Orion Ethanol Acquires Dimmitt Wet Milling Facility

The Dimmitt facility, idle at the time of purchase, previously operated as a corn fructose facility with a grinding capacity of over 60,000 bushels of corn per day. Orion Ethanol plans to convert the facility into a fully integrated renewable fuels campus in three phases over three years.

The first phase encompasses converting the corn fructose wet milling facility into a 60 million gallon per year ethanol plant and 10 million gallon per year edible oil extraction facility. Phases two and three will consist of adding a 10 million gallon per year cellulose-to-ethanol process, a 12 million gallon per year bio-diesel plant, a 25,000 ton per year yeast plant, and a 60-75 megawatt wind and biomethane based electrical generation facility. The asset purchase brings with it approximately 1,200 surrounding acres and a wind lease agreement. Orion is currently seeking strategic partners for construction of a wind farm project at the site.

Patrick Barker, chairman of the board, said, "Dimmitt Ethanol's wet milling facility is the ideal platform upon which we plan to develop an integrated renewable fuels campus that will include production of cellulosic ethanol, biodiesel, biomethane, and wind power. This project will help to horizontally diversify Orion across the energy spectrum, building upon Orion Ethanol's past success acquiring and developing our 55 million gallon per year dry-mill ethanol plant in Pratt, Kan.

"By retrofitting an existing corn fructose facility rather than building an ethanol plant from the ground up, we will realize dramatic cost-savings," Barker said. "We estimate the conversion cost to retrofit this facility will be approximately $1.10 per gallon. By comparison, the capital cost to develop a new dry milling ethanol facility would be approximately $2.20 per gallon of capacity, while the capital cost for a new wet milling facility would be nearly $3.50 per gallon, or over three times Orion's installed capital costs.

"The benefits of a wet milling facility versus a dry mill ethanol plant are also significant. First, traditional dry mill ethanol plants yield three products-ethanol, distillers grain and CO2, while a wet milling process yields seven primary products that include ethanol, CO2, corn oil, germ cake, condensed solubles, gluten and bran," he said. "Value is then added by further processing the primary products into four additional products, including biodiesel, glycerin, dried yeast and biomethane. The additional primary products from a wet mill generate over 50 cents per bushel more revenue than a traditional dry mill and, when further processed, contribute more than $1 per bushel more revenue than a dry mill. We believe that a lower capital cost and diversified product base will differentiate Orion from other ethanol producers and gives us a distinct competitive advantage."

Separately, the company announced an agreement to commission an engineering report for an enhanced oil recovery project in Kansas. The project will be in partnership with the owner of an existing oil field, which has significant oil reserves.

Barker noted: "An important and lucrative use of CO2 byproduct from ethanol production, as well as coal-fired power production, is the extraction of oil from stranded wells. The Department of Energy Estimates that over 52.9 billion barrels of oil are currently stranded in the mid-continent region of the U.S. The use of CO2 allows well operators to extract up to 60 percent more oil from these reserves that would have otherwise been unrecoverable. The use of CO2 byproduct from ethanol and coal-fired power production to extract oil also reduces the amount of CO2 that would otherwise be vented into the atmosphere. This project further illustrates our commitment to developing energy sources that protect our environment and reduce our dependence on foreign oil."

Orion Ethanol is in the business of building and developing energy related projects, including bio-refineries which produce ethanol, carbon dioxide, and animal feed products. The company's first ethanol facility, a 55 million gallon per year dry-mill ethanol plant, based in Pratt, Kan., began operations Nov. 5, 2007.

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