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Biofuel spinoffs boost community

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Published: December 14, 2006

SASKATOON – Bill Horan farms near Rockwell City, Iowa, but farming is only one part of his busy life.

He is also a partner in Western Iowa Energy, a company that produces commercial biofuel from various farm-grown products.

Speaking at Agri-Trend Agrology’s Farm Forum event held recently in Saskatoon, Horan said the first biodiesel refinery that Western Iowa Energy built at Wall Lake, Iowa, has 660 investors.

He said most of the money for the plant came from investors that live within 75 kilometres of the plant.

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That investment returns about $15 million US a year to that community, he added.

“What does that mean? All the kids in high school have their own laptops, there’s a new wing on the library, a new city park, a refurbished swimming pool. It changes rural places completely,” said Horan.

“I tell people that 100 years ago the railway came through the Midwest and it changed the Midwest forever. Now, 100 years later, renewable energy is coming through the Midwest and it’s changing us forever.”

Horan said the ethanol and biodiesel industry present an opportunity for Canada.

Horan is chair of a biodiesel plant and his brother is chair of an ethanol plant. They’re part of a company that has built three other 120 million litre biodiesel plants.

He said for every unit of energy it takes to make ethanol in a modern plant, 1.67 units are produced.

Biodiesel is even more efficient. For every unit of energy it takes to make biodiesel, the plant gets 3.2 units back out. With petroleum, every unit of energy it takes to make gasoline or diesel fuel, produces 0.8 units back out.

“You lose two-tenths of a unit of energy,” he said. “As we move forward and the price of energy goes up, the better the ratio, the more value.”

Horan said a typical biodiesel plant has no smokestack. It is an industry without noise, dust or emissions, he said. The only byproduct is glycerine, which is used to make items such as makeup and lipstick.

“We’re really interested in canola oil. If we can’t use canola oil for biodiesel, we’d like to see it replace a lot of the soybean oil so we can free up the soybean oil for biodiesel. Either way, canola growers in Canada are going to win.”

In Iowa, Horan’s company organized so at least 500 people invested in each of its four plants. The average investment has been about $40,000.

Organizers expected it would take 11/2-2 years to raise the money but within 13 days, they had raised $22 million, enough to build the first plant. It took nine days to raise the money for the second plant, seven days for the third and seven hours to raise $22 million for the fourth plant.

“This myth that there’s no investment money in rural America is not true.”

Horan found three critical ingredients go into raising capital for renewable energy.

The first is to develop a legitimate project, second is to convince locally successful partners to join and third is approval from the securities and exchange commission.

“We go into a community that has what’s needed – rail, four-lane road, natural gas and wastewater treatment.

“We say to the economic development person there, ‘find us five or six local people with A+ reputations, who have had financial success, are considered leaders in the community, absolutely honest and every one of them has to have a different occupation,’ ” said Horan.

Attracting people with different occupations ensures the project has various skill sets on the board. “We put that board together and go out to raise the money. It takes about four months to organize all this, but you’ve got a board that people want to invest with.”

But building the plant is only one hurdle. Every project needs to have markets.

When it comes to biodiesel, Horan said many people don’t comprehend all the uses for it.

“The U.S. military uses a lot of biodiesel. Every non-combat vessel in the U.S. Navy is required to use biodiesel.”

Trucking companies are interested, and it can be used in school buses, home heating oil, agriculture and construction.

He said more shipping companies are interested in biodiesel, but supply remains too limited.

“Cruise ships are contacting us constantly. Cruise ships want us to provide them with biodiesel, so they can put in their brochure that ‘Our cruise line uses clean, green, environmentally friendly fuel.’ “

Mines could also benefit from biodiesel, he said.

“There’s diesel engines running in mines, pumping water and running equipment. They can only run about half the time in most mines because the ventilation system isn’t adequate to get the fumes out. If you put a three percent blend of biodiesel in there, you can run the pumps in a mine around the clock.”

When selecting locations for biofuel projects, Horan doesn’t worry about building next to a crushing plant.

“You want them to compete, you don’t tie yourself up to just one. The other reason is it’s a one for one. For every gallon of oil that comes into the plant, you get a gallon of biodiesel back out,” he said.

“We’ve built four in Iowa and we think we’re done there. The biodiesel plants we build now will probably be on the East Coast, the West Coast or somewhere south of St. Louis on the Mississippi where we have year round barge traffic, so we can move oil in and biodiesel out.”

About the author

Bill Strautman

Western Producer

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