Central Bio-Energy Plans $500M Investment for Three 100M Gallon Corn Ethanol Plants
18 November 2006
Central Bio-Energy, LLC (CBE), a Nebraska-based firm, plans to invest more than $500 million to build three 100-million-gallon-per-year corn ethanol plants in Seward, Howard and Chase counties in Nebraska.
This investment will make CBE one of the leading ethanol producers in Nebraska, officials said. Projected annual revenues, when all three plants are operational, will approach $600 million.
Each plant will need about 40 million bushels of corn per year for feedstock, or 120 million bushels in total. CBE will also sell distillers’ grains, the after-product of its ethanol plants to local cattle feeders.
CBE has signed Plant Development Agreements (PDAs) with Delta-T Corporation for the engineering and technology design for all three plants.
CBE is negotiating with Tenaska BioFuels, LLC, which provides marketing, physical delivery and financial services to customers in the ethanol and biodiesel industries, to provide various consulting, supply and marketing services to CBE for their ethanol facilities.
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.
CBE plans to contract with ConAgra Trade Group Inc. for grain procurement, ethanol, distiller’s grain marketing and commodity risk management services.
In its recent commentary on the expansion of corn-ethanol production (earlier post), the Council for Agricultural Science and Technology noted:
Fuel ethanol production is a commodity business with little opportunity for product differentiation, which means a plant must be a low-cost producer to survive low-price periods. Many new Midwestern plants have annual capacities of 100 million gallons or more to take advantage of economies of scale.
If it costs $100m for a plant that can make 100 million gallons per year that will bring in $1 per gallon profit, the simple payback is 1 year. It does not take an MBA to see that this could be profitable.
Posted by: SJC | 18 November 2006 at 08:52 AM
The $100 million capital investment only buys the plant. The operator still has to buy feedstock and pay for operation and maintainance. So it will probably be profitable, but the payback is far greater than 1 year.
Posted by: JamesEE | 18 November 2006 at 08:57 AM
Those are just round numbers. If ethanol wholesales for $2 per gallon and it costs $.50 per gallon in materials, energy, labor, etc...then 2 years. No sense obsessing over details, it is profitable.
Posted by: SJC | 18 November 2006 at 09:17 AM
Ethanol is soooo much a loss leader. 1st we know corn is a very inefficient source. The yield is so low compared to some other crops (eg. sugar beets). Then, the mpg for an E85 auto is less than half of the mpg for a diesel car using biodiesel. Considering the price difference is not much, using E85 is pissing money away.
If algaculture takes off, and biodiesel is mass produced in factories instead of the welfare payments [er, I mean subsidies] to farmers who grow soybeans as a source, the cost of biodiesel will plummet below conventional (petroleum) diesel. Gee, I wonder which is a better avenue to go down???
The lights will go on in a few years once all the major automakers have brought diesels to the US.
Posted by: DB | 18 November 2006 at 09:19 AM
I agree corn is not the way to go, but the last I read you can get 50 gallons of soy biodiesel per acre of land. Use cellulose methods on the corn stalks and then gasify the rest, you could get 100 gallons per ton of biomass.
Posted by: SJC | 18 November 2006 at 09:26 AM
Actually these guys are planning to invest some $160M per plant. Either way, they will make profits in a nearer term than building petro refineries. And right, algal oil will blow away feedstocks eventually - 'til then there's money and... ahem, national security in ethanol.
Posted by: gr | 18 November 2006 at 10:06 AM
Let's see, the US consumes 190 billion gallons of gas and diesel per year. 100 million gallons is literally a small drop in the bucket. Ten more of these deals and corn/wheat
food prices go thru the roof and we get no closer to
energy indepdendence. It's not even worth talking about, much less posting an article.
Posted by: kent beuchert | 18 November 2006 at 01:30 PM
Big picture... US burned 140 Billion gallons of gasoline in 2005. If all states went to E10, we would need 14 billion gallons of ethanol... currently we produce 5, or around 40% of what we need...
Macroeconomics will come through for US in the end.
Posted by: HuskerCPA | 19 November 2006 at 08:51 PM
I need a lot of information about how to get an investment spescially who comcemtrate into wnid power generator.
Posted by: nocky | 08 July 2007 at 07:37 AM