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Burleson County Biodiesel Presentation

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Burleson County Biodiesel Presentation

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    1. Burleson County Biodiesel Presentation Overview of the Industry and Experiences of a Biodiesel Producer SMS Envirofuels August 10, 2006

    2. Transesterfication Process

    3. Critical Biodiesel Parameters Complete Reaction Removal of Glycerin Removal of Catalyst Removal of Alcohol Absence of Free Fatty Acids

    4. Existing & Proposed Production Sites

    5. Historical U.S. Biodiesel Production (in gallons)

    6. History of SMS Envirofuels Inc 2003: Two parties start with an “idea” and a partnership in Houston, Texas June 2004: Failure of first production plant and subsequent dissolution of partnership Too many ideas of process, No focus Too many variations of raw material (soy oil, yellow grease, etc) Production as a large scale industry still in its infancy therefore knowledge was gained by trial and error

    7. History Continued July 2004: One of remaining parties moves to Poteet, Texas and tries again with focus on Soy Oil July 2004 – April 2005: Much Trial and Error April 2005: First batches of biodiesel of ASTM quality produced and sold Late June 2005: Continuous batches of biodiesel being produced and sold (1 year later than initial forecast)

    8. History Finalized Late October 2005: First major disruption of production due to weather change. Reevaluation of “Recipe” – Formula and Process Jan 2006: “Recipe” settled upon that would produce ASTM Biodiesel Year Round. Plant is back to full and continuous production Mar – Jul 2006: Expansion to increase production from 1 tanker load a day to 3. Production still in process while expansion took place.

    9. SMS Production History (in gallons in thousands)

    10. Plant Layout

    11. Reaction TanksReaction Tanks

    12. On Left: Soy Oil and Finished B100 tanks. On Right: Reaction and Water Wash TanksOn Left: Soy Oil and Finished B100 tanks. On Right: Reaction and Water Wash Tanks

    13. Biodiesel Production Financial Model: Potential Profit Percentages

    14. Texas Subsidy Information Offered by Texas Department of Agriculture Apply on TDA form RED-100 Fuel Ethanol and Biodiesel Facility Registration Pay In $0.032, Pay Out $0.200 (quarterly) Major Requirements Biodiesel Producer Valid Fuels Tax License with Texas State Comptrollers Office Valid Form 637 registration number from IRS Confirmation of EPA registration under 40 CFR Part 79

    15. Biodiesel Production Financial Model: Volume Matters

    16. Biodiesel Production Financial Model: Sensitivity to Soy Oil Pricing

    17. Historical Market for Soy Oil

    18. Summary Risks & Opportunities RISK FACTORS Biodiesel Production is a cash intensive, serious business Many large scale Production Facilities are coming on line in 2006 and 2007 Soy Oil Market will tighten as Biodiesel begins to require a noticeable percent of total soy oil available Profit margins today are thin. A drop in Petroleum prices, or increase in soy oil price will have a very negative effect on the industry The $1.00 U.S. excise tax credit MUST remain in place

    19. Summary Risks & Opportunities OPPORTUNITIES Demand is rising, acceptance is rising Potential market is huge This is just the Beginning New Technologies will reduce equipment cost & processing time & cost New Feedstocks will be developed to replace soy. Biofuels are the first real step in reducing the U.S. dependency on Petroleum products and “foreign oil”.

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