Hopewell ethanol plant on track for projected opening next year

HOPEWELL -- The site for Virginia's first ethanol plant is clean, leveled and undergoing foundation work to support the silo and fermenting tanks that will start going up this summer.

Despite a national economic slowdown, the $160 million project near downtown Hopewell is on track for its projected May 2010 opening, an executive at Osage Bio Energy, the Glen Allen-based company developing the plant, said last week.

The economy, however, has affected Osage's plans to build additional plants at the same time as Hopewell's, said Craig Shealy, president and CEO.

The company announced in July it would build a second plant in Union County, S.C., where Osage Bio Energy purchased a property. A third plant was planned for Chase City in Mecklenburg County, where the company received zoning permits last year.

"We had intended to build two or three plants in parallel," Shealy said. But because of the financial crisis, the company will pursue those projects later, he said. "We will take our time and proceed once the financial situation gets better."

The Hopewell project is being built with $300 million in cash equity Osage Bio Energy secured last year, Shealy said. The weak economy has made it easier for Osage to find laborers and materials at lower prices for the Hopewell project, he said.

Osage plans to produce as much as 65 million gallons of the alternative fuel annually that would be distributed in local markets and used in E-10 and E-85 fuel blends.

It will also produce up to 170,000 tons of barley protein meal and 50,000 tons of fuel pellets.

The facility will bring about 50 full-time jobs and $2 million in tax revenue annually to this industrial city of 23,000 residents.

Osage Bio Energy faced strong opposition from residents and city leaders in late 2007 during negotiations to purchase the Hopewell site and last year when acquiring state and local permits for construction. But residents have warmed up to the idea of hosting the country's first major barley-based ethanol facility, local leaders say.

Opposition, at least public, to the industry has vanished as residents realize the project is under way, Vice Mayor N. Gregory Cuffey said.

"Many more people now think this is going to be great for the city," he said.

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As construction in Hopewell advances, the company has turned its focus to encouraging barley production in the region.

Osage is holding a contest to increase farmer interest in growing the winter crop. Farmers in Delaware, Maryland, Virginia, Tennessee, Kentucky, North Carolina and South Carolina are eligible to enter the contest, which coincides with Osage Bio Energy's planned construction of the bioprocessing facility.

Last month, the company held a community meeting in Hopewell and about 100 people showed up to learn about the company's job opportunities. Another meeting is planned for the summer when the company will be getting ready to start the hiring process, Shealy said.

In the meantime, the Department of Environmental Quality is planning a public meeting for comments on an amendment to the construction permit the agency issued to Osage Bio Energy last year.

Osage asked to reconfigure the facility to make ethanol from barley rather than corn as originally planned, said Sparky H.L. Lisle Jr., an air-permit writer for DEQ. Some of the equipment will also be of a different size than previously proposed.

The hearing is a procedure DEQ follows in any permitgranting process, especially when there has been broad public interest.

Company and city officials, however, say they are confident the amendment to the permit will be granted with no delay.

"We feel pretty good," said Shealy. "I am happy to be building a project in this economic environment."

Contact Luz Lazo at (804) 649-6058 or .