Granite Falls Energy is poised for future growth with $8.4M investment in new water source

GRANITE FALLS - An $8.4 million investment has allowed Granite Falls Energy to put its worries about a groundwater supply behind it, and poise itself for future growth.

GRANITE FALLS - An $8.4 million investment has allowed Granite Falls Energy to put its worries about a groundwater supply behind it, and poise itself for future growth.

As of Feb. 5, the ethanol plant on the eastern edge of Granite Falls began pumping Minnesota River water in place of its groundwater source.

"It is going very, very well,'' said Paul Enstad, chairman of the board of directors, of the switch over from groundwater to river water.

The company has developed an underground pipeline that connects the plant near the intersection of U.S. Highway 212 and state Highway 23 to a pumping station at the Minnesota Falls dam, a distance of roughly a quarter of a mile. The pipeline was drilled diagonally through the ground. The company will continue to use its wells as a back up water supply, said Tracey Olson, chief executive officer and general manager of Granite Falls Energy.

Granite Falls Energy has a conditional, three-year permit to use up to 240 million gallons of water from the Minnesota River annually. The permit provides sufficient water for the plant to eventually increase ethanol production from the current level of 45 million gallons per year to more than 60 million gallons per year, as it hopes to do.


The ethanol plant is believed to be the first in the state to tap a surface water source. The change was pursued after it was realized that water levels in an aquifer used by the company had dropped faster than expected, said Olson and Enstad.

Conversely, the water level in the aquifer has rebounded faster than expected since the plant switched to the river for its sole source of water. The aquifer recovered by 40 to 50 percent in the two-week period that pumping for the plant stopped, Olson said.

Enstad noted that having a redundant water supply is an important asset for the company. There is always the possibility that glitches -- such as a pump breakdown -- could temporarily stop the flow of river water. Also, the river permit includes restrictions on pumping during low flow periods.

The switch to the use of river water is also providing significant operational benefits for the plant.

The use of river water is allowing the plant to reduce the amount of water it requires to produce ethanol by 15 percent, Olson said. The river water requires less treatment and consequently there is less water lost in the process.

The river water contains lower levels of minerals and is essentially "cleaner" from a production standpoint than the plant's well water supply, according to Olson. When using the well water, the plant was obligated to purchase phosphorus reduction credits to compensate for the amount of the nutrient present in that water source and discharged.

The company has the physical capacity to boost its production to 60 million gallons per year, but must resolve permit issues with the Minnesota Pollution Control Agency before it does so. The MPCA issued a notice of violation to the plant last December.

Enstad said the company responded by voluntarily slowing down its production until it could resolve the issues. The chairman said the alleged violations have to do with reporting and recording requirements. He said the company did not violate any emission standards.


Olson said Granite Falls Energy is now in the process of employing a consulting firm to assist it with environmental compliance issues. He and Enstad emphasized that the company is seeking to work with the MPCA, and believe the company can correct the reporting procedures.

Olson said the company could also invest in additional equipment to increase production beyond 60 million gallons, but has not yet decided to do so.

Long term, both the chairman and CEO said the company is interested in expanding production, including the possibility of someday doubling current production levels. The facility began operations in November 2005. It employs 36 people and grinds 16 million bushels of corn annually.

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