Gate Petroleum says demand is driving plans for ethanol plant


The company wants a biofuel terminal built on Heckscher Drive in three years.


By TIMOTHY J. GIBBONS, The Times-Union


Gate Petroleum Co. plans to build a biofuel terminal along Heckscher Drive in about three years, the company said Thursday, a project that would enable its stations in the Jacksonville area to sell gasoline blended with ethanol.

The company - whose subsidiary, Gate Biofuels LLC will operate the 55-million-gallon terminal - is in the process of buying a 139-acre site on the St. Johns River that will be used for the project.

Ethanol and biodiesel would be brought to the site by rail or vessel, stored there and then blended with gasoline before being shipped to gas stations.

Ethanol is a form of alcohol, typically made from materials such as corn or sugar cane, that can be used as automobile fuel. All cars can burn what is known as E10, which is 10 percent ethanol. Some cars have engines able to burn E85, with is 85 percent alcohol.

Biodiesel is similar, but is usually made from natural oils, like soybean or vegetable oils.

The terminal is the second time Gate has taken steps to play in the ethanol market. In 2006, the company said it was considering building a multimillion-dollar ethanol production plant near White Springs, one of the first such facilities in Florida.

That plant, the company said at the time, would turn tons of corn into 30 million gallons of ethanol each year.

A number of other companies had similar ideas in the 17 months since Gate's earlier announcement, though, with a plethora of large and small producers jumping onto the ethanol bandwagon.

"It's one of the reasons we decided not to be a maker of ethanol," said Buzz Hoover, president of Gate Biofuels. "Now there's an advantage to being a buyer of ethanol. Supply is getting ahead of demand."

According to the most recent data available, U.S. ethanol producers turned out 421,000 barrels a day in July, up 33 percent from a year earlier. Suppliers aren't set up to blend all of that product with gas, though, creating an oversupply in the market, leading the price of the ethanol to slide by 30 percent, to near its lowest point ever - a particular problem given the spiking price of corn.

Gate's $90 million terminal would be the first in the state designed primarily to store and transfer biofuels. The company plans to get supplies from the Midwest, where most U.S.-produced ethanol originates, and possibly Brazil, the world's largest exporter of ethanol.

If permitting proceeds as expected, Hoover said, the company will break ground next October and finish construction in August 2010.