Bangor Biofuel Soon To Flow

July 21, 2006
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BANGOR — Michigan BioDiesel LLC is building a 10-million-gallon, soy-based biodiesel plant on a 120-acre site in Bangor that the state just christened as an Agricultural Processing Renaissance Zone.

Construction of the plant is nearing completion in Bangor Industrial Park and operations are expected to commence in September. There is only one other biodiesel facility in Michigan, in the Upper Peninsula community of Gladstone. That plant is not yet producing biofuel, so Michigan BioDiesel expects to be the first “producing” biodiesel plant in Michigan and the first large-scale biodiesel plant in the Lower Peninsula when it begins churning out batches of the product this fall, said Chairman John Oakley, owner of Seven Oaks Seed Co. in Lansing. He anticipates the company will begin some production test runs next month.

The biodiesel will be produced at the Bangor site but the mixing of biodiesel with petroleum fuel will be done at distributor sites. Straight biodiesel and biodiesel blends, such as a mixture of 20 percent biodiesel and 80 percent petroleum diesel, can be used in any diesel engine. The fuel reduces carbon monoxide, particulates and hydrocarbon emissions.

Michigan BioDiesel will produce 30,000 gallons of biofuel a day, or some 10 million gallons a year. As Oakley pointed out, diesel fuel consumption in Michigan, by comparison, is 1.2 billion to 1.4 billion gallons a year.

“We’re looking forward to having some in-state production,” said Gail Frahn, executive director of the Michigan Soybean Promotion Committee. “Last year, three million gallons of biodiesel were brought into Michigan from other states, so some in-state production is needed to help fulfill Michigan’s growing demand for biodiesel and to help both the economy and Michigan soybean farmers.”

Michigan BioDiesel LLC was formed in May 2005. It’s a consortium of 72 investors — including 56 farmers and nine fuel distributors — who raised and pooled funds to build a plant to produce biodiesel fuel from soybean oil. Investors from Michigan hold about 90 percent of the ownership in the company, Oakley said.

Oakley said that what sparked investors’ interest in getting together was a mandate issued by the Environmental Protection Agency in early 2004 that required all off-road equipment to use ultra-low sulfur fuel beginning in June 2006. They considered different options for accessing and maintaining a supply of biodiesel, he recalled, and along the way, more and more agricultural trade organizations joined in the process — organizations such as the Michigan Soybean Promotion Committee, Capitol Area Innovative Farmers, Corn Marketing Program of Michigan, Michigan Farm Bureau, CAP Co-op, Michigan/National Farmers Union and several other groups in addition to individual farmers, Oakley said.

They subsequently asked the Michigan Department of Agriculture to look into the feasibility of a private business establishing a soybean crushing plant and soy refinery in Michigan, which has been exporting about 85 percent of its soybean production to plants in neighboring states. The agency commissioned a study that analyzed the market, financial, technical and site feasibility of a biodiesel plant in Bangor, Zeeland, Wheeler Township and a few other sites. The report concluded that a five- to 10-million gallon biodiesel plant in Michigan was indeed feasible in one of several locations.

Oakley said the company’s biodiesel plant was originally scheduled to be built in Fremont, Ind., but Michigan stepped up with the Agricultural Processing Renaissance Zone designation for the Bangor site that freed the company of most state and local taxes for up to 15 years. He said the Ag Renaissance Zone, along with the city’s package of tax abatements, put the Bangor site on more equal footing with the Fremont site.

“Michigan is the state that put the nation on wheels and we will be the state that makes the nation independent of foreign oil by investing in alternative energy growth and development. This plant in Bangor is an important step in reaching our goal of becoming the nation’s alternative energy hub …” Gov. Jennifer Granholm said upon announcing the news.

Earlier this year, the Bangor city council approved a 100 percent tax break for the plant’s first seven years of operation and a tax break on a sliding scale for three years after that. The city sweetened the deal with a new facilities tax abatement for up to 12 years and a tax abatement on personal property for a full 15 years.

Oakley said the plant will use a unique batch process — “unique” in terms of the size of the process and the technology that’s used to transport and dehydrate the product. If not the largest, it will be one of the largest batch plants in America, he noted.

“The reason we felt it would be far superior to go to this size of batch system is that we can change feedstocks; we can utilize soy oil, corn oil, palm oil, canola oil, peanut oil, restaurant grease, tallows, lard or chicken fat,” he explained. “That’s a solution to high fuel prices, because it spurs thought processes and innovation.”

The Michigan BioDiesel operation will create 22 new jobs in Bangor, which has a population of less than 2,000. Bangor City Manager Larry Nielsen said his community worked “very eagerly” with Michigan BioDiesel. Due to the fact that, although the company would be making the biofuel, it would be blended elsewhere, any safety, hazardous material or environmental concerns never really surfaced with Bangor residents, he noted. He said in time the plant will give the city an economic boost, because the city’s tax base is only $22 million and the plant will add $3.5 million to that base.

“Mostly it’s the fact that we’ll have 22 new jobs in our small town and those payrolls will be here,” Nielsen remarked. “Payrolls generally circulate close to where they’re earned and circulate several times in the community before they end up leaving the community. That’s probably the largest benefit.”

He said another benefit is that it helps draw attention to Bangor Industrial Park and to what Bangor has to offer businesses in terms of access to rail and the interstate, reasonably priced land and a supportive community. He believes there could be some additional economic benefits to Bangor if Michigan BioDiesel creates a couple of spin-off businesses with byproducts of the biodiesel production process.

“They are a creative group of folks, I’ll tell you,” Nielsen said. “These are mostly farmers and agri-business people from the Central Michigan area. They are progressive; they are ‘out there’ in their thinking and are forwardly thinking on all sorts of tangents. This group is leading the pack in that regard.”

Byproducts of the biofuel production process are heat from hot water and glycerin, a raw material used in a variety of cosmetic, medical and food products.

“Glycerin is going to be the Achilles’ heel of biodiesel,” Oakley said. “Either we’re going to have to purify it and make it pharmaceutical grade so it can be used in the food and pharmaceutical industries, or we may look at producing glycerol, which is windshield washer solvent. There are numerous possibilities just for the glycerin.”

The 90- to 100-degree temperature water produced in the process represents excess heat that could become an energy source for a greenhouse or fish farm, or it could be used for “radiant” floor heating and snow removal. The Michigan BioDiesel plant, in fact, has underground hot water piping in the floors of its storage facility, in its concrete loading docks, in its office and shop space, as well as an underneath sidewalks.

“I truthfully don’t know what we’re going to be able to do, but if we have the low-grade heat and a way to utilize it, we will use it,” Oakley noted. “If this plant expands the way it’s laid out, we’ll have far more heat, and as we grow we know we’ll be able to use it, plus we’ve got plans for other ways to use it.”    

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