Sept. 15, 2005 12:00 AM

Arizona farmers and motorists could get a financial boost if Pinal County approves the construction of the state's first ethanol fuel factory.

Ethanol, a drinkable alcohol made primarily from corn, is increasingly being combined with gasoline to fuel vehicles. Supporters say it stretches the nation's gas supply, increases octane for lower grades of gas, lowers prices at the pump and reduces pollution. Critics say it reduces energy output and is only cheaper because of soaring oil prices and federal subsidies.

Pinal Energy LLC wants to build the factory south of Maricopa at an existing grain-distribution facility. The electric-powered plant will be more akin to a gigantic distillery and won't belch smoke and fumes, said John Skelley, president of Casa Grande-based Arizona Grain Inc. and a Pinal Energy partner. 

"We're not building it in a cluster of homes; it's in the middle of nowhere," Skelley said.

"It's much more like a brewery than a refinery."

Other members of Pinal Energy include Casa Grande-based Eagle Milling Co. Inc. and the EXL III Group Corp., a Delaware corporation that is an equity partner and is involved in other ethanol plant ventures around the country.

The project is still in the early stages of getting a special-use permit approved by the Pinal County Planning and Zoning Commission, Skelley said. The commission will hold a work session on the plant today.

State and federal environmental permits are also still needed.

Skelley hopes to begin construction this year and begin producing ethanol by late 2006.

"Until we're finished with our due diligence and government permits, this is still a 'maybe' project," Skelley said.

'A growth industry'

If it's built, Skelley said the $60 million facility could produce 50 million to 100 million gallons of ethanol a year, generate at least $100 million in revenue, provide several dozen permanent well-paying jobs and revitalize the corn market for Arizona farmers, who have seen the crop's cash value slip for five straight years to $9 million in 2004.

"It's definitely a growth industry," Pinal County Supervisor David Snider said. "That (revenue) will be a significant chunk of change." There are about 90 ethanol plants in the United States, with most in the Midwest, according to the Sioux Falls, S.D.-based American Coalition for Ethanol trade group. But President Bush's $12.3 billion energy bill, which requires the production of 7.5 billion gallons of ethanol a year by 2012, has fueled plant-building plans nationally.

And another year of high oil and gasoline prices could make the ethanol industry "blow through the roof," said Monte Shaw, a spokesman for the Renewable Fuels Association, based in Washington, D.C.

Maricopa and Pima counties already require a winter mixture of 10 percent ethanol and 90 percent gasoline at pumps to reduce pollution. Based on that mixture, Arizona Automobile Association spokesman Ron Lamberty estimated that about 500,000 gallons of ethanol a day are used in the Valley during winter months.

Higher percentages

A number of newer vehicles are able to run on gasoline mixtures with higher percentages of ethanol.

Although there are no such stations currently in the Valley, two Tucson stations sell a mixture of 85 percent ethanol and 15 percent gasoline mixture year-round for about $2.35 a gallon, said Colleen Crowninshield, director of the Pima Association of Governments' Clean Cities program.

The ethanol produced at the Arizona plant would be sold primarily in Arizona and California to companies that blend it with gasoline and then sell it to retailers. The plant will first look to Arizona corn suppliers to meet the demand of about 18 million bushels of corn annually to produce 50 million gallons of ethanol. Last year, Arizona farmers, mostly from Cochise County, produced only 4.9 million bushels of corn.