Biodiesel project gets $1.1
million loan
By Stella Davis
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CARLSBAD — A Carlsbad family that requested WIPP acceleration
funds for the construction of a biodiesel plant in
Carlsbad will receive $1.1 million, down from the initial request of $1.4
million. But the money will come with strings attached.
The $1.1
million will be a loan from the city with conditions of repayment and
milestones that will have to be reached.
The Carlsbad
City Council unanimously approved the request Friday during a special meeting
called by the city council.
Ronnie Walterscheid, who with his wife, Sheila; his brother
Phillip and his wife, Melissa; daughter Katie Aves and her husband, Richard;
and patriarch of the family Henry, have formed Cetane Energy, a limited liability company that will
partner with the Carlsbad-based
The Walterscheids said construction of the facility is
estimated at $2.8 million. They are in the process of securing personal
financing of $1.7 million
CEHMM will
supply Cetane with algae oil to be processed at the
plant. Working with
The Walterscheids came before the council Tuesday to formally
ask for the Waste Isolation Pilot Plant funds and to explain the economic
impact for
WIPP
Acceleration funds are awarded on a year-by-year basis from the federal
government to help offset the economic impact of the nuclear waste repository
closing at the conclusion of its mission in anticipation that it will be ahead
of schedule in processing the nation's nuclear waste.
Mayor Pro Tem
and head of Los Alamos National Laboratory's Carlsbad Operations Office, Ned
Elkins played a key role in helping the Walterscheids
secure the WIPP funding. Following Tuesday's council meeting, Elkins —
representing the city — the Walterscheids, Department
of Energy Officials and the federal agency's legal council sat down and worked
out the details that are agreeable with all the parties.
"The DOE
is committed to this project. It sees it as a credible path forward,"
Elkins said. "The agreement gives the city good oversight and it gives the
Walterscheids the ability to negotiate with the
city."
The
conditions for the Walterscheids to obtain the WIPP
funding include:
They must
show proof that they have secured the $1.7 million in private financing.
To the extent
allowable and desirable, all incentive or training monies paid to the Walterscheids' company, Cetane,
by the State of
All biodiesel sales by Cetane will
offset loan obligations at a rate equal to the city's receipt of direct sales
tax, state rebate to municipalities of sales taxes from municipal generators,
or other tax revenues associated with fuel production.
Credit for
re-investment in the project, such as facility expansion or equipment purchase
and installation, which improves or increases fuel production capacity beyond
the initial parameters, will be given to Cetane at an
agreed upon percentage rate of the re-investment costs.
The facility
must be built within the city limits.
Facility
construction and setup, as defined for the initial capacity of three million
gallons per year production of biodiesel, must be at
a level of completion allowing systems testing and final permitting.
A successful demonstration of planned operation resulting in biodiesel meeting basic quality specifications.
Production of 100,000 gallons of spec biodiesel
and sale of same to a licensed blender or user.
Working with
CEHMM, conduct pilot scale tests on the utilization of process-amenable algae
oil feedstock, ultimately resulting in the production of spec biodiesel.
After Elkins
read the terms to the audience, Mayor Bob Forrest said, "We are getting
better at this. What makes this a nice deal is that it is going to a local
family."
Forrest's
comment was in reference to previous deals with out-of-state-companies that
received WIPP acceleration funds to create new jobs in
Councilman
Jeff Diamond, who is also an attorney, said he is pleased with the conditions
"This is
not a gift. It's a loan and all above board. We are all working on the same
path forward. I'm glad to see there are performance standards that have to be
met," he said.
Following the
meeting, Ronnie Walterscheid said he is comfortable
with the terms.
"This is
a workable agreement," he said.
Walterscheid said that as soon as his family secures the
$1.7 million in personal financing, construction of the plant will get
underway.
"Once we
have the money, it will take us about six months to get into production,"
he said. "We have to order the plant and it will be assembled here."
Asked if a
location for the biodiesel plant has been determined,
Walterscheid replied, "Site selection is
ongoing. We are looking at four sites within the city limits. We have not made
a decision yet."
One of the
main criteria for a suitable site is that it must have access to the railroad, Walterscheid explained to the council. While CEHMM is
completing its work and research on algae and extracting the oil, Cetane will produce biodiesel oil
from soy and canola seed, which will be shipped to the plant by rail.