Special to The Hays Daily News

A California company that's had mixed results bringing new ethanol plants to Kansas using foreign investment announced this week it has purchased a shuttered plant just across the Colorado border that could draw on western Kansas for employees and crops.

An official with Nexsun Corp. said plans are to upgrade the aged former Sun Energy plant with a capacity of 3 million gallons a year near Walsh, Colo., and eventually more than double its capacity.

Previously announced plans by the company for new ethanol plants in Ulysses, Dodge City and Hiawatha, meanwhile, remain on hold pending securing additional financing.

Northeast Kansas Bioenergy LLC, doing business as Foothill Bioenergy, purchased the Colorado plant- which is about 32 miles from Johnson City -- from Farm Credit of Southwest Kansas.

Northeast Kansas Bioenergy was the company formed in Hiawatha last summer by Nexsun Energy to build an ethanol plant there. The company is now shifting some of the investment money it received to develop the Kansas plant to the Colorado site because the Hiawatha development has stalled, confirmed Alex Park, vice president of project development with Nexsun Corp.

Under the federal Immigration and Nationality Act, 10,000 immigrant visas are available each year to people seeking permanent U.S. resident status or "green cards" on the basis of helping create new U.S. jobs through investment. The program, called EB-5, allows 3,000 of the visas to be awarded for a $500,000 investment, and the rest, for a minimum investment of $1 million.

A crucial stipulation is that a minimum 10 jobs -- whether direct or indirect -- must be created within two years for each $500,000 invested. The Walsh plant, originally built in the early 1980s, Park said, was one of the first ethanol plants in the country. Farm Credit took ownership through foreclosure several years ago. Another company leased the plant in 2008, but it was not significantly upgraded and never proved economical because of its age, Park said. It closed again last December.

"We're in the process of doing an engineering evaluation and getting bids from engineers to upgrade the plant," he said. "The plan is to get a couple of bids from an EPC (engineering, processing and construction) contractor by the end of this month and select a winner sometime next month. We'll start construction of the upgrade sometime in late February or early March, depending on weather."

Officials, expecting it to reopen in early summer, are advertising now for a plant manager and controller.

The improvements will be done in two stages, Park said. First it plans to modernize the existing plant, and then expand it to 7 million to 10 million gallons per year.

The plant expects to employ 10 to 15 people after startup at its current production level, and then grow to 25 to 35 people if expanded to 10 million gallons per year, Park said.

"When I say modernize, we want it to run as efficiently as possible to produce as much as ethanol as possible per bushel of feedstock," he said. "We have to automate the plant, to put in processes that monitor it constantly with computers, instead of people turning knobs."

The plant will use primarily grain sorghum as its feedstock.

"We are grateful to be part of a small community and to be able to contribute to the increased economical stability of the county," Rebecca Lee, chairwoman of Foothill Bioenergy, stated in a release. "We plan on becoming a trusted part of the local economy."

Nexsun is still in the process of trying to raise money for its other projects, Park said.

"We have equity capital but not debt capital," he said. "Banks are not looking on these projects favorably right now. The Ulysses project is basically the same as Hiawatha. Because the bank funding disappeared, we're trying to raise additional equity capital."

Nexsun announced in early 2007 it was developing separate ethanol and biodiesel plants on neighboring parcels west of Ulysses. It broke ground for the $100 million project in September 2007, but after temporary underground utilities, a fire suppression system and some grading and site work were done, the work stopped. The company indicated in the middle of last year it was shifting its focus to a smaller biodiesel plant, but it also never progressed.

"We're glad we didn't do it," Park said of the biodiesel plant. "The $1 excise tax (supporting the industry) expired at the end of 2009 and the entire industry is shutting down. Until that comes back, I don't think anyone will consider biodiesel."

Two Kansas ethanol projects partially funded by Nexsun through the EB-5 program have been successful -- the Bonanza Bioenergy ethanol plant in Garden City, which began operating in September 2007, and the Arkalon Energy plant near Liberal, which came online in January 2008.

"Those projects are going very well and are making money," Parks said. "We're very pleased with their management."