The Northwest Minnesota Foundation, Bemidji, recently awarded a grant to the Northwest Regional Development Commission (NWRDC) for a feasibility study to determine the economic and market potential of locating a biodiesel refining facility in northwest Minnesota. With the expanding interest in ethanol and biodiesel, exploring opportunities using locally produced crops may create new jobs and help reverse out-migration.

Biodiesel is a clean-burning, renewable fuel that can be refined from different sources, including soybean oil. Soybeans have now surpassed corn as the number one cash crop in Minnesota. According to the Minnesota Department of Agriculture, there were 21.6 million bushels of soybeans produced in northwest Minnesota in 2002.

The study will look at supply and demand factors for various oils, technology consideration, construction and operating costs, political factors, state and federal incentives, marketing options, byproducts, capitalization costs, permitting requirements, infrastructure assessment and financial analysis.

Cam Fanfulik, NWRDC agricultural development specialist, noted that the project has the potential to provide new markets for crops grown in northwest Minnesota, resulting in improved sustainability for area farmers. "A biodiesel production facility of the anticipated size will use thousands of crop acres from most of the region's counties," he said. "It will create a significant number of new good-paying jobs and enhance general economic activity."

Northwest Minnesota Foundation president John Ostrem said that biodiesel may see a rapid expansion in demand similar to the growth in demand for ethanol. "In March 2002, the Minnesota Legislature passed a law requiring that 2 percent biodiesel be blended into all of the diesel fuel sold in Minnesota by June 2005, if certain conditions are met," Ostrem said. "The timing seems right for the project, considering this mandate."

The foundation's $25,000 grant will leverage a value-added grant from the United States Department of Agriculture, received by the Hallock Co-op Elevator Company and Johnson Oil, whose staff has been working with NWRDC to pursue the development of a biodiesel facility in Hallock.

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