HELENA More than two years after Gov. Brian Schweitzer touted his plans to jump-start ethanol production in Montana, the state has the same number of ethanol plants it started with: Zero.

Some in the industry say they're still hopeful Montana will get an ethanol-production plant, and that incentives pushed by Schweitzer and approved by the 2005 Legislature will help.

"I think the Montana Legislature has done an excellent job to encourage the industry," says Gary Hebener, president of Montana Ethanol, which has been trying for more than 15 years to finance an ethanol plant in Great Falls. "We are working diligently every day to bring this project to financial closing."

Others, however, wonder if Montana's ethanol opportunity has slipped away for now, as scores of competing plants are now under construction in the Midwest, which has plentiful stocks of corn to feed production of the alternative fuel.

"I feel like we missed the bubble," says Dick Vinson, president of Yellowstone Power, which is trying to sell a partially developed ethanol-plant site near Hardin.

Schweitzer himself says he always knew producing ethanol was "a challenge" for Montana, because the state doesn't grow a lot of corn, which has been the primary feed-stock for making ethanol.

The Democratic governor says production of biodiesel, an alternative fuel produced from vegetable and seed oils, may be a better bet for Montana now.

Still, Schweitzer says he thinks the ethanol incentives are a good idea that could yet pan out.

"Nothing ventured, nothing gained," he said last week. "The idea is to make an incentive so if (ethanol) works, it works. And if it still didn't pencil out, it didn't cost the Montana taxpayers a dime."

Ethanol is essentially alcohol, derived from corn, grain, sugar cane or other feed-stocks. It can be added to gasoline to make it burn cleaner.

Congress and President Bush put on a big push for ethanol production in 2005, selling it as an environmentally-friendly fuel that can help the United State become less dependent on foreign oil. The federal government pays a 51-cents-per-gallon subsidy to ethanol producers.

Critics say ethanol is not an environmental or economic savior, but that hasn't stopped the boom. There are 119 ethanol plants in the country now and 86 under construction. Once finished, those plants will nearly double ethanol production in America to 12.5 billion gallons.

The 2005 Montana Legislature, at the urging of Schweitzer, passed three major incentives for ethanol production in the state:

- A 10-year exemption from property taxes for ethanol manufacturing equipment.

- A 20-cents-per gallon tax payment for any ethanol produced from Montana-grown feed-stock.

- A requirement that most gasoline used in Montana must have at least a 10 percent blend of ethanol. The requirement, however, kicks in only after Montana plants are producing at least 40 million gallons of ethanol per year.

The intent is to reward ethanol developers with a reliable market for ethanol in Montana, but not until they invest in a producing plant.

Sen. Jerry Black, R-Shelby, who sponsored the main ethanol-incentive bills in 2005, says he thinks "a great window of opportunity" still exists for ethanol, because it can be a less expensive, cleaner alternative to high-priced gasoline.

But he also says the longer that ethanol developers wait in Montana, the more expensive it becomes to build a plant -- while more competitors elsewhere are moving forward.

"You can pass the enabling legislation, but you can't provide the financing or other expertise to build it," Black says.

Montana Ethanol is proposing a 125 million-gallon plant that would use barley to produce ethanol, costing as much as $350 million to build.

Hebener says his company has selected a contractor, but ran into delays when the contractor was purchased this year by a French firm.

"We are waiting for the contractor's purchaser to complete the transaction, which will allow us to close the contract," he says.

The Great Falls plant is a bit unusual because it would use grain instead of corn and also produce vital wheat gluten. That wrinkle can make it more difficult to finance, Hebener says.

"It's easiest to finance cookie-cutter plants," he says. "We're not pioneering, but we are deviating from what the ethanol industry is most accustomed to, and from what the financial community is most accustomed to."

Hebener says the 2005 incentives passed by the Legislature are a "positive message" to financiers, showing that the state supports alternative fuels and agri-based business.

Montana Feed and Fuel, based in Miles City, also has been working on an ethanol project. Company president William Krutzfeld, though a spokeswoman, declined to elaborate.

Vinson, a co-developer of the Hardin proposal, says the state's per-gallon tax incentive didn't help his project, because it conditioned the tax credit on paying union "prevailing wages" for construction jobs at the plant and using Montana-grown feedstock to produce ethanol.

Meeting those conditions increased the cost of the plant, he says: "We were going to get (corn or other feedstock) wherever it was the cheapest."

The company, Rocky Mountain Ethanol, closed its doors this spring and is entertaining offers for the project, which has a shell of a building, permits, water rights and access to rail transportation.

Vinson says his company might explore building a biodiesel manufacturing plant.

Schweitzer says he wanted the incentives to encourage Montana businesses and agricultural producers, rather than plants that would only import stocks from elsewhere.

"If we're building an ethanol plant just so we can ship corn from South Dakota, what's the point?" he says.

Schweitzer says there are still ethanol developers out there "kicking the tires" on potential Montana projects, and that another potential is "cellulosic" ethanol, which is ethanol produced from non-food products, such as sawgrass or wood chips.

"I support biofuels and ethanol and biodiesel, but more than anything, I support Montana producers of these," he says. "We're trying to create more commerce in Montana."