SOMERSET, Ky. – Continental Refining Co. will be bringing a new soybean crushing operation into its refining facility in Somerset for local and regional soybean producers, according to company officials.

“We were pleasantly surprised to find out just how many soybeans were grown in a 10- to 12-county radius of us, and so that’s what led us to the idea of a soybean crushing operation,” said Steve Morris, the company’s chief financial officer. “And the more we got into it, the more we realized that this was a fantastic fit for the region.”

According to company officials, as soybean production in Kentucky has increased exponentially over the last two decades, producers in areas of the state where grain elevators are not located nearby have had to truck their harvest over great distances, adding additional costs and time constraints.

“This has been especially burdensome as fuel prices have increased dramatically over the past two years,” a company statement read. “In 2020, the average U.S. cost of a gallon of diesel fuel was about $2.55. Today, it is over $5 in many places.”

The company said the new soybean crushing operation will be providing a valuable outlet for the region’s soybean crops and much-needed relief for producers who have been absorbing those increased fuel costs.

Formerly Somerset Oil, which was built back in the 1930s, the refinery was a major employer and business in the community and the region for many years, Morris said.

“Unfortunately, the period from 2000 through 2011 saw the refinery change hands several times, go through a bankruptcy and ultimately shut down,” he said. “It appeared what had been a staple in the region for decades might never operate again.”

But in late 2011, Demetrios Haseotes, a local entrepreneur and Hemisphere, Ltd., CEO, purchased the facility, renovating the refinery, which began processing crude oil, and selling road fuels and heavy fuel oils in late 2012.

“By 2018, the aging equipment, as well as an inconsistent quality crude oil supply, caused Continental Refining Co. to cease operations,” Morris said. “Knowing the facility still had value and wanting to continue the legacy, the Continental Refining Co. team set out to re-design and rebuild a modern state-of-the-art oil refinery, a major undertaking.”

To date, Haseotes has invested more than $60 million updating and improving the facility’s crude oil refining capabilities, and will now shift his focus to soybeans as the future of diesel energy production and additives at his Continental Refining Co. refinery.

“The south-central and southeastern regions of Kentucky have industries and institutions that rely on diesel fuels, and because Kentucky is a leader in the nation for soybean production, the region also has the raw materials and technology to make biodiesel at a scale that reflects the local and regional demand,” Haseotes said.

Continental Refining Co. is located on 77 acres in the heart of Somerset. Company officials said this revitalization process would include the acquisition and installation of its soybean crushing and biodiesel facility.

Moreover, the company’s crushing facility will process nearly four million bushels of soybean per year (84,000 tons), while its biodiesel refining division will generate up to five million gallons per year as planned. Its product terminal will have the ability to distribute more than 130 million gallons of product, company officials added.

Skipper Todd and Mark Woodrum, both Liberty, Ky., soybean producers, said they see the new facility as a way to get their crop to a much closer market.

“That facility is about 20 miles from here and most of our soybean crop, right now, goes to either Owensboro, which is 200 miles away, or Jeffersonville, and that’s a little over a hundred miles,” Todd said.

“Having someplace local is going to help out on transportation, on getting our crop marketed out of here, and help as far as fuel costs and time moving our crop away,” he added. “We spend a lot in fuel each week moving our crops.”

Woodrum said, “As long as they have their prices competitive with your other markets, this will just cut down on a lot of the trucking, and be a lot faster, too,” he said. “And I think it’ll be really good for some of the smaller producers who don’t grow a lot and would benefit from a closer market.”

Chris Pierce, a Science Hill, Ky., producer, said having such a market for area soybeans could be a game-changer for a lot of growers.

“We have marketed 2022 soybeans with Continental Refining Co., and feel this facility will be an opportunity for local farmers,” he said. “For the first time, local producers in our area will have an end user buying soybeans close to the farm gate.

“Continental Refining Co. will provide jobs to local tradesmen and feed products to farmers in this area,” he added. “Local ownership and commitment are the backbones of this regional opportunity.”

Scott Gerlt, American Soybean Association chief economist, said the soybean processing industry intends to significantly grow over the next few years.

“This change will open up more domestic opportunities for soybean consumption,” he said. “Soybeans are almost never used whole, but are instead ‘crushed’ to produce soybean meal and soybean oil.

“Expanding crush capacity provides additional places for farmers to sell their beans, while providing more soybean meal and oil for the domestic market,” he added. “To date, there have been announcements for 23 plant expansions, which would add about 750 million bushels per year in crush capacity.”

But to produce extra soybean oil, Gerlt said crush capacity in the U.S. must also grow.

“In fact, some of the announced renewable diesel plants have been paired with crush plant announcements through a joint venture,” he said. “Of the 23 crush plant announcements, 13 are for new plants, and 10 are for expansion of current plants, at least two of which have been completed.

“However, announcements are not shovels in the ground,” he added. “Expansion is based upon growing renewable diesel production, and as the biofuels industry grows, so will the crush plant buildout.”

Currently, Gerlt said, “Iowa has the highest soybean crush capacity of any state, with over 1.3 million bushels per day of nameplate capacity (the intended full-load sustained output of a facility, which is approximately 420 million bushels per year in practical capacity).”

Gerlt said realized announcements would add about another 340,000 bushels per day in nameplate capacity.

“Iowa is followed by Indiana and Illinois in total crush capacity,” he said. “Indiana is currently looking at minimal increases in capacity, while Illinois has 445,000 bushels per day of nameplate announcements. Some of the states with the largest percent increases are North Dakota, Nebraska and Louisiana.”

Morris said he’s looking toward the future in having Continental Refining Co.’s new soybean crushing operation running at full capacity. But for now, the facility will be buying soybeans from this season’s crop.

“We have got beans contracted through early spring 2023, and will be buying spot beans as well, so we will be buying this year’s crop,” he said.

“But in looking down the road, maybe three to five years, we could be in the neighborhood of five or six million bushels of soybeans that we would process annually,” he added. “I feel this facility will be a real boost to the local farmers, the rural economy, and the region as a whole.”