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Midwest AgEnergy Eyeing Barley to Increase Ethanol Output
Midwest AgEnergy Group plans to decide shortly whether to proceed with a
project that would use barley to produce a protein concentrate for aquaculture
as well as ethanol at its existing facility in Spiritwood, N.D., according to
its CEO.

"We are working through the initial engineering design at this point," Jeff
Zueger told OPIS on Tuesday. "We are looking at options and continuing to put
the final pieces together."

The North Dakota Industrial Commission this year approved an $83,810 award for
a study that could lead to an expansion at the Dakota Spirit AgEnergy plant
that would increase its current annual capacity of 70 million gal of ethanol.
It would also add fish food to the products produced there.

"We have a report due at the end of the month to the folks who gave us the
grant, and will determine the next steps," Zueger said.

The plant would use about 5 million bu of barley each year as feedstock, he
said, adding that the facility would separate the grain into protein and
carbohydrates, with the protein processed into a high-value fish food with a
target market of commercial salmon and trout farms.

"It will improve the aquaculture environment by not requiring fish to be
harvested to feed other fish," Zueger said. "This is a protein that is
plant-based that would replace fishmeal."

The carbohydrates would be processed along with the corn currently processed at
the plant into ethanol. The barley would be processed annually into 20,000 tons
of protein concentrate feed and an additional 7.5 million gal of ethanol.

"We think this is a great diversification opportunity to have a primary product
in that barley protein concentrate," Zueger said. "It is worth more per pound
than the ethanol is. The starch component of the barley would be converted to
ethanol as well, so we would be producing both barley protein concentrate and
ethanol from the barley."

It would be the only ethanol in the state produced from a feedstock other than
corn, according to Zueger, and it may have additional benefits.

"We think that it would qualify as an advanced biofuel under the Renewable Fuel
Standard (RFS) because we think that we will achieve a 50% greenhouse gas
reduction compared with gasoline," he said, so it would qualify for D5
Renewable Identification Number (RIN) credits.

A company called Montana Microbial Products in that state has a small-scale
pilot plant that produced enough fishmeal to do some large-scale trials, but
that did not produce ethanol, he said.

Montana Microbial Products and the U.S. Dept. of Agriculture hold a patent on
the process and Midwest AgEnergy Group would be a licensee of that patent.

"The pilot facility was at 30 tons per month of concentrate and ran for a
couple of years," Zueger said. "We are looking to scale it up to 20,000 tons
per year of barley protein concentrate."

The processing of 4.5 million to 6 million bu per year of barley would yield
15,000 to 25,000 tons of barley protein and 7 million to 10 million gal of

Preliminary cost estimates place the project at about $20 million for Midwest
AgEnergy Group if it were to go forward with it.

There is potential for additional barley to be available in North Dakota,
according to Zueger.

"Barley production continues to decrease in the state each year because malting
facilities have closed," he explained, "so there are a lot of people who would
like to grow barley in their crop rotations and are losing the opportunity to
sell that barley."

Construction could start as soon as next year.

The company's Blue Flint plant near Underwood, N.D., produces more than 70
million gal of ethanol annually.

--Michael Schneider,

Copyright, Oil Price Information Service