USDA awards loan guarantee to AD project in Oregon

By Erin Voegele | March 02, 2016

On Feb. 26, USDA Rural Development announced plans to support an anaerobic digestion (AD) project under development by Novus Energy LLC in Boardman, Oregon, with an $11 million loan guarantee awarded under its Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program.

According to the USDA, Minnesota-based Novus plans to build a biorefinery in Boardman to process agricultural waste into fuel, natural gas, organic fertilizer and other biobased products. The company is expected to use waste from onion and potato processing plants, dairy manure, seasonal plant byproducts and other waste supplied by local growers and processors as the primary feedstock. The facility is planned for development on land owned by the Port of Morrow, which is located near large farms and is home to 10 major food producers.

Joseph Burke, president and CEO of Novus, explained that the proposed facility will feature the company’s Novus Bio-Catalytic Conversion System, a catalyzed, compete mixed, multistage AD system. “We have patents, intellectual property and some pretty elegant engineering that make it a very high-rate system,” he added.

Information published by the company indicates the NBC system features a patented biological process and unique engineering design. It accelerates the digestion of complex organic molecules by employing a unique consortium of anaerobic bacteria that enable the facility to realize higher conversions in smaller volumes. According to Burke, Novus has more than 3.5 years of experience operating the technology on the demonstration-scale.

The proposed facility in Boardman is expected to process up to 750 tons-per-day of waste feedstock, producing 3.8 million cubic feet of biogas each day, or approximately 2.5 million standard cubic feet of pipeline-quality renewable methane. In addition, the facility is expected to produce 350 gallons of liquid fertilizer per day, along with 11.2 tons of soil amendment. According to Burke, his company is working with Pacific Gro to market the fertilizer and soil amendment coproducts. The plant will also return approximately 172,000 gallons of treated water to the Port of Morrow each day.

Renewable natural gas produced at the plant will be injected into the pipeline. While the ultimate end use for the biobased methane has not yet been determined, Burke said it will likely be sold into the transportation fuel market. Novus intends to register with the U.S. EPA to generate D3 cellulosic biofuel renewable identification numbers (RINs) under the renewable fuel standard (RFS). According to Burke, the company plans to complete the RFS registration process with the help of Texas-based Weaver LLP.  

Regarding feedstock, Burke said the company has tested a variety of different materials. The technology is able to process a number of different types of cellulosic feedstocks, he said, noting that feedstock handling is a key component of developing a project like this. He indicated the material handling components of the plant needs to be designed specifically for the feedstocks the facility will employ. “I think that’s a very important point,” Burke said. “We’ve done a lot of work and engineering around that, so we have the right pieces in place to handle the feedstocks we’ll be processing.”

According to Burke, a significant amount of development work has already been complete on the project. He said Novus hopes to be in a position to close the loan guarantee during the second quarter, which would allow construction to begin as soon as this summer. The build-out process is expected to take 12 months.

Novus Energy is working with Old West Federal Credit Union, an Oregon-based lender, to finance the $20.2 million project.

The USDA recently streamlined its application process for the loan guarantee program. According to Burke, Novus put together an application with Old West Federal Credit Union and submitted it to USDA late last summer, as soon as the application window opened. In December, the company was notified its application had progressed to Phase II. If the project moves forward as planned, it could break ground less than one year after the loan guarantee application was first submitted.

Burke stressed the loan guarantee is critical to securing financing for the company’s first commercial-scale project. “I think the effort that the USDA has undertaken to…help support projects like this through this type of loan guarantee program are essential to move some of these technologies forward, ours included,” he said, adding that the first project featuring a new technology is typically hardest to finance. “I think once our technology has been proven on a commercial scale, replicating it will be much easier from an operational and a financial perspective.”

According to the USDA, Novus expects to hire up to 10 people to operate and maintain the plant. The project is also expected to indirectly create an additional 15-20 support jobs.

Congress established the biorefinery loan guarantee program in 2008 and expanded it in the 2014 Farm Bill to include renewable chemicals and biobased product manufacturing. Since the start of the Obama Administration, UDSDA has invested $765 million in nine biorefineries that have produced 150.1 million gallons of advanced biofuels, including projects in Florida, Georgia, Iowa, Louisiana, Michigan, Nevada, New Mexico, North Carolina and Oregon.