Email This Story
Print This StoryOther News Video |
Construction Halted On Large Biofuel Plant
Company Blames Soaring Commodity Prices
UPDATED: 8:07 am CST November 10,
2007
MADISON, Wis. -- Construction of what is supposed to be the largest biofuel plant in the state has been halted.
VIDEO: Watch The ReportNorth Prairie Productions, LLC, said that high commodity prices have forced it to put its 45 million gallon a year biodiesel production plant on hold.North Prairie officials said they are still hoping to open by the target date of the fall of next year.But they have some significant hurdles to overcome before that, including commodity prices that have been soaring, WISC-TV reported.At the Evansville site of the $42 million plant, bulldozers are pushing dirt around the 15 acres on Friday -- but won't be for much longer.North Prairie Production's 900 investors just received a letter telling them their board of directors "has unanimously voted to temporarily suspend construction" of the plant.Officials blamed the delay on a "dramatic increase in feedstock prices … along with recent U.S. credit market issues and concerns."The board chair, John Sheehy, said its main lender has financial concerns, but the heart of the problem is soaring commodity prices."We see a problem with commodity prices where the ultimate goal of the plan won't work financially," Sheehy said. "They have escalated pass where it makes sense to make biodiesel out of soil oil. It's too expensive."North Prairie's specific issue is the soaring cost of its raw product -- soybean oil made from soybeans.A variety of factors have pushed up demand, which has increased prices.North Prairie had projected a cost of 24 cents a pound, but soybean oil for next May is currently trading at almost double that at 44 cents a pound.Still, company officials said they are optimistic the market will correct itself and prices will drop and they can resume construction.They claimed they have the financial stability to wait it out."We can ride this out six months, 12 months, a year and a half, whatever we need to do and then we're still a viable project," Sheehy said.North Prairie said it still hopes a new soybean crushing facility will go in next door to its biodiesel plant. Others are hoping for the same thing.Rep. Brett Davis, R-Oregon, helped pass a $4 million state grant to get one built, hopefully in Evansville. Davis said he hopes that will still be the case."Wisconsin is in the top 13 soybean-producing states that don't have a crush facility, so it's still important that we be a leader in this area and that we move forward with it, with or without a biodiesel facility," Davis said.Davis said the plant delay might not only allow the market to correct itself but give backers of the soybean-crushing facility time to raise the money they need to get it built.
VIDEO: Watch The ReportNorth Prairie Productions, LLC, said that high commodity prices have forced it to put its 45 million gallon a year biodiesel production plant on hold.North Prairie officials said they are still hoping to open by the target date of the fall of next year.But they have some significant hurdles to overcome before that, including commodity prices that have been soaring, WISC-TV reported.At the Evansville site of the $42 million plant, bulldozers are pushing dirt around the 15 acres on Friday -- but won't be for much longer.North Prairie Production's 900 investors just received a letter telling them their board of directors "has unanimously voted to temporarily suspend construction" of the plant.Officials blamed the delay on a "dramatic increase in feedstock prices … along with recent U.S. credit market issues and concerns."The board chair, John Sheehy, said its main lender has financial concerns, but the heart of the problem is soaring commodity prices."We see a problem with commodity prices where the ultimate goal of the plan won't work financially," Sheehy said. "They have escalated pass where it makes sense to make biodiesel out of soil oil. It's too expensive."North Prairie's specific issue is the soaring cost of its raw product -- soybean oil made from soybeans.A variety of factors have pushed up demand, which has increased prices.North Prairie had projected a cost of 24 cents a pound, but soybean oil for next May is currently trading at almost double that at 44 cents a pound.Still, company officials said they are optimistic the market will correct itself and prices will drop and they can resume construction.They claimed they have the financial stability to wait it out."We can ride this out six months, 12 months, a year and a half, whatever we need to do and then we're still a viable project," Sheehy said.North Prairie said it still hopes a new soybean crushing facility will go in next door to its biodiesel plant. Others are hoping for the same thing.Rep. Brett Davis, R-Oregon, helped pass a $4 million state grant to get one built, hopefully in Evansville. Davis said he hopes that will still be the case."Wisconsin is in the top 13 soybean-producing states that don't have a crush facility, so it's still important that we be a leader in this area and that we move forward with it, with or without a biodiesel facility," Davis said.Davis said the plant delay might not only allow the market to correct itself but give backers of the soybean-crushing facility time to raise the money they need to get it built. Copyright 2007 by Channel 3000. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
