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U. S. Biodiesel Market Presented December 4, 2006 BioFuels in the Energy Matrix – The Opportunity and the Challenge PowerPoint Presentation
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U. S. Biodiesel Market Presented December 4, 2006 BioFuels in the Energy Matrix – The Opportunity and the Challenge Jess Hewitt Gulf Hydrocarbon National biodiesel marketing company Member National Biodiesel Board Biodiesel Terminals: Houston Texas Hammond Indiana

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U. S. Biodiesel Market Presented December 4, 2006 BioFuels in the Energy Matrix – The Opportunity and the Challenge


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U. S. Biodiesel MarketPresented December 4, 2006BioFuels in the Energy Matrix – The Opportunity and the Challenge

Jess Hewitt

Gulf Hydrocarbon

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National biodiesel marketing company
  • Member National Biodiesel Board
  • Biodiesel Terminals:
    • Houston Texas
    • Hammond Indiana
  • Production Off Take Agreements for Biodiesel Producers
us biodiesel demand

750,000 mt

950 m liters

US Biodiesel Demand

Biodiesel Tax

Incentive

Changes to

EPACT

Bioenergy

Program

2 Million

500,000

Conversions: 1 mmt ~ 300 m gallons ; 1 gallon = 3.8 liters

distribution locations may 06

Type of Seller

Both Retail & Bulk Distribution

(227)

Bulk Distribution

(1365)

Retail Outlets

(489)

Distribution Locations (May 06)
industry plant size
Industry Plant Size

Industry Capacity 580 million gallons per year (1.9MMT)

Avg Plant Size 6.7 million gallons per year (22,330MT)

Conversions: 1 mt ~ 300 gallons; 1m gallons ~ 3,333 mt; 10m gal ~ 33,000 mt

size of plants under construction expansion
Size of Plants Under Construction & Expansion

Construction Capacity 1.4 billion gallons per year (4.6mmt)

Avg Plant Size 17.9 million gallons per year (56,660mt)

Conversions: 1 mt ~ 300 gallons; 1m gallons ~ 3,333 mt; 10m gal ~ 33,000 mt

production capacity by state preliminary as of 8 28 06
Production Capacity by State (Preliminary as of 8/28/06)

Conversions: 1 mmt ~ 300 m gallons; 1m gallons ~ 3,333 mt; 10m gal ~ 33,000 mt

production capacity trends
Production Capacity Trends
  • The industry is trending toward larger facilities
  • Plants capable of handling multiple feedstocks are becoming more common
  • Production capacity does not equal production for several reasons
    • Some facilities are just starting up
    • Some facilities choose to run less than 24/7
    • Some facilities have not effectively debottlenecked their systems to maximize their output
    • Some facilities overestimate their capacity
industry implications
Industry Implications
  • If growth in production capacity is realized, it could have feedstock price implications in the short term.
  • New capacity is probably going to replace some existing capacity
  • Not all companies will survive
reasons for industry growth
Reasons for Industry Growth
  • Federal Energy Policy
  • Strong Diesel Prices
  • State Energy Policy
federal energy policy
Federal Energy Policy
  • Ultra Low Sulfur Diesel (USLD) 15ppm
    • Phase in 2006 thru 2010
    • Lubricity
  • Biodiesel Blender’s Tax Credit $1.00/gal
  • Renewable Fuels Standard
    • 7.5 m gallons 2012, ethanol/biodiesel
    • 1.5 credits for biodiesel
us crude oil diesel fuel and biodiesel spot prices
US Crude Oil, Diesel Fuel and Biodiesel Spot Prices

Sources: Energy Management Institute and The Energy Information Administration

biodiesel and diesel prices
Biodiesel and Diesel Prices

Sources: Energy Management Institute and The Energy Information Administration

increasing oem support
Increasing OEM Support
  • Diesel powered Jeep Grand Cherokee CRD to have B5 factory fill
  • Mercedes BlueTech
  • DaimlerChrysler approves B20 in 2007 Dodge Ram pickup’s used in fleets
  • GM working towards B20
  • EMA approves a B20 specification
will biodiesel void my warranty
Will biodiesel void my warranty?
  • The use of B20 and below will not void the warranty of any major US engine manufacturer
  • Position statements can be found at www.biodiesel.org
    • Caterpillar
    • Cummins
    • Detroit Diesel
    • International
    • John Deere
    • Case New Holland
    • Volkswagen
diesel vehicles
Diesel Vehicles
  • J.D. Power estimates diesel vehicles will make up 7.5% of passenger cars by 2012 (up from 3% in 2004)
    • Highly fuel efficient
    • Cleaner and quieter
diesel vehicles23
Diesel Vehicles
  • Diesel is getting cleaner
  • New EPA regulations:
      • .07 grams of NOx per mile
      • All emissions drastically reduced
      • Ultra-low sulfur diesel fuel
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Biodiesel Lowers Emissions

  • Decreases EPA-targeted emissions
  • Virtually free of sulfur & aromatics
  • Soy B100 reduces lifecycle CO2 by 78%
environment
Environment
  • Biodegrades as fast as sugar
  • B20: helps diesel portion degrade twice as fast
  • Nontoxic
soybean oil palm oil and yellow grease prices
Soybean oil, Palm Oil and Yellow Grease Prices

Source: The Jacobsen Publishing Company

usda soybean oil price and ending stock projections
USDA Soybean Oil Price and Ending Stock Projections

Source: USDA Economic Research Service

feedstock pricing trends
Feedstock Pricing Trends
  • Institutional investors have taken an interest in biodiesel production and helping to provide support for soybean oil prices
  • The switch to oil with lower trans fatty acid oils due to labeling laws could help bring down soybean oil prices
  • Animal slaughter numbers have been strong but biodiesel plants are not coming on stream fast enough to soak up any of the extra fat on the market.
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Jess Hewitt
  • Gulf Hydrocarbon
  • www.gulfhydrocarbon.com
  • Biodiesel 24/7
    • Brazil-Texas Chamber of Commerce
    • Houstonian Hotel & Conference Center
    • Houston, Texas