Biodiesel dream stalls at start

Ambitious plans for a former citrus plant have hit a few bumps.

Published April 1, 2007

DADE CITY - Back in February, a little-known company came forward with big ambitions to turn a shuttered citrus plant into the nation's largest producer of biodiesel.

Agri-Source Fuels, which was founded and funded by Pensacola residential developer Rick Higdon, projected it could pump out more than 120-million gallons of the clean-burning fuel a year.

That is one tall order of juice - especially given that it is 20-million more gallons a year than the next known runner-up: a Seattle facility being built by a company with a former Microsoft executive at the helm and a headline-making $214-million in private financing.

Agri-Source said in February that production would start at the former Pasco Beverage plant within two weeks. But nearly two months later, the facility hasn't produced its first batch to sell.

Company spokeswoman Peggy Mathews acknowledged last week that the company was overly sunny in announcing its early start time.

Mathews said transforming the 60,000-square-foot space at what is now the Dade City Business Park has taken longer than expected.

So has securing contracts with fuel distributors, who would buy the biodiesel and sell it to such customers as trucking companies and retail stations. (She would not say how many contracts Agri-Source has finalized so far but said it is still taking orders.)

The company is looking at starting production this month, she said, and is in the process of hiring about 50 workers, many of whom worked at the former citrus plant.

"When we start," she said, "we're going to start up big time."

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Agri-Source also underestimated what work it would need to do with state and local officials before it could get started.

Shortly after its announcement in February, Agri-Source, citing the clean process of producing biodiesel, ruled out needing any permits. That assessment turned out to be premature.

City officials are requiring Agri-Source to come up with an engineer-approved fire-protection plan for the facility, said Code Enforcement director Joey Wubbena. He said he didn't think Agri-Source was close to starting production.

"They are cooperating but there is debate over what codes apply and don't apply," Wubbena said. "These alternative fuels are totally new. It's like stepping into a gray area."

Same with state permits. Based on a January meeting Agri-Source had with Department of Environmental Protection officials based in Pensacola, the company determined the project would "not require any DEP permits," according to a Feb. 19 Agri-Source letter to the DEP's southwest district, which is based in Tampa and covers Pasco.

But that meeting in Pensacola had been only about Agri-Source's other proposed biodiesel plant, a much smaller project - about 10-million gallons a year -- outside Pensacola.

Whether a permit is required is a site-specific decision, not based just on the type of industry, said Pamala Vazquez, the DEP's southwest district spokeswoman. DEP requires permits for projects that release certain levels of pollutants into the air.

The southwest district is awaiting additional information from Agri-Source, including a diagram showing its process in Dade City and a brief description of its methanol storage tanks, according to a March 2 letter. Mathews said an Agri-Source engineer is preparing materials that will show "we are well below needing an air permit."

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Mathews said Agri-Source is in the early construction stages of its smaller biodiesel plant in the Pensacola area, which it hopes to open this year. In an application for state grant money earlier this year, Agri-Source asked for $1.5-million to help equip a Pensacola plant totaling $4.5-million.

All this was news to Escambia County officials last week. Public information officer Joy Tsubooka said that the county knows Higdon as a residential developer but had no records of any proposals for his biodiesel plant. She said the Agri-Source plant's address is on property permitted only for a storage building.

Mathews said Friday that Agri-Source did not need to consult with Escambia officials because the project is located in an industrial zone.

"I can't worry about the county not knowing what's going on," Mathews said.

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Agri-Source officials have declined to say how much money Higdon is putting into reconfiguring the Dade City plant. Pasco Economic Development Council reports on its Web site that the plant represents a $1.75-million capital investment.

According to the National Biodiesel Board, a general rule of thumb is that starting a plant from scratch costs $1 to $1.50 for every gallon it can produce. So a 100-million gallon a year facility would cost $100-million to $150-million to build and equip.

Construction costs alone at the Seattle plant, which will have the capacity to put out up to 100-million gallons a year, are about $65-million, according to the company, Imperium Renewables.

Agri-Source officials point out that their company's costs are much lower, however, because they found a jewel: An existing building with the old citrus plant's 5.6-million gallons worth of storage tanks.

Higdon said in a recent interview that it would have cost him four times as much to build such a facility from the ground up.

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The National Biodiesel Board, a trade association that tracks plants across the country, is keeping an eye on the Dade City proposal, said spokeswoman Amber Thurlo Pearson. Board officials, she said, are intrigued by the Dade City project's potential.

"Certainly the volume is unprecedented," she said.

Agri-Source sees a biodiesel market bound to grow: Trucking companies, the marine industry and governments, especially those with mandates that a certain percentage of diesel vehicles, such as school buses, run on biodiesel.

Higdon displays nothing but confidence.

"We'll be in the black in six months," he said in an interview in February.

Locally, the project is getting hopeful reviews from city commissioners.

Mayor Hutch Brock said he was excited to see something being done with all the equipment left over from the citrus plant. In terms of jobs, he said, the biodiesel plant could help fill the void left by the closed plant.

"I was somewhat cautious about their goal of being a leader in the industry so quickly," he said. "But they've got a lot of things in place that are going to allow it to maybe take off.

"Gosh, wouldn't it be great if they were that successful?"