Delay in facility upgrade may mean shutdown in harvest
KAAPA Partners Aurora representatives offered area farmers an update on plans to upgrade the ethanol plant on the west edge of Aurora last week, announcing details regarding significant improvements as well as an unexpected timing issue which could cause the plant to shut down for three to four weeks during harvest season.
Mike Bergen, president of the Hamilton County Corn Growers Association, said he thought the timing was right to invite KAAPA to the group’s Aug. 28 meeting, which began with a corn plot tour east of Giltner.
“I thought it would be nice to give KAAPA the opportunity to come talk to our members since earlier this year KAAPA formed a joint venture with Aurora Coop on the ethanol plant west of Aurora,” Bergen said. “Many changes are coming and I felt like it would be nice for them to talk directly to the farmers of Hamilton County.”
More than 80 area farmers, as well as Nebraska Extension and seed company representatives, enjoyed a meal at the Giltner Community Center before Blake Veno, KAAPA’s vice president of risk management, was introduced.
“We are going to do a couple of things here at the Aurora plant,” Veno began, after giving a brief review of the company’s history. “We’ve got to improve the plant’s efficiencies and we’ve got to increase the plant’s capacity.”
KAAPA was formed in 2001 by a group of Nebraska farmers and has since grown to include plants in Minden and Ravenna. The Ravenna plant was purchased in 2016, with the company later retrofitting the facilities, reflecting the same plan announced earlier for the Aurora West facilities.
“Over time with what we’ve accomplished in Ravenna we feel like there is a sweet spot in capacity that can take us to where we need to go, so we’re working on that,” Veno said. “Those projects are going to start here this fall. Right now it’s looking like it’s going to be probably mid-October.”
Conceding that shutting the plant down during harvest is not ideal timing, Veno explained the circumstances, adding that the exact timing of the pending shutdown is still not yet known.
“Contractors are hard to get,” he noted. “This plant was originally scheduled to go down in September, three to four weeks, before October. The contractors are behind. The shipments on new parts are behind, so where we’re at it looks like today Oct. 15 we will be going down three to four weeks.”
Saying he realizes a shutdown during harvest isn’t the news farmers expected to hear, he said it is important to set clear expectations.
“We’ll get it right,” Veno said. “We have a lot of money that we’re going to spend there. Just going back, I think we spent $50 million in Ravenna and it took us a little while to get it right, but now I think we have it right. I think that the number in Aurora is probably 70 or 80 million (dollars on plant improvements). We’ll get that money spent and then the location will be right for you.”
Veno said he felt it was important to share the news now, before harvest begins, so area farmers could plan accordingly.
“I know I kind of sprung this shutdown on everybody and what we want to do is give you the opportunity to plan ahead of time,” he said. “If the contractors get pushed back even further, we might run all fall, but we want to at least set the expectation that there is a chance that we might be down the last half of October.
“It’s not unheard of to think that the contractors could come back and say, ‘Hey, your shutdown is not 10/15 anymore, it’s 11/2,’ and now we just told everybody to not come for the last half of October. So we’re just very day by day with this project. There are a lot of contractors on site, a lot of parts that need to be delivered, and it just feels like those schedules are starting to slip. That’s why we want to set the expectations today that it’s going to be a struggle. It’s going to be a little bit sloppy this first 18 months, but just bear with us. We’re spending money in the right places and we’ll make the place great. It already has great bones, so we just need a little bit of time to spend some of the money and we’ll get there.”
Q&A
Veno and two KAAPA grain merchandisers who joined him in Giltner took a few questions from the audience, one focused on details of the planned improvements in Aurora.
“There are two different stages to this,” he explained. “The first piece, by December, what we’re trying to do is get our efficiencies right. What we’re trying to aim for is to get our BTUs per gallon down. We need to get our natural gas down. Then the scope afterwards is increasing grind.”
Currently, the newer west plant is running at a capacity of 90 million gallons per year, he said.
“That capacity is going up,” Veno said. “We haven’t formally released the number we’re going to, but there’s some scale that we see happens when you get over 120 million gallons to touch on the BTUs per gallon. It’s all about the fight for low carbon fuels, right, so we really feel like after the shutdown that this could be the most efficient plant in the KAAPA group, of all three, and the other two are kind of industry leaders today. We’re really excited about what ICM is going to come in and do.”
Another question from the floor was if the Aurora plant will be accepting Enogen corn. The answer, Veno explained, is no.
“I’m no chemical engineer …, but what I can tell you is we think a lot of the efficiencies in our world have come from enzymes and processes,” he said. “It is our belief that the enzyme is cheaper to buy than to have in the kernel.”
When the plant is operational, Veno said it will be open Monday through Saturday from 7 a.m. to 7 p.m., and noon to 5 p.m. on Sundays. He also noted traffic flow changes, with a new in-bound scale house having been added on the south side of the property to help create one big traffic loop rather than having trucks double back.
Veno concluded his presentation by inviting farmers with questions about the harvest schedule or shutdown policies to contact KAAPA Ethanol Holdings at 308-455-4195.
New partnership
KAAPA Ethanol Holdings, LLC (KAAPA) and Aurora Cooperative Elevator Company announced in late February that the parties had closed on a joint venture, forming a new company to be known as KAAPA Partners Aurora, LLC.
The new company now owns and operates the ethanol and grain facilities located west of Aurora. Once the deal was signed, KAAPA became majority owner and operator of the facilities, with Aurora Cooperative retaining a minority interest in the new company.
KAAPA Partners Aurora, LLC announced at that time that it intends to make significant investments in the ethanol and grain facilities with the goal of increasing production and efficiencies so that the ethanol plant may remain a destination for area farmers’ corn for many years to come.
Chuck Woodside, KAAPA’s CEO, said he is excited about the new partnership.
“We are excited to enter this partnership with Aurora Cooperative and look forward to expanding our customer base to the Aurora region,” he said in a press release. “The collaboration with our existing plants, along with significant improvements to the facility will make this plant a great addition to KAAPA.”