Friday, July 04, 2008
February 2007 issue - Vol.7, No.5, 24 pages

   We Mean Business. Illinois Business.
 
 

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...continued Local firm buys land in Granite City for ethanol plant

for the future construction and operation of a 110 million-gallon-per-year ethanol plant. Multiple sources have told the Illinois Business Journal that American Milling and Park 70 purchased this property as part of this agreement with VeraSun.
   VeraSun is the nation's second-largest ethanol producer. While the company has five plants that are either in operation or under construction in the Midwest, this would be its first project in Illinois. The cost of the project was listed in Leadership Council Southwestern Illinois' recent Market Review and Investment Update report as $110 million, but sources say it could go as high as $150 million.
   The company began operation in 2003 with its first plant in Aurora, S.D. Its second plant was constructed in Fort Dodge, Iowa and a third will come on line this summer in Charles City, Iowa. Two more plants in Hartley, Iowa and Welcome, Minn. are being built and are expected to be completed in early 2008. With the completion of these two plants, VeraSun expects to have production capacity of 560 million gallons per year of ethanol by the end of first quarter 2008.
   Increased demand for ethanol is driving the price of ethanol higher, according to the Energy Information Administration.

   The price of a gallon of ethanol typically runs about 50 cents higher than the price of a gallon of gasoline due to the 51 cent-per-gallon federal subsidy for ethanol, according to the Energy Information Administration's Short Term Energy Outlook released in late summer of 2006. However, according to the EIA report, the price of ethanol began a rapid climb in mid May of 2006 and peaked at nearly $2.20 per gallon above the price of a gallon of gas over the summer.
   This price spike was due to the continuing shift away from methyl tertiary butyl ether or MTBE and toward ethanol as an oxygenizing agent, according to the EIA. An oxygenizing agent adds oxygen to the gasoline, making it burn hotter and more completely. In the report, the EIA predicted that the price of ethanol would decline as the summer driving season came to a close.
   To promote the increased use of ethanol, VeraSun has been forging partnerships with American auto manufacturers like Ford and General Motors to install more E-85 pumps. Last June the company announced a collaboration with Ford Motor Co. to open a Midwest Ethanol Corridor by adding 14 new retail locations between St. Louis and Chicago where VE-85 - VeraSun's blend of 85 percent ethanol and 15 percent gasoline - could be purchased by consumers. Last July VeraSun announced a similar deal with General Motors in the Pittsburgh area.
   If built, the VeraSun plant in Granite City would be Southwestern Illinois' second ethanol plant. Center Oil Co. currently has one under construction in Sauget.

vice president/coo: Alan J. Ortbals
email: aortbals@ibjonline.com

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