A Maryland company announced plans Thursday to build what could be the first large-scale facility on the Delmarva Peninsula for converting poultry manure and other organic waste into energy.Machinery is used at a Perdue agri-recycling center in Blades, DE, in 2017 to turn beds of curing compost and expedite the decay of nutrients. The end product was sold as fertilizer. (Dave Harp)

Bioenergy DevCo, based in Columbia, has struck a 20-year deal with Perdue Farms to take over the composting operation Perdue has in Delaware. The company said it plans to expand that and build an anaerobic digester on the same 220-acre site that will be able to treat 100,000 tons of manure and poultry processing byproducts a year.

“We believe the relationship between Perdue and BDC offers a large-scale opportunity to create a truly consistent source of clean, renewable natural gas in a sustainable way that will benefit the industry and the environment for years to come,” said Shawn Kreloff, Bioenergy’s chief executive officer, in a statement announcing the arrangement.

Anaerobic digestion uses microorganisms to break down organic material. The digester would extract methane, which could fuel vehicles equipped to burn it or be piped elsewhere for other uses, Kreloff said. Composting the byproducts of digestion would yield a fertilizer that’s easier and safer to store, ship and use than manure.

The deal comes at a critical time, as Maryland officials consider delaying the next phase of a regulation that would limit the use of phosphorus-rich animal manure as fertilizer. Much of the cropland on the Eastern Shore, the heart of Maryland’s poultry industry, is already brimming with the nutrient; adding more increases the risk of it running off into waterways and fouling the Chesapeake Bay. The nutrients nitrogen and phosphorus are the largest form of pollution in Bay waters.

A Salisbury University business professor recently warned that the state has neither the funds nor the infrastructure in place to handle all of the poultry litter that could no longer be spread as fertilizer. An estimated 1,330 farms statewide would be affected, most of them on the Shore.

The lack of alternative uses for the 400,000 tons of poultry manure generated in Maryland each year has raised concerns about the economic impacts to farmers of curtailing its use as fertilizer. Although the state has doled out nearly $6 million in recent years to test manure-to-energy technologies, which might yield growers some revenue from their excess animal waste, the projects have been small in scale and have yet to prove viable.

The Salisbury-based Perdue has operated an Agri-Recycle subsidiary in Blades, DE, for nearly two decades, where it has treated manure cleaned out of the chicken houses of some of its contract growers, along with some of its processing plant byproducts.

For much of that time, the facility converted the waste into dry pellets for use by farmers, gardeners and turf managers, and shipped much of it outside the Bay watershed. But the pellet plant never made money, and a couple of years ago Perdue mothballed it to focus on a smaller composting operation, which handles about 30,000 tons of organic waste a year.

“With Bioenegy, we have found a partner that enables us to be more sustainable, create cost-savings and help produce renewable energy while continuing to address soil health and nutrient management in the environmentally sensitive Chesapeake Bay watershed,” said Perdue Farms CEO Randy Day in a statement.

Perdue has pledged to pay Bioenergy to take organic waste from Perdue’s processing plants, said Steve Levitsky, Perdue’s vice president of sustainability.

“Composting and anaerobic digestion … is not Perdue’s core business,” Levitsky said. Perdue executives “felt comfortable,” he added, “that this company knew what they were doing and had a good track record moving forward.”

Shown here in 2017, wood chips were added to nutrients from Perdue's wastewater streams and egg shells and other waste from Perdue's hatchery to produce compost. (Dave Harp)Perdue has spent close to $90 million over 18 years, Levitsky noted, on the pelletizing and composting operations and processed 2.5 billion pounds of poultry litter and plant waste. However, Levitsky acknowledged that the composting operation, like the pelletizing plant, lost money.

It also ran afoul recently of Delaware regulators, who reached a settlement with Perdue AgriRecycle earlier this year over misreporting or failing to report the results of tests required to ensure its compost was fit to be sold.

In some instances, regulators found batches of compost contaminated with elevated levels of cancer-causing hexavalent chromium and fecal bacteria. The state Department of Natural Resources and Environmental Control assessed Perdue a penalty of $179,429 in a settlement agreement announced in June.

Levitsky said Perdue has corrected all of the issues found by Delaware regulators and agreed to pay the penalty.

The deal may also help Perdue keep clear of a controversy on the Shore about the handling of a slurry-like organic residue from poultry plants, which is often collected in open tanks or lagoons before being spread on fields as a nutrient-rich soil amendment. A flurry of complaints about odor from the stockpiles prompted Wicomico County recently to impose a six-month moratorium on approving any new storage facilities.

Perdue expects Bioenergy’s facility to take all of its plant waste generated by the treatment process known as “dissolved air flotation,” much of which is now spread on farmland, Levitsky said.

Kreloff said running the waste through the digester would eliminate any odor issues. He also said the plant’s production of “renewable” natural gas from organic material would give the facility a negative carbon footprint, helping to combat climate change.

The agreement announced Thursday isn’t the first to promise an alternative use for excess manure generated on the lower Shore. A California-based company won a state contract in 2013 to build a plant that would have generated electricity by burning poultry litter. It never broke ground.

Two years later, a New Hampshire-based company teamed up with Perdue in a bid to build a large anaerobic digester near Salisbury that it said would take up to 200,000 tons of litter annually. That was the amount of poultry manure estimated at the time to be unsafe environmentally to spread on fields on the Shore. That plan didn’t go anywhere either.

The experience and expertise of Bioenergy has convinced Perdue to try again, said Levitsky.

Bioenergy established offices in Columbia just three years ago. Kreloff said he had been involved with running technology firms before getting interested in anaerobic digestion. Earlier this year, his firm acquired a biogas company based in Italy, which according to Kreloff has two decades of experience building and running anaerobic digesters. BTS Biogas, the acquisition, has built more than 220 digesters and operates 150, mostly in Europe, he said.

The company is preparing to build its first North American digester in Jessup, MD. It has leased land from the Maryland Food Center Authority, where it plans to install an anaerobic digester capable of annually processing up to 100,000 tons of organic waste from the wholesale food and seafood businesses concentrated in that area. Construction had been held up to resolve some traffic and design issues with the site, but Kreloff said work will start within a few weeks or next spring at the latest.

Kreloff said he expects Bioenergy’s project on the Shore to succeed because his company has the needed experience, expertise and capital to build the facility. Bioenergy announced in August that it had secured $106 million in private equity investment.

Kreloff said there also seems to be growing interest nationwide in anaerobic digestion as an alternative to disposing of organic waste by burning it or putting it in a landfill.

“It’s a business that’s gaining a lot of traction,” Kreloff said. Regulations are being changed to encourage it, he said, but added, “It’s the right thing to do. There’s no reason to bury this stuff in the ground or burn it. We can recycle it.”

(As originally posted, this story incorrectly characterized Perdue's commitment to provide material for composting to Bioenergy DevCo.  The Bay Journal regrets the error.)