Governors' Biofuels Coalition

• PHOTO: Susanne Retka Schill, BBI International

Many eyes are focused on the ethanol plant rising from the prairie at Spiritwood, North Dakota. Highway drivers keep watch on progress on the plant just north of Interstate 94, and on the other side of the world, investors in China can watch as well on the live webcam streaming coverage of the work in progress on the website of Dakota Spirit AgEnergy LLC.

Dakota Spirit is unique in many ways. It is the first corn ethanol plant to be built since the Energy Independence and Security Act of 2007 required new corn-based plants to meet a 20 percent greenhouse gas (GHG) reduction requirement—a process that took 19 months to get approved through the U.S. EPA.

The 65 MMgy Dakota Spirit also is the first U.S. plant fully integrated with a coal-fired combined heat and power (CHP) plant. And, equally unique is its financing—about half came through a little-known immigration program that gives permanent green card status to foreigners making hefty investments in U.S. industries creating new jobs. Dakota Spirit has 150 foreign investors from 10 countries.

Dakota Spirit AgEnergy is owned by Midwest AgEnergy Group, which also owns the 65 MMgy Blue Flint Ethanol LLC  plant at Underwood, North Dakota. Great River Energy, a wholesale electric cooperative serving 28 Minnesota and Wisconsin distribution cooperatives, is the majority owner of the group. In addition to Great River’s equity investment, there is a number of corporate and local farmer investors as well, explains Greg Ridderbusch, president of Midwest AgEnergy.

Project development for the ethanol plant at Spiritwood followed a long, winding road. In 2006, the North Dakota governor’s office announced plans for a $350 million Spiritwood Industrial Park that would include a 100 MMgy corn ethanol plant to be built by the Newman Group, along with an expansion of the Cargill Malt plant and a coal-fired CHP plant to be built by Great River Energy to power the campus. A little over a year later, in November 2007, the governor presided at the groundbreaking ceremony for Great River’s 99 MW CHP plant. About the same time, Cargill Malt began its expansion. The recession, however, torpedoed the Newman Group’s plans. But with a newly built CHP plant sitting idle due to the recession and the need for a second steam partner, Great River continued exploring the ethanol option. “We seriously looked at cellulosic for a while,” Ridderbusch recalls. But with the technology still developmental, and a feedstock study suggesting the proposed 20 MMgy plant would need to draw cellulosic feedstocks from as far as 100 miles, the planning returned to a corn-based facility. “By that point, Blue Flint Ethanol had been successful,” he continues. “We said, we might bolt on cellulosic later, but we let’s build Blue Flint No. 2.”  Early in 2011, Great River made the decision to move forward with Dakota Spirit AgEnergy.

GHG Performance
The first hurdle was to demonstrate Dakota Spirit would meet the renewable fuels standard (RFS) requirement for any new ethanol plants to reduce GHG emissions by at least 20 percent compared to the baseline. The feedstock portion of the Dakota Spirit life-cycle analysis was based on the existing corn ethanol pathway determined by EPA, but the CHP contribution to GHG reduction was unique.

Co-location with a power plant providing steam to the ethanol plant is not unheard of, though not common. Iowa and South Dakota have one ethanol plant each co-located with a power plant. And, Dakota Spirit’s sister plant, Blue Flint, is co-located with Great River’s Coal Creek Station located along the Missouri River near Underwood. That power plant is a conventional 1,100 MW coal-fired plant sending steam to its neighbor the ethanol plant.

Dakota Spirit will be using steam from Great River Energy’s 99 MW CHP Spiritwood Station. What is unique about Dakota Spirit, explains Jeff Zueger, chief operating officer, is the full integration—Dakota Spirit doesn’t have a boiler. “We are taking their steam directly in our columns and our exchangers and sending the condensate back,” he explains. “It has inherent risk, but it is a more direct relationship. And, they’re relying on us, using that condensate directly in the boiler.” The power plant, he adds, does have backup natural gas boilers. The facilities are integrated in other ways, as well, such as the ethanol process water coming through the power plant, eliminating the need for water treatment at the ethanol plant. While Great River is generating power next door, the ethanol plant is connected to the grid, assuring electrical service during maintenance or outages.

The CHP integration was critical for meeting the 20 percent GHG reduction requirement, although the benefits had to be clearly demonstrated. “It took a team effort,” Zueger says. “It took us working with the engineering firm (Karges-Faulconbridge Inc.) and the expertise within Great River Energy figuring out how to run the turbine in optimal mode.” Besides optimizing the process steam systems, the ethanol side needed additional levels of thermal efficiency to meet the GHG reduction goal. The letter from EPA approving the pathway came through in February 2013.

Green Card Financing
The final piece of the puzzle, not surprisingly, was financing. It was a very challenging time for project finance during the recession, Ridderbusch explains. “But when we looked at international funds, this was a viable project—we were able to demonstrate the economics. And, there is a different motivator for EB-5 investors.”

Midwest AgEnergy worked with the CMB Export LLC Regional Center, Rock Island, Illinois, to utilize a program created by Congress to encourage job-creating foreign investment in communities affected by military base closures, which was later expanded to qualify other communities. The EB-5 program requires an immigrant investor to make an at-risk investment of $1 million, or $500,000 in some cases, that creates no fewer than 10 American jobs, thus the name Employment Based 5th Preference Visa (EB-5).

The CMB Center did an economic study of the Midwest AgEnergy project to confirm about 80 direct jobs would be created at the power plant and ethanol plant, plus another 70 indirect jobs. “We have, for this project, 150 foreign investors, from over 10 countries, most significantly China,” Ridderbusch says. “Each of them put $500,000 in—not directly to our project, but into a pooled investment fund managed by the CMB Center. The CMB Center is the lender into our project.”

In December, Midwest AgEnergy announced the $155 million financial package was completed and construction would now begin. They were pretty confident a few months earlier, however, as the official groundbreaking ceremonies had already been held in August.

McGough Construction began work in earnest in January. The dead of winter in North Dakota may not seem to be an ideal time to begin construction, but for pile-driving it was. Even though subzero temperatures made it challenging to keep the pile driver firing, Zueger says, the frozen ground was easier to work on than if work had started in what turned out to be a very wet spring.  “Because of the soil conditions, piles had to be driven to support load bearing structures like the fermentation and grain tanks,” Zueger explains. “We have 18 miles of 9.5-inch, 90-foot long piles.” Project planners also demonstrated foresight in preparing roadbeds with subgrade development including geomats and substantial amounts of gravel to be able to handle the loaded trucks, in spite of wet conditions.
“We are on the pathway to have the facility starting up by later winter and into production by the second quarter of next year,” Ridderbusch says. At peak, there will be 20 contractors working on all the projects underway around the 40-acre ethanol plant site. Stutsman County is upgrading road access to the Spiritwood Energy Park and the local rural and city water systems are supplying water. Great River and the Jamestown Stutsman Development Corp. each invested land as the base for a rail loop capable of loading and unloading unit trains simultaneously. The hope is to attract other industries to the 500-acre energy park that will use the common track. The final leg in the multiple community partnerships was contributed by the state with a state-level loan guarantee. “The community has been such a great partner with us,” Ridderbusch says.

Zueger is optimistic about the timing for Dakota Spirit, in spite of the talk of the blend wall and the ethanol industry being very close to the 15 billion gallon maximum for corn ethanol under the RFS. “If you look through 2015, there are strong margin opportunities for ethanol,” he says. “We haven’t seen that the entire history of operation at Blue Flint. We think we’re coming on at a good time. We think markets will find opportunities for all the ethanol that is produced because it is so competitively priced as an energy source globally.”