for ethanol operation
Havre Daily News
ROCKY BOY'S INDIAN RESERVATION - The Rocky Boy tribal council will be looking for $87 million in startup capital for an ethanol plant, council members said Thursday.
A plant at Rocky Boy would bring in a healthy profit with little negative impact on the area, according to a feasibility study conducted from February to April.
"Our tribe doesn't have to write a check for this amount, which is a misconception," said Neal Rosette, chief operating officer for the firm spearheading the project for the tribe, the National Tribal Development Association.
With the study in hand, NTDA is preparing to formulate a business plan that Rosette said he hopes will bring in investors. NTDA will partner with industry members to come up with the plan, he said. The ethanol company would be run separately from the tribe.
One likely partner is BBI International, a Cotopaxi, Colo., company that conducted Rocky Boy's feasibility study. On Thursday, Rosette was preparing a contract with that company so it could consultant on the project.
If the business plan is as well done as the feasibility study, investors will be easy to find, NTDA officer Ronnie Henry said.
The three-month study evaluated several options for the plant size and type. According to the study, the best option for Rocky Boy is a 40 million-gallon-a-year plant which processes wheat into three marketable byproducts, ethanol, wheat gluten and DDGS - an animal feed called distillers dried grain with soluble.
The study predicted a 43 percent annual average return on investment over 11 years. Rosette said investors consider an ethanol project when they see a projected return rate of at least 25 percent.
The goal is to make the tribe a 51 percent owner in the plant, he said. Part of the tribe's investment will be in the form of land and water. Any grants the tribe can receive can also go toward its share of the investment.
The tribe is planning to zone the reservation and create a 160-acre industrial park in Laredo where the 40-acre facility would be located, Rosette said. The site will be between the town of Box Elder and Havre, near U.S. Highway 87.
In its study, BBI indentified a number of issues a business plan needs to address. Those include securing power for the plant, designing the plant, obtaining permits and finding investors.
The project is still in an early phase, Rosette said.
If built, a plant of the size Rocky Boy proposes would satisfy the requirements of an ethanol-incentive law passed this year by the Legislature, said Rep. Bob Bergren, D-Havre. Bergren sponsored an ethanol bill that did not become law but was incorporated into a proposal that did.
Under the new law, new fuel standards that require the inclusion of ethanol in gasoline sold in the state would apply once Montana has a 40 million-gallon plant, Bergren said.
Rocky Boy could also qualify for some state incentives, Rosette said. The feasibility study, however, did not take that into account.
"I'm a hundred percent supportive," Bergren said of the plant Rocky Boy is proposing. "I think it's a great idea. I think it's excellent for our area."
Rosette said the construction of the plant would create 200 jobs and the plant would provide 43 jobs.
Ideally, he said, preference would be given to tribal members, but the likelihood is that both tribal and non-tribal members would be employed at the plant.
Rosette said a plant at Rocky Boy could have some advantages over plants not on tribal land. The permitting process would probably go more quickly and there would be no state property tax. Also, Rocky Boy has natural gas wells and the plan now is to use those to provide power for the ethanol plant.
Increased traffic in the area was the biggest impact identified by the study, Rosette said. An ethanol plant would require the trucking in of wheat and the trucking out of the plant's byproducts.