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Drilling for northern oil


Hallock, Minn. – Kittson County, in extreme northwestern Minnesota, is far from the heart of soybean country where farmers expect to profit from new state biodiesel mandates. Although other oils and greases will work, soy oil is the predominant feedstock for biodiesel.

But that isn’t stopping Hallock-area producers from pursuing construction of a biodiesel plant. Hallock Farmers Elevator and its 260 members have partnered with Johnson Oil Company of Hallock to pursue a biodiesel refinery in the area. The group invested $50,000 in a feasibility study, matched with a $50,000 USDA Rural Development grant, which will also help develop a business plan.

Interest in biodiesel production has accelerated since lawmakers passed the “Minnesota Mandate,” requiring that all diesel fuel sold in the state contain a 2-percent biodiesel blend by June 2005.

The Hallock producers are beyond casual curiosity. “Once the Minnesota mandate hit the books, we really got interested,” says Todd Johnson, vice president of Johnson Oil, an oil distributor. “We didn’t want to miss this opportunity without giving it a thorough look.”

The evaluation will examine the plant’s economic feasibility, including the optimal size and best feedstocks. Given its northern location and available local crops, Johnson expects the biodiesel refinery’s primary oil sources to be soybeans and canola. Hallock is only 30 miles from a canola crushing plant.

“We’re taking snapshots of different scenarios so we can decide where we want to start,” Johnson says. The study’s results, expected by mid-summer, will help determine how the project moves forward.

Cold weather and market distance pose challenges to a northern Minnesota facility, Johnson acknowledges. But Hallock is within reach of large markets such as Fargo, Grand Forks and Winnipeg.

“We know that freight is a concern, depending on where the market leads us,” he says. “But we know it’s a quality product and if we can make it here in northern Minnesota with our weather, it will be a cakewalk to do it elsewhere.”

Michael Sparby, AURI project director, says AURI has helped connect the cooperative to available resources and, once the study is complete, “will take a look at a facility and see if there is enough there to move forward.”

Minnesota’s mandate – the first in the country – will likely boost biodiesel production throughout the state. But the industry won’t reach its full potential until biodiesel incentives are included in a federal energy bill, Johnson says. “Without it, I think the industry will flounder. It’s absolutely critical that biodiesel be included in some sort of energy bill.”