As the price of gasoline continues to rise, interest in a Md. ethanol plant grows

On the farm

May 06, 2007|By Ted Shelsby

The surging price of gasoline in recent months is giving new momentum to an old plan for Maryland farmers to move into the energy business.

About seven years ago, the Maryland Grain Producers Association began work on a plan to build an ethanol production plant in the state. The plan has changed over the years, and it might take a change in federal policy before a Maryland plant becomes a reality, but officials say rising energy prices only can help the initiative.

"We're moving, but we're moving slowly," said Lynne Hoot, executive director of the association, a member organization of grain producers that is based in Edgewater in Anne Arundel County.

Ethanol, grain alcohol that can be used as an alternative fuel, is made from crops such as corn, wheat and barley. It is typically used in a mixture of 90 percent gasoline and 10 percent ethanol, which today's cars can run on. The association wants to see a bigger stretch.

"Every vehicle on the road can use a 10 percent blend," said Hoot, "But we would like to move past the 10 percent barrier. That would be a big boost to our efforts."

The farm group wants Congress to pass legislation requiring a motor fuel blend of 80 percent gasoline and 20 percent alcohol made from grain, she said.

"Brazil uses 20 percent. Why can't we?" Hoot said.

Another goal is a requirement that cars sold in the United States have engines that can burn E-85, an ethanol blend using only 15 percent gasoline.

"It would not cost that much more," Hoot said of requisite engine adjustments, which she estimates would cost $150 to $200 per vehicle.

Most of the corn and soybeans grown in Maryland is used by the poultry industry as chicken feed. Grain farmers launched the effort to build an ethanol plant with the idea of creating a new market for their grain, as well as higher prices.

Ethanol plants have been sprouting across the country in recent years. There are 116 in operation, said Matt Hartwig, a spokesman for the Renewable Fuels Association. Another 81 plants are under construction and are expected to be operating by 2009.

The existing plants produced 4.9 billion gallons of ethanol last year, and output is expected to jump nearly 43 percent this year, to 7 billion gallons.

Most of the plants are in the Midwest, which is dense with corn growers, Hartwig said. The one that is closest to Maryland is in eastern Ohio. But that could change, with several plants being planned for Maryland, Virginia, Delaware, Pennsylvania and New Jersey.

Maryland's efforts were slowed this year when negotiations for a plant site along the Baltimore waterfront fell through, Hoot said.

The group still envisions a plant in the Baltimore area, close to a Curtis Bay facility where ethanol is blended with gasoline before it is distributed to gas stations across the state.

Originally, farmers planned a plant that could produce 15 million gallons of ethanol a year. That was changed a few years ago, when research showed that a larger plant would be more feasible. Plans now call for a plant capable of producing 50 million gallons a year.

The nationwide increase in ethanol production has more than doubled the price of corn in Maryland.

While this has been a boon to grain farmers, it has driven up costs for poultry companies.

"We don't want to drive the poultry industry out of the area," Hoot said of an industry that accounts for about one-third of Maryland's total farm sales. "But it is not going to bother me if they have to pay more for their feed."

The price of building an ethanol plant has gone up as the cost of steel and concrete continues to rise, Hoot said.

As a result, the cost of building a 50-million-gallon-a-year ethanol plant has risen to $130 million from $100 million over the past year and a half.

It would be impossible for Maryland farmers to raise the approximately $50 million in cash needed to finance the construction of a plant, Hoot said. So the association is looking at outside partners, including companies that have built ethanol plants in other parts of the country, Hoot said.

Even if such talks lead to an agreement, it will be some time before a plant goes into operation.

"If all the parts fall in place, we're still talking about two years, at a minimum, before we begin pumping ethanol," Hoot said. "We're moving slowly, but surely."

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