Backers of ethanol plant seek support

Twice in the past couple of years, Ken Dixon and Glynn Harris have gotten justthisclose to nailing down the financing for a big ethanol refinery in the Fernley area.

Undaunted after two failed attempts, the founders of Sunset Ethanol Inc. are back on the streets, looking to raise $200,000 to demonstrate that a key piece of the plant's technology works in the real world.

The potentially tricky part of the plant: While ethanol plants in the Midwest generally convert corn into the fuel additive, Dixon and Harris plan to use switchgrass and sorghum as a feedstock.

Diversion of corn into production of fuels ethanol is commonly used in a 10 percent blend of gasoline has drawn political fire because it pushed up food prices.

In fact, the federal government wants nearly half of the nation's ethanol production to come from sources of other than corn by 2022.

Use of switchgrass and sorghum would avoid that stumbling block, Dixon says, but potential investors want to see proof that a pre-treatment process will sufficiently prepare tough switchgrass and sorghum for refining into ethanol.

If the technology proves successful, Dixon and Harris will look to raise another $800,000 for engineering design.

Another $15 million to $20 million would be needed to build a plant that produces 5 million gallons of ethanol a year. At current prices, the plant could generate $14 million a year in sales with potential profits in the range of $2.8 million to $4.2 million, Sunset Ethanol estimates.

A plant to produce 100 million gallons of ethanol annually that would be enough to meet roughly 10 percent of the demand from California each year would carry a $250 million price tag.

"It takes a lot of capital, and it produces a lot of sales," Dixon says.

Federal funding that would have jump-started the company's plans fell through at the last moment, Dixon says, apparently because of doubt about the pre-treatment technology.

Harris and Dixon, longtime veterans of mechanical engineering in the petroleum industry, say their system is based on equipment that's been used successfully in oil fields since the 1980s.

While Nevada isn't exactly a lush producer of vegetation that can be used for feedstock, Sunset Ethanol is confident that switchgrass can be grown successfully by northern Nevada farmers.

It's a perennial crop that can be harvested twice a year once it's established. It's native to the Midwest, and crops in Nevada would require some irrigation, Dixon says, perhaps with center-pivot systems.

The Fernley-Hazen area makes sense for a refinery location, Dixon says, because ethanol typically is transported in mile-long trains from production facilities to major markets. The Union Pacific main line runs through northern Lyon County.