AmericanFarm.com

Growers hopeful in Hopewell plant’s sustainability

By SEAN CLOUGHERTY
Managing Editor

HOPEWELL, Va. (June 7, 2016) — The restarting of ethanol production at an often idled plant in eastern Virginia has generated a lot of interest from farmers as another avenue to market corn in a year of projected low commodity prices.
Under the ownership of Omaha, Neb.-based Green Plains, the plant started ethanol production in late March after purchasing the facility in October 2015, according to Jim Stark, Green Plains’ vice president for investor relations.
“The operation is improving,” Stark said. “We’re gaining experience and a better knowledge set of this facility.”
The plant has the capacity to produce 60 million gallons of ethanol annually using 21.5 million bushels of corn, Stark said.
Stark said on some days the plant has performed at its capacity and the company’s expectation is to operate the plant consistently at capacity soon. 
That’s good news for corn growers in Virginia and surrounding states who look at the plant in operation as another option in selling their crop.
“The Green Plains facility in Hopewell has already generated quite a bit of interest from producers around the Commonwealth,” said Shane Horsley, president of the Virginia Grain Producers Association. “Corn yields, and as a result, corn supply, continue to increase due to technological advances in all facets of corn production.
“The trend of growing supply leads to producers being always eager for new outlets for their grain.
Recently, corn prices have been trading at the low end of the range for the past 5 years, and producers are optimistic that Green Plains will present a new utilization opportunity for their product.”
After purchasing the Hopewell plant for $18.25 million last year, Green Plains invested another $9 million in upgrading it for production. Stark said that investment included a hammer mill to further process distillers grains and equipment for corn oil extraction which is primarily marketed as a feedstock for biodiesel as well as a supplement to livestock feed.
“That will give us another revenue and income stream that the plant did not have before,” Stark said, adding the company expects to begin oil extraction later this summer.
Originally named Appomattox Bio Energy and owned by Osage BioEnergy, the plant was mechanically completed in 2010 and initially designed to handle multiple feedstocks but focus mainly on barley.
Under Osage, the plant never reached full production and was sold to the British company Vireol Bio Energy in March 2013.
Vireol’s original intent was to dismantle the plant and ship the pieces to the United Kingdom but the company later decided to start operation back up in Hopewell until it determined two years later the company couldn’t operate was at a profit as the price of gasoline was at its lowest since 2009 and put it up for sale.
The plant’s on-again, off-again status the last five years has led to several lawsuits, either by the City of Hopewell or other companies who did work on the plant and weren’t initially paid for it.
Stark said the company is very aware of the need to build relationships throughout the region moving forward.
Ten of the company’s 14 operating plants were acquired after other ethanol companies built them. The company now produces 1.2 billion gallons of ethanol annually.
“I believe we have some reputation in the industry that we’re someone people want to do business with,” Stark said. “We didn’t get to that point without understanding how important relationships are in this business.”
The plant is different from many of Green Plains’ 13 other plants in the United States in that it is a “destination” plant, Stark said, with the ethanol produced in Hopewell likely used in the highly populated, high fuel demand areas of the East Coast. Its “originiation” plants in the midwest are sited, where corn is readily available year round.
It will cost more to purchase corn for the Hopewell plant, Stark said, “but at the same time, Hopewell is in a good place to sell the products we make.”
He also said the company is looking at ways the Hopewell plant could double as a distribution hub for getting its products moved throughout the eastern United States.
“Part of the drive for us to own the Hopewell plant was its location in the East Coast,” he said.
Stark said for the first month and half of production, the plant used locally-sourced corn before shipping some in by rail.
As a company, “We want to buy as much local corn as we can, and that would be true of our Hopewell location as well,” Stark said.
Local for the Hopewell plant could mean corn from Maryland, West Virginia and North Carolina, Stark added, where as the Green Plains’ Midwest plants can get enough corn within a 30-mile radius.