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Bio Energy
What is going on out there with renewables ?
Bill Beukema General Manager of SoyMor is a 30 million Gallon per year Bio
Diesel Plant in Albert Lea MN SoyMor has been in operation since August
2005 SoyMor currently uses Soybean oil as its
feed stock SoyMor was built and is currently managed
by REG
Outline of Presentation What is Ethanol and Biodiesel Overview of current Renewables
market Investment opportunities for rural
America Current impact on production
agriculture Future of renewables
What is Ethanol Ethanol is a molecule Ethanol base raw material is
– Shelled corn– Sugarcane– Cellulose
Ethanol by-products include– DDG– Co2
Ethanols conversion is– 1 bushel of corn = 2.8 gallons of ethanol– 1 bushel of corn = 18 lbs of DDG– 1 bushel of corn = 18 lbs of Co2
Ethanol energy conversion is +1.35 Petroluem energy conversion is + .88
What is Biodiesel Biodiesel is a compound Biodiesel base raw material is
– Oil seed ( SBO )– Animal Fat– Waste Grease
Biodiesel by-products include– Glycerin– FFA
Biodiesel conversion is– 1 bushel of SB = 1.5 gallons of Biodiesel– 1 bushel of SB = 1.1 lbs of Glycerin
Biodiesel energy conversion is + 3.24 Petroluem energy conversion is + .88
Overview of current Renewable Market
ETHANOL– 2005 DATA
OVER 105 PLANTS
TOTAL PRODUCTION OF 4.3 BILLION GALLONS
153,725 JOBS CREATED FROM DIRECT ETHANOL PRODUCTION
? PLANTS CURRENTLY UNDER CONSTRUCTION
OVER 1.1 BILLION GALLONS TO BE ADDED
1.5 BILLION BUSHELS USED FOR ETHANOL 2005
Overview of current Renewable Market
ETHANOL– 2006-2007 Estimates
3.5 BILLION BUSHELS PROJECTED FOR FOOD AND IND USE 06-07
6.1 BILLION FOR FEED USAGE FOR 06-07
2.1 BILLION FOR EXPORT USAGE FOR 06-07
OVER ? BILLION GALLONS AT THE END OF 2007
Overview of current Renewable Market
Biodiesel– 2005 Data
75 million gallons sold 1 company marketed over half of all the
product sold ( REG) For all practical purposes biodiesel acted like
a niche product
Overview of current Renewable Market
Biodiesel– 2006 Data
Over 120 million gallons of capacity added to the market place.
Biodiesel became widely accepted– Terminal storage– Pipeline movement (Grow Mark)
Investment Opportunities for rural America
Both Ethanol and Biodiesel are experiencing tremendous Return on Equity
To a producer Ethanol and Biodiesel are Hedge type investments
Factors driving ROE– U.S. interests in becoming GREEN– Favorable tax treatment – $78 dollar crude oil– $ 3.00 gasoline and diesel pricing– $2.00 corn $.255 sbo
Current Impact on Production Agriculture
Hedge fund activity Supply and Demand Basis Supply agreements Acreage Shifts Increased sensitivity of the commodity value Shift from fair market value to margin
management To date all of these have been Positive results (
past success does not guarantee future results )
The Future of Renewables
Long term 4 to 7 years – New technology will decrease the cost of
production– Corn and Soybean acres will find a balance
based on demand– Pricing points for retail will trade a at premium
higher than the base commodity, but lower than the today's margin premium
– Entities that respect Quality, understand commodity trading and invest appropriate amounts in R & D will own those who do not
The Future of Renewables
Short term 1 to 3 years– Commodity volitity will increase– Acre shifts will be more frequent– Global energy equation will continue to be
difficult to manage– Industry will struggle the speed of
maturity