Auburn ethanol team expects thaw in financing climate

 5 comment(s)  
 E-mail Story
 Print Story
  Share

 digg it!
 Facebook
 del.icio.us
Seed Newsvine
Fark It
Reddit

Text Size: 

Tools Sponsor

BY ART HOVEY / Lincoln Journal Star

AUBURN — E Energy officials tried to reassure a City Hall audience of about 30 local leaders Tuesday that a proposed $190 million ethanol plant will be built in Nemaha County, despite a recent case of the jitters among Wall Street investors.

E Energy executive Bud Olsson pointed to December action by Congress increasing a renewable fuels mandate as a new source of enthusiasm for outside financing of construction in Nebraska and surrounding states.

However, Olsson doesn’t expect to see anything similar to the building boom that followed initial federal mandates in 2005. That’s because enough projects are already under way to produce much of the new annual mandate of 15 billion gallons by 2012.

“When it opens up, it’s going to open and close like a mouse trap,” he said of investment opportunities, “so there will be only about 2 billion gallons of capacity to get sucked up.”

Auburn’s approximately 3,500 residents have already spent about three years expecting a project that faces an extra financial hurdle: a water pipeline that would stretch more than a dozen miles to wells planned along the Missouri River.

That could carry a price tag as high as $15 million, and the city’s Board of Public Works recently bowed out as a potential partner in that portion of the project.

But Olsson said every plant has unique financial considerations. That includes the Auburn project and two others the company is trying to nudge toward construction at Broken Bow and in southwestern Illinois.

“They all cost within 2 percent of the same amount of money,” he said.

In his opening remarks, Olsson repeatedly disputed local doubts about a plant being built on a site about 2 miles southeast of town.

He invoked the name of Everett Larson, who died of cancer in December at age 70, as a source of inspiration for getting the job done.

Larson had been president of E Energy Auburn and also led efforts that resulted in the completion of the E Energy Adams plant in Gage County and the start of production there in late 2007.

“Everett didn’t live to see this thing to fruition,” he said. “We’re going to make sure it happens.”

Larson’s daughter, Susan Hershberger, remains on the development team. As Olsson talked in an interview of the need to be ready when investors are ready and to offer solid management expertise, Hershberger chimed in, “We want to be the one they single out.”

Auburn Mayor Bob Engles said he thinks his town is on its way to an economic development breakthrough.

“I’m very optimistic and positive that we will have an ethanol plant in Nemaha County,” he said.

Tax increment financing, through which project developers can reroute tax obligations to site improvements, is one of the pending enticements on the city checklist.

Dave Hunter, general manager of the city’s utilities provider, said the proposed water partnership is not on the list.

“The way E Energy wanted the water structured and the way the Board of Public Works could participate in it was not going to work,” Hunter said.

A decision that appears to leave water responsibilities with E Energy is just fine with local resident Dottie Holliday, who raised several questions about that subject, truck traffic and other potential community impacts during a question-and-answer period.

“I just have so many reservations about the plant,” Holliday said afterward, “because I’ve been going to a lot of meetings.”

She prefers a limited role for the city in where the project goes from here.

“If this is a very profitable business,” she said, “then the investors should bear the brunt.”

E Energy’s Red Klein, a farmer in the Adams area, said the Auburn project has top billing among the three the company has on the drawing board.

“If the investment money comes forth, Auburn will be No. 1,” Klein said.

He predicts the Auburn project will pay off for the community, just as it has at Adams. But the investment climate has changed and most of the money will have to come from places far removed from corn country.

“We raised $50 million in Adams, Nebraska, in two days,” he said. “That world is gone.”

Reach Art Hovey at (402) 523-4949 or at ahovey@alltel.net.