South Bend plant will get $230 million in upgrades to produce natural gas and ethanol

SOUTH BEND ―The ethanol plant in the southwest outskirts of the city was potentially headed toward extinction until a German-based biorefinery company purchased it a year ago.

Despite the plant's age and lack of investments to keep it up to date in recent years, Verbio opted to inquire about purchasing the business from Mercurio Investments, which had purchased it in 2018 and was more of an investing firm rather than an operator.

During a groundbreaking ceremony on Friday, executives from Verbio were on hand for the start of $230 million in planned upgrades to the plant at 3201 W. Calvert Street near Four Winds Casino.

Work on the project will get underway in the beginning of June and could take two or so years to complete, said Greg Northrup, president and CEO of Verbio North America Holdings.

The ethanol plant currently employs 61, but it intends to add 29 new full-time jobs in the next year as it begins to ramp up production of ethanol while adding a new product ― renewable natural gas ― that will likely end up in pipelines operated by NIPSCO.

Verbio already has managed to boost efficiencies at the plant, which was only producing 65 million gallons of ethanol a year just a couple of years ago, said Claus Sauter, CEO and founder of the company.

By the end of the year, Sauter said, the South Bend plant should be producing 85 million gallons of ethanol a year with the goal of reaching 100 million gallons in 2025. At the same time, the company will begin installing 16 massive anaerobic digestion tanks where the stillage from the ethanol process will be moved.

The local ethanol plant had previously been expending energy to dry the stillage in order to produce dried distiller grain, which is high-protein feed used for livestock and even fish. But with the upgrades, the digesters will convert the byproduct into natural gas used to heat homes, produce electricity and power vehicles.

Northrup estimated that the plant will ultimately be able to produce 2.8 billion cubic feet of gas a year, which is equivalent to about half a percent of all of the natural gas consumed in Indiana each year.

“And that’s just one plant,” he said, adding that there are as many as 250 ethanol plants in the United States. A plant also owned by Verbio in Nevada, Iowa, already is producing renewable natural gas and expects to also produce ethanol this year.

After the stillage goes through anaerobic digestion to produce natural gas, there won’t be much left except for a dried out material called humus, a material that contains the nitrogen and phosphorus needed by plants and could ultimately go back to those growing the corn.

The dried out material also is currently being tested as a medium to grow the hydroponic leaf lettuces at the Pure Green Farms, just across the street from the biorefinery, said Joe McGuire, CEO of the business.

The project was incentivized by real and personal property tax abatement as well as tax credits from the state for job creation. However, Northrup said, the most important piece of the financial puzzle was the 30% tax credit available for such renewable energy projects that are part of the Inflation Reduction Act.

Mayor James Mueller, who was among the large group attending the project start, said the project not only saves the refinery, which was in danger of being scrapped just a few years, but it also creates new jobs and puts South Bend on the map because of the use of cutting-edge technology.

It’s also good news for the farmers throughout the region who send about 28 million bushels of corn to the plant each year and are paid a fair market price for their product, Sauter said.

“Everything we needed for our concept was here,” Sauter said, adding that he came from a farming background in Germany before starting Verbio 20 years ago. “We believe Indiana and the U.S. has enormous potential and everyone benefits.”

Email Tribune staff writer Ed Semmler at esemmler@sbtinfo.com.

This article originally appeared on South Bend Tribune: Work begins soon on $230 million upgrade at South Bend biofuel plant