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Dave Olson, Published February 18 2013

Drought idles US ethanol plants; North Dakota proves an exception

Persistent drought is taking a toll on producers of ethanol around the United States, and corn has become so scarce almost two dozen ethanol plants have halted production.

The picture is different in North Dakota, however.

Corn supplies are plentiful, and the state’s four ethanol plants are doing well, said Deana Wiese, executive director of the North Dakota Ethanol Council.

Wiese said ethanol production from the four plants remains at almost 400 million gallons a year, even though one of the state’s older ethanol plants, located in Walhalla, closed last April.

Wiese said she couldn’t speak to the exact reasons why the plant was closed, but she said she doesn’t believe it was tied to drought.

While some spots in North Dakota, such as Cass County, experienced dry conditions last year, the western and central parts of the state experienced good growing conditions.

That factor, along with an increase in corn acreage, combined to boost corn bushels by 60 percent in 2012, said Greg LaPlante, manager of research for the North Dakota Corn Growers Association and Utilization Council.

“We’re exporting corn to Illinois and Indiana to help them out on their supply, because we have plenty,” LaPlante said.

Wiese said that while high corn prices may sometimes prompt North Dakota ethanol plants to temporarily scale back production, she isn’t aware of any large-scale shutdowns.

“It’s been tough, economically, with the price of corn, but they’re not in threat of closing their doors,” she said, adding that the efficiency of the plants allows them to idle down for short periods of time, such as when there might be an oversupply of ethanol.

Wiese said construction is expected to start this spring on an ethanol plant in Spiritwood.

Other cities with ethanol plants are Casselton, Hankinson, Richardton and Underwood.

North Dakota’s ethanol plants get about 80 percent of their corn from North Dakota suppliers, according to Wiese.

Nationwide, the Renewable Fuels Association, an ethanol industry trade group, provided data to The Associated Press that shows 20 of the country’s 211 ethanol plants have ceased production over the past year, including five in January.

Most remain open, with workers spending time performing maintenance-type tasks. But ethanol production won’t likely resume until after 2013 corn is harvested in late August or September.

Industry experts don’t expect a shortage – millions of barrels are stockpiled, and the remaining 191 plants still are producing. Still, there is increasing concern about what happens if the drought lingers through another corn-growing season.

“There’s a lot of anxiety in the industry right now about the drought, and a lot of folks watching the weather and hoping and praying this drought is going to break,” said Geoff Cooper, vice president for research and analysis for the Renewable Fuels Association.

America’s ethanol industry has taken off in the past decade. Plants in 28 states produce more than 13 billion gallons of ethanol each year, Cooper said. By comparison, in 2002, the industry produced 2.1 billion gallons. Today, about 10 percent of the U.S. gasoline supply is made up of the biofuel.

Availability of locally produced corn is vital for ethanol plants because having it shipped in is too expensive. To make matters worse, the drought hit hardest in many of the top corn-growing states.

Six of the 20 ethanol plants that stopped production are in Nebraska, two in Indiana, and two are in Minnesota. Ten states have seen one plant affected. Cooper said the 20 plants employ about 1,000 workers combined, but it wasn’t known how many have been laid off.

Production stoppages are cutting into ethanol production. The 770,000 gallons per day produced in the last full week of January were the fewest since the U.S. Energy Information Administration began tracking weekly data in June 2010.

That’s not much of an issue for consumers, at least for now, because there are plenty of stockpiles of ethanol. Purdue University agriculture economist Chris Hurt said the nation has more than 20 million barrels of ethanol in stock, just more than a year ago, largely because Americans are driving less and driving more fuel-efficient cars. Cooper said, though, that stockpiles are expected to dwindle in the spring and summer as demand picks up and plants remain idled.

The Associated Press contributed to this report

Readers can reach Forum reporter Dave Olson at (701) 241-5555