Ethanol production sees more interest
LIBERAL ? The large number of cattle in southwest Kansas makes it a prime area for ethanol production, according to a consultant hired to study the feasibility of an ethanol plant in Seward County.
Ed Stahl, of BBI International, told a group of ethanol supporters Thursday that his company believes an area from Garden City to the Texas panhandle could easily support five to seven projects to create ethanol, a fuel additive.
He forecast that a plant that produced 50 million gallons of ethanol a year could generate annual pretax earnings of $8.38 million, while a 100-million-gallon plant could generate $18.03 million.
Stahl said cattle make a ready market for distillers grain, a feed that is one of the byproducts of ethanol production.
The positive report has members of the Liberal Ethanol Steering Committee excited about bringing a plant to the area.
“I think the numbers speak for themselves,” said Nick Hatcher, who leads the Liberal group.
Hatcher said the steering committee – made up of ranchers, farmers, bankers, businessmen and others from Seward County – will meet again to decide the next step.
The specific timing of any project “depends on the equity drive we put together,” he said.
The group isn’t the only one interested in ethanol. A St. Louis-based firm announced last month that it plans to build a plant near Ulysses to generate 100 million gallons per year, perhaps starting this fall. Kearny County officials are studying the feasibility of building a plant there.
“Practically speaking, BBI thinks the area, Garden City to Hereford, Texas, can easily sustain five, six, seven projects just based on the amount of cattle alone,” said Stahl. Hereford is in the Texas Panhandle.
Ethanol is made from corn or sorghum. With cattle close, the distillers grain can be shipped to buyers wet, saving on the substantial cost of drying it. When ethanol producers have to ship distillers grain long distances, they must dry it first so it won’t spoil.
Although interest in ethanol is growing, Stahl said the biggest hindrance to such projects is lack of equity from investors. Bankers will lend up to 60 percent of the money required to build a plant, with the rest coming from equity.
“There are a lot of projects that get started, and they just can’t get the money to close,” Stahl said. “Be deliberate, don’t rush. On the other hand, this industry is growing extremely fast.”