Nebraska ethanol threesome

A Nebraska-based company called Central Bio-Energy (CBE) has announced plans to invest more than $500 million to build three - count 'em, THREE! - 100 million-gallon-per-year ethanol plants in Nebraska.

The bold move is intended to make CBE one of the leading ethanol producers in Nebraska, company officials said, and help it thrive with economies of scale in a future of dwindling margins.

The company projects that annual revenues, when all three plants are operational, should approach $600 million.

CBE executives insist there's lots of money to be made yet in conventional ethanol. "In high growth industries like this, there's always the natural tendency to say 'the bubble's going to burst', or think of it as a 'dot com'. This industry's bigger than that," said CEO Gordon Glade, who made his fortune founding leasing company AXIS Capital. "We feel the industry has established its legs. Yes, it's a large project, and there's risk obviously with any large project, but we're comfortable - especially with the billions of dollars of other capital investments coming into the industry - about the ethanol industry as a whole."

Each CBE plant is expected to purchase approximately 40 million bushels of local corn annually, or 120 million bushels in total, officials said, "providing a tremendous boost to the local corn markets." (ed. re: corn supplies, see this week's Ethanol concerns from the American corn heartland.)

Construction of the first plant, near St. Paul in Howard County, is scheduled to begin later this year and is expected to be completed in the first quarter of 2008. The second plant, scheduled to begin construction in the spring of 2007, will be built near Utica in Seward County and is expected to be operational by the summer of 2008. The third plant, to be built near Imperial in Chase County, will break ground in the spring of 2007 and is expected to be completed in the summer of 2008.

The company does not yet have all the financing for the entire project, said CEO Glade. It has raised enough local money to build its first plant and begin plants two and three. Potential partners for the balance of the project's financing include institutional investors, according to the company, which wouldn't specify how much money it was still seeking.

Unlike other ethanol projects, these are real, assured CEO Glade. "There are lot of plants out there that don't have a contractor or a design firm picked out and are trying to raise money. We're beyond that. We've already paid for our license agreements and made deposits with our builder. All of our ground is optioned and some of our money is in escrow."

CBE has signed plant design and engineering agreements with Delta-T Corporation, one of the leading ethanol technology firms in the United States.

Compared to biorefineries that may look similar, Rob Swain, president of Delta-T Corporation, said the CBE plants are being designed to run on less energy, use less water and use a unique water recycling system resulting in zero process wastewater.

"Central Bio-Energy will have the smallest environmental footprint of any plant in operation today," said Swain.

Central Bio-Energy is headquartered in Grand Island, Nebraska.

For more information:

www.centralbioenergy.com