Enerkem’s biofuel plant in Pontotoc still on drawing board

The Enerkem plant in Edmonton, Alberta, Canada, was commissioned in December. (Courtesy photo)

The Enerkem plant in Edmonton, Alberta, Canada, was commissioned in December. (Courtesy photo)

By Dennis Seid

Daily Journal

PONTOTOC – Five years have passed, and a planned $100 million ethanol plant is no closer to being built.

Little has changed from a year ago, when company officials said they were committed to the project and were working to “move the project forward.”

For now, though, Enerkem Mississippi Biofuels is stuck in park.

Enerkem Inc., EMB’s Canadian-based company, said last March said it expected construction to begin in the second half of 2013.

That hasn’t happened.

And EMB’s office has closed, although the company is paying its bills.

“They still own the project site, making payments on the local office,” said Ronnie Bell of Three Rivers Planning and Development District, which is the administrator of Three Rivers Regional Solid Waste Authority.

Enerkem plans to convert municipal solid waste from the Three Rivers Landfill in Pontotoc, which is overseen by the Authority.

As for when plant construction will begin, an answer remains elusive.

“At this stage, we are not in a position to confirm a date for the beginning of construction,” said Marie-Helene Labrie, Enerkem’s vice president of government affairs and communication.

If and when construction does start, it will take about 18 months to complete.

Bell said there’s no reason to be alarmed at the slow pace of the project, which admittedly is behind schedule.

“We’re under confidentiality agreements with the company, but I can say that we continue to fully support the project,” he said. “They are still seeking equity for several projects, including Pontotoc.”

Bell also says taxpayers’ money hasn’t been lost on the project.

“It hasn’t cost anything locally,” he said. “They’ve reimbursed us for our engineering, legal, travel, etc., from day one with this project.”

State officials also say Enerkem hasn’t received any help from their coffers.

Jeff Rent, a spokesman for the Mississippi Development Authority, said the agency spoke to Enerkem initially, but did not provide any state incentives.

“We have worked with other energy producers, and the incentives have been of the traditional variety,” he said. “There are no special programs for biofuels producers.”

Federal aid

But taxpayers are on the hook from a federal level.

Enerkem has up to $110 million in federal money it can tap into, at least for now: a $50 million grant from the U.S. Department of Energy and up to a $60 million loan guarantee from the Department of Agriculture.

This illustration of the Enerkem plant in Pontotoc is modeled after the Alberta plant. (Courtesy photo)

This illustration of the Enerkem plant in Pontotoc is modeled after the Alberta plant. (Courtesy photo)

The company has secured other financing from private and public sources. It sought a $125 million IPO in 2012, but abandoned it, citing market conditions. There’s no indication it will make another attempt.

However, the federal money comes with some stipulations including when construction and production is to start. Labrie said she couldn’t comment on how they may affect the Pontotoc project.

“There are conditions associated with any government funding,” she said. “We have ongoing discussions with DOE and USDA about this project, but we are not in a position to share the details of these discussions.”

Labrie also said Enerkem has invested heavily in the project, perhaps a reassurance that the company doesn’t plan to walk away from it.

“As a private company, we do not discuss detailed financial information, but I can certainly tell you that several million dollars has been invested in the project development to date, including engineering and preconstruction work, permits, site acquisition, local infrastructure, regional infrastructure, regional feedstock analyses and agreements.”

Bell said Three Rivers continues working with Enerkem personnel, which Labrie confirmed were from the company’s Texas and Canada offices.

Alberta precedence

Enerkem clearly is focused on its Edmonton, Alberta, Canada, ethanol plant, on which the Pontotoc plant is modeled.

That facility, which was commissioned in December, is all but finished, but production has yet to begin.

“As announced last December, Enerkem achieved a major milestone at its full-scale waste-to-biofuels and chemicals facility in Edmonton when the commissioning began,” Labrie said. “Before production can actually start at a full-scale facility such as the one we built in Alberta, the commissioning must follow a predetermined plan which is currently being deployed. It is advancing well and production is expected to start gradually this spring. When fully operational, the total annual capacity of the facility will be 10 million gallons.”

That’s the same capacity of the Pontotoc plant, whenever it gets off the ground.

And Labrie said the project hasn’t been scaled back, despite the delays.

“The projected facility in Pontotoc is based on the very same standard design that we used in Edmonton: a 10 million gallons-per-year production capacity, using 100,000 metric tons per year of local waste,” she said.

In addition, the plant won’t be using municipal waste from the landfill at first. It will use wood waste to produce ethanol at first, eventually making the transition to solid-waste conversion.

For now, Pontotoc is watching and waiting for the promised 70 jobs.

Labrie said it’s only a matter of time.

“Enerkem is developing several projects in Canada and the U.S., and Pontotoc is one of them,” she said. “At this stage, we need to finalize preconstruction milestones such as final feedstock-related agreements and financing.”

Bell, too, said the nature of the project means a different approach has to be taken.

“This is a little different from most economic development projects because of what they’re doing,” he said. “But it still creates jobs, provides investment, expands infrastructure and has attached to it a state-of-the-art recycling facility.”

Enerkem has applied for, and received, permits for its Pontotoc operations, though there have been some changes since 2010.

According to the Mississippi Department of Environmental Quality:

• On Sept. 30, 2010, Enerkem applied for environmental permits for a site in Pontotoc to construct a facility capable of chemically converting municipal solid waste and wood biomass into bio-crude for the production of methanol and ethanol. Specifically, it applied for a Solid Waste Processing Permit, a Pretreatment Wastewater Permit, an Air Permit to Construct, a Baseline Stormwater Permit and a Construction Stormwater Permit.

MDEQ reviewed the applications and held a public hearing regarding the Air Permit to Construct on Jan. 12, 2012 in Pontotoc. Thedraft Air Permit, along with the Construction Stormwater Permit, was ready to be issued; however, at the request of the company, these permit issuances were postponed.

• In the summer of 2012, Enerkem changed the proposed location of the facility to its current location at 1300 Beulah Grove Road in Pontotoc, and submitted the appropriate revised permit applications for the Air Permit to Construct and the Construction Stormwater Permit.

MDEQ reviewed the revised applications, developed a draft Air Permit to Construct, and sent the draft to public notice. This permit, along with the Construction Stormwater permit, is ready for issuance., the agency said. And at the request of the company, these two draft permits have not yet been issued.

• In addition, MDEQ says, Enerkem needs to, but has not yet submitted, a revised Baseline Stormwater Permit application, Pretreatment Wastewater Permit application or a Solid Waste Processing Permit application. The agency said Enerkem has to submit the required revised applications before initiating further permitting review.

Labrie reiterated the company has not backed away from the Pontotoc project, and would submit any and all permit applications when the time came.

“Enerkem is fully committed to producing cellulosic biofuels in the United States and we intend to leverage the experience gained with our Edmonton plant,” she said. “This full-scale facility demonstrates our leading position in the market and is based on the same standard design as the Mississippi project to provide a cost-effective alternative to landfilling and a domestic energy solution.”

dennis.seid@journalinc.com