Colo. company explores production of nitrogen fertilizer at ND ethanol plants

Colorado company Agrebon Inc. and North Dakota partners are in discussions with North Dakota's two largest ethanol plants in Casselton and Hankinson to build small-scale nitrogen fertilizer factories on their campuses.

The fertilizer plants will be funded through venture capital investment funds led by two North Dakota corn farmer leaders, Wallie Hardie of Wahpeton and Mike Clemens of Wimbledon.

Each $20 million fertilizer plant would bolt onto an ethanol plant and use waste streams to produce fertilizer. Each will produce 12,500 tons of urea or 7,000 tons of anhydrous ammonia per year. Several fertilizer plants -- four or five -- could be added in a single location.

The Tharaldson Ethanol plant in Casselton itself would consume 40 percent of the first fertilizer plant's output, leaving 60 percent available for farmers. Fertilizer from subsequent plants in the same location could go entirely to farm production. In grant proposals for the project, Agrebon has projected the nitrogen fertilizer price at about $490 per ton to farmers.

Agrebon is working with Fargo-based Progressive Nutrient Systems LLC to design, construct and operate the fertilizer plants, using technology developed with the University of North Dakota.

iPad of industry?

Justin Eisenach, CEO of Agrebon, tells Agweek the company's technology has the potential to replace existing technology in ethanol production. "It has global potential to change the way we live," Eisenach says. "That's why we call it the 'iPad of the (fertilizer) industry.'"

Eisenach says Agrebon has pending discussions with Tharaldson and with Hankinson Renewable Energy LLC. If successful in those projects, Agrebon would work to build more PNS plants at ethanol plants throughout North Dakota.

Theoretically, the fertilizer plant would reduce the carbon footprint of the corn-based ethanol plants, and provide a localized supply of nitrogen fertilizer to decrease fertilizer price volatility for North Dakota farmers.

The Agrebon technology can be expanded to provide enough fertilizer to satisfy corn needs to feed an ethanol plant, Eisenach says.

With the fertilizer plant bolted on, the corn ethanol plants could help meet the Renewable Fuel Standard. RFS2 requires that new corn-based ethanol plants have a 20 percent lower carbon footprint than existing petroleum-based gasoline.

Orange juice to ethanol

Agrebon is named for the combination of the words "agriculture and reduced carbon." In 2010, the company received initial funding from PepsiCo to develop a low-carbon fertilizer from byproducts of Tropicana orange juice, Eisenach says. As part of this, they formed an exclusive agreement to use technology developed by the University of North Dakota's Energy and Environmental Research Center for small-scale nitrogen fertilizer production.

The North Dakota ethanol projects are its first ethanol-related efforts.

Agrebon's ethanol projects will be in a distributed modular system. Eisenach says it takes waste streams and runs a "puree through catalysts and forms anhydrous ammonia." According to grant applications, the system will sit on a two-acre pad. It has access to an anaerobic digester already in place at Tharaldson Ethanol, biogas clean-up, hydrogen and nitrogen production, ammonia synthesis and urea production. The fertilizer plant uses ethanol plant biogas and carbon dioxide byproducts.

Eisenach says based on local demand, the system can be used to make nitrogen fertilizer in either the urea or UAN (a solution of urea and ammonium nitrate in water) forms. It's likely the fertilizer could be used in a 25 mile radius of the plant -- possibly by farmers who would be offered an opportunity to invest in the plant.

Angel funds

The entire $20 million cost of a first Agrebon plant would be farmer investor equity, Hardie says. This would come from the angel funds headed by Hardie as president and Clemens as executive director. Angel funds are venture capital investment funds.

Hardie says an "angel fund" law in North Dakota allows investors to get a 45 percent tax credit that can be carried forward up to seven years. According to law, each fund must invest in at least three start-up companies.

"There are a lot of angel funds in the state, but ours is the only one in the ag sector," Hardie says.

Hardie is a former state and national corn growers president. Clemens is a former state president as in National Corn Growers Association policy boards.

2 grant programs

The Casselton project already has been been funded by two granting agencies in North Dakota.

In July 2012, PNS was awarded $76,000 from the North Dakota Agricultural Products Utilization Commission to "defray costs associated to demonstrate the feasibility" of the process. It has received half up-front, and will receive the last half at the project report completion in August this year.

Separately, PNS asked the North Dakota Industrial Commission renewable energy grant for $500,000 of a $1 million project costs for engineering and development. They were recommended for $431,000, pending a successful feasibility study that would be approved by the Council, among other things.

The Agrebon model is far smaller than the other two fertilizer manufacturing plants being planned for the state.

CHS Inc. is planning for a $1.2 billion plant in Spiritwood, N.D., that would make 2,000 tons of anhydrous ammonia a day. Construction on that plant would start in the spring of 2014.

Separately, the Northern Corn Development Corp. is involved with another company called Northern Plains Nitrogen, a separate $1 billion project somewhere in North Dakota. If that becomes a reality, it would produce 750,000 tons of anhydrous ammonia per year, possibly by 2016 or 2017. Northern Corn Development Corp. is led by the North Dakota Corn Growers Association, as well as Minnesota and South Dakota Corn Growers and the Manitoba Canola Growers.

Eisenach says his company "decided we needed to get out there and tell our story" because other fertilizer plants in North Dakota are making headlines. "They're in the same stages of negotiations that we are in," Eisenach says, adding that North Dakota farmer-investors are "progressive, and have a can-do attitude."