BY CHRIS BLANK Associated Press AND CHRIS KILLIAN Special to the Gazette LILBOURN, Mo. –

It’s one of the newest buildings in this small agricultural town. Aligned between two city water towers, the 120-foot long biodiesel plant gleams in the sun. The paint on its sign hasn’t even chipped.

But weeds have begun to encroach on the Great River Soy biodiesel plant, which produced just 94,000 gallons over two weeks before it ran out of money and was shuttered.

It’s a scene that has been repeated throughout the United States: Clovis, N.M.; Nevada, Mo.; Hartsburg, Ill.; Lamoni, Iowa; Evansville, Wis.; Greybull, Wyo.; Rock Port, Mo.; Belle Fourche, S.D. All were supposed to have biofuel plants operating or under construction by now. None do.

Hopes ran high in many small towns amid an explosive interest in biofuels and a rush to build large plants. Unseen by planners, however, was the coming spike in crop prices and a financial meltdown unlike any that America has seen since the Great Depression.

Bangor plant survives
A biodiesel plant in Van Buren County’s Bangor opened in November 2006 amid the flurry of excitement over making fuel from crops. But nearly two years later, it’s about survival at Michigan BioDiesel LLC.

Since spring of last year, the 10,000-square-foot plant has been pumping out biodiesel, but most of it not in fuel form.

Instead, plant officials decided to begin refining crude glycerin — a co-product of the refinement of soy oil, corn oil or other crude products that biodiesel is made out of.
“We’re not a biodiesel plant anymore,” said John Oakley, chief executive officer of Michigan BioDiesel. “We’re more of a chemical plant.”

Only about 5 to 10 percent of the plant’s production is biodiesel fuel, he said.

When it opened, Michigan Biodiesel officials had predicted that by March 2007 the plant would be at full capacity, capable of producing 8.5 million gallons of biodiesel fuel a year.

But shortly thereafter, the market for biodiesel became unprofitable, and the decision to go in a different direction was made, Oakley said.

“There was simply no profit,” he said. “This was about survival. Period.”

The “cracking” of crude glycerin, as Oakley calls it, produces two technical grade glycerin products by separating the fats and soaps in the crude glycerin.

The first can be used as lubricants, coolants, heat transfer agents and veterinary pharmaceuticals. The second products are “green” fats and soaps for animal feed, which can also be blended with other products to improve animal feed efficiency. It can also be converted into feedstock for biodiesel production.

“Think of it this way,” he said. “We’re making Legos and we’re selling them to industry to be used to produce other things.”

On Thursday, Michigan Biodiesel signed a contract to process 10 million gallons of corn oil. The plant also processes glycerin from five other biodiesel plants.
Oakley wouldn’t say whether the plant’s current production strategy is profitable. “But we are turning the corner,” he said.
Struggling to adapt

Plants in other parts of the country, meanwhile, haven’t found new markets to keep running.

“The market just exploded and got so crowded,” said Kerry Rose, the president of Ozark Ethanol, which has abandoned plans for a plant in Missouri.
By 2007, corn and soybean prices charged upward, cutting into the profit margin for biofuels and leaving some plants without enough cash to operate.
Biofuels firms going through tough times

WHAT HAPPENED: Ethanol and biodiesel plants across the country have struggled in recent years to recruit enough investors for their projects. Others have finished plants but don’t have enough money to operate.

THE REASON: There was a rush to build biofuel plants when gas prices spiked because corn and soybeans could be purchased cheaply to make fuel. Investors rushed into the market, but then commodity prices spiked. Now money for new and existing projects has dried up as the nation enters its worst financial crisis since the Great Depression.

LOST MONEY: For one shuttered southeast Missouri biodiesel plant, investors’ money is locked into a plant that’s scheduled to be auctioned next month. The state also lost money through $924,000 in tax credits for the plant’s investors and $28,000 in subsidies for the plant.
– Associated Press