The ethanol-based national wave toward U.S. energy independence continued flowing through California in March when Sacramento, Calif.-based Pacific Ethanol announced the groundbreaking for two, 50-million-gallon-a-year ethanol plants in the Golden State.

The plants, to be located at the Port of Stockton in San Joaquin County and Calipatria in Imperial County, are scheduled to be in production by next spring or summer.

Pacific Ethanol, the self-proclaimed largest West Coast-based marketer and producer of ethanol, opened its first plant in California last October at Madera, a 35 million to 40 million-gallon facility.

The ethanol will likely be sold and utilized within a 100-mile radius of each plant.

Corn will be brought in by rail from the Midwest on 110-car unit trains, although the company is also seeking contracts for some locally-grown corn to help meet the plants' behemoth annual demands.

“California has the ability, because of the size of its agriculture and the fact that it's irrigated, to have a huge impact on the market very quickly, if the right price signals are sent,” said Pacific Ethanol board chairman and farmer/rancher Bill Jones.

“There is a huge ability to expand corn production in California, given the current market, and I believe it will happen over the next 18 months.”

At press time, May '07 corn futures were $4.035 per bushel on the Chicago Board of Trade.

“The price of corn has obviously gone up,” said Jones. “But it has also sent a price signal to the agricultural community across the country that will command additional acreage going into production this year.”

According to the National Agricultural Statistics Service, California farmers grew more than 18 million bushels of corn for grain in 2006 on 520,000 acres; it was valued at more than $62 million. Corn for grain production in California for 2007 is forecast at 490,000 tons, down 8 percent from last year's crop and unchanged from the August forecast. With acreage estimated at 100 thousand acres, the yield is 4.9 tons per acre.

Inputs like grain represent about 70 percent of an ethanol plant's operating costs, Jones says.

A 50 million-gallon plant generally uses about 20 million bushels of corn annually. The production cost for ethanol is about $2 per gallon, or in the $100 million range for a 50 million-gallon plant.

Jones was elected to the California State Assembly in 1982, where he spent a dozen years and later served as Secretary of State. His family has farmed on the West Side of the San Joaquin Valley for decades.

His role with Pacific Ethanol is mirrored by his job as a second-generation farmer and rancher, growing sugarbeets, tomatoes, Pima cotton, and cattle about 40 miles south of Fresno.

In 2006, he grew the first corn in California strictly for ethanol use; the grain was used to help fuel the Madera plant. But Jones told Western Farm Press, corn is not the only feedstock the company is eyeing.

“Ethanol plants can process other products. Like everyone else in the ethanol industry, we're obviously looking at a whole range of other options — from cellulosic to biodiesel to other types of renewable fuel options. We haven't announced any specific actions in any of those areas yet.”

Jones is wary of rapid changes in crop sources for ethanol. “It really gets down to having a consistent output on the co-product. If you keep changing up, it hurts the marketing of your co-product because there's not a consistent product (wet distiller's grain) coming out of the plant for the dairy industry.”

Two out-of-state Pacific Ethanol plants are under construction at Boardman, Ore., and Burley, Idaho. The company also owns a 42 percent interest in Front Range Energy LLC, which owns a plant in Windsor, Colo.

According to a Pacific Ethanol release, the company's destiny is to be a major producer of over 220 million gallons of ethanol a year by mid-2008. The Calipatria and Stockton plants should push the company past that goal by 10 million gallons. The 2010 year-end goal is 420 million gallons.

From the ethanol process, investors usually have two other income streams — wet distillers grain (WDG) and carbon dioxide (CO2).

The WDG, a leftover mash from the corn fermentation process, is sold to livestock producers, typically located within a 50-mile to 60-mile radius of the plant, as a cheaper yet high-quality ingredient for beef and dairy rations.

CO2 is sold to food and beverage makers, but represents a small portion of the total revenue stream.

Due to skyrocketing corn prices, feeding distillers grain has gained in popularity nationally. But the problem of drying the grain in the Midwest, where most ethanol is produced, and then railing it out West as dried distillers grain adds costs for Western growers.

Western-based ethanol plants will likely improve WDG's affordability,

Jones says. “Wet distillers grain is a great dairy feed product, with fat and oils that are particularly needed by beef cattle. Depending on the price of ethanol, it can represent anywhere between 25 percent to 35 percent of the gross revenues at a standard size ethanol plant.”

One other ethanol plant is located in California, a 27 million-gallon plant at Goshen, acquired by Altra, Inc., from Phoenix Bio-Industries LLC in July, 2006. Plans are to increase production to 35 million gallons.

Two plants are under construction in Arizona, a 55 million-gallon plant at Maricopa owned by Pinal Energy LLC, and a bio-refinery near Vicksburg owned by XL Dairy Group, Inc.