based near Chicago, filed its plan to sell stock to the public for the first time.

Its goal is to raise $100 million in the stock sale and use some of that money and cash on hand, plus a $87.9 million U.S. Department of Agriculture-backed loan, to build its first commercial plant to make biofuel from wood wastes. Listed in its proposed initial public offering, or IPO, is the site for that proposed plant — Boligee, a town of several hundred people in Greene County.

Coskata is one of several bio-energy projects that have popped up in West Alabama within the past few years in an industry that is heating up big time. 

Biofuels Digest, a daily that follows the industry, noted that Coskata is the 14th biofuel company nationally to propose an IPO since the latest biofuels boom started two years ago.

No date has been set for when Coskata’s stock will go on sale, and Coskata spokesman Matthew Hargarten said the company could not discuss its plans other than to refer to information in its 189-page IPO statement, which details the project and the company’s history. Such no-comment periods are common when a company is about to trade stock for the first time.

But Coskata’s IPO statement outlines what could be happening during the next few years in Greene County.

“The initial production capacity of this facility, which we refer to as Flagship, will be 16 million gallons of ethanol per year,” its filing said. It said it expects to have that first-phase portion of the plant built by 2013 and operating shortly there-after. 

A second phase of construction will follow and be completed by 2015. That expansion will add capacity to produce another 62 million gallons of ethanol. “We expect to build out Flagship to achieve total production capacity of 78 million gallons of ethanol per year,” the IPO filing said, when the plant is in full operation.

The Warrenville, Ill., company made it clear why it picked Boligee: “The feedstock for this facility, wood chips and wood waste, is in plentiful supply in the region and allows us to capitalize on existing wood gathering and processing infrastructure,” the filing said.

“When fully built out, we expect Flagship to produce fuel-grade cellulosic ethanol at an unsubsidized cash operating cost of less than $1.50 per gallon.”

Ethanol is blended with gasoline. Most of the ethanol used now comes from corn, but biofuel companies are looking at other sources.

The forestry industry and its wood and wood products have long been a major part of Alabama’s economy. Renewable forests cover much of the state and thousands of jobs are tied to that abundant natural resource. That industry also is a major state exporter. 

Alabama’s Labor Market Report for April estimated 12,500 people work in wood product manufacturing. Another 12,300 Alabamians work in paper manufacturing, with 8,600 of those working in the state’s pulp, paper and paperboard mills.

A breakdown on how many people work in the state’s logging and forestry jobs was less precise. The report indicated natural resources, which includes logging, natural gas and oil production, has an estimated 6,400 workers.

Coskata’s IPO statement did not indicate how many employees it would have at the Boligee facility.

In January 2011, when the state announced the plant would be built in Boligee, state economic development officials estimated it could create about 300 construction jobs and could generate up to 700 jobs at the plant and in the harvesting and hauling of wood biomass once it is in full operation.

Coskata’s IPO filing said the company picked the Boligee site not only because of its proximity to a plentiful supply of wood chips and wood waste in West Alabama, but because it is close to large ethanol markets in what it described as “the under-supplied Southeast ethanol market.”

With a 10-percent ethanol blend with gasoline, the Southeast needs almost 1 billion gallons per year, it said.

Coskata also said it received strong support for the project from the state and county governments and that it has received the key permits for the plant, including air-operating and water-discharge permits.

Coskata is not the only company looking at West Alabama’s wood waste products as a source for fuel.

Tuscaloosa-based Westervelt Co. is building a plant in Aliceville in Pickens County that will make wood pellets that will be exported to Europe, where they will be burned at electrical utility plants.

And at Westervelt’s Moundville sawmill in Hale County, turbines were added last year to produce electricity that is generated from the burning of sawdust and waste wood used to heat the plant’s wood-drying kilns. The turbines produce enough electricity to supply the power needs of 3,000 homes a year. Alabama Power Co. has teamed up with Westervelt on that project.

One uncertainty facing the bio-energy industry is the costs and availability of the fuel sources.

Several years ago, switchgrass was being hailed as a source of clean energy that could be used to generate electricity, and Alabama Power blended it with coal at its Gadsden generating plant.

New discoveries of natural gas, however, have made that cleaner-burning fuel a more economical energy source. 

“At this time, we are not using biomass at Plant Gadsden, which is currently using natural gas as its primary fuel versus coal or coal blended with biomass,” said Alabama Power spokesman Michael Sznajderman. “The plant has the ability to switch pretty easily from one fuel to another, so we could decide to utilize biomass again at the plant in the future.”

Some biomass is being used at the utility’s Coosa Pines facility in Childersburg, he said.

Wood waste products are not the only source of biofuel in West Alabama.

In Demopolis, Sweet Water Biofuels is converting fats from discarded catfish wastes at catfish processing plants into an advanced biofuel used in industrial generators. The company has about 50 employees in Alabama, and has begun collecting used cooking oil and grease from restaurants for conversion into its clean-burning biofuel, said Gene Pugh, the company’s regional sales manager.