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Exhibit 10.17
 
 Preparer
    Information
    
    James L. Pray
    
    666 Grand Ave. Suite 2000
    
    Des Moines, IA
    
    (515) 242-2404Individuals Name
    
    Street Address
    
    City
    
    PhoneSPACE ABOVE THIS LINE FOR RECORDER
 REAL ESTATE OPTION AGREEMENT
 THIS
AGREEMENT 5 th May
 WITNESSETH:
 WHEREAS
 WHEREAS
 IN CONSIDERATION
 1.
    
    PREMISES: That Seller hereby agrees to convey to Buyer by quit claim
deed all real property and the 100-foot railroad right of way, including any extra
width railroad right of way, and all other easements appurtenant to the use of the
real estate, together with all track, ties, ballast, other track material and other
improvements thereon owned, possessed, or claimed by the Fillmore Western Railway
Company and more specifically described as follows:All of the interests of Fillmore Western Railway Company, real or personal, from
milepost 1.7 to milepost 3.7 on the Fillmore Western Railway Company line and running
through the following sections:




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Section 25 and 36, Township Eight (8) North, Range Three (3) West of the 6th
P.M. AND Section 1, Township Eight (7) North, Range Three (3) West of the 6th
P.M. all in Fillmore County, Nebraska.A breakdown of the values of the real estate and track materials will be
provided by the Seller at closing.2.
    
    CONSIDERATION: Buyer agrees to pay to Seller at the time of the
execution of this Option Agreement the sum of $50,000.00 as a downpayment toward. The
parties agree that there is valid and sufficient consideration for this Agreement based
on this sum, the mutual obligations herein contained and other good and valuable
consideration. In addition, Seller agrees not to enter into any other Purchase, Lease
or Agreement of any kind with any other party relating to the subject property while
this Purchase Agreement is in place.3.
    
    PURCHASE TERMS: Pursuant to the terms of this agreement, Seller agrees
to sell and Buyer agrees to purchase the above-described real property with
improvements thereon under the following terms and conditions:
 a.
    
    Purchase Price: The purchase price shall be: $500,000.00,
inclusive of both real estate and all track, ties, ballast, other track material
and other improvements thereon. Buyer agrees to pay to Seller at the time of the
execution of this Purchase Agreement the sum of $50,000.00 as a downpayment toward
the Purchase Price.
  b.
    
    Quit-Claim Deed: At closing, upon receipt of the full
purchase price set forth above, Seller shall execute and deliver to Buyer an
appropriate Quit Claim Deed, a Bill of Sale, if required for all track, ties,
ballast, other track material and other improvements thereon, and other required
filings for recording by Buyer.c.
    
    Taxes: Seller shall pay all real estate taxes
prorated to the date of closing [Initialed TP and RLS] through tax year 2004.d.
    
    The parties agree that there is valid and sufficient consideration
for this Agreement based on this sum, the mutual obligations herein contained and
other good and valuable consideration. In addition, Seller agrees not to enter
into any other Purchase, Lease or Agreement of any kind with any other party
relating to the subject property while this Purchase Agreement is in place.e.
    
    Special Assessments: The Seller shall pay all special
assessments which are a lien and due and payable on said property and can be paid
as of the date of
closing.
 
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f.
    
    Eminent Domain: In the event the property or any part
thereof is taken or threatened to be taken pursuant to eminent domain after the
notice of exercise of the above option, but prior to closing, the Buyer shall have
the right at its election to cancel and terminate this agreement or to complete
the purchase as set forth above with the Buyer being entitled to receive all
condemnations proceeding against the real property.g.
    
    Closing: Subject to any approval by the Surface
Transportation Board, closing shall be held on a date agreeable to the parties not
later than 90 days from the date of the signing Purchase Agreement.h.
    
    Default: In the event Seller has fulfilled all of its
obligations hereunder and all conditions precedent and concurrent to closing for
which it is responsible and Buyer fails to fulfill its obligations hereunder and
continues to fail and refuses to fulfill its obligations hereunder for more than
30 days after receipt of written notice of such default from Seller may either:
1) terminate this Agreement in which event it shall be entitled to retain the
downpayment money and any other monies paid hereunder and such termination and
retainage shall be the sole remedy and damages available to the Seller; or 2)
pursue any legal and/or equitable remedy available to it. In the event Buyer
fulfills all of its obligations hereunder and meets all conditions precedent and
concurrent to closing for which it is responsible and Seller is unable, fails or
refuses to meet its obligations hereunder for more than 30 days after receipt of
written notice of such default, Buyer may either: 1) terminate this Agreement in
which event it shall be entitled to receive refund of all of its option money
deposits and any other monies paid hereunder and; 2) pursue any legal and/or
equitable remedy available to it.i.
    
    Personal Property: Seller understands and agrees that Buyer
shall have all rights in and to any personal property currently situated on the
Real Estate.
 5.
    
    RECORDING OF OPTION: The parties hereto
agree that this option Agreement shall be recorded. [Initialed TP and RLS]
 6.
    
    INSPECTION RIGHTS: Buyer shall, until closing of this purchase
Agreement, have the unrestricted rights to enter upon the subject property for purposes
of performing any and all due diligence necessary to Buyers determination to purchase
the subject property including, but not limited to, the taking of soil samples and
testing of rail and track material. Seller has a duty to provide to Buyer any
documents evincing title or environmental tests and studies that it may have that
pertain to the Real Estate. TYO does not warrant any of the material contained therein
for any structural integrity or suitability for any particular purpose. Buyer
acknowledges that it is buying the materials from the track as salvage only, AS IS 
WHERE IS and will make its own determination as to fitness and suitability for a
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purpose. Any attempt to continue use
of these materials as a track structure will be at the discretion of the Buyer, and
Buyer will assume all risks and liabilities associated with Buyer or any other persons
or entities use of these materials as railroad track.
 7.
    
    RAILROAD DOCUMENTS: Seller agrees to provide copies of any related
railroad files or maps in Sellers possession that pertain to the Real Estate.8.
    
    STB FILINGS: Seller agrees to cooperate with any necessary filings
that must be made with the Surface Transportation Board to effect this transaction.9.
    
    NOTICES: Any notice, demand or other document which either party is
required or may desire to give or deliver to or make upon the other party shall be
given in writing and served either personally or given by prepaid United States
certified mail, return receipt requested, and addressed to the following addresses:
 If to Seller:
    
    Tie Yard of Omahac/o Terry Peterson8202 F StOmaha, NE  68127If to Buyer:
    
    Advanced BioEnergy, LLCc/o Revis L. Stephenson III137 N. 8th St.Geneva, NE  68361
 Either party hereto may designate a different address for itself, or additional persons
to whom copies thereof are to be sent, by notice similarly given.8.
    
    REAL ESTATE BROKERS: The parties hereto represent that, absent
specific disclosure in writing, no real estate brokers have been employed, utilized or
relied upon by either party as a result of the real estate sale contemplated therein.9.
    
    TIME: Time is of the essence as to the performance of all of the terms
and conditions of this Agreement.10.
    
    ATTORNEY FEES: Any action required of the Seller hereunder to enforce
its rights to this Agreement shall entitle the Seller to the recovery of its reasonable
attorney fees, costs and expenses incurred and necessary to the enforcement of said
rights.11.
    
    GENERAL: This Agreement shall be deemed to have been made and shall be
construed and interpreted in accordance with the laws of the State of Nebraska. This
Agreement shall be binding upon and inure to the benefit of the respective parties
hereto and their successors and assigns. The captions and titles herein are for
reference only and are not to be considered a part of this Agreement or in the
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interpretation hereof. This Agreement shall not be valid until signed by both parties.
The phrase execution and delivery hereof, as used above, shall be the date the last
party hereto signs this Agreement and serves it upon the other party in the same manner
as set forth for notices. Time is of the essence.
 12.
    
    ADDITIONAL WARRANTY OF COOPERATION. Seller and Buyer acknowledge that
exact and perfect real estate legal descriptions were not available at the time that
this document was executed and agree that prior to closing a more exact and final real
estate description will be used. Seller and Buyer further agree that to the extent
that the milepost markers do not convey uninterrupted access to existing rail line to
the north or leave a gap in the legal description that Seller agrees to convey any
additional Real Estate owned by Seller that might be necessary. Any additional Real
Estate that must be conveyed pursuant to this paragraph shall be paid for on a per-foot
basis comparable to the consideration paid for the other Real Estate conveyed herein.
 13.
    
    EASEMENT. Seller conveys to Buyer an easement to use the FWRY right of
way from MP 3.7 to Turkey Creek, for the purpose of underground pipeline and or other
utitlities. [Handwritten: Purchase price of easement shall be an additional $10,000.00
(ten thousand dollars) TP RLS]
 IN WITNESS WHEREOF
 SELLER:
    
    
    
    BUYER:ADVANCED BIOENERGY, LLCBy
    
    /s/ Terry Peterson
    
    
    
    By
    
    /s/ Revis L. Stephenson IIIFillmore Western Railway Company
    
    
    
    
    
    Revis L. Stephenson III, Chairman
 Nebraska
  Douglas
 5 th May Nebraska Terry
Peterson Vice-President Terry Peterson Vice Pres
 [SEAL]
    
    /s/ Hollye Hempel

Notary Public in and for the State of NE
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Nebraska
  Douglas
 th
 [SEAL]
    
    /s/ Hollye Hempel

Notary Public in and for the State of NE
 6