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Tharaldson hits billionth gallon of ethanol, announces expansion

Gary Tharaldson (right) owns Tharaldson Hotels II, Inc., of Fargo. He is flanked by Ryan Thorpe, chief operating officer of the Tharaldson Ethanol subsidiary at Casselton, N.D., which marked its one-billionth gallon of production on Wednesday, April 5, 2017. Mikkel Pates / Forum News Service1 / 7
Ryan Thorpe is chief operating officer of Tharaldson Ethanol, Casselton, N.D. Mikkel Pates / Forum News Service2 / 7
Gary Tharaldson is the owner of Tharaldson Ethanol of Casselton, N.D., a subsidiary of Tharaldson Motels II, Inc., based in Fargo, N.D. Mikkel Pates / Forum News Service3 / 7
Crews erect a tank (lower left) that is part of a $3 million addition at Tharaldson Ethanol of Casselton, N.D. The expansion will take the plant to 180 million gallons, the sixth-largest ethanol plant in the nation. Mikkel Pates / Forum News Service4 / 7
The Tharaldson Ethanol plant at Casselton, built in 2008, is now the sixth largest in the U.S. Mikkel Pates / Forum News Service5 / 7
The Tharaldson Ethanol plant at Casselton, built in 2008, is now the sixth largest in the U.S. and on Wednesday, April 5, 2017, produced its 1 billionth gallon of ethanol fuel. Mikkel Pates / Forum News Service6 / 7
Ryan Carter is general manager of the Tharaldson Ethanol plant, Casselton, N.D. Photo taken April 5, 2017, at Casselton, N.D. Mikkel Pates / Forum News Service7 / 7

CASSELTON, N.D. — Tharaldson Ethanol quietly marked its 1 billionth gallon of fuel ethanol production last week.

The company also announced Wednesday, April 5, it will increase annual production this year, making it the sixth largest ethanol producer in the United States.

They'll increase by 180 million gallons — a 7 percent increase this year, but up 38 percent from its original design in 2008. The increase will be due to some changes in fermenters and cooling towers. The investment is expected to cost $2.5 million to $3 million.

Gary Tharaldson is owner of Tharaldson Motels II, Inc., of Fargo, which built the plant nine years ago. The plant grinds roughly 60 million bushels of corn a year, about 90 percent of which comes from a 60-mile radius of the plant.

"We're good for the area — good for the farmers; they're good for us," Tharaldson said, accompanying visitors for a tour of some new construction on the day of the milestone. Tharaldson said the plant's success allows it to be a good community citizen. The company recently announced it will put $1 million into Casselton Public School's athletic facilities.

Initially, the hotels were funding the ethanol industry foray, but now it's the other way around.

Hotel-ethanol

Tharaldson is a self-made businessman. He started buying motels in 1982 and has built more than 400 motels. He sold one portfolio of 200 hotels to the employees. He built another portfolio of 143 motels and sold them to Goldman Sachs Group, Inc., in 2006 for $1.3 billion and used some of that cash to build the ethanol plant in 2008.

Initially, Tharaldson consulted with Harold Newman, a Jamestown, N.D., billboard marketer who, with his family, owned and ran the Alchemy Ltd. ethanol plant at Grafton, N.D.

"He was always telling us what a good deal ethanol was back in those days," Tharaldson said.

Ethanol plants then were making $1 a gallon profit. Casselton had rail, natural gas and access to water through Fargo.

Ryan Thorpe, chief operating officer of the ethanol company, said the plant is among the top 10 percent for efficiency and profitability in the country.

"It's all about continued improvement every day," Thorpe said. "We want to be the low-cost producers. North Dakota this year produced as much corn as Ohio. The technology has come a long way—the farmers, the seed companies."

Cutting cost

Ryan Carter, general manager for the plant, said the plant is already in the top 5 to 8 percent of the country's ethanol plants for efficiency, measured by cost per gallon of ethanol and ethanol per bushel of corn.

Since 2011, the company has improved from 46 cents a gallon in production costs to 27 cents. The addition may yield an additional 1 percent efficiency, which involves both the ethanol and corn oil and distiller's grains. A penny a gallon increase is $1.8 million.

Along with improving efficiency, the company also increased output, climbing in 2013 from 130 million gallons to 153 million gallons, followed in 2016 by an increase to 168 million gallons.

The company in 2016 also socked $25 million into replacing the dryers they'd initially installed.

"Initially, we'd tried a new technology (for distillers grain) drying that is used in the sugar beet industry — a fluidized steam bed dryer," Thorpe explained. "They're very efficient and it would have been a game-changer for the ethanol industry if we'd gotten it to work. We tried it for a year, but distillers grains have a different bulk-density than beet pulp and we had to — unfortunately — scrap that dryer." They installed drying equipment made by ICM Inc., of Colwich, Kan.

Dried distillers grains make up about 20 percent of Tharaldson Ethanol's revenues. The distillers grains are a co-product that starts out at 68 percent moisture — two-thirds water — and must be dried to about 10 percent moisture.

DDGs generally trade at about 85 to 90 percent of the value of standard No. 2 yellow corn. In the past, the DDGs have been as high as 130 percent of the corn price. The ratios are affected by the trade and production policies of countries like China, Thorpe said.

The plant has made money in all but 2009 and 2012 — two years out of nine. The most profitable years were 2013 and 2014 when corn was at its most expensive, he said.

"The price of ethanol is more a function of the price of gas and how people are driving," Thorpe said.

Ethanol-hotels

Tharaldson operates 35 hotels and has nearly 60 under various stages of development. The ethanol plant contributes to 20 to 25 percent of the equity the company needs for new motels, if he opens 20 new hotels a year, he said.

"We want to have 40 opened by the end of the year and 120 opened within four years," Tharaldson said. "The next four years are heavy growth years for us."

After that, will there be an ethanol expansion? Perhaps elsewhere?

Thorpe says the company is unlikely to expand production at Casselton again. It might be possible to expand elsewhere, but the company isn't actively seeking those opportunities.

The future looks bright, he said.

President Donald Trump has made statements supporting the ethanol industry.

"I envision he will keep that promise," Thorpe said, adding that the current oversupply of corn in the U.S. and the world makes ethanol fuel "the cheapest molecule you can put in your fuel tank."

Sixth largest ethanol plant

With its latest expansion, Tharaldson Ethanol of Casselton, N.D., will rank sixth among plants of its type in the U.S., although competitors often make similar expansions.

Production figures are often private, but here are ratings published in trade journals:

1) ADM — Cedar Rapids, Iowa: 515 million gallons.

2) ADM — Decatur, Ill.: 365 million gallons.

3) ADM — Columbus, Neb.: 350 million gallons.

4) Cargill — Blair, Neb.: 190 million gallons.

5) ADM — Peoria, Ill.: 185 million gallons

6) Tharaldson — Casselton, N.D.: 180 million gallons.

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