Biodiesel fuel plant is job boost for Bangor

First facility in state to also help soybean farmers

June 14, 2006

BANGOR -- This small, western Michigan town, known primarily for its local pickle factory and bumper blueberry crop, will soon be one of the state's gateways for the production of biodiesel fuel.

Michigan Biodiesel LLC is building the state's first biodiesel plant in Bangor. Scheduled to come online in July, the plant will create 25 jobs and be a boon for hundreds of Midwest farmers. It takes one bushel, or 7.3 pounds, of soybeans to make 1.4 gallons of biodiesel, according to the U.S. Department of Agriculture. And the new plant will produce about 40 million gallons of biodiesel fuel a year. That's a lot of soybeans.

Bangor, population 1,933, is in Van Buren County in western Michigan. It is one of the poorer towns -- per capita income is $14,925 a year -- in one of the poorest counties in the state.
As a result, Michigan Biodiesel will become an economic driver for the town.

"It's a significant development for us because it means an opportunity to add 25 jobs in the community with long-term benefits of a stable non-auto related business that may not be as cyclical," said Larry Nielsen, city manager for Bangor. "After all, it's a $3.5-million investment and the town's tax base is only $21 million."

Michigan Biodiesel is funded by 71 investors, many of them farmers who put up $50,000 each. Four others are expected to be running within the next two years.

Biodiesel is a domestically produced, renewable fuel for diesel engines derived from natural oils from soybeans, canola and sunflowers and animal fats. Michigan produced 107.6 million bushels of soybeans last year, according to federal statistics. There are 97 biodiesel plants in the United States.

Less well known to consumers than ethanol-blended fuel, biodiesel primarily powers heavy-duty trucks and tractors that consume diesel. It can be used in its purest form -- B100 -- or blended to B20, which is a mixture of 20% biodiesel and 80% petroleum-based diesel fuel. The renewable fuel is perhaps best known as an environmentally friendly product that reduces carbon monoxide, particulates and hydrocarbon emissions compared with petrol-diesel fuel.

State energy plan

"Biodiesel is a small part of a big answer for Michigan's energy problems," said Roger Betz, chief financial officer for Michigan Biodiesel and a soil scientist at Michigan State University.

The state plans to spend $2 billion in bond money in the next decade to ensure that it becomes the nation's alternative energy epicenter, a key component of Gov. Jennifer Granholm's 21st Century Jobs Fund program.

In April, Granholm called upon the Michigan Public Service Commission to draft a comprehensive energy plan to encourage the greater use of alternative sources including biodiesel. The plan is to be completed Dec. 31.

"The spinoff from this is that Michigan Biodiesel's decision to come to Bangor has other businesses that are looking to grow coming to Bangor to see if we would be a good fit for them as well," Nielsen said. "As that happens, somebody else is bound to say that we want to be here, too."

That's what customers of the Coffee Depot café are hoping.

The popular morning meeting place has been buzzing with news that the new plant is serving as a magnet for other businesses considering opening up shop in Bangor -- known as Train City USA , according to café manager Teresa Wiles.

"Oh yeah, people are really talking about this," said Wiles, 45, who left Bangor in 1980 and came back two years ago.

"A lot of people come here to catch the Amtrak" train "from Kalamazoo and everyone is asking about the biodiesel plant. It's all the rage."

To be sure, the plant won't solve the economic woes of Bangor or Michigan's energy crisis overnight.

Twenty-five new jobs would have a limited impact on the everyday lives of Bangor residents. There is also the question of who's going to buy the stuff. Right now, only one retail filling station in Bangor sells biodiesel.

Critics of the fuel, meanwhile, say biodiesel in its B100 form is a notoriously poor-performing cold-weather fuel. Below 50 degrees, the fuel begins to form wax crystals that can cause the engine to run rough.

Still, the factory and its new jobs are viewed by most as a good start for a town that could use all the help it can get.

Dozens of citizens met with company officials and city leaders last August to ask questions about the safety of the new plant and make sure that there would be no negative environmental impact.

The Michigan Department of Environmental Quality approved the building of the site and deemed it environmentally safe, Nielsen said.

Wiles, who attended the meeting, said she was satisfied that there would be little risk of pollution from the plant after seeing a demonstration on how biodiesel is made.

"I'm comfortable that it's safe," she added.

After considering 17 different locations throughout the state, the company settled on Bangor.
With a federal tax subsidy on production of biodiesel recently extended through 2008, companies like Michigan Biodiesel can expect to find fertile markets for their products.
"We think it's a win-win for us and the community of Bangor," said Betz. "We think our advantage is having local people working in the plant and helping to stabilize the town's workforce."