statewide clean cities conference a perspective of 2006 and 2007
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Statewide Clean Cities Conference A Perspective of 2006 and 2007Astor Crowne Plaza HotelJanuary 25, 2007New Orleans, LA
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David Shiflett VP of Business Development, SE RegionWith World Energy since May 2006Area covers 11 states in SE15 years experience in the oil and petroleum industry with large regional retailer and wholesaler
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World Energy: A Global LeaderRecognized and Respected brand Diversified BQ-9000 productionExporter
Largest supply infrastructure in the industry
Premier source of quality fuel to petroleum companies worldwideAGGREGATOR
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Biodiesel Has Arrived!
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And It's Here To Stay
GAP
Source: Transportation Energy Data Book: Edition 19, DOE/ORNL-6958, September 1999, and EIA Annual Energy Outlook 2000, DOE/EIA-0383(2000), December 1999
Millions of Barrels per Day
Domestic Oil Production
Heavy Trucks
Automobiles
Light Trucks
Energy Security
Passenger Vehicles
The U.S. situation is a harbinger of future world trends. Domestic oil production is declining gradually. Petroleum use is steadily rising. Two-thirds of the petroleum consumed in the U.S. is for transportation. Until recently, vehicle fuel efficiencies have shown steady improvement since the 1970s, but increases in population and per capita miles driven have more than offset these gains. In fact, the number of U.S. light vehicles is projected to increase from 183 million today to 230 million in 2020. We now consume more oil just for transportation than we produce and, as the chart shows, the gap is expected to get bigger over the next 30 years.
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The Biodiesel Curve
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Distribution Locations
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What happened in 2006?Major focus on plant constructionIntense interest from capital marketsState Incentives remain importantPetroleum prices were the main driver
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2006 Encouraged Plant ConstructionHigh petroleum + Low Ag Fats/Oils = Be close to Production (Production Margin)Low petroleum + High Ag Fats/Oils = Be close to Customer (Opportunity to Buy with right infrastructure)
Both markets are highly volatile Disconnect between Biodiesel and Diesel
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State Incentives Are Increasing
2004: 130 biodiesel bills proposed / 27 passed
2005: 170 biodiesel bills proposed / 31 passed (22 states)
2006: 275 initiated / 53 passed
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International MarketsEuropean market is largest; significant feedstock constraints (EU Directive)
Asian market is growing; significant source of palm oil
South America is growing; significant source of soybean oil
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Is Europe a glimpse of our future?
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Looking Ahead to 2007Too many plant dealsCapital markets will coolScale does matterQuality, quality, ASTM D 6751Logistics will be the keyCrude Oil????
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Plant Logistics
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ExampleA 50 mm gal/yr plant with rail service will have . --2500 Rail car movements annually
With 12 turns/year, the plant will need 200 RCs
How Available Are Rail Cars:Delivery in 2008 (Maybe)??$800/month lease10 year Lease?
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Other Considerations
How often do you get rail service??How fast can you load trucks??Glycerin disposal? Waste water disposal
Nothing will shut a big Biodiesel plant down faster than not having big logistics!!!!!!!!!!
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The Nimble PlayerFeedstock Sourcing
Robust Logistics Capability
Market & Risk Diversification
Reliable Supply to Customers??
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Independent Model: Go it Alone!
Mandates / Incentives Trigger Motivation
Production delays
Quality Problems
Marketing Setbacks
Distribution Bottlenecks / Cant get to Market
Discount Price reduce returns
Risks Improperly Managed
Projects falter
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2007 Regulatory Issues?RFS from 7.5b by 2012
New Farm Bill
Tax Credit Extensions to 2015??
CCC Producers Credit
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Cold Flow PropertiesBiodiesel realizes cold temperature issues faster than most petroleum dieselUntreated B20 freezes 6-10F faster than #2 petroleum diesel, depending on:the cold flow properties of the biodieselthe cold flow properties of the petroleum dieselB2 to B5 nearly identical to Petroleum DieselUtilize the same precautions!Utilization of an additive that enhances cold flow propertiesStorage of the vehicles in or near a building when not in use
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Feedstock DifferencesSoy Most common in US Largest availabilityBest Cold Temp Ops 35Poultry / TallowLower feedstock costFull Tax BenefitLimited SupplyPoorer Cold Temp Ops 38 / 50Recycled oils / fatsLower cost / tax benefitLimited supplyMid Cold Temp Ops 40 / 45Imports: Palm Very Large Supply PalmHas Full Tax BenefitWorst Cold Temp Ops 60
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Enhanced Lubricity B2 has approx. 60% more lubricity than #2 Diesel
Chart3
571450
547450
485450
373450
374450
366450
346
374
380
374
Ultra-low Sulfur Diesel
Biodiesel Blend (%)
HFRR WSD (micron)
Ultra-low Sulfur Diesel
Sheet1
#2 Low Sulfur Diesel0450
04291450
23652450
53723450
4450
5450
#1 Low Sulfur Diesel
0692
2369
5376
Canadian #2 Winter Diesel
0571
2368
5356
Ultra-low Sulfur Diesel
0571
0.25547
0.50485
0.75373
1.00374
1.25366
1.50346
1.75374
2.00380
5.00374
JP-8
0726
2382
5373
Sheet2
Lubricity testing of various Biodiesel treat rates
in a variety of diesel fuels using an HFRR. (3/8-26/2001)
Sheet2
429450
365450
372450
450
450
450
#2 Low Sulfur Diesel
Biodiesel Blend (%)
HFRR WSD (micron
#2 Low Sulfur Diesel
Sheet3
692450
369450
376450
450
450
450
#1 Low Sulfur Diesel
Biodiesel Blend (%)
HFRR WSD (micron)
#1 Low Sulfur Diesel
571450
368450
356450
450
450
450
Canadian #2 Winter Diesel
Biodiesel Blend (%)
HFRR WSD (micron)
Canadian #2 Winter Diesel
571450
547450
485450
373450
374450
366450
346
374
380
374
Ultra-low Sulfur Diesel
Biodiesel Blend (%)
HFRR WSD (micron)
Ultra-low Sulfur Diesel
726450
382450
373450
450
450
450
JP-8
Biodiesel Blend (%)
HFRR WSD (micron)
JP-8
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Emerging Markets for GrowthFederal and State Incentives
Fuel Regulations RFS
ULSD markets
High Crude Prices
BioHeat
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Checklist to ImplementationSpecify D6751Specify cloudpointUse 20% blend or BXXDoes not Void WarrantyPay more per gallon?*Clean tankPour into tankSchedule early filter changeResume business as usual
* pre-incentive?
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World EnergyCorporate Headquarters90 Everett AvenueChelsea, MA 02150617-889-7300
www.worldenergy.net
David Shiflett10 West 8th AveRome, GA 30161706-234-7646davids@worldenergy.net
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