INDIANAPOLIS — A billion-dollar project to destroy a deadly nerve agent stored in western Indiana is entering its final stages now that workers have eliminated more than 90 percent of its cache of the Cold War-era chemical weapon.

By late August, Army contractors expect to destroy the last of the 1,269 tons of VX nerve agent the Newport Chemical Depot once housed, said Jeff Brubaker, the Army's onsite manager.

After that milestone and subsequent cleanup work, workers will begin dismantling two cavernous buildings erected to destroy the nerve agent for the depot's planned 2011 closure.

Brubaker said that as of Tuesday, about 275,000 gallons of VX had been destroyed at the depot about 70 miles west of Indianapolis.

He said reaching the 90 percent threshold was a “very significant accomplishment” for the site's contractors, most of whom work for Pasadena, Calif., based Parsons Technology Inc.

The project overcame early technical problems that included leaks caused by degraded valves, but it has been dogged by controversy throughout over the disposal of its wastewater byproduct.

After two failed attempts to find private companies to treat and dispose of that waste, called hydrolysate, the Army signed a $49 million contract last year with Veolia Environmental Services to incinerate nearly 2 million gallons of the waste at its Port Arthur, Texas complex.

The Army's move upset activists who worry that one of the trucks used to ship the waste to Texas might crash, spreading contamination.

Residents and activists in Port Arthur, meanwhile, said the Veolia project posed a risk to the mostly poor, mostly black city of 60,000.

The Army has said the hydrolysate contains no detectable VX — a tiny droplet of which can kill a healthy human — at sampling levels of 20 parts per billion.

VX destruction began at Newport in May 2005 under an international treaty requiring the United States to destroy its chemical weapons stockpile.

To date, Newport's VX destruction project has cost $1.2 billion, including the cost of the two large buildings where the VX is neutralized by heat in chemical reactors, said Newport spokeswoman Terry Arthur.

The depot housed the nation's only VX production facility until 1969, when President Nixon halted the manufacture of chemical weapons. That move left the depot saddled with a large stockpile of VX stored in hardened steel vessels.

Once the last of its VX is gone, the Army hopes to finish decontaminating and disassembling the disposal facility's two large buildings by summer 2009, followed by complete closure of the 7,000-acre installation in 2011, Arthur said.

The Department of Defense is expected to declare the site “surplus” by late summer, a move she said will open up federal funding for a local group planning the future of the site.

With about 850 employees, the depot in rural Vermillion County is one of the larger employers in the county that abuts the Illinois state line, said Ed Cole, executive director of the Vermillion County Economic Development Council.

“The economic impact is going to be tough,” he said of the loss of those jobs. “It's going to have a huge, far-reaching impact on us for years to come.”

Cole, who's involved in planning the site's post-military future, said he and his cohorts on the planning group hope the site can find a new purpose as a multi-use industrial complex.

“We just see it as a blank slate with a lot of possibilities,” he said.

Cole said two interstates — I-70 and I-74 — are within about 15 miles and about 20 miles respectively of the depot. Rail service could easily be added because the right of way for a former rail line at the site remains intact.

Aside from roads, water and sewer service, he said the depot's fenced-in portion has laboratory space and an administration building that could serve new uses.

Cole said he and his colleagues have approached Purdue University about the school possibly using about 3,000 acres of the depot currently leased to farmers for the school's crop research.