CLATSKANIE, Ore. (AP) — Columbia Pacific Bio-Refinery officials overcame concerns about the plant's ability to produce viable ethanol, but now find themselves caught in a declining market and have yet to start production.
"Most plants are at best breaking even or losing money," said Dan Luckett, general manager of the plant. "(National) analysts believe the fourth quarter will turn out well. We're hoping to start up around October."
Columbia Pacific officials planned to begin producing ethanol by February. The decision to delay production led to the layoffs of almost 50 of the company's 70 employees in May. Luckett said the plant will recall most of the employees once it becomes operational later this year.
The ethanol market has fallen on hard times as prices for corn, the main raw material used in production, are high, while the price of ethanol has plummeted. The expiration of a 30-year-old federal ethanol tax credit last year has also had a negative impact on the market.
"We figured the storm would last 6 to 12 weeks," Luckett said. "We're now looking at six months."
Columbia Pacific's current priority is maintaining its facility while making minor upgrades.
JH Kelly, a Longview contractor, built the $200 million plant and purchased it out of bankruptcy, investing $20 million to correct issues that arose during the six months it operated in 2008 and 2009 under the name Cascade Grain. At peak production levels, the plant can produce 120 million gallons of ethanol a year.
JH Kelly intends to prove the plant profitable before trying to sell it, Luckett said.
"They look to at some point to divest themselves from this," he said. "(JH Kelly) looked at it as an investment and they looked to, at some point, harvest that investment."
Luckett added that Chevron has reviewed the 44-acre facility along the Columbia River since its reopening and has the company listed as an approved ethanol manufacturer.
The plant is designed to produce and export ethanol to be blended into gasoline. Federal law requires a certain amount of renewable fuels, such as ethanol, be mixed into gasoline.
Despite the rocky beginnings, Luckett said the plant will be ready to begin production as soon as soon as the market turns, saying it's better to sit on the sideline and lose money than operate at a deficit.
"We're at the front or the middle of the pack," Luckett said. "At some point the market will correct itself and there will be an opportunity for us."