Noble Americas, the company that bought the shuttered facility last year and set to work retrofitting it, is now testing the plant to ensure it’s ready for production again. The company sent a notice to city officials a few weeks ago to notify them of the impending startup. Chris Fielding, assistant executive director for the South Bend Department of Community Investment, said Noble Americas’ goal is to be shipping the corn-based fuel additive by the middle of December. “We’re certainly excited to see the first truck of ethanol go out of that place in the coming weeks,” Fielding said.
It will be the first ethanol made at the plant since New Energy, the facility’s former owner, filed for Chapter 11 bankruptcy two years ago. At the time, it looked like the 30-year-old plant might have reached the end of its usefulness, especially when liquidators bought it at a bankruptcy auction.
Noble Americas not only saved the plant from the scrap heap by purchasing it from the liquidators, it also has invested heavily in the facility to make it more efficient and able to withstand the ups and downs of the ethanol industry. Fielding said Noble Americas has spent about $40 million on upgrades at the plant. The company had projected spending $31 million when it applied to the city for incentives.
He said Noble Americas has hired 65 people to work at the plant. Its commitment to the city was to employ at least 50 workers. “Noble has been a great corporate citizen for South Bend,” Fielding said. “They’ve actually exceeded their commitment to the city in all aspects.”
Local corn farmers also are happy to see the plant returning to production. The plant used 35 million bushels of corn annually when it was running at full capacity under New Energy’s ownership. Roger Mochel, manager of Frick Services’ location in Wyatt, said the agricultural business sent eight truckloads of corn to the South Bend ethanol plant a couple weeks ago. The plant has bought corn for December delivery too. “It’s a great thing to have back,” Mochel said. “We’ve grown two good corn crops in a row, and there’s a lot in the supply line. Having that additional market locally is going to help stabilize prices.”
When New Energy went bankrupt in 2012, the company was struggling to turn a profit amid flat demand for gasoline and high corn prices caused by a drought that year. As Mochel mentioned, farmers have grown record crops the past two years, and corn prices have dropped as a result.
But Wallace Tyner, a professor of agricultural economics at Purdue University, said there’s still a lot of uncertainty in the ethanol market because the U.S. Environmental Protection Agency has delayed setting the new Renewable Fuel Standard that will determine how much ethanol has to be blended with gasoline in coming years. In general, under the current standard, ethanol accounts for 10 percent of each gallon of gasoline sold in the United States. “The good news is there’s a strong export market for ethanol now,” Tyner said. “We have enough capacity to meet the Renewable Fuel Standard already. If it weren’t for exports, (ethanol producers) would be having a really tough time.”
Low corn prices are good for the industry, he said, but oil and gasoline prices are low as well — and that’s a challenge.
“Ethanol doesn’t have the advantage over gasoline like it did earlier in the year,” Tyner said, “but, because of low corn costs, ethanol companies are still making money.”
The city is in the process of obtaining a corn-oil extractor for the plant. That equipment, which will cost the city almost $2 million, was a key incentive in attracting Noble Americas to the South Bend property. It will provide another product and revenue source for the plant as well.
Ethanol plants typically sell two byproducts: distillers dried grains for animal feed and corn oil for cooking and other uses.
Fielding said the plant’s distillers dried grains, or DDG, had low value in the past because they were too oily and sticky. Noble Americas has invested in better dryers to solve that problem, he said. The plant was missing the corn-oil market entirely under the previous ownership.
“By increasing the value of the DDG and adding corn oil as a third revenue stream, that improves the viability of the plant,” Fielding said. “Those investments definitely make the plant more sustainable in the long term and less susceptible to the commodities market.”