A company planning a $170 million biofuel refinery in Sampson County will clear its last hurdle before construction today when the U.S. Department of Agriculture announces a federal government guarantee for financing the project.
Chemtex, an international engineering company with offices in Wilmington, plans to use its new technology to convert grasses and other plants into 20 million gallons of ethanol a year starting in 2014.
Secretary of Agriculture Tom Vilsack said the refinery, to be built near Clinton, will provide a new stream of income for farmers, add jobs to a rural community and reduce dependence on foreign oil. And the new technology, which relies on inedible grasses such as miscanthus and switchgrass, won't compete with the food supply, a common criticism of corn-based ethanol.
Vilsack said the new technology gives the Chemtex facility a better chance to succeed than two previous corn ethanol facilities that failed in the region.
"It takes a lot less energy to grow these grasses than it does corn," Vilsack said in a telephone interview. "We think there's great energy potential. This biorefinery is going to help us learn more about how to produce it."
The USDA is expected to announce this morning its guarantee of $99 million in loans for Chemtex, which company executives say will pave the way for getting loan applications approved.
The planned refinery will employ 65 people with average salaries expected to exceed $48,000 a year. It is expected to create 250 indirect jobs for suppliers, maintenance workers and drivers to transport the crops from the fields to the refinery.
The Sampson County facility will be the first in the nation to use a new Chemtex process that essentially blasts the grasses with steam to expose their sugars. The sugars are then fermented into ethanol.
Chemtex officials say the refinery will be a sort of proving ground to demonstrate the technology in the United States. A similar Chemtex plant in Italy is scheduled to open later this year.
The USDA previously approved $4 million through its Biomass Crop Assistance Program for 4,000 acres of miscanthus and switchgrass in 11 southeastern North Carolina counties. The program will pay farmers up to three-quarters of the establishment costs along with five years of rent payments. The deadline for farmers to sign up for the program is Sept. 14.
Chemtex will need between 20,000 and 30,000 acres of energy crops. It has soft commitments for about half of its needs. Chemtex is asking farmers to consider planting on marginal lands that are not good for planting corn or soybeans. But a major part of the acreage likely will be hog waste spray fields.
The Biofuels Center of N.C., which has a goal to replace 10 percent of the state's fuel imports by having 600 million gallons of renewable liquid fuels produced in the state, has identified 100,000 acres of spray fields in Sampson, Duplin and Wayne counties that could potentially be used for biocrops.
State environmental workers still are studying how to plant the crops in spray fields in a way that complies with waste regulations. The USDA says the grasses may make the spray fields more environmentally effective than the typical Bermuda grass currently planted there.
The USDA loan guarantee is part of a program that has funded eight other refineries in the U.S. that are creating fuel from products such as solid waste, algae and agricultural residue.
Vilsack said the program is another step in a long line of government partnerships with new industries to help them get started. He compared it to the interstate highway system being built to support a budding car industry.
He said the U.S. in the past three years has gone from importing 62 percent of its oil to importing 45 percent.
Vilsack said the Department of Defense, especially the Navy, is looking closely at new technologies to help it reduce dependence on foreign oil.
Chemtex documents say North Carolina has enough available land to support as many as 15 refineries, which could mean 5,000 new jobs and a $2 billion boost to the state's economy.
Chemtex, which counts Toyota among its partners on the project, has an agreement with Gulf Oil to buy all of the ethanol it produces in Sampson County.