The Garden City Telegram

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Energy company to expand operations

Published 9/8/2010 in Local News

By SHAJIA AHMAD

sahmad@gctelegram.com

Local officials on Tuesday agreed unanimously to enter into a $1.1 million public-private partnership with Bonanza BioEnergy to help the company expand its operations and allow the city and county to acquire property they deem is lucrative for industrial growth in return.

Garden City commissioners met with Finney County commissioners during a joint meeting Tuesday to consider the agreement between them and officials from the ethanol plant located east of town.

The agreement allows Bonanza BioEnergy to solicit state assistance for the construction of a $2.58 million rail project through a half a million dollar grant from the state and a $1.1 million low-interest loan through the Kansas Department of Transportation.

Finney County and Garden City would agree to pay off $1 million of the KDOT loan at a two-percent interest rate over the next decade. Bonanza would pay $100,000.

In the first year, the city and county will use about $200,000 of funds the two entities have set aside for economic development incentives to begin paying off the loan.

In return for repaying the loan, the ethanol company will sell a 50-acre property at the southwest corner of U.S. Highway 50 and Jennie Barker Road to the city or county for $1. The site has long been of much interest to prospective industrial companies, according to local officials.

Tom Willis, the chief executive officer of Conestoga Energy Partners, the operators of the plant, said Tuesday his company is building the rail spur to accommodate more cars and larger trains to carry ethanol to California, where the company wants to begin marketing its product.

"The carbon footprint of our ethanol is probably as low as it is anywhere else in the county," Willis told commissioners Tuesday. "We're bringing California dollars to southwest Kansas."

Local officials agreed that the opportunity was "rare" and "unique" and not one they should pass up. The site has long been attractive to prospective businesses as possible industrial locations because it meets several ideal selection criteria: access to a four-lane highway, utilities to the site, rail and access to a wastewater treatment facility in the area, City Manager Matt Allen has said.

"Access to rail, in this county, is as close to priceless as you can get," Allen told city and county commissioner Tuesday. "This could be the difference between being in the game and being immediately discarded (by potential industries)."

"We always talk about economic development, and here's the opportunity to put our money where our mouth is," Garden City Commissioner Reynaldo Mesa said. "This is a win-win for Bonanza and a win-win for the community. We need this."

County Commission Chairman Cliff Mayo recused himself from Tuesday's discussion and vote because he has investments in Conestoga Energy Partners, LLC, the operators of the Bonanza plant. Conestoga officials announced last spring their intentions to divert about 150,000 metric tons of carbon dioxide produced annually by the ethanol plant's fermentation process to the Stewart oil field site, northeast of Garden City, via underground pipe.

Burying gas emissions aids in the extraction of oil in aging wells, and the company's efforts to spread carbon sequestration technology increases the value of its ethanol.

The energy company also has agreed to share the railroad spur with prospective companies at the site, according to the agreement. In addition, if Bonanza abandons or fails to maintain the newly constructed railroad spur, it becomes the property of the county or city.

Willis said Tuesday his company plans to start the project immediately and complete it by the beginning of next year.

The company saw $7.5 million in profits in 2009, Conestoga officials have said.

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