Region's farmers pin profit hopes on Westmoreland ethanol plant
When he looks out over his 167-acre Mt. Pleasant Township farm, Duane Hutter sees a lot of work for little money.
It's a grind, with days that start at dawn and end after dark six days a week. It's also disheartening because high fuel costs and low corn prices have gouged his bottom line so much that he's happy to break even at harvest time.
But Hutter, 50, like many Pennsylvania farmers, believes ethanol -- grain alcohol distilled from plants and mixed with gasoline as an octane enhancer -- may be the key to turning a profit as the burgeoning ethanol industry creates a new, competitive marketplace for corn growers.
Pennsylvania is late to enter the race that industry analysts compare to a modern-day gold rush as the nation speeds to reduce its dependence on oil imports. Although five plants are planned in Westmoreland, Clearfield, Erie, Lancaster and Schuylkill counties, ethanol is not produced anywhere yet.
But Westmoreland County is poised to become a leader.
Commonwealth Renewable Energy Inc., a subsidiary of the Anderson Group of Companies, on Friday announced acquisition of Sony Electronics' American Video Glass plant along Route 119 in Hempfield Township in a deal valued at $17 million. The 700,000-square-foot facility will be converted to a natural gas-powered plant to produce more than 200 million gallons of ethanol from 75 million bushels of corn annually.
It is expected to become the largest ethanol producer in the U.S, according to Steven Savor, Anderson's chief executive officer.
Savor said production should start by the end of next year at the plant, which will purchase corn from local farmers. First, considerable work must be done to retrofit the site, which offers components critical to ethanol production, including rail service, highway access and a good water supply.
Although county officials have said that at least 100 jobs will be created, Savor said it is too soon to tell how many people the plant will employ.
Increased demand
For a long time, ethanol was considered a boutique fuel. Today, 46 percent of the nation's gasoline contains some percentage of ethanol, said Matt Hartwig, of the Renewable Fuels Association, a trade group.
Demand is driven by a federal mandate that 5 percent of the nation's gasoline supply -- roughly 7.5 billion gallons -- contain some ethanol by 2012.
Corn is most often used to produce ethanol, but it can be made from other grains, sugar beets, potato and beverage wastes and switchgrass.
In the United States, ethanol production began in a few plants that produced 175 million gallons in 1980. More than 25 years later, the industry has evolved to 107 plants that produced 3.9 billion gallons in 2005. By year's end, the industry is expected to produce nearly 6 billion gallons, according to a national Corn Growers Association study.
Massive state and federal government subsidies ranging from $6 billion to $9 billion annually nationwide have boosted interest in ethanol production and development of new plants, said Jerry Taylor, a senior fellow specializing in energy policy and environmental protection at the Cato Institute, a nonprofit public policy research foundation.
"I'm not against ethanol, per se, but if it weren't for government subsidies, very little would be produced. If ethanol has an economic market, it doesn't need a dime of subsidy," Taylor said, adding that removing subsidies could cause the industry to collapse.
Ethanol blends
There are two types of ethanol blends. They are cheaper than unleaded gasoline and produce less pollution, but offer slightly less efficient gas mileage.
A blend containing 10 percent ethanol, E-10, can be used in all makes and models of vehicles and is available at most retail fuel outlets across the country. An 85 percent blend, E-85, is designed for specially modified vehicles that are being produced by many major automakers.These flexible-fuel vehicles can use any blend of ethanol up to the 85 percent level or any unleaded gasoline.
Locally, sales of flexible-fuel vehicles are brisk, according to Joe Valasek, sales consultant at Day Chevrolet in Monroeville.
"The buzz is out. They're doing very well. Just about everything we order in is equipped with flexible fuel," he said.
But in Pennsylvania, it's difficult to find E-85 at the pumps.
Today, the blend is available at only nine retail outlets, according to the National Ethanol Vehicle Coalition. Locally, only Sheetz stores on Campbells Run Road in Robinson Township, Route 51 in Pleasant Hills and Route 22 in Monroeville carry the fuel, which is only a few cents cheaper per gallon than unleaded gasoline.
Public opinion
John M. Urbanchuk, an agriculture, consumer foods and financing analyst for LECG, a global consulting firm, warned that not all ethanol ventures have a happy ending.
"Big pitfalls could center around public opposition," he said.
That was the case in York, where Penn-Mar Ethanol LLC had planned an $80 million project. But the plan died this summer amid residents' concerns about the environmental impact of the facility.
"We still don't have a site. They're hard to find," Penn-Mar President Dan Wolf said.
Studies show ethanol plants emit carbon dioxide, methanol and other organic compounds at varied levels, depending upon the type of fuel used in the process. A new study by Frontline BioEnergy in Ames, Iowa, found that natural gas ethanol plants have lower emissions levels than those powered by coal.
In some states, the Environmental Protection Agency has ordered plants to install pollution control levels.
For some people, the smell is the problem.
Charles Thorp, 62, a retired teacher from Lena, Ill., lives about two miles away from an ethanol plant that smelled like "burning rotten corn."
"We haven't had a good experience," Thorp said, adding that a group of residents sought relief in federal court in 2003, after which the plant management installed equipment to cleanse plant emissions.
"It's improved now. ... We only get beat up a couple of days a week, instead of all week."
Dee Haussler, director of the Hastings Economic Development Corp. in Adams County, Neb., home to a pair of ethanol plants, sees the matter in a different light.
"To me, it's a sweet smell. It's not a sickening smell," Haussler said. "At this point, it's been a positive impact for our community and our farmers."
Although local officials in Westmoreland County have been aware of the proposed plant for some time, so far there has been no public opposition. As yet, the firm has no plans to hold public meetings, Savor said.
Overall, members of the local farming community appear enthusiastic about the proposal.
"Everybody who grows corn is going to be impacted because it drives prices up," said Gary Sheppard, Westmoreland County director for the Penn State Cooperative Extension. "It will make corn a more competitive crop."
Sheppard said farmers who raise beef and dairy cattle also could benefit from nearby ethanol production because it creates waste that is used to make a high-nutrition feed for livestock.
The Pennsylvania Farm Bureau said a bushel of corn yields about 2.8 gallons of ethanol, while an acre can produce 300 gallons. Last month, a bushel of corn sold for $3.47, the U.S. Department of Agriculture's National Agricultural Statistics Service reported.
The amount of corn grown for grain by Pennsylvania's approximately 15,200 corn producers varies from year to year, according to Mark Tosiano, director of the agency's Pennsylvania field office in Harrisburg. This year, the USDA reported that 940,000 acres of corn were harvested for grain statewide.
"We think any opportunity for ethanol is positive," said Mark O'Neill, spokesman for the farm bureau.
Hutter, who has spent his life growing corn and raising beef and dairy cattle, said he cut back on the amount of corn he planted this year because it sold for just $2 a bushel in 2005. If he can sell corn to the ethanol plant, he'll ramp up his operation again.
"Years ago, when corn was selling for $5 a bushel, we used to say it was gold. If we get this plant, we might be able to make a profit on it again," he said.
