Biodiesel is Wayne Presby’s next challenge

Turning around two faltering New Hampshire tourism icons — the Mount Washington Cog Railway and then the Mount Washington Hotel — into world-class destinations took more Yankee ingenuity than Gilded Age swagger. Now, three years after selling the grand resort for over $85 million, Wayne Presby plans to put his contrarian common sense to work building one of New England’s largest biodiesel plants in his native North Country.

Biodiesel is a nontoxic renewable fuel made from vegetable oils and animal fats. Currently, the biodiesel market is bogged down by lower oil prices, a heavy reliance on costly feedstock and restrictive European trade duties.

White Mountain Biodiesel, which begins operating this summer, will produce as much as 5.5 million gallons of biodiesel from its $1.7 million plant in North Haverhill’s business park.

Presby’s winning formula can be summed up this way: Keep a tight wallet, open mind and don’t follow the so-called experts.

Presby, who still owns and serves as president of the Cog Railway, was spurred into the biodiesel business after years of trying to find a better way to power the 140-year-old mountain-climbing passenger railroad. The locomotives, which were steam-powered by burning coal, were inefficient and unreliable, he says.

The problem had plagued the Cog since the 1930s, when the Boston & Maine Railroad attempted to convert the operation to oil. By the 1970s, an ambitious young Cog manager was so committed to the idea of conversion that he spent his own money constructing an engine. His progress was thwarted by the Cog’s nostalgic owner, who was so enamored by the old coal-fired steam system that she ordered all of the custom-made parts destroyed.

The idea lay dormant until Presby and co-owner Joel Bedor purchased the railroad in 1983. They found the constant problem was creating consistent, even heat. The breakthrough came when the paradigm shifted away from trying to use oil-fired steam to building diesel motor-powered locomotives.

Presby even contemplated purchasing a Swiss-made diesel locomotive until he learned it would cost over $2 million and there was a plethora of challenges between Swiss regulations and Cog’s needs.

Talented crew

It became clear that if the Cog locomotives were going to be converted it would have to be done internally by people who knew the railroad and the terrain.

Then, serendipitously, two men were drawn into the project.

Presby convinced Nigel Day, who had successfully built an oil-fired burner in England, to come to New Hampshire for two years and help him build an oil-burning engine, but he still needed to create a locomotive with the endurance and dependability to deal with the unique conditions that Mount Washington is famous for.

That job went to Al LaPrade, who was hired eight years earlier when Presby asked him if he liked working with mechanical things. Unbeknownst to anyone at the Cog, LaPrade was a mechanical engineer, who took an early retirement from the Portsmouth Naval Shipyard to hike the Appalachian Trail and ended up staying in the North Country.

He said he’d “had enough” with large bureaucracies and “enjoyed skiing in the winter and being a brakeman in the summer.”

Slowly over the years, he was drawn into the design process, which was led by, as he said, a “talented crew of generalists” who encouraged participation.

As the focus turned to converting the operation from steam to oil, he emerged as the lead designer for the new locomotives, work that was completed last year.

LaPrade credited Presby for creating an environment that is “open to any new ideas” and “having an innate sense of mechanical things.”

Presby was guided by the same “can-do” philosophy in building his new biodiesel plant, and that, he said, will make his company successful when the market changes.

He has refused to turn over the design and construction over to industry experts. “You pay a lot for their expertise and technology,” he said. “A plant just completed in Latvia cost $110 million to build and had a capacity of 30 million gallons per year. This equates to a cost of $18 million for a plant our size.”

Typically, the construction of a biodiesel plant runs about $10 million. Presby’s plant will cost as low as $1.6 million. The key is to “design, build and operate our plant, and develop our own proprietary technology.” Where possible, they did the construction themselves and purchased used equipment, including the large holding tanks.

Presby’s also benefited from a slumping construction market and lower building material costs. The key is stay in control, he insisted.

“There is tons of capital available for these plants,” Presby added, it is vital to have the discipline to “just say no” and not becoming overleveraged.

Long-term trend

As with the Cog and Mountain Washington Hotel, Presby has attracted an eclectic group of partners and employees. He credited one of his partners, Bob Kuhsel, for encouraging the idea for many years.

Both he and Presby were college roommates and graduated from then-Franklin Pierce College in 1979. Kuhsel, a former industrial arts teacher, has run several businesses and is knowledgeable about construction, marketing, distribution and sales.

Presby also has tapped local talent with Bruce Lamarre, a Piermont chemical engineer, who has led the design of the plant and will oversee day-to-day operations.

Initially, Presby said he expects to hire 12 employees working two shifts to produce 3 million gallons of biodiesel, and in two years he hopes to ramp up production to 5 million gallons and employ 20 people.

The supply of feedstock will come primarily from yellow grease, but Presby also is developing a consortium of local farmers to supply vegetables, whose oils could be converted to feedstock, and then biodiesel.

Presby is entering the biodiesel market at a time when many are shutting down. High oil prices spurred investment in the biodiesel industry, but now that crude oil prices have fallen dramatically since their peak last year, the industry is reeling and unable to compete.

Further, the cost of soybeans, which is the primary feedstock for most biodiesel plants, has proven to be unreliable, thus creating pressure on producers to find new raw or waste materials — the most popular being vegetable cooking oil, called “yellow grease.”

Adding to the industry’s problems, European markets have become more costly to tap because of duties imposed on imports of U.S. biodiesel.

Peter Rudd, general manager of Salem-based Atlantic Biodiesel, the region’s largest facility, said “the volatility (of the market) has been absolutely brutal.”

Atlantic Biodiesel has been operating for 14 months, but had to close to retool the plant to enable the processing of multi-feed stock, rather than just soybeans.

Atlantic resumed production several weeks ago and is producing a million gallons of biodiesel. He estimated the plant will ramp it up 3 million gallons in a year.

“The profit margins have been cut so low that it is close to the price of production,” Rudd explained.

Presby said he looks beyond the immediate turmoil and sees a long-term trend toward alternative energy. By maximizing construction costs, creating technology that is able to process various feedstocks and developing efficient collection and distribution systems, he’s confident of long-term success.

Moreover, he is certain that the current crisis in the biodiesel market will change. The price of oil will go up, he said, the government will increase mandates for fuel-efficiency standards and require blending, and low-input, high-yield feedstock options will emerge — including the use of algae.

State Rep. David Borden of New Castle, chair of the New Hampshire Biodiesel Commission, agreed with Presby’s assessment.

“There is amazing potential,” said Borden. “For every dollar spent on fossil fuels, 10 cents stays in New Hampshire. But with biodiesel, virtually all of it stays here.”