Chemtex International Inc. is currently involved in a permitting process that will see a $200 million biofuels refinery production plant open at the start of 2015, creating around 350 direct and indirect jobs and anticipated to bring well in excess of $1 million in annual tax revenue to the city of Clinton if ultimately annexed, company and local officials said.
And company officials say that may just be the start if the plant proves as successful as they think.
City of Clinton staff, officials and City Council members received a literal blueprint from Chemtex executives during a work session earlier this week. At that session, company officials laid out a timeline by which the plant’s construction would proceed and talked about the benefits, and ultimate goals, of the plant and its location in Clinton.
In August, Chemtex International was officially selected by USDA-Rural Development for a $99 million loan guarantee to develop a 20 million gallon cellulosic ethanol plant in Sampson County. The plant, project officials said, will benefit the local economies and farmers of Sampson and surrounding counties, while blazing a trail in alternative fuels production on a national level.
The announcement was touted by local officials as a “great day for Sampson County” and by company representatives as the start of a “green revolution.” The local plant will use Beta Renewables’ Proesa technology to produce cost-competitive ethanol using non-food biomass as its feedstock, the same technology being used at the world’s first commercial-scale cellulosic ethanol plant in Crescentino, Italy.
Paolo Carollo, executive vice president for Chemtex, told city officials that it is the hope the Sampson-based facility, the first commercial-scale facility of its kind in North America, would also prove to be the first of many.
“We are going to be starting with smaller facilities and probably evolving into 40 or 50 million gallons,” he said. “We need to have a good handle on the logistics before we can think about expanding the capacity.”
With Chemtex’s “Project Alpha,” Sampson County and eastern North Carolina farmers will directly benefit through the sales of newly established energy grasses, including switchgrass and miscanthus, to the biorefinery. About 20,000 acres will be required to supply the facility with 600,000 tons of energy grasses annually, and the increased net revenue to local growers is expected to be about $4.5 million a year.
“We saw a lot of potential here,” said Carollo. “This is a better use of low-yield land or land that cannot be used for other purposes. We see in this region there is enough potential to build maybe — we were saying 10 or 15 facilities — but certainly there is a cluster of opportunity. We see this as one of several facilities that might come up.”
Carollo also addressed some concerns of the adverse effects the crop might have, saying he spoke with USDA, Department of Department of Environment and Natural Resources, crop specialists and others. Carollo said he received a positive response.
“They were quite comfortable that what we are providing here is going to be manageable and safe for the environment in which it is going to be introduced,” he noted, adding that the needed land would be comparatively minimal for the switchgrass and miscanthus. “To produce the same amount of fuel using Bermuda grass, we would need five times that land — 100,000 acres, instead of 20,000,” Carollo said.
Those grasses would likely be produced within a 50-mile radius from the facility, which will be developed on a 40-acre site at Clinton Industrial Rail Park on Turkey Highway in Clinton, just outside the city limits.
“We’ll have service by the rail line coming in,” said Jeff Taylor, vice president of technology for Chemtex, “and we’ll have trucks bringing in the raw material. We’ll be making about three rail cars a day of ethanol and about 100 trucks a day of the biomass material coming in. We’ll be storing about three days of fresh biomass at the facility.”
Answering Council concerns, Carollo said there would not be a tremendous odor, but that it would emit a “grainy” smell, similar to a brewery.
“Basically, with the components we are using, in the end there’s a fermentation process so we are producing beer, then distilling that to a higher level of purity to go toward ethanol,” Carollo said.
‘Starting at 70-80 percent’
Clinton mayor Lew Starling asked whether Carollo felt the 20,000 acres of farmland needed to feed the biorefinery would be satisfied. Carollo said he felt it would, but not initially.
He said Chemtex officials have spoken with four large pork producers and received feedback in assessing the numbers, as well as the overall local impact of the project.
“We tried to have their counsel and their support in how to deliver this industry without causing problems,” said Carollo. “We are trying to learn from them. They are actually cooperating very closely with us. One thing is sure: they don’t like corn at $7 per bushel, and this is going to take out the equation of corn from fuel. For them, it is a big driver. Strategically, it makes more sense than supporting corn ethanol.”
Currently, with the assistance of those producers, Carollo said 12,000 acres of land of the needed 20,000 acres had been secured, with contracts still to be finalized. There is a formal condition of commitment in place, he noted.
“We see the project starting with maybe 70 to 80 percent of what we need, then closing to 100 percent within the next few months or years,” said Carollo. “We think there is enough potential. It’s kind of public, but Murphy Brown, Murphy Family, Prestage Farms and Goldsboro Mill were very supportive and very helpful in trying to get us on the right track.”
Bill Sisk, project manager for Chemtex’s Clinton project, shed further light on just when that plant would come to be.
“Right now we’re right in the middle of defining all the permitting information,” said Sisk. “That work has started already and we have to be finished with those (permits) by June or July. We see in fall 2013 starting the first site clearing work then moving into the full detail of the project — foundation, steel and everything else — which should lead to finishing the construction by late fall of 2014, with a projected start-up in the first quarter of 2015.”
Approximately 65 people will be hired as part of the process, with an additional 280 indirect jobs expected in areas such as feedstock supply, maintenance and transportation.
Economic developer John Swope said, if Chemtex were to be incorporated, calculations show a boon to city coffers in the tax revenue produced. Over the first five years, the facility would pay approximately $1.3 million in property taxes to the city, and $1.2 million over the second five years.
“That would be an additional benefit if it were to be annexed,” Swope noted.
Carollo told city officials that the plant would not be competing with grain and corn land, which is “too nice.” Land that is more challenged in producing high-value crops was sought as the energy grasses do well on sandy, non-irrigated land such as hog lagoon spray fields, he noted.
Leading up to August’s announcement, Chemtex International received a $4 million Biomass Crop Assistance Program (BCAP) award to support startup costs associated with establishing and growing over 4,000 acres of miscanthus and switchgrass across Sampson and 10 other counties. Carollo said nearly half that acreage was able to be realized during the short window for the funding.
“This project is going to be producing, at least for the first years, only ethanol for being added to the gasoline,” said Carollo. “Our vision was, ‘we need to be profitable even without the subsidies. We can’t rely on something that is here today, and maybe is not going to be here a few years from now.”
Similar to BCAP, as well as projects like Chemtex, the goal is to reduce America’s dependency on foreign oil, cut down pollution and spur rural economic development and job creation while having a sustainable source of energy and a viable product.
He said there would eventually be avenues for Chemtex to move toward manufacturing plastics, which would make the plant viable locally for many more years.
“That is going to be a potential market that is probably three or four years from where we are right now,” said Carollo. “The reason we feel we have a good Plan B is that converting sugars to some different polymer can always be done.”
However, for now, producing cost-competitive ethanol is where it is at.
“Ethanol is a great market right now,” Carollo said. “Long-term, our sustainability is certainly based more on chemicals, although we believe that the appetite for cellulosic biofuels in the (U.S.) will remain high for at least 10 or 15 years, no matter what happens to the dependency. It is possible that new fossil fuel reserves will be found, but long-term, you will want to have a renewable mix of fuels that can make the whole package more sustainable.”
Chris Berendt can be reached at 910-592-8137 ext. 121 or via email at sicrime@heartlandpublications.com.
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