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Jobs, Revenue Critical Side of Industry

by Scott A. Yates
Capital Press, November 13, 2006

Chemist sees 44 full-time jobs, millions of dollars from single biodiesel plant

Frequently lost in the hoopla surrounding the construction of a biodiesel infrastructure in Eastern Washington is each facility's potential economic impact to the rural region and the state.

Jeff Stephens, a chemist with Washington Biodiesel, made a point of looking at that side of the equation in a presentation at the recent Biodiesel Summit in Pasco, Wash. His company won't just produce 35 million gallons of alternative fuel, it will also manufacture 44 family-wage jobs and circulate millions of dollars of revenue that would otherwise be lost from the state.

The Washington Biodiesel deal involves CHS and Connell Grain Growers, the Port of Warden, the Grant County Economic Development Council, the Columbia Basin Railroad and the Grant County PUD. Besides generating $100 million worth of diesel that would normally be imported into the state, it will replace $25 million worth of meal that's imported from Canada to support the dairy industry.

Recirculating that amount of money in the state, Stephens said, will add 2,000 jobs to the economy, $60 million in additional labor income and $250 million in additional economic output. At least, that's the projection. The Washington Biodiesel facility is among a handful of yet-to-be-built projects receiving state support.

Stephens outlined an aggressive timetable for the project. He said he expects permitting for the 1,100-ton-per-day canola processing facility to be finished this fall, with complete financing in place at the same time. Groundbreaking is slated to occur in the first quarter of 2007, with production starting a year later.

As part of the state's effort to jump-start alternative fuel production, a batch of projects are receiving money from a Washington Legislature-passed package in the form of low-interest loans and grants. The money is intended to help leverage additional investment. Washington Biodiesel is on course to receive $4.3 million in various forms of aid, said Rep. Janea Holmquist, R-Moses Lake, who also spoke at the summit.

With the need to obtain 350,000 tons of canola seed annually, not to mention marketing 220,000 tons of canola meal and 35 million gallons of biodiesel, an integral part of the Washington Biodiesel effort is its relationship with CHS.

"When we went to look for partners, we looked for people with connections. CHS is the largest farm cooperative in the country," Stephens said. "They'll be sourcing all our seed for us and doing meal marketing."

CHS isn't just into agricultural commodities. Cenex (the "C" in CHS) has two refineries and already does about $5 billion in fuel sales annually. As a result, it has contacts with distributors up and down the West coast, Stephens said. All of Washington Biodiesel's fuel will be marketed by Cenex.

Dennis Spangler, general manager of Connell Grain Growers (which is wholly-owned by CHS), said the cooperative is not involved as an investor. In an interview after the conference, he said the partnership revolves around the strengths and expertise of both companies.

"The expertise of Washington Biodiesel is in the crushing, manufacturing and distilling of the canola seed to produce biofuel," he said. "They are taking what they are good at and what we're good at to form a complete business model."

What CHS is good at is grain origination, particularly through its contacts in the Northern Plains and Canada. The company is the largest canola seed marketer in the country. Spangler said that seed will be augmented by local production. In the process, storage will become crucial, and existing Connell storage, with necessary modifications, will be used to ensure adequate stocks are on hand.

Spangler said the company will offer a variety of contracts, based on risk. He said he expects they will be rolled out in time for winter canola planting in 2007. He is taking a cautious approach, however, pointing out that if biodiesel plants aren't on line by harvest, the closest receiving point for oilseed is Lethbridge, Alberta.

Scott Yates is based in Spokane.
Jobs, Revenue Critical Side of Industry
Capital Press, November 13, 2006

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