Murphy’s Law 2020 #7 EERC Synergies and Ethanol

June 3, 2020

Each year the Interim Energy Development and Transmission Committee visits the Grand Forks-based Energy and Environmental Research Center. This June it was virtual and our legislators were presented with some program updates. I listened in to see what might concern agriculture and there was plenty. One headache for farmers in the northern tier of counties is that there are over 500 pre-Bakken abandoned oil wells. Called Legacy wells, these were drilled and abandoned before there was a Department of Mineral Resources and no rules for reclaiming well sites. Many have land surrounding them which was despoiled by production (salt, etc.) water which ruined it for farming. EDTC Chair Wardner reported that our state has taken $33 million from COVID-19 relief and $10 million from the Reclamation fund to plug these wells and later reclaim the land. This will take manpower and time which North Dakota has. We want to keep quality labor in the state now that we have shut in 7,000 of our 16,000 wells. Also discussed with relation to Agriculture is the pending shut down of Great River Energy’s Coal Creek Station. The state is trying to keep this coal plant open as it supplies power for the Blue Flint ethanol plant at Underwood and the Midwest Ag ethanol plant in Spiritwood. As you may know, North Dakota is still working on and hoping for a new soybean crush plant to be able to utilize steam from Spiritwood. This would create efficiencies making resulting soybean oil more attractive to a biofuels plant in Dickinson which would in turn sell fuel to California. It was stated that our Governor’s office is actively involved and I know that our Department of Commerce is as well.

Much more ensued from the EERC, but to stick more succinctly to Agriculture, the Committee also heard from ethanol industry people as they explained where our plants are and how they add about 60 cents to the price of each bushel of corn. Legislators were also informed about how demand for fuel due to COVID-19 has fallen by about half and even further by the small oil refinery exemptions these past couple of years (also hurting our biodiesel industry). Gerald Bachmeier, of the North Dakota Ethanol Producers Assoc., and President of Red Trail Energy also mentioned that the Bank of North Dakota has instituted an Ethanol Recovery Program which can provide up to $15 million at 1% interest as the industry seeks to hang on and grow through these challenging conditions. Most of you soybean farmers grow corn, 40 to 60% of which is sold to ethanol plants. The committee was told one silver lining lately is that ethanol used for hand sanitizer is up from around 300 million gallons per year to about a billion gallons.