Idle biodiesel plant in Delaware sold at auction

CLAYTON, Del. - A biodiesel plant that went bust when soybean prices rose was sold at auction Thursday for $1.35 million, barely more than the amount of government grants it received just a few years ago.

The Mid-Atlantic Biodiesel facility in Clayton was purchased by four brothers who operate a biodiesel research refinery in Frederick, Md., and plan to use the Clayton facility for production.

Tom Butz said he and his brothers, who have done extensive research on alternative fuels and established a partnership with Fairfax, Va.-based Petroleum Marketing Group, see the Clayton plant as "the next step" in their plan to produce and distribute biodiesel.

Butz said he expects the sale to close within 30 days, and his group could resume production of small amounts of soybean biodiesel in Clayton within 60 days after closing. Their goal, however, is to enhance the technology at the site to produce biodiesel not just from soybeans, but from other feedstocks as well, including chicken fat and restaurant grease.

The Clayton plant, which received $800,000 in federal grants and $300,000 in state grants, as well as a federal loan guarantee of almost $5 million, opened in fall 2006 but shut down the following spring.

State officials had hoped the facility would play a key role in an alternative energy industry in Delaware, but a spike in the price of soybean oil hurt the economic viability of the business.

"Entrepreneurship is risk taking; that's part of it," said Martin Ross, a soybean farmer who led the effort to build the Clayton refinery. "This risk didn't turn around."

Ross noted that more than 30 biodiesel plants around the country have been shut down or idled as higher soybean oil prices and a decline in crude oil prices have made biodiesel less attractive to consumers.

"It's tough times in the biodiesel business," said Jack Purdy of Woodstock, Ohio, a farmer who built a biodiesel refinery with his sons and traveled to Delaware to attend Thursday's auction. Purdy said he would sell his operation if he could and wanted to see how Thursday's sale was conducted.

Bidding for the Clayton plant, which has an annual production capability of 5 million gallons, was less than spirited. When bidding stalled at $1.2 million, the auctioneer joked that the bolts in the facility were worth that much, and that some $10 million had been invested in the facility. He called a five-minute break a short time later, urging bidders to "call your bankers, call your wives," or whoever else had authority to allow them to bid.

"You're going to be sorry tomorrow," the auctioneer warned reluctant bidders at one point. It was to little avail, however, as the bid increment dropped from $50,000 to $25,000, and the process ended at $1.35 million. The total purchase price, including the buyer's premium and fees, was $1.485 million.

Also auctioned off were a few pieces of equipment, including a forklift that went for $500.

"The battery needs a little work on it, otherwise it's ready to go," the auctioneer said.

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