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Report: Ethanol funding reviewed

By Staff
AEP looked at building plant in southern Beaufort County
Managing Editor
The U.S. Attorney’s Office is looking into the financing of a proposed ethanol plant planned for Beaufort County, according to the Triangle Business Journal.
The publication reported Friday that federal agencies have served at least one former employee of Agri-Ethanol Products with a subpoena to testify before a grand jury.
AEP, based in Raleigh, proposed to build a $220 million facility near Aurora that would convert corn into ethanol. Ethanol is a chemical that can be blended with gasoline and eliminate the need for gas additives that have been linked with cancer.
The business journal reported that as of last September, AEP owed more than $622,000 to a dozen consultant groups for engineering, market studies and attorney services. One firm, Matthews-based Perigon Engineering Services, is owed more than $250,000, according to the publication.
None of the unpaid companies are based in Beaufort County, according to Tom Thompson, the county’s chief economic development official.
When asked how much Beaufort County taxpayers had invested in the AEP project, Thompson said “not a nickel.”
The original plan was to build a facility that could produce 55 million gallons of ethanol a year. Thompson believes that plan would have worked, but an outside investor came into the picture and the work stopped while plans were drawn up for an even larger plant near Aurora and 19 others up and down the east coast.
In the roughly 18 months that followed, corn and construction prices rose and banks scaled back how much money they would loan such a venture.
The business journal reported that AEP was evicted from its north Raleigh office in October shortly after it laid off its employees and shut down the office.
While Beaufort County has no funds invested, AEP does continue to hold an option for the land near Aurora. The option expires in May, Thompson said.
It takes about one bushel of corn to produce 2.8 gallons of fuel ethanol. North Carolina produces about 102 million bushels a year.
Two states, Iowa and Nebraska, combined have 46 ethanol plans that produce 1.8 billion gallons of ethanol a year. None are presently in operation in North Carolina, but one is under construction.
When the AEP proposal was first floated, county officials agreed to tax incentives that would help get the company started. Because the plant never got off the ground, those incentives were never exercised. Likewise the State of North Carolina agreed to help pay for a railroad extension, but no funds were ever provided.
The Aurora plant isn’t the only one on hold. Late last month Cargill, a company with a net worth of $16 billion, announced it was scrapping plans for a $200 million ethanol plant near Topeka, Kan.
Fortune magazine reported that as many as 50 new ethanol plants have been shelved in recent months. One reason is the cost of corn. The price was below $2 a bushel in 2006 and has risen to $5.25 today.