BioFuel Energy Corp. (Nasdaq: BIOF) today announced that start-up of its first two ethanol plants had been delayed by roughly 90 days.
According to the company, commercial production at the plants is now expected before the end of the second quarter. BioFuel said until recently, it had appeared that the numerous challenges which had arisen in engineering, procurement and skilled labor could be overcome with little change to the schedule.
However, The Industrial Company (TIC), the general contractor building the plants has indicated the original schedule cannot be maintained without compromising on quality, according to BioFuel
BioFuel said the aspects of construction which it is directly responsible for, including rail connections, water supply and wastewater treatment, natural gas lines, electricity and grain storage upgrades, currently remain on schedule.
However, completion of the core production facilities and the instrumentation required to run it efficiently, which TIC is building under turnkey contract, have fallen roughly three months behind schedule, the release says. It adds that a variety of unforeseen challenges could cause further delay.
However, BioFuels says it does not anticipate any material change in its previously estimated total plant construction costs of $1.35 to $1.40 per gallon.
Through December 31, a cumulative total of $258 million had been spent on construction, BioFuels said. Based on remaining amounts due under the TIC turnkey contracts and estimated costs to complete work classified as the company’s responsibility, it is estimated that a further $55 million to $65 million will be expended through completion. These amounts exclude corporate overhead and financing charges.
Scott H. Pearce, the Company’s President and CEO said, "We are obviously disappointed by this delay. Unfortunately, despite an admirable degree of high level management attention at TIC, construction at both Wood River and Fairmont have experienced and continue to face challenges. These have largely been due to the still very strong industrial construction market and the resulting competition for personnel and material."
The Company’s main facilities in Wood River, Nebraska and Fairmont, Minnesota will each have a nameplate capacity of 115 million gallons a year of fuel grade ethanol. Cargill, Incorporated, which holds an equity interest in BioFuel, will supply the corn required by the plants and market their output of ethanol and distillers grain. The company said it expects to report its fourth quarter and year end results in the last week of February.
About BioFuel Energy
BioFuel Energy is a development stage company currently engaged in constructing two 115 million gallons per year ethanol plants in the Midwestern corn belt. The company’s goal is to become a leading ethanol producer in the United States by acquiring, developing, owning and operating ethanol production facilities.
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