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Illinois biodiesel plant opens in a low market

Soy-crushing neighbor will cut transport costs

By LINDA McGURK
Indiana Correspondent

DANVILLE, Ill. — If investors behind one of the nation’s newest biodiesel plants were nervous about starting production amid plunging energy prices and shrinking profit margins for the renewable fuels sector, they didn’t show it during the Nov. 20 ribbon-cutting ceremony.

“This will still be a profitable venture, and I see a very bright future,” said Jon Rosenstiel, vice chair of Blackhawk Biofuels, LLC.
Blackhawk was formed by 500 individual investors from five states to develop the new Danville, Ill., biodiesel plant. “The Renewable Fuels Standard calls for the production of 500 million gallons of biodiesel per year, and this plant will play a critical role in meeting that mark,” Rosenstiel, of Pearl City, Ill., added.

Blackhawk has commissioned Renewable Energy Group (REG), a biodiesel production and marketing company headquartered in Ames, Iowa, with operating the 45-million-gallon-per-year facility. REG expects to start producing biodiesel from soybean oil from the plant the first week of December and begin selling it by the end of the month.

Sometime during the first quarter of 2009, the plant will also be capable of producing biodiesel from animal fats purchased from regional producers. REG, which runs nine plants with a combined annual production capacity of 300 million gallons, will market the biodiesel from the Danville plant through its nationwide network of more than 20 terminal locations.

The vicinity to final markets in Indianapolis, St. Louis and Chicago, and access to railroads and Interstate 74, helped Danville land the plant. But what really made the six-acre formerly residential site attractive was its next-door neighbor: Bunge North America’s soy crushing facility.

The new biodiesel plant will use more than 300 million pounds of soybean oil per year, and REG will purchase the feedstock directly from Bunge. “We’ve basically eliminated transportation costs. Not too many plants are co-located with a crusher,” said Ron Mapes of Stockton, Ill., and chair of Blackhawk.

Local officials were pleased about the 27 full-time, “green-collar” jobs created by the plant and said the facility will be a boon to Vermillion County, an area that’s been hit hard by factory and store closings in the past. The employees were hired locally and are in training to bring the plant online. Approximately 40 construction jobs were also created thanks to facility upgrades on the site.

“In a county where one out of every three jobs is in one way or another related to the agricultural community, this particular project not only helps stabilize the economy, but in fact grows it at a time when other industries are declining,” said Danville Mayor Scott Eisenhauer, who attended the ribbon-cutting ceremony.
“It also helps Danville move into the future in regards to renewable fuels, and puts us on the forefront of that movement.”

The state of Illinois provided $5 million in grants and $20 million in loan guarantees to help the $75-million project get off the ground.
Of the total, approximately $57 million was spent on constructing the facility.

“Startup will take anywhere from one to four weeks, depending on how good we are,” said Gus Baltabols, an REG general manager, during a tour of the plant.

Despite the many twists and turns in the energy market since its groundbreaking two years ago, Rosenstiel was optimistic about the prospects for the plant.

“The price structure changes every day and we’ll just have to see what tomorrow brings,” he said about the volatile markets.
“I think the stars are lined up for long-term growth for biodiesel – not only because we need to reduce our dependence on foreign sources of energy, but also because consumption just keeps growing.”

11/26/2008