Laurelwood Brewing Co. wants to brew more beer, and the city of Battle Ground can almost taste it.

But despite city efforts to court the planned expansion of the Portland-based beer-brewing company, Laurelwood has not selected a location so far, said Mike De Kalb, 50, who co-owns the brewery restaurant chain with his wife, Cathy Woo De Kalb.

“We’re looking at three (sites) in the Portland area. Battle Ground is one of them,” Mike De Kalb said.

De Kalb said it would cost between $1.5 million and $2.5 million to develop and start up the plant. The facility is needed to meet demand for products now sold throughout Oregon and Washington and eventually to Nevada and Arizona.

De Kalb said Laurelwood has almost reached barreling capacity at its main brewery, which is attached to its brew-pub restaurant at 5110 N.E. Sandy Blvd. in Portland.

“We’ve expanded that facility twice in three years and have no more room for growth,” De Kalb said.

He expects to select a site by the end of the year.

Laurelwood, known for such beers as Free Range Red and Work Horse IPA, produced 4,100 barrels in 2009. If plans go forward for the new brewery, it would produce 18,000 barrels in the first year and ramp up to a capacity of 50,000 barrels, De Kalb said.

“We are looking at a production brewery that more than likely would not have a restaurant attached to it,” he said.

Laurelwood Brewing Co., which generated $1.5 million in combined beer and restaurant sales in 2009, opened a new restaurant and brew pub last year in Battle Ground Village. The company also has five brewing and restaurant venues in Portland.

In March, Battle Ground Mayor Mike Ciraulo announced in his city address that Laurelwood’s proposed facility could thrive in the southern, industrial quadrant of the city’s Battle Ground Village mixed-use development. The site also borders the Lewis and Clark Railroad.

“We’re doing our part to make it as enticing as possible,” Ciraulo said in May, nearly three months after his initial announcement.

City incentives include access to a low-interest loan to finance the project, which could add between 10 and 30 new jobs to the community.

To boost its employment rolls, Battle Ground received $3.5 million in American Recovery and Reinvestment Act funding to pass through to new businesses that plan to expand.

“We had to demonstrate that they would create new jobs, and it had to be a manufacturer,” said Cathy Huber Nickerson, the city’s finance and information services director.

Anderson Plastics is among other expanding companies the city is trying to encourage.

The funding is the kind of access to capital that is vital to business expansions today, given the limited lending environment, said Dennis Pavlina, president of The Gold Medal Group, developer of Battle Ground Village.

“We have not found a single local bank that is able to add any real estate type of activity to their lending portfolio,” said Pavlina, whose job it is to sell or lease the development’s industrial and commercial sites to potential tenants.

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