MFA Oil announces renewable energy partnership worth 980 jobs

JEFFERSON CITY — MFA Oil Co. and an Ohio-based company announced a renewable energy partnership Tuesday morning that is expected to bring 980 jobs to the Columbia area in the next few years.

But the project must secure federal funding through a crop assistance program before it gets off the ground.

The jobs that could come from the partnership will be in farming, manufacturing and farming services, with indirect jobs created to support the increase in industry.

The majority of the projected jobs will go to farmers contracted to grow a drought-resistant grass for conversion into fuel pellets.

At a news conference Tuesday in Jefferson City, MFA Oil announced its partnership with Aloterra Energy to form a renewable energy company called MFA Oil Biomass.

The entire project encompasses areas around Columbia and Aurora in Missouri and at Paragould, Ark. Altogether, the project will have an estimated $150 million annual economic impact and create 2,700 new jobs, the company announced.

MFA Oil Biomass is set up as a support system for farmers who will grow a grass called Miscanthus giganteus, a source of renewable energy. 

The company will provide farmers with special equipment to plant and harvest the bamboo-like grass, as well as access to processing machines that convert it into pellets for heat or power.

The grass originated in Asia and takes three years to mature as a crop. It requires little maintenance or water, enabling it to grow on land otherwise considered barren.

Since the grass is not a food source, it is only marketable in areas looking for alternative fuel sources.

Columbia was attractive to the new energy consortium because the city and MU are already headed toward reliance on renewable energy. 

The city is required by ordinance to derive 5 percent of its energy from renewable sources by 2012 and 15 percent by 2022.

At Tuesday’s news conference, Mayor Bob McDavid said the 2012 goal will be met through solar energy, wind energy and methane gas emissions from landfills. Biomass energy could help bridge the gap for 2022 when the city must triple the percentage of renewable energy used, McDavid said.

“I see this as the first major initiative to bring low-cost, renewable energy to the area,” he said.

MU’s power plant is replacing its current boiler with one that runs exclusively on biomass. Vice Provost for Economic Development Steve Wyatt said the new boiler will need 100,000 tons of biomass annually, compared to the 6,000 tons it uses now.

The available biomass sources — largely wood and corn — are insufficient to meet future demand, Wyatt said.

McDavid pointed to the economic benefits of producing energy locally. Rather than purchasing coal and paying to transport it here, for example, the grass would be grown and processed in the area.

“When the cycle is local, our entire dividends are local," McDavid said. "Virtually nothing leaves the community.”

An independent study for MFA Oil Biomass predicted that the energy initiative will support 550 jobs in farming, 115 jobs in manufacturing and 100 jobs in farming support services, with 100-200 indirect jobs created to support the increase in industry, Scott Coye-Huhn of Aloterra Energy said.

To get the project off the ground, MFA Oil Biomass must first secure federal funding through the Biomass Crop Assistance Program. Funding is key because it reduces the risk to farmers who plant the drought-resistant grass.

According to the program’s website, up to 75 percent of a farmer’s planting costs would be reimbursed under the assistance program. In addition, the farmer would receive rent as the crop matures and matching payments for the following two years.

For now, the grass will primarily be formed into pellets to be burned as a clean source of power and heat, said Jerry Taylor, MFA’s president and CEO, although the crop also has the potential to be used for fuel.

Approval for funding depends on passage of the federal budget. Congress could cut the biomass program from the budget, but Taylor said he had assurances of support from both Sens. Claire McCaskill and Roy Blunt.

Taylor added that MFA Oil Biomass will continue to push forward with the renewable energy initiative either way.