By KEVIN WALKER
Michigan Correspondent

OLIVER TWP., Mich. — A large biodiesel plant could be added to Michigan’s alternative energy portfolio within a couple of years.
That’s according to Bill Moran, CEO of Huron Biofuels, LLC, a private company that is seeking approval to build a biodiesel plant in the Thumb area of the state.
“I don’t have any doubts that it will happen,” Moran said. “This is not conjecture at this point.”
The plant would be located in Oliver Township, near Elkton, which is where the Harvest Wind Farm’s 32 turbines are located. Moran has lined up some financing and is planning a $65 million plant that will turn 13 million bushels of soybeans into 20 million gallons of biodiesel each year.
He still must fulfill the engineering and permitting requirements, but he doesn’t anticipate any major problems on those matters. He said there aren’t any environmental issues, either. Although there has to be a zoning change, he said it shouldn’t be a problem because the site is near an industrial zone.
“The local economic development people have been very supportive,” he said. “The local agriculture community has been very supportive, also. Having a stable customer for soybeans year after year will help a lot to keep the price stable.”
Moran, an engineer, came to Michigan while doing consulting work for Noble Environmental Power, another alternative energy company that’s building a wind farm in nearby Sanilac County. He said that he likes the area and the people, and decided to buy a house in nearby Bad Axe, Mich. He’s been working in the power generation industry for 35 years.
There is a federal mandate to have 1 billion gallons of biodiesel production per year nationwide by 2012, Moran said.
The plant he is planning would have a crushing facility, which could make a big difference in its profitability.
Many facilities buy soybean oil for their production, and according to Moran, 35 percent of these have shut down because the high price makes it difficult to turn a profit. He said the soybean oil produced from their own crushing facility would be much cheaper. A recent article in Iowa Ag Review online about the economics of biodiesel seems to confirm Moran’s point. According to the article, “A Billion Gallons of Diesel: Who Benefits,” the biodiesel industry has a lot of overcapacity and thus promises little or no return to investors in such operations.
“Without the (federal) mandate, high feedstock prices will result in little or no production. Low feedstock prices will trigger production, but feedstock prices will consequently be bid back up to break-even levels that do not allow for a return on capital,” the article states. “Biodiesel plants integrated with soybean crushing facilities may enjoy some positive returns, especially when the price of soybean meal is high.”
The article concludes that farmers and landowners will be the primary beneficiaries of the new mandates, rather than investors.
“You can say it’s pessimistic, but I was just pointing out that getting returns on the average plant is going to be difficult,” said Miguel Carriquiry, one of the article’s authors and an analyst at Iowa State University’s Center for Agricultural and Rural Development.
He also said while there is little investing going on right now in biodiesel plants, operations that are able to get their oil in an alternative, less expensive way may be able to make a profit.
Moran said he agrees with the statement that some biodiesel plants were based on the assumption that soybean oil prices would not rise above 40 cents a pound.
“I do not agree with the conclusion that mandates only favor farmers, not investors,” he said. “Wise investors know that the commodity markets are cyclical. A good business plan has to address market fluctuations and remain economically viable.
“Many biodiesel projects are now looking for alternative feedstocks. The key to managing the volatility of the soy market is vertically integrating a crush plant with the biodiesel production.”
He also said that the marketing of by-products such as meal and hulls will keep soybean oil prices competitive with other feedstocks.
For more information on Huron Biofuels, e-mail Moran at info@huronbiofuels.com and there will also be a website soon at www.huronbiofuels.com