CEO: South Bend Ethanol plant key to increasing natural gas production

The president and CEO of Verbio North America Holdings Corp. says the decision to acquire the South Bend Ethanol plant was part of a six-month search for a location to grow the company's ethanol and renewable natural gas production operations.

The company, a subsidiary of Germany-based Verbio AG, announced the acquisition Monday, as well as plans to invest $230 million to expand the plant to include RNG production and add a small number of jobs.

Greg Northrup says the plant has the ability to produce 85 million gallons of ethanol annually, and the company plans to get the plant running at capacity over the next year.

In an interview with Inside INdiana Business, Northrup said the South Bend plant brings many benefits to the table, especially for making RNG.

"Because of the size of the plant, the amount of stillage, which is the waste product that comes from the ethanol production, was significant in terms of our renewable natural gas production process," Northrup said. "So we’re able then to get to this kind of scale that we want to in terms of production of renewable natural gas."

Northrup added the facility already had the necessary infrastructure in place to add RNG production, including access to local distribution pipelines, proximity to the interstate, and sufficient electricity and water capacity.

"And obviously, we’re sitting in the middle of Indiana's Corn Belt, and we need corn," he added. "So you put all those things together, and we put together the right price, and we’re pretty excited about the future there."

Verbio plans to use the stillage that comes from the production of ethanol and use that toward the production of renewable natural gas. Northrup says typically, ethanol plants use their stillage to create distillers’ dried grains with solubles, which becomes feed for livestock.

But creating DDGS uses a lot of energy to dry the stillage, which Northrup said will be avoided with the new process.

"We’re going to instead take the stillage as it is, in a wet form if you will, [and] put that into our anaerobic digestion tanks. So first of all, we’re not using any of that energy that used to be used to dry the product," he said. "At that point, we automatically start making methane natural gas out of the stillage once it's put into our anaerobic digestion tanks. From there, we upgrade the methane to pipeline quality natural gas so that we can injected directly into the system."

The South Bend facility will be Verbio's second U.S.-based plant. The company began operations in 2021 at its plant in Nevada, Iowa and plans to begin ethanol production later this year.

Northup said the demand for renewable natural gas is fueling the increased production.

"A lot of industrial process now is looking for renewable natural gas to offset fossil natural gas or large campuses like Notre Dame, for example, that would use natural gas to fire their boilers," he said. "They’re starting to look for renewable natural gas sources to make themselves more sustainable to be responsive to carbon issues and greenhouse gas issues that we’re trying to deal with."

Because Verbio can combine the production of ethanol and RNG in the same place, the company itself gets a better utilization of its capital costs, Northup said.

"Our cost structure is much better as it relates to the products that we’re producing, and ultimately, for our shareholders, we get a better return," he said.

As part of the $230 million expansion, Northrup said the company will spend about $20 million to fine tune the ethanol production operation at the plant, including improving the energy efficiency and distillation of the process, which will allow the plant to reach its 85 million gallon capacity.

The company will also build 16 anaerobic digestion tanks that will have the capacity to produce 2.8 billion cubic feet of RNG annually. Construction is expected to take about three years to complete.

Northup said he met with South Bend Mayor James Mueller a few weeks ago, who was enthusiastic about the project.

"I think what we’re trying to do is bring a sense of commitment to this plant that will allow it to operate successfully for many, many years. And we believe we have the operating technology to make that happen."