Montana oilseed processing plant to make biodiesel fuel, preserve jobs in rural community

Seed money: Culbertson oilseed processing plant to make biodiesel fuel

By JIM GRANSBERY

The gap between Missoula and Culbertson is measured in more than miles across the breadth of the state. It is a cultural divide.

The twain are getting closer.

Montana venture capitalists and renewable fuels technologists in the Garden City are linking up with oilseed farmers in northeastern Montana to create a new industry and preserve jobs in a rural community striving to survive.

The effort melds high-quality cooking oil with biodiesel fuel technology - vegetable oil to run buses.

"It’s exciting," said Paul Miller, head of Sustainable Systems LLC. "It’s a real relationship between rural and urban."

Sustainable Systems of Missoula had agreed in principle to buy Montola Growers Inc., an oilseed processing plant in Culbertson. The sale is expected to close June 1. Sustainable Systems has put up earnest money for exclusive rights to the plant during a due-diligence period. The purchase price was not disclosed.

"The best thing about this is Montana folks are behind it," said Neil Turnbull, manager of the plant that processes almost every kind of oilseed grown in North America.

As for the employees of the plant - up to 30 - and the growers in Eastern Montana, "it could be huge," he said.

Miller sees the move as a partnership to save jobs and enhance the rural economy.

"Agriculture is the backbone of our economy," he said. "It is re-emerging as part of our national security. It is a critical component to striking an economic balance in society."

Sustainable Systems was organized in 2001 by a group of scientists, business people and agriculture producers. Miller serves as president, CEO and chairman of the board.

The goal of his company is add value to crops, using them as raw materials to make fuels, lubricants and branded dietary products.

He said financing is a regional effort headed by another Missoula firm, Daniel Capital Management LTD, led by Michael McGowan. Efforts to contact McGowan were unsuccessful during the past week. DCM is a fee-based investment management group for both individuals and institutions, according to its Web site.

Plant almost closed

The oilseed crushing/extraction operation in Culbertson was on the verge of closing in 1997, but was kept afloat by the Sheridan Electric Cooperative, which bought it. The plant at the time was the co-op’s biggest customer.

"Those folks stood up and got us through the tough period," Turnbull said. "I commend them for it. I had the board members on a conference call (Tuesday) night, and there was 100 percent attendance. They are committed.

"They kept the business in place and grew it and kept some economic activity in the area."

The plant can process any seed that has oil in it - safflower, canola, flax and crambe (a part of the mustard family) - and refine other oils sent to it such as wheat germ and avocado.

The Culbertson plant, built in the 1950s, is named after specially developed varieties of safflower, the oil of which is the highest quality in the world. The Montola line was developed by plant breeder Jerry Bergman, who heads the Eastern Montana Research Center in Sidney. The meal left over from the extraction processes makes excellent cattle feed.

However, it was the healthful properties of the safflower oil developed by Bergman that connected Sustainable Systems with Montola Growers. The path meanders through the student dining halls at the University of Montana. After the oil was used for french fries, it was refined into biodiesel and pumped into buses in Missoula, a city known for its environmental concerns.

"The University of Montana is a huge supporter," said Turnbull. A campus program, UM Farm to College, got Montola safflower oil from Culbertson to Missoula two years ago.

Promoting the oil

Turnbull traveled to the campus to make a presentation on the health benefits of Bergman’s varieties.

"That is exactly why we got it," said Mark LoParco, director of dining services on campus. "We use it for frying and for salad oils."

LoParco said the Farm to College program is an attempt to buy products from local and regional agricultural producers.

"We buy from 35 Montana vendors," he said. The program, now in its second full year, will spend $325,000 in the fiscal year ending June 30.

"This is a work in progress," LoParco said. "We like to buy as many Montana products as we can."

It was after the french fries were cooked that Sustainable Systems got involved, Miller said. The company developed a pilot project that recovered the frying oil, refined it into biodiesel and put it into campus buses.

Sustainable Systems’ interest in the Culbertson plant "blossomed from there," said Turnbull.

Or as Bergman told The Gazette three years ago: "(Safflower oil) is the best for both body and engines. It is the best edible oil in the world and it burns cleanest in engines. That surprised me; the engine does not clog up."

Miller, who recently earned a doctorate degree in chemistry from UM, came to Montana in summer of 2000 because it afforded the "opportunity to discover."

Miller said a diversified oilseed crop is more healthy and profitable. The company is looking to process safflower, canola and flaxseed and is actively contracting for safflower acres in the Mon-Dak region, which includes northeastern Montana and northwestern North Dakota. The area is home to several other irrigated crops - sugar beets, malt barley and alfalfa. Canola and safflower are dryland crops that offer alternatives to wheat and barley. The Mon-Dak region is home to a farmer-owned sugar beet refinery in Sidney and a new malt barley elevator in Sidney built by Anheuser-Busch.

Oil is extracted from the seeds during a twofold process. As a general rule, the oil is about 30 percent of the seed’s weight.

Meal byproduct

Crushing the seed draws off about half the oil, while a solvent extraction using the chemical hexane draws off the rest. About 1 percent of the oil remains in the meal byproduct. Another byproduct, wax, is sold for soap stock.

Turnbull said the new owners intend to change the process to make the plant comply with EPA regulations as they apply to hexane.

"There are solutions out there for this," Miller affirmed. "We are on the edge of new industry."

Miller added that the effort in Culbertson is not seen in isolation. "We want to work with other businesses such as cattle feeders," he said.

Sustainable Systems is a renewable energy and biobased product research, development and commercialization company focused on the processing and marketing of agricultural and waste materials into fuels, lubricants, specialty chemicals and other biobased and dietary products. The company has branded fuels, Montana Biodiesel and PacBio, has expanded retail pump presence and currently supplies federal state and local governments as well as transit authorities in the region with renewable diesel fuel.

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