East Coast Ethanol, LLC recently announced plans to build 110 million gallon per year ethanol plants in Chester, S.C., Seaboard, N.C., Jesup, Ga. and Campbellton, Fla, making the company the largest supplier of ethanol in the Southeast and the sixth largest in the U.S.

In addition to producing over 400 million gallons of ethanol annually, the multiple plants will produce 1.4 million tons of distiller’s dry grains (DDG) and $3-5 million annually in carbon dioxide sales.

These plants will produce approximately 4-8 million gallons of biodiesel from the syrup lines — a new process — in their ethanol production process.

The biggest revenue will come from ethanol. Distiller’s grain sells for about $180 per ton and will bring in an additional $250-$260 million annually at current prices.

Randy Hudson, who is CEO of the company says their model is really simple — corn in and ethanol out. The challenge to the model, he says, is supplying the plants with enough corn. All four states in which plants are planned are grain deficit and rely heavily on Midwest corn to feed large livestock industries.

“We can answer the question of supplying enough corn — we do it every day to feed our large poultry and beef cattle industry and hogs in North Carolina,” Hudson says.

First United Ethanol in Camilla, Ga. used a similar model to begin making ethanol this year. The 110 million gallon per year facility located 100 miles south of Columbus, Ga., is not affiliated with East Coast Ethanol, but is demonstrating that the destination concept for ethanol, which involves bringing corn in from long distances and shipping ethanol short distances, will work.

“We want First United Ethanol to be successful. The market is too big for the one plant that is now operational and for our four plants when they come online. In Florida, Georgia, South Carolina and North Carolina, we estimate the total ethanol market to be 3-4 billion gallons to meet the Renewal Fuel Standard.

“If all four plants come online as expected in 2010, total production in the Southeast still would provide less than 25 percent of ethanol demand — just for blending,” Hudson says.

For Florida alone, it will take nearly a billion gallons of ethanol to meet state standards by 2010, he adds.

“We will bring corn in from the Midwest by rail, contracting primarily with grain elevators in the eastern side of the Corn Belt. Our processed ethanol will be trucked out to refineries for blending with gasoline,” he explains.

The proposed ethanol plants will provide some risk reduction and price support for corn producers in the Southeast. The basis for Southeast corn is typically 30-60 cents higher than prices in Chicago. The difference is basically the cost of shipping corn from the Midwest to the Southeast. The basis differential has dropped since investors began buying into the commodities market in a big way.

“We know we can’t come anywhere close to filling our corn needs with corn grown in the Southeast, but we will buy all we can get in the region. This will add 30-50 cents per bushel to the price the farmer gets for his corn. Plus, the market is there for all he can grow,” Hudson says.

“Ethanol in the South is good for a lot of reasons. One of the biggest benefits to farmers is protecting the basis for corn pricing.”

Each of these plants will produce approximately $250 million annually and over $100 million will go back into the communities. This will be as big a rural economic development impact as we have ever had in the Southeast, Hudson explains.

The livestock industry in the Southeast is in need of and waiting and ready for a high protein feed supplement like DDG. Poultry producers can use up to 18 percent in a blended ration. The DDG component reduces the overall cost of poultry rations by $1-$2 per ton.

We will be able to sell at least half of the carbon dioxide we produce. CO2 is used in both liquid and solid forms as refrigerants and in the food industry. Midwest plants typically have to pay, or have some cost associated with getting rid of the carbon dioxide they produce in ethanol plants, Hudson says.

The four East Coast Ethanol plants are planned for:

• North Carolina: The $212 million plant will be located on 414 acres of land in Northampton County, just west of Seaboard, N.C., which is located approximately 100 miles east of Raleigh.

• South Carolina: The $230 million plant will be located on 319 acres of land in Chester County, just southwest of Chester, which is approximately 50 miles southeast of Charlotte, N.C.

• Georgia: The $216 million plant will be located on 350 acres of land in Wayne County, just southeast of Jesup, Ga., which is approximately 100 miles northwest of Jacksonville, Fla.

• Florida: The $212 million plant will be located on 296 acres of land in Jackson County, just southwest of Campbellton, Fla, which is approximately 25 miles southeast of Dothan, Ala.

Total construction cost for the four plants is expected to exceed $870 million. Construction of the plants is to begin in the spring of 2009. Construction of each plant is expected to take 18-22 months, hence operations are expected to begin in late 2010.

Each of the plants will initially have a workforce of more than 40 employees. The U.S.-based firm will generate more than $400 million annually to the local economies where the four plants are located.

ECE was founded in Aug. 2007 as a result of a merger of four entities — Mid-Atlantic Ethanol, LLC, Palmetto Agri-Fuels, LLC, Atlantic Ethanol, LLC, and Florida Ethanol, LLC — which were each in the process of developing a 110-million-gallon, corn-based ethanol plant in the four states.

Fagen, Inc. will design and build all four of the ECE plant facilities. Fagen will partner with Industry Consulting & Marketing, Inc. (ICM) to provide ECE with the most efficient processes and equipment available to the ethanol industry. Combined, Fagen and ICM have been responsible for developing over 60 percent of the plants built or currently under construction in the U.S.

Since its inception, ECE’s 120 seed investors have invested $9.8 million in the project. More than two-thirds of the ECE investors in the four-state area are involved in farming and the agribusiness industry and/or are small business owners.

“We never set out to be just another ethanol-from-corn production plant. We can cash flow corn-ethanol. We cannot cash flow cellulosic ethanol or some other technologies for biofuels as a stand alone entity.

“As these new technologies come online, we will be positioned to switch from or add to cellulosic and other feed stocks to produce biofuel. At all four of our locations we have large enough sites to transition into these new technologies,” Hudson says.

“We envision a companion plant sitting adjacent to our four ethanol plants. These cellulosic plants will produce enough energy to fuel our ethanol plants. In the short-term all our plants will be powered by natural gas.

“On the front end, we will replace about half its natural gas needs by taking in wood biomass. There is enough forest residue and discarded wood products to more than meet the energy demands of these plants, and we will utilize these initially to offset much of the energy requirements of our four ethanol plants,” he adds.

Raising the $860 million dollars needed to construct these plants has been challenging in the current economic environment. However, Hudson stresses that all the lending sources who have seen their business plan are enthusiastic about the project. “In fact, several of these lenders urged us to go ahead and go public with our plans to build these ethanol plants,” Hudson says.

e-mail: rroberson@farmpress.com