on ethanol planning
Havre Daily News
ROCKY BOY'S INDIAN RESERVATION - The Chippewa Cree Tribe wants to keep majority ownership of a proposed ethanol plant and, at a meeting Thursday, project planners said they believe it can.
Organizers also spoke optimistically Thursday about potential agreements with two major industry marketers and investors.
The roughly $80 million project is still at least a year away from groundbreaking, but Thursday was the time for some initial number crunching, said Neal Rosette, National Tribal Development Association chief operating officer and project coordinator.
Once built, the ethanol plant would be the only one in the country to primarily process wheat, rather than corn, into the alcohol fuel additive ethanol, said project developer Art Wiselogel of the Colorado consulting company BBI International.
An ethanol plant at Rocky Boy's Indian Reservation was first proposed almost two years ago, tribal council chair John "Chance" Houle said. A feasibility study conducted in early spring told the tribe that a 40 million-gallon-a-year plant could be successful, leading organizers on a hunt for investors, marketing, plant design, natural resources and transportation lines.
"This is the number one priority for this tribe at this point," Houle told about 40 speakers and community members at Rocky Boy Catholic Church. Among the speakers were representatives from several tribal programs, Bureau of Indian Affairs, Bureau of Land Management and the tribe's legal, engineering and business consultants on the project.
The cost of opening the plant and operating it for the first year will be about $83 million to $87 million, Rosette said. The tribe would need to invest about $16 million to $18 million to keep 51 percent ownership. That is according to a business model in which 60 percent of its initial start-up cost is financed through debt and 40 percent, about $30 million, through investment.
The debt would be held by a corporation, separate from tribal government, that would be solely responsible for operating the plant, Rosette said.
The tribe's investment can come in the form of the land, water and natural gas it contributes to the project, Rosette said. Grants and loans could supplement that, and the tribe's contribution in promoting the plant should be worth about $3 million according to standard business practices, he said.
Harold Monteaux, co-founder of law firm Monteaux and Peebles, which counsels tribes nationwide, said the tribe could also sell to investors the tax incentives it would receive from the state for building an alternative energy project.
Jim Morsette, director of water resources for the tribe, told the group that the tribe has unlimited access to water 150 feet down in the ancestral Missouri River aquifer. That water source can be reached in the Laredo area where the tribe has proposed building the plant. Morsette said the water there would satisfy the plant's voracious water needs.
The plant would use 800 gallons of water a minute, Wiselogel said. That water will be recycled in the process.
In addition, the plant would require 1.5 billion cubic feet of natural gas a year, Rosette said.
According to information provided by the BIA and BLM, and from the tribe's Department of Natural Resources, the tribe could provide about 20 percent of the plant's natural gas needs, Rosette said.
Rosette said he and Wiselogel and others working on the project met with Land O'Lakes and Cargill about possibly investing in the plant, and marketing the ethanol and byproducts produced by the plant.
When ethanol is produced, starch is removed from grains and combined with enzymes to create alcohol, Wiselogel said. Left over from that process are the proteins and fats. Those can be used as animal feed in either a wet or dry form. Wheat gluten is another byproduct, which can be marketed for use in human and animal foods, he said.
Rosette said Cargill representatives told him they could market up to 100 percent of the plant's byproducts.
David Feider, media relations director for Cargill, declined to comment Thursday on whether Cargill is talking with the tribe about the project. Land O'Lakes did not respond to a request for comment.
Rosette has said both Cargill and Land O'Lakes are potential investors.
Monteaux said the tribe will also look to other tribes for investment in the project. The hope, he said, is to keep money circulating within Indian communities.
An ethanol plant would also be good for the state economy, Wiselogel said.
"We're using Montana feedstock, Montana energy and Montana people to produce ethanol," he said.
In states without oil refineries, only about 5 percent of gasoline sale profits stay within a state. With oil refineries in the state, 10 percent to 15 percent of the profits stay in state. In the case of ethanol, almost all of the profits stay in the state, Wiselogel said.
The plant would also create a demand for 14 million bushels of wheat a year, Rosette said. Ethanol plants generally look for ordinary wheat that doesn't have the high protein content that fetches premium prices for farmers.
That's good news for the farming community, Montana Grain Growers' Association president and local farmer Jon Stoner said today.
"Anytime that somebody can build a value-added business that will use up crops that are growing here, it is great," Stoner said. "Last year we had so much low-protein grain. Sometimes climactic conditions occur where spring wheat and winter wheat has low protein. To have an outlet that's local for that low protein would be great."