Ethanol plant to open on Buffalo River
Called a 'perfect fit,' $80 million project will use historic grain elevators to store corn
By SHARON LINSTEDT
News Staff Reporter
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Derek Gee/Buffalo News
RiverWright Energy co-founders Rick Smith III, left, and Kevin Townsell plan to build an ethanol plant on a Childs Street site that will incorporate four historic grain elevators to store corn for processing.
A dormant cluster of grain elevators and milling facilities on the Buffalo River in the city's Old First Ward will come back to life as an ethanol production plant, local businessmen say.
When the plant is up and running - in about a year - it is expected to produce 110 million gallons of ethanol annually and create 65 full-time jobs, according to RiverWright Energy, LLC, a new, Buffalo-based alternative fuel company.
The $80 million ethanol project will be located on a 23-acre parcel along Childs Street, off Ohio Street, using four mothballed grain elevators, along with two former flour mills and a malting house. The oldest of the industrial structures dates to the 1880s.
While the project makes sense because of surging demand for alternative fuels, it also fits well with Buffalo's industrial heritage, said Rick Smith III, co-founder of RiverWright Energy.
"This is about reaching back and utilizing pieces of Buffalo's industrial past to create new wealth, new jobs for the future of this city," Smith said. "This is something that will put Buffalo on the map for all the right reasons."
Under RiverWright's business blueprint, some 40 million bushels of corn, primarily from the Midwest, would be delivered to the plant each year. The bulk of the corn would arrive by lake freighter, a throwback to Buffalo's heyday as a milling capital.
Increase in ship traffic
As many as 60 lake freighters a year are expected to serve the plant, tripling the number of commercial ships making stops at Buffalo ports annually. More corn would arrive by rail lines, which run directly into the property.
"We're in a unique position of having all these great grain elevators. What a novel idea, reusing grain elevators to store grain," Smith said.
The alternative fuel company has set an ambitious project timetable,
which starts with a September groundbreaking and a fall 2007 production start.
Conversion of the Childs Street facilities to ethanol production will include construction of an 80,000-square-foot building for fermenting and distilling. As many as eight 500,000-gallon tanks will be installed for production and storage.
The existing grain silos will be retrofitted with modern self-unloading bins to accept ship-delivered corn.
In addition to producing more than 100 million gallons of pure ethanol annually, the plant will create an estimated 400,000 tons of livestock feed grain as a byproduct of the process. Sales of liquid carbon dioxide, another byproduct of the distilling process, will provide additional revenue. The plant's heavy use of water for corn processing will have a side benefit of discharging clean, highly oxygenated water into the turbid, slow-moving Buffalo River.
Ethanol produced in Buffalo would be shipped by rail to an ethanol depot in Albany for distribution to fuel companies.
Smith, president of Rigidized Metals, which is next door to the plant site on Ohio Street, is teaming with Kevin Townsell, a local entrepreneur whose resume includes the Buffalo Brewpub, Shannon Pub and the Buffalo Irish Festival, on the fuel production project.
After more than a year of extensive research on ethanol production and the feasibility of producing it at the Buffalo site, the businessmen are more convinced than ever it will succeed.
"We have a competitive advantage over almost every other ethanol facility in the country because we have the elevators and we have direct lake, rail and highway access. We're a perfect fit," Townsell said.
The existing infrastructure will allow RiverWright to build its plant at a cost 30 percent below the "build from scratch" industry norm.
RiverWright also has joined forces with ethanol industry veteran KL Process Design Group, of Rapid City, S.D. The Midwest company, which has developed several ethanol production facilities and manages two plants, will oversee plant development and day-to-day operations.
The Buffalo project is unusual because of the existing grain elevators, KL Process founder Randy Kramer said.
"The sheer capacity of grain storage is amazing. There's room for one-third of corn the plant will process in a year," Kramer said, noting that a typical ethanol plant has capacity to store just a week's worth of grain.
"This will allow us to buy corn when it is inexpensive and put it in storage. That's huge for cost mitigation," he said. "This is a special and unexpected opportunity for us."
Kramer also said his company will play a key role in developing a local ethanol work force. Future employees will be given an intensive education in the "art and science" of turning corn into fuel.
"They'll end up with the equivalent of a two-year technical degree through our training program. . . . It's tough, but rewarding," he said.
The average salary at the Buffalo plant will be $35,000.
RiverWright is relying on private investment, not government funding to get the ethanol plant up and running. However, the company has secured 5 megawatts of low-cost power annually from the New York State Power Authority.
"Our intent is for this to be supported by private capital. We're in an Empire Development Zone and could apply for some of those tax credit benefits, but we aren't counting on any public money," Smith said.
RiverWright's business model stands in sharp contrast to the $87 million ethanol plant proposed for a rural site in Orleans County. Development of that plant, which will produce half the amount of fuel as the Buffalo plant, is contingent on some $25 million in state and federal aid.
Northeast Biofuels, which recently broke ground on a $150 million ethanol project at a former Miller Brewing Co. plant in Fulton County, has been promised some $10 million in government assistance.
The future of Buffalo's inventory of idle grain and cement elevators has been a growing cause for concern in the preservation community. Reuse options have proved elusive, raising the likelihood they'll face the wrecking ball, as did the H-O Oats silos in Buffalo's Cobblestone District that were torn down to make way for Seneca Buffalo Creek Casino.
The RiverWright project will use the mothballed Lake & Rail, Marine "A,' American and Perot grain elevator complexes, which date from the late 1880s to 1929.
Timothy Tielman, of the Campaign for Greater Buffalo, applauds the reuse concept.
"On principal it's a fantastic idea," Tielman said. "Anytime you're considering a reuse for an existing structure . . . the first consideration should be to consider that purpose for which it was built."
Mayor Byron W. Brown, who was recently briefed on the ethanol plant plans, gave the project high marks.
"What better way to mark the rebirth of Buffalo than to transform our waterfront with the productive reuse of property and buildings that have stood idle for many years," Brown said.
"The RiverWright Energy project is yet another example of the changing economic fortune of Buffalo and proof that investing in our city makes sense."
There are currently 100 ethanol production facilities in the United States, the vast majority in Iowa, South Dakota and Nebraska. Ethanol is considered the fastest-growing energy industry in the country.
Existing plants have the capacity to churn out 4.5 billion gallons of the bio-fuel per year. Thirty-two new plants under construction and another seven undergoing expansion will add another 2.2 million gallons to the ethanol pipeline.