Last Updated: Jan 8th, 2015 - 07:42:25

Future of Osage, piece by piece
By Caitlin Davis, Senior Staff Writer
Jul 9, 2013, 16:47

CAITLIN DAVIS/HOPEWELL NEWS/NEWS-PATRIOT Ged Russell, technical director for Vireol Bio-Indusries PLC in the UK, takes a tour of Osage in the weeks following the announcement the plant was purchased for $13 million.

HOPEWELL — In the spring of this year, a new future was brought forward for the Osage Bio Energy Plant in Hopewell. Future Fuels LLP, based in Great Britain, spent $13 million to purchase the plant and is now deciding the exact plan for the bio-energy plant, a future that will either be in the city or across the ocean.

Ged Russell, technical director for Vireol Bio-Industries PLC, came to the city in the weeks following the announcement of the purchase to look at what exactly Osage had to offer.

The plant was brought to the attention of Russell and his partners in Vireol by a technology company in Ohio. Russell said the plan of Vireol, which was founded in 2005, was to build a plant almost identical to Osage to produce bio-fuel.

In the United Kingdom, Russell explained that a large amount of surplus wheat is grown, wheat that is not of good quality and cannot be used for food, such as bread, but is instead good for blending and for animal feed.

He explained that the starch can be taken out of the wheat and turned into ethanol, which can then be used for fuel, and the protein remains can be used for food.

One of the difficulties Russell and the partners at Vireol faced when undertaking this project was the funding, which like Osage is estimated to cost over $200 million to build. To help reduce capital costs, Vireol is looking at buying second-hand equipment, such as the unused equipment that is sitting at the plant in Hopewell. The equity backer for Vireol is Future Capital Partners, which has set up the company, Future Fuels, the entity that now owns Osage and has been funding Vireol since 2008.

“We were looking at how to deliver our plant to the lowest possible cost,” Russell said. “One of the suggestions they made was that we might be interested in looking at this plant and there were some other plants in similar condition but could provide pieces of equipment that could reduce our capital costs.”

Russell said the estimated cost savings of purchasing Osage and shipping the parts over to England is about $40 to $50 million. While there are savings that come along with the purchase, there are other issues that Vireol is facing.

“There are a lot of technical issues about making equipment that is designed for use in the US environment suitable for use in the UK environment. The climate conditions are rather different and the regulatory regime ... is a bit different,” Russell said.
CAITLIN DAVIS/HOPEWELL NEWS/NEWS-PATRIOT Some of these parts could be shipped to England and some could stay with the Osage plant here in Hopewell.

Last summer, the ball began rolling on the project as the investors in Vireol, one being Future Fuels, began taking at look and what the plant had to offer in terms of equipment. Once monetary offers were made on the plant and a purchase price of $13 million was agreed upon, the next step in the project began.

“Now we’ve sort of embarked on quite a detailed engineering study, looking at exactly what we can do and what we will be able to take,” Russell said. “If we take it to England or how we would then incorporate that into the project in England.”

Russell said the extensive study of the plant will run through the summer and from there, decisions will be made on what can be shipped overseas and what can be done with the parts that are left over.

The study involves taking the plant, essentially piece by piece, and comparing the costs of new equipment versus relocation costs.

“It will give us an opportunity to think about what will be left if we take parts of the plant and how we will deal with that in terms of either tearing it down and leaving a clear site for future development or reusing it in a revised plant or revised production capacity.”

The plant that is in production in England will have a large amount of benefits, Russell explained. The UK is, what he referred to as, structurally short on protein, with most protein being imported from Brazil, for example.

“The use of a plant like this to concentrate the protein in the feed wheat makes it a much more efficient use of protein,” Russell said.
CAITLIN DAVIS/HOPEWELL NEWS/NEWS-PATRIOT Some of these parts could be shipped to England and some could stay with the Osage plant here in Hopewell.

As to whether or not the company in England will consider reopening the plant in the city, Russell said that decision is almost out of his hands. A petition was filed with the Environmental Protection Agency before the opening of Osage to have barley used as advanced bio fuel in the production of ethanol. Almost three years have passed and it has yet to be signed and approved.

“I think if somebody waved a magic wand and said ‘You’ve got advance bio fuel status,’ I think we would be insane to not look at reopening it,” Russell said. “... We will continue to keep that as an option in the back of our mind as long as it exists but we won’t be deflected from our goal of delivering a low-cost, a good value plant in the UK.”

As Craig Shealy, co-founder and former CEO of Osage, sat with Russell and discussed the future of Osage, he said he is now pleased that has a future has been made possible for the plant, which sat in the city for two years.

“One of my motivations, my driving motivation, was just bring this thing to closure in some type of productive next step because it’s just kind of stuck,” Shealy said. “Stuck from the perspective of the city, stuck from the perspective of the marketplace. You have all this great technology and work that has been done out here and it was just kind of languished.”

Shealy said he is just pleased a new owner is taking over who is committed to the renewable fuels industry, a future he himself was a part of when building Osage in the city.

“I’m excited to have them here,” Shealy said. “I think the alternatives were far less interesting and exciting. I’d much rather see it put to good use in the UK than sit here and rust.”

With the meeting coming to a close, Russell puts on a hardhat, Vireol safety vest and takes a walk around the Osage plant, looking toward the future of the plant, a future that will be made possible with the parts of Osage, the parts of a past in the city.

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