What Unemployment Rates Tell Project Developers

Don’t forget that no two projects are alike
| May 20, 2011

The process formula being used successfully by Inbicon in its Danish biorefinery has not yet seen the same success in wheat-straw biorefining tests in North Da­kota. Cole Gustafson, professor from North Dakota State University, says that “the bottom line is yes, it can be commercially done” in North Dakota. But for that to happen, the biorefinery will have to overcome some common, and not so common, hurdles to get there.

Collection of wheat-straw biomass is already happening, Gustafson says. “We have a cabinet manufacturer who is collecting wheat straw to make a composite panel that is used for cabinetry,” he points out, and the cabinet maker is paying $15 a ton for the biomass if it is left in the field and an additional $35 a ton if it is baled and delivered to the facility. But, like most projects, even though the collection of the feedstock may be possible, there is still a density versus distance issue. In this case, the areas of the greatest wheat straw density are further away than the desired distance.

Another common issue that could affect the success of the biorefinery is some basic agronomic information that Gustafson thought would be readily available: plant matter left standing after initial harvesting. Because the information didn’t exist, he spent a week driving through North Dakota collecting information and determined that the average height of the wheat straw farmers are leaving is seven inches.

But issues such as density versus distance or the amount of biomass typically left in the field after a harvest will affect every project. It’s the state’s unemployment rate though that shows why every project really is different.

“When we looked at their (farmers) preferences, they are interested in leaving the straw in the field and not doing much more than that,” he explains. Why? Because the state has one of the lowest unemployment rates in the nation at roughly 2 to 3 percent, meaning that farmers don’t have access to labor in rural areas. “So,” he said, “they were very hesitant to committing any additional field operations to bale, collect or store because they didn’t have a labor source.”

But the labor force dilemma isn’t the only hurdle that shows why a project developer can’t base a project strictly off past projects. In North Dakota, he explains, there is a question of who to negotiate with to purchase biomass crop residues. “It turns out that in most cases the tenant has a say in terms of what can be done with the crop stovers.” But, he adds, “the tenant has to leave the land in the same condition as he acquired it at the beginning of the production period,” noting that this can be another dilemma in feedstock contracts. Even with state-specific challenges, however, Gustafson says, “everything at this point looks very positive.” —Luke Geiver