Green Plains Inc. Acquires Virginia’s Only Ethanol Plant
Green Plains Inc. announced it has acquired Virginia’s only ethanol plant from Vireol Bio Energy LLC for $18.25 million.
The plant, which has an annual capacity of 62 million gallons, was idled in August by Vireol after the company found it could not realize a profit from the facility amid high supplies and low crude oil prices.
Record levels of corn ethanol production and ethanol prices that are at $1.60 per gallon – their lowest point for this point in the year in a decade, combined with gasoline and crude oil prices that are at their lowest in years have put strong pressure on the industry and have caused Archer Daniels Midland (ADM) to opt for alternative products such as high-fructose corn syrup that offer better margins.
Green Plains states that it plans to spend an additional $6 million to $7 million for a corn oil extractor and other needed improvements at the plant, and plans to reopen the facility by the end of the year. The additional capacity will bring Green Plains’ total production to 1.1 billion gallons per year from a total of 13 plants.
This deal comes upon a wave of consolidation within the ethanol space after Pacific Ethanol Inc.’s acquisition of ethanol producer, Aventine Renewable Energy Holdings, for $184 million earlier this year, and U.S. farm cooperative, CHS acquiring two ethanol plants for $196 million within the past year.
The plant in Virginia is one of many along the U.S. East Coast. Plants along the coast have a higher cost due to the transportation costs of the main feedstock, corn, from the Midwest, but the East Coast is also a top market for ethanol and has close proximity to the East Coast ports.