What started out to be a large ethanol production plant in Aurora, N.C., recently became a huge ethanol producing plant with the announcement that the facility will be doubled in size from 54 million gallons per year to 108 million gallons per year.

Speaking at a recent meeting to introduce the plant to eastern North Carolina corn growers, Terry Ruse, vice-president for Agri-Ethanol Products, who will operate the Aurora plant, noted that the facility will be good for farmers, good for the environment and good for consumers.

“For every 42 gallons of ethanol we produce, we will eliminate 17 gallons of foreign oil,” he notes. Though ethanol production is skyrocketing nationwide, Ruse says maximum U.S. capacity under current conditions is 15-18 billion gallons. To reach the Federal goal of 60 billion gallons of fuel from renewable sources, the remainder will have to come from other high cellulose plants, he explains.

Currently there are 97 ethanol plants in operation in the U.S., with 31 more under construction. The U.S. ethanol industry currently produces approximately 4.6 billion gallons per year. At its current size, ethanol production consumes approximately 12 percent of the U.S. corn crop.

In 2005, North Carolina farmers produced 84 million bushels of corn, down about 23 percent from 2004. The state corn yield average was the second highest on record at 120 bushels per acre. Though North Carolina ranks 15th in corn production, state growers produce less than one percent of the total corn crop.

It will take approximately 40 million bushels of corn per year to fuel the Aurora ethanol plant. At 120 bushels per acre, that would be approximately 333,333 acres of corn, or about half the state’s current production.

At peak production, the Aurora plant will grind 114,000 bushels of corn per day. “We want to buy every bushel of North Carolina corn offered to us, as long as it is competitive on price and on grade,” Ruse says. “We will have to bring corn in by rail to supplement local supplies. Still, growers need to understand that we want to buy every bushel of local corn that we can get our hands on,” Ruse stresses.

How corn is harvested and dried will be critical to any premium prices offered. Typically, corn in the Southeast is harvested at higher than 20 percent moisture, and both Obrock and Ruse stress that the Aurora plant cannot process corn at higher than 15 percent moisture. How corn is dried will definitely affect starch content and therefore price, according to Obrock.

In 2007, the Aurora plant will begin buying corn. Ethanol plants typically do not have a long lead time, says Ruse. “In my experience with ethanol plants, they start up at about 85 percent of production capability and within 60 days are over 100 percent of design capabilities,” he adds.

The principles who started the company are from North Carolina, and they wanted to build a facility in their home state. Aurora is in the heart of Beaufort County, which is the highest corn producing county in the State. “Here in eastern North Carolina there is high human population for consumption of ethanol products as fuels, in a high livestock area for consumption of the distillers grain produced in making ethanol, and in a deficit C02 area,” Ruse says.

Within easy trucking distance of Aurora, N.C. are 169 million head of poultry, 10 million head of swine and 2,500 acres of fish. Within 500 miles of the plant, there is a potential demand for 2.3 billion gallons of ethanol. And, North Carolina is a CO2 deficient state, so there is an opportunity to sell CO2, while most ethanol plants are venting it, Ruse explains.

“It used to be that lenders believed every ethanol plant built must have corn fields growing around it. Now, it is accepted that shipping grain in is cheaper than shipping finished, or value-added, products out,” Ruse explains.

The new plant, on approximately 200 acres of land, north of Aurora, N.C., is the first ethanol plant in the Southeast. The doubling of the plant’s original capacity will delay construction by 60 days. Construction is set to begin this month, with first grain purchases to begin in the spring of 2007.

The plant will have 2.6 million bushels of storage on site. At full operational capacity, the facility will be able to unload trucks at the rate of 30,000 bushels of corn per hour. In addition, the plant will have two grain unloading facilities capable of unloading another 60,000 bushels per hour.

Total price tag for the Aurora ethanol plant will be approximately $160 million. At peak production it will have 550 people on site building the plant. It is expected to yield $300 million in one time economic development aid to eastern North Carolina.

At full operation the ethanol plant will employ 65 full time people, the CO2 plant will employ another 25-28 people and eight people will manage the operation from company headquarters in Raleigh.

It will operate 24 hours a day, 350 days a year and produce 199.6 proof alcohol. The plant will produce 300,000 tons of CO2 and 400,000 tons per year of high quality livestock feed in the form of high protein, highly digestible distiller’s grain. Each bushel of corn ground to produce ethanol, produces approximately 19 pounds of distiller’s grain.

Corn is 70 percent starch, by taking the starch out and converting it to sugar and using yeast for fermentation, distiller’s grain is typically a 30 percent protein material. It will be priced to compete with soybean and corn feeds. The Aurora plant will be able to segregate the fines portion through a drying and evaporation system, which will be a 40 percent protein product.

“One of the key benefits of our process is that unlike traditional dry mills in the Midwest, this process operates at about 50 percent of the heat used in these facilities. Our system operates at 600 degrees F,” Ruse says. “As an animal feeder, it is beneficial because every time protein is exposed to heat, it is degraded. By reducing this degradation, digestibility and value are increased. We are looking forward to having a livestock feed that will set the benchmark for quality,” Ruse contends.

Corn buying for the plant will be done by FGDI, a subsidiary of the FC Stone Group. FGDI has six offices in the U.S. and trades primarily cash grains. They maintain a grain elevator at the port of Mobile, Ala.

Bob Obrock, executive vice-president and chief operational officer for FGDI says they plan to have a full-time person on site in Aurora to buy grain. “We will get corn here by unit train, via rail or truck corn in from local areas. We will offer cash grain prices and forward grain prices, so growers will be able to sell corn today, six weeks ahead or a year ahead,” Obrock says.

“We will try to offer local growers as many marketing options as possible. Corn coming in by truck will be our key supplier,” Obrock notes. “As we get closer to beginning of operations, we hope different varieties that have higher starch-producing capabilities will be available,” Obrock says

Some local growers are skeptical that the 5-7 cents per bushel premium price for corn will be enough to entice new production. Pat McCotter, who grows over 1,000 acres of corn in nearby Vandemere, N.C., says it would not be worth planting more corn for him. He explained that North Carolina is in a corn deficit state and that growers already get a higher price for their corn than growers in states with grain surpluses.

“I can see where a 40-50 cent per bushel premium would be worth planting more corn and providing storage until the ethanol plant needs it,” McCotter says. Among the 150 or so growers attending the recent ‘get acquainted’ meeting held in Plymouth, N.C., several expressed some concern that a high percentage of the corn used in the Aurora ethanol plant would come in by rail from the Midwest, even by barge from South America.

Regardless of the source of corn, the long-term benefit of the Aurora plant will likely be to consumers. With gas prices soaring at and above $3.00 per gallon, the time appears right for an alternative fuel.

Brazil is free from dependency on foreign oil, but it has taken nearly 30 years to get there. Ruse explains that Brazil started producing ethanol from sugar cane to control sugar prices. When sugar prices went low, they upped ethanol production to balance their economy. As crude oil prices have continued to climb, the Brazilians have gone more and more to ethanol.

Now, ethanol is their primary transportation fuel. “To survive, this country must turn to more fuel from renewable sources for transportation,” Ruse contends. Huge increases in fuel demand from China and India reduce our access to vast amounts of crude oil that allows us to keep the price of fuel low, he explains.

The U.S. currently uses approximately 144 billion gallons of gasoline per year. Currently, ethanol makes up 3-4 percent of U.S. transportation fuel. Ford and GM have stepped up big time to provide flex fuel cars. Chrysler recently announced 750,000 flex fuel vehicles for 2007. Consumer demand for more efficient automobiles will force U.S. automakers to produce more flex-fuel cars.

GM recently announced that anyone who buys a flex car, capable of operating on ethanol/gasoline blends without any drop in fuel performance, will receive a $50 debit card. Ford is planning a similar program.

In addition, GM is in the midst of a $50 million advertising campaign to promote their brands that can use E85 fuels, which are 85 percent ethanol and 15 percent gasoline. Dekalb is also offering discounts on E85 vehicles for farmers who buy certain quantities of their hybrid seed.

Ethanol producers do not control the price of ethanol at the pump, according to Ruse. There is very little correlation between the price of corn and the price of ethanol. It all depends on the gasoline distributors that still control the price, and they are probably going to price it commensurately with their hydrocarbon products.

“We can produce ethanol, but we don’t determine how much it sells for on the street. It will take a grassroots movement by the general public to put pressure on local dealers to lower the price, compared to hydrocarbon products,” Ruse says.

He points out that one retailer in Missouri sold ethanol for 51 cents a gallon cheaper than gasoline, but notes that is a distributor’s decision, not one made by ethanol producers.

While the ethanol plant in Aurora is likely to become the first production facility in the Southeast, it is not likely to be the last. Plans are well underway to build a biodiesel plant in Williamston, N.C., which is 50 miles north of Aurora. In addition, early negotiations are underway to build an ethanol plant in Camilla, Ga.

e-mail: rroberson@farmpess.com