Murphy’s Law 2019 #13

February 14, 2019

It seems that many are curious about the status of the Spiritwood soybean crush plant and today I was one of a dozen people in the Commerce Department building for an update. There were representatives from Great River Energy (GRE), Jamestown EDC, the Lieutenant Governor, the Bank of ND, MNSP (Minnesota Soybean Processors)/NDSP, three state farmer-legislators comprised of a Tax committee chair, a Senate Appropriations member and the House Majority Leader, three members of the Commerce Department and myself.
Here, in no particular order, is some of what I gathered from that 90 minute meeting: The plan for the crush plant has some financing options. They began by holding about 50 meetings in ND and now have 110 investors with MNSP being the largest and ND Farmers Union the second largest investor. MNSP thinks that the ND farmer investment is about tapped out. They have hired a venture capital firm that will search for large investors. They need to have a clear financial pathway by the end of this March (with some leeway). If not, the MNSP board is going to be asked if they wish to quit or continue with the project. The soybean oil will no longer be used to produce biodiesel, but renewable diesel which would come out of the Marathon Petroleum refinery in Dickinson looking, smelling and tasting just like #2 diesel. 100% of that would be put on trains and go to California. The Spiritwood facility would send about half of their oil production to Marathon as they are reluctant to put all of their eggs in one basket. The Marathon refinery could use all of what Spiritwood may produce. Corn oil is also a source of oil and is even better for the RINs and carbon index than soybean oil. While steam from GRE at Spiritwood will still be used, natural gas will be needed for the heat and pressure needed to produce renewable diesel. Dropping biodiesel and switching to renewable saves some money — Marathon off-take agreement allows them to eliminate some capital expenses so $18m appears to be off the table. However, structural steel costs have jumped 20 percent which have pushed the plant cost up from around $280 million to $287 million. An option is to increase preferred stock offerings. I also reinforced the notion that I am not a banker or accountant by not understanding terms such as uni-traunch and subordinated debt. I would say that a) I will not be able to answer the many questions you may have on this matter as so much is up in the air and it would take more than one meeting to learn it all. b) Our state leaders are working to find solutions to make the project viable, including the Governor’s office, the Commerce Department, the Bank of ND and the Legislature. C) It is not dead yet and holds great promise for you producers should it come to fruition.