The Rapid Evolution of Ethanol as a Universal Gasoline

Blending Component

Gene Peters Consulting

genepeters@charter.net

The National Corn-to-Ethanol Research Center

Center of Excellence for Ethanol Research

12

9

13

Yeast7

Hopper

Hammer Mill Slurry Tank Jet

Cooker

CO2

Enzyme4

Enzyme4

DenaturedEthanol

MolecularSieve

10

DistillationSystem

CentrifugeEvaporator

(Syrup)Drum Dryer

5

Liquefaction

9

9

12

3

Dried DistillersGrain with Solubles

The Corn to Ethanol ProcessNational Corn-to-Ethanol Research Center, SIUE

>2%Gasoline

Added

(200 Proof )

(190 Proof )

(WholeStillage)

Start Here

Ammonia

Steam

(Recycled Water)

Urea

(Cooling)

( Wet Cake)

(ThinStillage)

Water

(Heating)

Enzyme 6

TM

© 2007 All Rights Reserved

Beer Well

Fermentation

8

Sulfuric Acid

• Flexible and capable of operating with a variety of production processes and feedstocks.

• Performs near-term industrial research.

PILOT PLANT: Dry Grind and Wet MillPILOT PLANT: Dry Grind and Wet Mill

• Training center for personnel in the ethanol and biofuels industry.

• USDA theoretical production data.

Workforce Development Program Workforce Development Program

- NCERC is training the biofuels workforce of tomorrow -

• Current Ethanol domestic production 10.2 billion gallons/ year

• Projected 13 billion gallons/ year by 2009

• 171 plants operating in 25 states• 33 plants still under construction• 5 plant expansions

The U.S. has 150 crude oil Refineries operating in 33 states with a combined capacity of 17.7MMB/D….…or 271 billion gal/yr.

Both the corn refining and the petroleum refining industries……

•Use a raw material possessing stored energy from the sun

Both industries……•Use catalysts and process chemicals to promote necessary reactions to produce transportation fuel from that raw material.

•For crude refining, inorganic catalysts, such as cobalt, molybdenum, platinum and acids.

•For corn refining, organic catalysts such as enzymes and yeast.

Both industries……•Deal with byproducts that pose handling or environmental issues but are key to overall economic performance of the facility.

•DDGS for a corn refinery

•Petroleum coke and sulfur for a crude oil refinery

•And carbon dioxide for both

Both industries……

•Make key motor gasoline components for blending finished grades of motor gasoline (“mogas”).

Petroleum Refinery

CornRefinery

Gasoline Components

Ethanol

DistributionTerminals

Service Stations

Motor Gasoline Octane

Ethanol 112

Isooctane 100

“Regular” 87

n-heptane 0

Octane is the measure of the auto-ignition resistance of gasoline in an internal combustion engine.

.

87 octane gasoline performs the same as a blend of 87% isooctane and 13% n-heptane.

1,058950

690 683 679 633

483

270

785

922

0

200

400

600

800

1,000

1,200

Energy Density of FuelsThousand Btu per ft3

< 70% Gasoline Equivalence

United States Gasoline Production

•U.S. gasoline demand is 9.1MMB/D or 140 billion gal/yr

•As of late 2008, Ethanol is 0.7 MMB/D or 10 billion gals/yr

•75% of total U.S. gasoline currently is E-10

•With 75% of the U.S. gasoline pool currently as E-10, 0.7MMB/D of gasoline otherwise refined from crude oil has already been replaced with ethanol from corn.

•Blending 100% of U.S. gasoline to E-10 would replace an additional 0.2MMB/D of crude oil-derived gasoline.

•But by the end of 2009, it is projected that ethanol production will reach 13.5 BGY, or 0.9MMB/D, which is 10% of the total US gasoline demand.

•Thus by 2010, ethanol will hit the “blending wall”.

Energy Independence and Security Act of 2007

•2008 9 BGY from corn

•2015 15 BGY from corn

•2022 36 BGY total renewable fuels• 15 BGY minimum from corn, but not a max.• Up to 21 BGY from “advanced” sources (Biomass, cellulosic), and can be “others”, such as biodiesel.

Policies that will impact ethanol future….

• Energy Independence and Security Act of 2007• Auto industry---Flex Fuel vehicle production and

ethanol concentrations > 10% for existing fleet• Retail Issues---E-10, E-20, E-XX, E-85• Distribution Issues---evolution to pipeline• Blender credit

U.S. Motor Vehicle Fuel Use, 2008

0

50

100

150

Motor Gasoline (all uses) incl ethanol Distillate Fuel (transport use only)

Ethanol Share ~4.2%(gasoline equivalent)

Source: CRS projections based on U.S. DOE, Energy Information Service, Annual Energy Outlook 2008

Biodiesel share ~0.9%

Billion Gallons

Typical Yield from One Bushel of Corn

-1 bushel of corn (56 lbs.) + 17 lbs. DDGS

+ 17 lbs. CO2

+ 2.8 gallons ethanol

=

Ethanol Yield (gal/bu)

2.4 2.522.72

3.1

1.51.71.92.12.32.52.72.93.13.3

1984 1994 2004 2014

•Current conversion rate (2006) is 2.81 gallons/bushel

•New hydrolysis & fermentation processes will allow producers to get more ethanol out of a bushel

NCERC Crop Research Prioritization StrategyUS Biomass Sources

ABUNDANT & AVAILABLE

ECONOMICAL

U.S. Biomass SourcesU.S. Biomass Sources

Corn Starch

Switch Grass

Paper

Sugar Cane

CottonwoodsStover

Wood Chips

Corn Fiber

Ethanol from Corn = Gasoline from Light Sweet Onshore Louisiana Crude Oil

Ethanol from Dry Fractionated Corn = Gasoline from Athabasca Tar Sands

Ethanol from Cellulose = Gasoline from Colorado Oil Shale

So why is corn the ethanol feedstock of choice at this time?

Ethanol from Sugar Cane = Gasoline from Uinta Basin Crude

Biomass or Cellulosic Ethanol

•Cellulose 30-50 % plant matter, produces C6 sugars (glucose)

•Hemicellulose 20-30 % plant matter, produces C5 sugars (xylose)

•Lignin 15-30 % plant matter, does not convert to ethanol

•Pretreatment of cellulose is difficult and expensive

•Requires high quantities of complex enzymes

Food and Fuel Forum

Agricultural Business Council of Kansas City

October 23, 2008Congressional Research Service•Growth in ethanol industry will reduce corn available for animal feed

•Non-farm costs are 80 percent of retail food prices

•Energy efficiency of ethanol from corn much higher than gasoline from crude oil

•Whispered concerns about cellulosics economic viability

National Corn Growers Association•Non-farm costs are 80 percent of retail food prices

•Available technology will supply adequate corn to meet all needs with low environmental impact

American Bakers Association•Increases in corn acreage will begin to limit acreage to wheat

•Foreign concerns of genetics is limiting research for wheat yield increases

Ethanol Uses an Increasing Share of U.S. Corn Production

0%

25%

50%

75%

100%

1960 1970 1980 1990 2000 2010

Perc

ent o

f Tot

al U

se

Source: USDA and Renewable Fuels Association; www.ethanolrfa.org.

FeedEthanol

Processed Food

Exports

80%35%

35%

2008

0%

25%

50%

75%

100%

Farm Gate Elevator Wholesale Processor Retail

Farm Share of Market Price Declines as Commodity Moves to Retail Outlet

Source: Retail Shares, USDA; all other categories are hypothetical representations by CRS.

Raw CommodityShare

100%

Labor

Other

Retailing

19.5%

TransportEnergy

Value is Added from Farm to Retail

Corn to Ethanol -- Energy CycleNatural Gas Solar Energy

Fertilizer Production

Corn Farming

FertilizersNG / LPG ElectricityDiesel Fuel

Corn TransportationDiesel Fuel

Ethanol Production

Ethanol TransportationDiesel Fuel

CoalNG / LPG Electricity

Ethanol at Refueling Stations

0.74 million Btu of Fossil Fuel Energy

Produces

1.0 million Btu of Ethanol

Efficiency Rate of 1.35

Animal Feed

Fossil Energy Balance –Ethanol, Gasoline, Bio-Diesel, and

Diesel10.3

8

2 2 1.67 1.35 1 0.85 0.8

0

1

2

3

4

5

6

7

8

9

10

11

Cellulosic eth.

Eth. (sugar c

ane)

Eth. (wheat)

Eth. (sugar b

eets)

Biodeisl

Eth. (corn)

Eth. (sorghum)

Diesel (crude oil)

Gas. (crude oil)

Source: Worldwatch Institute, “Biofuels for Transportation, Global Potential and Implications for Sustainable Agriculture and Energy in the 21st Century”, Table 10-1, page 127, June 2006.

1.6 - 1.7 ?

Corn Yield (bu/acre)

177160.4

138.6106.7

020406080

100120140160180200

1984 1994 2004 2014

Bushels of Corn per Pound of Fertilizer, 1966-02

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0.700

1969 1974 1979 1984 1989 1994 1999

Bus

hels

Fertilizer Efficiency

0

10

20

30

40

50

60

Bushels

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Bushels of Corn per Pound of Pesticides, 1991-02

Pest Control Efficiency

30 lbSeed corn

< 1 galPesticides

3 galFuel

50 lbPotash

50 lbPhosphorus

200 lbNitrogen

11,200 pounds of corn (200 bushels)

560 gallons of ethanol

and

3600 pounds of distillers grains

Inputs per acre…

87% of U.S. corn acreage is non-irrigated

Higher Corn Prices Expand the Zone of Profitable Corn Production

Corn & Soybean

BeltHard Winter Wheat Belt

Spring Wheat Belt

Cotton Belt

Food and Fuel Forum

Agricultural Business Council of Kansas City

October 23, 2008

Consensus:

The United States needs an energy policy.

Finally, just a calibration……..

America burns 140 billion gallons/year of gasoline.

That’s 380 million gallons/day…..

….or a quarter million gallons each second.

For several months, gasoline was more than $2.00/gallon higher than costs would justify.

For the $1 billion excess we were paying out each dayover that period…

…know that someone can build one of these babies:

And building them, they are!!

Thank you!!Gene Peters Consulting