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Officials say plant to make ethanol

February 08, 2005|by DON AINES

chambersburg@herald-mail.com

CHAMBERSBURG, PA. - A group of farmers and agricultural business investors from Pennsylvania and Maryland is purchasing 55 acres in the Cumberland Valley Business Park as the site of a distillation plant to produce up to 60 million gallons of ethanol annually from one of the region's most abundant resources - corn.

Penn-Mar Ethanol, a limited liability corporation based in York, Pa., signed a sales agreement Monday to buy the land for $2.24 million, according to John Van Horn, the executive director of the Letterkenny Industrial Development Authority, which runs the park.

The parcel has not been idle in recent years, Van Horn said. "It's a cornfield right now," he said.

Total investment in the project is approximately $80 million, said Scott Welsh, the project manager for Penn-Mar. Once built, the plant would employ approximately 40 people on site and generate 25 or more jobs in transportation, Welsh said.

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"Our goal is to try and be operational in late 2006," Welsh said. Construction could begin late this summer, he said.

Welsh said there would be plant, general and operations manager positions and he expected employees would be paid in the range of $35,000 to $45,000 a year.

The business park now has 43 businesses and industries employing 853 people, Van Horn said. Employment at the adjacent Letterkenny Army Depot is approximately 2,500 people, he said.

Although the parcel is in a Keystone Opportunity Zone, meaning it will be exempt from most state and local taxes through 2010, Welsh said that was not the primary consideration for building in the park.

"It's an advantage, but it's not the main reason we picked that," Welsh said.

The distillation process requires substantial supplies of electricity, water and natural gas, all of which the park has, along with rail access to ship in millions of bushels of corn each year, he said.

One bushel of corn will produce 2.8 gallons of ethanol, which will be sold as a gasoline additive, Welsh said. At full production, the plant would partially consume about 20 million bushels a year, he said.

According to the Pennsylvania Agricultural Statistics Service, Franklin County farmers produced 6.1 million bushels of corn for grain and 653,000 tons of corn used for silage.

With a good mixture of rain, sunshine and warm temperatures, 2004 was one of the finest corn harvests in the county's history, said Jere Wingert, a livestock and agronomy agent with the Penn State Cooperative Extension Service. Late last year, farmers were having a hard time finding places to store their crops, he said.

"We have warehouses out here sitting full of corn," Van Horn said of the park.

"We'll certainly probably bring in more than half of it (corn) by rail from the Midwest," Welsh said. He said the balance likely will be purchased from farms within a 100-mile radius of the plant.

That grain will be ground, mixed with water, yeast and enzymes and allowed to ferment, Welsh said. It will then be distilled to separate the ethanol from the corn mash, he said.

A significant byproduct of the process is known as "distiller's grain," which will be marketed as livestock feed, Welsh said. The starch in the corn produces the ethanol, but leaves behind the protein, fiber and oil, he said.

Van Horn said this is the third parcel to be purchased within the 283-acre Keystone Opportunity Zone in the park, one of several areas in the state designated to be eligible for tax breaks to encourage redevelopment. Ingersoll-Rand and Warrior Roofing are the other companies with facilities in the zone, which still has about 200 acres of land left, he said.

Once part of Letterkenny Army Depot, the park has about 1,000 acres of land that were turned over for civilian development after the depot was downsized by the Base Realignment and Closure Commission process in 1995. Van Horn said about 450 more acres eventually will be transferred from the Army to the authority.

Penn-Mar Ethanol was founded by 13 investors in 2002, a number that has grown to about 50 now, he said. This will be the group's first plant, he said.

About 80 ethanol plants produce about 3 billion gallons of ethanol a year in the United States, according to Welsh. Most are in the Midwest and West, he said.

Depending on market conditions, Welsh said ethanol sells for about $1.30 to $1.50 a gallon.

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