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ND village poised to be energy mega-hub

SPIRITWOOD, N.D. -- Transportation, power and water are the main reasons Spiritwood has been chosen for two major agriculture-related manufacturing installations, officials say.

Dakota Spirit plant
If planning for the Dakota Spirit AgEnergy LLC ethanol plant come to fruition this spring, the corn-ethanol plant would be the first steam client for the Great River Energy Spiritwood Station. Construction to the left (west) of the electricity and steam generating station could start in June 2013, triggering development of the Spiritwood Energy Park, with its railroad development, as well as later construction of a large nitrogen fertilizer factory. (Forum News Service/Agweek/Mikkel Pates)

SPIRITWOOD, N.D. -- Transportation, power and water are the main reasons Spiritwood has been chosen for two major agriculture-related manufacturing installations, officials say.

Spiritwood has long been a visible focal point for the region's agriculture, as the Cargill Malt plant has loomed and grown north of Interstate Highway 94 since the 1970s. Now it will be a mega-hub, with ethanol and fertilizer production coming in the next three years.

"Location, location, location -- they all come together there," says Rich Garman, senior project manager for Great River Energy, which has interests in electrical generation and ethanol projects at the site.

The village of 72 people is just five miles east of Jamestown in eastern Stutsman County, and will have more than 400 people coming to work when all of the development is complete, probably by the end of 2016.

Connie Ova, CEO of the Jamestown/Stutsman Development Corp., which is helping to direct all the Spiritwood Energy Park projects, says the potential is tremendous.

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"The economic impact to the area is enormous," Ova says. She says the jobs are important, as is the value-added impact on the agricultural community.

Getting started

Construction on Dakota Spirit AgEnergy LLC is expected to start this summer and continue for 18 months. Dakota Spirit will use 23 million bushels of corn to produce 65 million gallons of ethanol each year. It will create 35 full-time jobs.

Construction on a $1.4 billion CHS Inc. fertilizer plant project would start in 2014, just as the ethanol project comes to a close.

The CHS fertilizer plant is a much larger project than the ethanol plant. Once completed in late 2016, CHS would provide 150 full-time jobs. It will take natural gas and produce 2,200 tons per day of various kinds of ammonia, which will make several products including anhydrous ammonia and urea.

A dedicated 12-inch pipeline for CHS would "barely make a dent" in Bakken natural gas production, but will be a "step in the right direction," in local usage, Garman says.

Both project will use tremendous amounts of water. Dakota Spirit will use 450 gallons of water per minute, getting most of it from the city of Jamestown wastewater treatment plant, Garman says. The bulk of it will be for a cooling tower.

If the CHS project comes on board as expected, it will need 5,000 gallons per minute of water. Developers have identified and intend to explore the Dakota Aquifer -- a water source 1,000 feet underground that will need processing. It is separate from the Spiritwood Aquifer that is about 200 to 300 feet underground.

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The two projects together could use 20 megawatts of power, and it isn't clear who will supply that.

Funding the projects

Garman says the whole project fits into the framework of the Spiritwood Energy Park Association.

That's the joint association among Great River Energy and Jamestown/

Stutsman Development Corp. The entities jointly purchased 551 acres of land, just west of an electrical energy generation plant and the Cargill malt plant, specifically to develop industry across the road that would use energy coming out of the power plant.

The JSDC will develop roads and rail service and is financing about half of the energy park project. It expects a 5 percent annual return on its money. About $1.8 million will come from a North Dakota Transportation Department revolving rail loan fund, which has been in place since the 1970s for small rail projects in the state.

Northern Plains Electric Cooperative is sponsoring a loan guarantee of $740,000, on a 0 percent interest U.S. Department of Agriculture Rural Economic Development guaranteed loan program. Still short as much as $1.75 million, the project will seek funds from local lenders. First Community Credit Union in Jamestown has shown interest in the program, Garman says.

Rail access

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An initial rail design circling the development has been approved by Burlington Northern Santa Fe. It will provide access to trains coming from east or west.

"You can get at least two 100-plus car trains in there at any one time to offload or load different products for CHS," Garman says. "Fertilizer will go by either rail or truck, depending on if it's local or long-haul situation."

For the ethanol plant, corn will come in primarily by truck and ethanol will go out primarily by rail. The park itself will be managed by the Spiritwood Energy Park Association, which will function as a landlord, and like a cooperative. "They'll operate the rail and will maintain the internal roads," Garman says.

Steam customers

Tenants will be able to buy steam created from GRE's Spiritwood Station electrical and steam generation plant.

The first steam customer will be Dakota Spirit, which will have a sister plant -- Blue Flint Ethanol, in Underwood, N.D., which is 100 percent owned by GRE. Those two companies will come together to form a new parent company -- Midwest Ag Energy, which will manage them both.

A couple of other projects that have seen significant interest include an iron plant that would take iron ore tailings from Minnesota to produce iron ore pellets.

Besides selling to the ethanol plant, the plant expects to sell some steam to Cargill, which runs a large malt plant.

Infrastructure issues

Some local residents have raised concerns about road traffic as the projects converge.

There are nearly three miles of roads from Interstate 94 to the facilities, Garman says. An existing blacktop will be upgraded with a new asphalt overlay and other roads will be made concrete -- built by the county and then specialty-assessed taxes will be paid by GRE and the energy park. The energy park will pass its specialty tax assessments on to tenants.

Ova and Garman are hoping that creating the better roads will "push" traffic onto those, but Garman acknowledges there is nothing to stop traffic from going on "Old Highway 10," which goes east-and-west through Spiritwood.

Housing also is an issue.

"There's a need, for some housing," Garman says. The city and county are looking at having appropriate ordinances in place, in case the issue for temporary housing arises. Generally, that's handled by an outside logistics company.

There are concerns about housing and the workforce, Ova acknowledges. A Hampton Inn will open a 90-room hotel this spring. "That will take a little of the pressure off," she says.

The JSDC is reaching out to developers, encouraging them to look into the opportunities. Some of the housing needs are temporary, she says.

"We're also feeling a pinch with the rest of the sectors, of a lack of employees," she says. "It goes back to the fact that we have no place for them to live."

Some of the employee needs will be retraining people because of needs for industrial plant operations and maintenance. Ova says many of the jobs will start in the $40,000 range and higher.

Agricultural impact

Any way you cut it, the project will be a big deal for the region's agriculture and for input providers.

In addition to ethanol, Dakota Spirit will produce 173,000 tons per year of distillers dry grains, and 5,400 tons of corn oil per year.

And that may not be all. Dakota Spirit has plans for a second phase that would include cellulosic ethanol production

The technology is "very promising" but "not quite there yet," Garman says.

"We're proceeding with a corn plant with the ability to expand and do a bolt-on of another technology," Garman says. "What the technology is, we don't know right now, and, frankly, we don't care. Whatever the technology is at the time, we're ready. That could be biomass like corn stover and wheat straw. It could be energy beets. It could be something completely different. It could be another corn ethanol plant. We don't know what the next phase is going to be."

Ova says that beyond the jobs created, the agricultural impact makes the project special. "Agriculture still overshadows the energy and oil industry in North Dakota. Ag is still No. 1, and whatever impacts ag flows around the most times" in the economy, she says.

Related Topics: AGRICULTURE
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