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Coal-fired ethanol plant begins production

HERON LAKE -- More than three years have passed since plans were announced to build the state's first coal-fired ethanol plant at Heron Lake, and while a few kinks continue to be worked out, the plant is now in business.

"It's just a pleasure to be operational," said Robert Ferguson, president of Heron Lake BioEnergy (HLBE) on Wednesday.

Nearly three years and three months after an equity drive kicked off plans to construct the 50-million gallon ethanol plant on the outskirts of Heron Lake, Ferguson said, "It's quite a window. It's good to be done, it's good to be running."

The plant produced its first gallon of ethanol on Sept. 21, and "other than a couple little power glitches ... as a whole, it's been pretty good," he added.

Fagen Inc. of Granite Falls and ICM of Colwich, Kan., led construction of the plant from the November 2005 ground-breaking through the July 2007 completion.

HLBE is the first coal-fired ethanol plant in Minnesota, and the fourth plant to operate in the Midwest.

While the permitting process took more time, Ferguson is optimistic about burning coal in ethanol production.

"We're running on less (coal) than we had anticipated. The process is more efficient than we thought it would be," he added.

As the plant remains in "testing" mode, Ferguson said HLBE has stockpiled a three-month supply of corn and has a marketing firm in place to purchase grain from farmers across the region. He anticipates the majority of the corn supply needed will come from within a 30-mile drive of the plant.

Farmers today are cashing in on $3-per-bushel corn, compared to the $1.75 to $1.80 per bushel market when HLBE first announced its plans to construct an ethanol plant. At the same time, Ferguson said they've seen a swing in the market for ethanol, going from $1.53 in July 2004 up to about $3 and back down to the $1.55 per gallon it was selling at on Wednesday.

"It's kind of like the Dow Jones, you're going to have ups and downs in the market," Ferguson said.

HLBE has yet to ship out any of its product -- ethanol or distiller's grain -- because the Union Pacific Railroad has not had a chance to grant final approval on the rail loop constructed for plant access. Preliminary approval is hoped to be received in days, with the final check to be conducted late this month.

"We're building an inventory of ethanol," said Ferguson of the work employees are doing in the meantime. "There are cars in Heron Lake to load out ethanol, and hopper cars are sitting in Mankato to haul out distiller's grain."

The plant has 38 employees, with another seven working in the elevator division, which includes facilities in Lakefield and Wilder.

Ferguson said most employees were hired from within a 60-mile radius of the plant, and a couple of people have relocated to the area to work at the facility.

"We are in the process of hiring a commodity manage, and we're looking for another hire in safety and environmental compliance," he added. "We've had good success in hiring people. I think we have a very qualified work staff here."

Marketing firms are in charge of the sale of ethanol and distiller's grain produced at HLBE, and Ferguson said the products will be shipped to buyers across the country, as well as into Canada and Mexico.