Castle Danger Brewery is planning a major expansion of its facility in Two Harbors that will enable the brewery to double its production capacity in the coming years.

This spring, Castle Danger will begin work to build a packaging hall adjacent to the current brewery and taproom in Two Harbors - work that will be aided by a $90,000 state grant awarded earlier this year.

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That project, and other planned improvements and expansions, will allow Castle Danger to increase its staff by more 40 full- and part-time positions in the coming months, on top of the more than 40 people it currently employs, company officials said.

The current brewery facility opened in August 2014 and has a maximum capacity of 20,000 barrels of beer per year or about 276,000 cases of beer.

Since the taproom and production facility opened in 2014, Castle Danger has experienced dramatic growth each year. In 2014, an abbreviated year at the current facility, Castle Danger brewed a little more than 1,000 barrels, increasing to almost 4,000 in 2015 and an estimated 9,200 in 2016.

As the production of beer has increased, Castle Danger has expanded its capacity several times, adding fermentation and conditioning, or brite, tanks. Recently, the brewery just placed its first order for a 90-barrel fermentation tank, 50 percent larger than the current 60-barrel tanks in the current facility, according to Castle Danger vice president and co-owner Lon Larson.

The brewery expects to produce 14,000 barrels in 2017 and projections show production growing by about 4,000 barrels of beer each year through 2020. The expanded facility will have a maximum capacity of 40,000 barrels per year.

"(The packaging hall) will free up space in the existing facility to add many more and larger fermentation tanks," Larson said. "In effect, the volume of fermentation capacity defines the brewery's production capacity. The proximity of the proposed packaging hall is the most critical key factor for the piped transport of product from fermentation to conditioning and packing."

Over the coming months, the company will construct its new packaging hall adjacent to the current building in downtown Two Harbors, moving all the brite tanks as well as the canning and kegging operations into the new building. The 8,400-square-foot building will have the same look as the current building and will also provide expanded cold storage and administrative offices. The building must be close by so that pipes can be run between the buildings to transport the beer.

Before construction can get started, though, there is some cleanup to do. The Two Harbors property was originally developed in 1888 as a sawmill and railroad house and eventually housed a YMCA facility that included a swimming pool. The YMCA building was demolished in the late 1960s and much of the debris was pushed into the former swimming pool, where it remained until Castle Danger's owners selected the site for the new brewery and taproom.

Many of the materials from the demolished YMCA contained asbestos, lead and other hazardous materials that needed to be cleaned up before construction began on the current facility. Much of that same contaminated soil and debris is still buried under the land Castle Danger acquired from Canadian National Railway to build its expansion. The $90,000 grant the brewery received from the Minnesota Department of Employment and Economic Development will pay for 75 percent of the costs of cleanup. Castle Danger will contribute the remaining amount to restore the site.

The improvements and expansions aren't just limited to the production facility, however. Castle Danger also is set to expand its distribution footprint around the state and make improvements to its taproom in the coming months.

Castle Danger already distributes to the eastern two-thirds of Minnesota and in Douglas County in Wisconsin, Larson said. In 2017, the brewery is looking to expand its reach to all of Minnesota, including border cities in North Dakota such as Fargo and Grand Forks, and will begin to expand further into Wisconsin going north to south in 2018.

In addition, the brewery's taproom will close for a week in early April to upgrade the current back bar's 10 tap lines to a 20-tap system. The outdoor patio, which was added to the brewery in 2015, will also be expanded beginning in May, adding seating and some activities for people visiting the taproom. The 10-tap system being removed from the taproom will be used to install a full patio bar in spring 2018.