By Mark Coddington
mark.coddington@theindependent.com

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Independent/Scott Kingsley Work continues at the Aurora West ethanol plant as workers pump cement into a massive electrical junction box. The project is 30 percent complete and the 113 million gallon-per-year facility is expected to be online in early 2009. Independent/Scott Kingsley Electrical conduit is prepped to be encased in concrete as the ground work progresses at the 113 million gallon-per-year Aurora West ethanol plant. Click Thumbnails to View

Plants in three area towns Ravenna, Ord and Albion began production last year, while projects in Wood River and Aurora are moving steadily toward that point.

But rising grain prices and falling ethanol prices have cooled investors on the industry, leaving the future of many of the state's proposed plants in question.

Todd Sneller, administrator of the Nebraska Ethanol Board, said he expects that only a few of the 25 or so plants that have been announced will become reality.

That's not to say the state has reached its saturation point, he said. As the market for ethanol grows, Nebraska communities will get their shot but they'll have to fight for the attention of investors.

"It's going to be much more disciplined growth than we've seen over the last couple of years," Sneller said.

Officials from all three of the area's announced projects south of Grand Island, in rural Custer County and in St. Paul said their plans are still alive.

But one executive said that, for many plants, plans are at a standstill.

"Everybody's kind of waiting for the equity markets to resolve themselves," said Bud Olsson, president of E Energy Broken Bow, which announced in January 2006 its intent to build a 100-million-gallon-per-year plant near Ansley.

Olsson said his plant's plans are all set to go, with funding the only obstacle. The project has its permits from the Nebraska Department of Environmental Quality and a final site layout.

Olsson hopes the markets will open back up to ethanol investment within six months or so. If that happens, he expects dozens of projects to have to fight for just a few potential suitors.

He believes that the quality of Broken Bow's site, with its available rail lines, water, corn and cattle, will put that project at the top of the heap, along with its management's experience and progress on the project.

Until then, it's a matter of waiting and being prepared for the opportunity to come.

"Be patient. That's all you can be," Olsson said.

Energy Grains Development of Kearney proposed in December 2006 to build a 100-million-gallon-per-year plant at the Platte Valley Industrial Park south of Grand Island.

Dan Lindstrom, the company's corporate counsel and vice president, said it is in the first round of gathering equity from local investors.

The process is in a "quiet period" right now, Lindstrom said, but the company expects to have the majority of its ownership come from local sources.

Energy Grains is in the process of obtaining most of its required permits, including its air permit from the DEQ, Lindstrom said, though a few are already in hand.

Tim White, a vice president of Central Bio-Energy, which announced plans for a 100-million-gallon-per-year plant near St. Paul in November 2006, said plans there were moving forward.

He said he could not discuss the plans publicly, citing the project's equity partner. He refused to comment further.

The plant's air permit was approved by the DEQ in September.

Sneller said the industry has largely shifted from the bottom-up model of community investing, popular several years ago, toward outside investors from large firms.

It's much more difficult than it used to be to find dozens of investors across the state willing to commit $50,000 to $100,000 toward a project, he said.

"There's not many pockets that haven't been tapped pretty good for capital," Sneller said.

That means that for many projects, outside equity partners control the show, Sneller said. And they're looking for groups with extensive experience, low risk and steady community commitment.

Though Sneller said the market slowdown has begun to affect plants under construction, neither Aurora's nor Wood River's projects have been sidetracked.

Wood River's 115-million-gallon-per-year Pioneer Trail ethanol plant is on track to begin production in late May, with pre-startup testing set to begin in March, said Bob Crockett, the plant manager.

Crockett said more than 600 construction workers are finishing work on the site, and staff training is in its fourth week.

"We are in that home-stretch run," he said.

Work at the Aurora West project is about 30 percent complete, and startup on the 113-million-gallon-per-year plant is expected in early 2009, said Adam Crotteau, the plant's project manager for Aventine Renewable Energy.

Crotteau said an abnormally deep frost has slowed construction, but said that time could be made up when warmer weather comes this spring.

"We're full-speed ahead," he said.