Biomass

The Project consisted of SMAC providing an economic analysis consisting of complete historical analyses of crude bean soy oil, de-gummed soy oil, soy-based bio-diesel and yellow grease representing the selected and successfully liquefied biomass-derived oils as previously determined by Client and communicated to SMAC. This Project also included a complete analysis of the economic viability of using the above-described biomass-derived oils plus the above-described biomass-derived oils and diesel blends. This process also required collecting secondary information concerning current petroleum-based fuels to properly develop the economics associated with the blends.

Executive Summary

From an economic point of view, any of the sources of fuels discussed in this analysis could be justified as a renewable and sustainable fuel for turbine generators. Based on the demands that are being placed on them, most of these fuels appear to have a significant risk of higher pricing in the future if and when demand for them increases.

The analyses related to this study indicate that a ready supply of degummed soy oil will be available in sufficient volume that increased demand resulting from its use in turbine generators will not adversely impact the current supply-demand equilibrium. The same is true for crude soy oil. The prospects for price and supply stability for biodiesel are less clear. This price and availability risk is a critical issue when considering other forms for renewable fuels that are in somewhat shorter supply domestically, such as yellow grease or other derivatives from oil seeds. At present yellow grease continues to have a notable, although shrinking, price advantage over the other fuels.

The objective of this study and associated regression and econometric models is to determine a selected fuel that is presently in adequate supply with sufficiently limited current and prospective future demand. Such a fuel would suggest that pricing and availability will not be adversely affected by an increased demand resulting from its use as an alternative energy source to fuel power turbines in the upper Midwestern region of the United States. Extensive analysis is also presented concerning possible changes in supply and demand that would result over time depending on market forces that could take place. These projections are useful only to the extent that they offer insight into potential pricing directions that could occur. Decisions today will require that the objective information presently available be treated as being somewhat stable in the long run. Projections concerning future direction for each of these biofuels has taken into consideration as many scenarios as deemed practical for this analysis.

Recommendations

• Degummed soy oil has a favorable mix of pricing, availability and energy balance
• Other domestic renewable fuels appear to have unfavorable price increase potential
• Yellow grease should only be selected after careful consideration of future supplies
• Projected demand for biodiesel may adversely affect pricing as supply maximizes

Conclusions

• Any renewable fuel could prove to be viable for use in powering gas-fired turbines.
• Biodiesel appears to be the current "favorite" of renewable fuels due to its heavy promotion, but its price advantage is questionable and probably will shrink as more demand is created.
• Degummed soy oil appears to have some advantages over crude soy oil based on its byproduct of lecithin and its associated demand as a feed supplement
• Degummed soy oil also has a more economically favorable energy balance in comparison to crude soy and biodiesel.
• Yellow grease has been touted in the past as a good economical energy source but most data used for this pronouncement is now out-of-date and its historical price advantage seems to be shrinking over time.
• Glycerin, a byproduct of biodiesel production, may hold future promise as a fuel based on its potential cost per BTU of energy available. Performance issues such as consistency of product are questionable and beyond the scope of this study.
• Evaluations of alternatives have been driven by the requirement for domestic production; otherwise, the same potential difficulties could arise that now confront the United States with petroleum products. The constraint of domestic production requirements eliminates other potential choices such as palm oil.

This information along with a detail of findings section was all given to the client in the form of a written report. A PowerPoint report was also presented.