Transcript Mississippi Biodiesel Feasibility Study

BioFuels Activities in
Mississippi
Sumesh Arora
Mississippi Alternative Energy Enterprise
- Mississippi Technology Alliance
Southern Bio-Products Conference
March 5, 2004
What are BioFuels?
Significance of Biofuels
National Security
 Increased Energy Independence
 Creates Jobs – improved farm economy
 Environmental Benefits

Biodiesel Emissions
EPA: A comprehensive Analysis of
Biodiesel Impacts on Exhaust
Emissions: Draft Technical Report
EPA420-P-02-001, Oct. 2002
Why Use Ethanol?
10% ethanol-gasoline blend reduces
carbon monoxide emissions by up to
30%.
 Over 10% all gasoline in the US contained
ethanol in 2002.
 All new vehicles are ethanol-ready.
 Ethanol reduces our demand for imported
gasoline by 100,000 barrels each day.

BioFuels Activity in
Mississippi
Very Progressive…
Projects in Mississippi
BioFuels
Ethanol
Biodiesel
Commercial
Commercial
Pilot Scale
Pilot Scale
Research
Research
Feasibility
Studies
Legislative
Demonstrations
ETHANOL
C2H6O
Ethanol Process and Feedstocks
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US Capacity: 2.85 billion gallons/year
– 72 Plants, 10 under construction
– > 90% derived from cornstarch (fermentation)
Gasification of biomass
 Syngas fermentation
 Other potential ethanol feedstocks:
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– Wheat, sorghum, potatoes, wood waste, corn cobs,
straws, corn hulls, corn stover, grasses (switch
grass), kenaf, bagasse, MSW
Ethanol Plant Activity
Southern Ethanol
45 MM gal/year
Mississippi Ethanol
1 MM gal/year
EOH Energy LLC
50 MM gal/year
Southern Ethanol
30 MM gal/year
Amory
Greenville
Vicksburg
Aberdeen
Winona
Pearson BioEnergy
3 MM gal/year
Commercial Ethanol Activity
Southern Ethanol Company, LLC
 First company to announce sites in Amory and Vicksburg
 Amory construction expected to begin in early 2004 and complete by mid
2005
 A 30 mm gal/year plant may consume about 12 million bushels of corn per
year
 which translates to about 30,000 bushels of corn per day
 A sizeable portion of the corn used could be locally grown
 TDF (Tire Derived Fuel) will be a unique feature of the Amory plant
 Greenville may be a third site
EOH Energy, LLC
 Announced in April 2003 to construct a corn-based ethanol plant in
Greenville
 Plant capacity of more than 50 million gallons of ethanol per year
 Expected investment in the plant is about $58 million
 Plant expected to open in the fall of 2004
 Working with one of the major ethanol plant design and construction
companies in the US to build this plant
Ethanol Pilot Scale Activities
Pearson Bioenergy Inc., Aberdeen, MS
 Involved in pioneering work in non-fermentation based waste biomass to
ethanol technology.
 A 400 pound per hour pilot plant completed in early 2004 is in limited
operation
 A 3 million gallon per year prototype plant is expected to open mid - 2004
 The pilot plant capable of evaluating of various biomass feedstocks
Mississippi Ethanol, LLC, Winona, MS
 Innovative gasification process to convert biomass into ethanol
 The design for a 1 million gallon per year ethanol pilot plant is complete
 Expected start date of the pilot plant is in the summer of 2004.
 This plant will utilize 30 dry tons per day of wood waste as the feedstock
 A 1/10th scale version of this plant is being assembled at Mississippi State
University (MSU) for research purposes
 This project is getting technical assistance from MSU engineering faculty
and staff of the university’s Diagnostic Instrumentation and Analysis
Laboratory (DIAL).
Ethanol Research Activities
Biomax Gasifier
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Mississippi State University is home to one of
only six of such gasification units in the world
The object is to efficiently convert various
biomass materials into gases, and
subsequently into energy-related and valueadded chemicals such as ethanol and acetate.
The machine, which arrived on campus in
August 2003, is built by Community Power
Corporation (CPC) of Littleton, Colorado.
Joint research project between MSU and
Oklahoma State University
Two-year-old U.S. Department of Agriculture
grant that evenly divides about $1 million a
year between the two schools.
Experimenting with grasses and residues from
various crop processes such as cotton gin
waste, rice husks and chicken litter.
More Research Activities
The Mississippi University Research
Consortium for the Utilization of Biomass
formed in 2000
 Funding from the US Department of
Energy and the State of Mississippi
 Total funding is $8.1 Million over a six
year period
 Members include Mississippi State
University (lead university), Jackson
State University, University of Mississippi,
and University of Southern Mississippi

The mission of the Consortium is to develop
technologies that are capable of
producing valuable products from
Mississippi-grown biomass resources,
development of additional research
capabilities within Mississippi, and the
education of future engineers and
scientists within Mississippi with expertise
in the production of chemicals from
biomass feeds.
Ethanol Research…

Syngas Fermentation – The MSU
Team has isolated cultures capable
of producing ethanol at a rate
several times that of the best rates
reported in literature

Acid Hydrolysis – USM has greatly
improved conversion performance
via better reactor design and
operation and is developing new
membrane separation systems
JSU has developed a pre-treatment
technique that improves
fermentation of the hydrolyzate by
removing inhibitors prior to
fermentation.
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Enzymatic Conversion – UM is
working on the isolation of novel
enzymes
Mississippi-Land Use
BIODIESEL
Excellent choice as a low sulfur,
high lubricity, fuel additive
Biodiesel Process
Catalyst
CatalystMixing
Purification
MethanolRecovery
Quality
Control
Methyl
Ester
Methanol
Recycled
Methanol
Vegetable Oils, Used
Cooking Oil,
Animal Fats
Pharmaceutical
Glycerin
Transesterification
Crude Biodiesel
Glycerin
Purification
If desired
Neutralizing Acid
Neutralization
Phase Separation
Re-neutralization
MethanolRecovery
Crude
Glycerin
Biodiesel Plant Activity
Biodiesel of Mississippi
15 MM gal/year
Renewable Fuels, Inc
2 MM gal/year
Tunica
Marks
Nettleton
Biodiesel of Mississippi
40 MM gal/year
Meridian
EECo
400 gal/day
Commercial Biodiesel Activity
Environmental Energy Corporation (EECo), Meridian
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EECo is the first producer of biodiesel in the state
Current production capacity is about 400 gallons per day with potential of 2,000 gallons per
day
Operation uses yellow grease from regional independent restaurants
Renewable Fuels, Inc. (RFI), Tunica
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Evaluating biodiesel production technologies and feedstock sources for year
Considering a 1.5 million to 3 million gallon per year plant
This plant is expected to be able to use yellow grease and soybean oil
Biodiesel of Mississippi, Nettleton
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Approximately 15 million gallons per year plant under construction in Nettleton
Currently awaiting necessary environmental permits from Mississippi Department of
Environmental Quality (MDEQ)
Based solely on soybean oil as the feedstock
Since 1 gallon of soybean oil yields one gallon of biodiesel, this plant is expected to use:
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15 million gallons of soybean oil annually
Requirement of roughly 10.7 million bushels of soybeans
or 240,000 acres (assuming a soybean yield of 45 bushels per acre)
Considering co-locating a biodiesel plant with the Bungee soybean oil processing facility in
Marks, Mississippi.
Biodiesel Research Activity
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Develop numerous potential candidate lipid feedstocks included blended
feedstocks
DOE
Potential feedstock candidates in the Southeast US include:
– poultry and swine fats
MSU
– oils extracted from genetically manipulated plants
– novel plant species typically not considered lipid feedstocks
– and other lipid sources selected based on a thorough technical and
economic assessment.
Evaluate innovative extraction techniques such as:
– co-solvent amended supercritical extraction
– propane extraction
Extraction and separation of novel secondary products, such as selected lipids
(lecithin) and fatty acids (DHA and EPA), prior to transesterification will be
researched
Improve environmental performance including reducing oxide emissions and
utilization of more environmentally friendly process chemical reagents.
Potential ability to customize product performance to customer needs.
Research team consists of process engineers, mechanical engineers, plant
scientists, biochemists, economists, chemists, biologists, and microbiologists.
Feedstocks = 70% production cost
Biodiesel Demonstration
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Mississippi Development Authority – Energy
Division grant to the Lauderdale County School
District for the 2003-2004 school-year
9 buses at West Lauderdale Elementary School
are currently operating on a B10 blend
Biodiesel is being purchased from the local
biodiesel producer in Meridian
No operational problems reported to date
Feasibility Studies
Ethanol Feasibility Study
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Sparks Companies, Inc. & MSU Cooperative
Extension Service was asked by the Mississippi,
Alternative Energy Enterprise to conduct a
statewide feasibility study regarding the prospects
of ethanol production
There were two areas of primary concentration the overall state potential for ethanol production
and the assessment of five specific production
sites
Study completed in January 2003
Mississippi Index
US Index
20
01
20
00
19
99
50
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
200
19
90
19
89
19
88
19
87
19
86
19
85
19
84
19
83
19
82
19
81
Index (1981 = 100, Base Year)
Corn Yield Index: MS vs. US
250
225
Mississippi
175
150
125
100
75
US
25
0
MS Corn Production
Mississippi: Corn Production
70,000
This is a record
production of 66.3
million bushels of corn
60,000
40,000
30,000
20,000
02
00
20
98
20
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
19
74
19
72
19
70
19
68
19
66
19
64
19
62
19
60
19
58
19
56
19
54
19
52
19
19
50
10,000
19
Bushels (000's)
50,000
Major Commercial Grain Elevators
McAlister Grain
Alab ama
F riars Point
Arkan sas
G unnison
Bunge
Tom Soya
Jimmy Sanders
Jimmy Sanders
Cleveland
Bunge
G reenwood
G reenville
W est Point
Coop Elevator
Greenwood
Brooksville
Farmers Grain
Terminal
Belzoni
Bunge
Mayersville
Farmers Grain
Terminal
Yazoo City
Satartia
Bunge
Tom Soya
Storage Capacity
5,000,000to 6,080,000 (1)
2,000,000to 5,000,000 (4)
Bunge
1,000,000to 2,000,000 (4)
100,000to 1,000,000 (8)
40,000 to 100,000 (1)
Vicksburg
Production Density
(Bus hels per Sq. Mile)
Bunge
L o u isian a
Natchez
25,000 to
10,000 to
5,000 to
2,500 to
1,000 to
500 to
0 to
58,900 (251)
25,000 (272)
10,000 (204)
5,000 (219)
2,500 (268)
1,000 (209)
500 (494)
© 2002 Sparks Companies, Inc.
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5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
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Capacity in Bushels
MS Grain
Commercial
Elevators,
Capacity
Capacities of MS Port, River, Terminal and Subterminal Elevators
8,000,000
7,000,000
6,000,000
Report Summary
–
General Theme: the State should proceed with
caution, this is predicated on the following
conclusions
1
2
3
4
5
Supply-Side Issues - there needs to be continued
expansion in MS corn production - critical for ethanol
success (MS net importer of corn for animal feed)
There are significant regional differences in corn production
The animal livestock industry plays a vital role in the
balance of corn in MS
Some proposed production areas/sites are significantly
better relative to the other sites
There are important financial variables/issues to consider
Major Drivers to the Model
Revenue
– MS Producer Payment
– DDG Prices
– Ethanol Prices
Costs
– Feedstock
– Energy Prices - Natural Gas
– Cost of Capital
Biodiesel Feasibility Study
Completed in
February 2004
MISSISSIPPI DEVELOPMENT
AUTHORITY
ENERGY DIVISION
US DOE/SSEB
Mississippi Land, Water and
Timber Resources Board
Biodiesel Study Participants
MSU
ChemE
Department of
Agriculture and
Commerce
Chemical Engineering
ASU
SFDC
MDAC
MBC
FBA
Frazier Barnes
& Associates
Small Farms
Development Center
MSU
GRI
GeoResources
Institute
Feedstock Availability
Average
Cost:
$0.23/lb
Average
Cost:
$0.25/lb
•Soybean Oil: 38.6 million gallons
•Cottonseed Oil: 16.0 million gallons
•Yellow Grease: 6 million gallons
Average
Cost:
$0.11/lb
Soy Based Biodiesel Potential
Yellow Grease
Based
Biodiesel
Potential
Weighted
County
Scores
Cumulative
Weighted
County
Scores
Biodiesel Technology
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Oilseed Processing Technology Review
 Mechanical Extraction vs. Solvent Extraction
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Biodiesel Technology Review & Providers
 Biodiesel produced must meet or exceed the
ASTM specifications as per the standard D6751
 Catalyst Conversion
Vendors
Capital Costs
Operating Costs
Product Yield and Quality
Economy of Scale
Feedstock Flexibility
Who Can Use Biodiesel?
Anyone who uses
Petroleum Diesel…Annual
US Consumption
…57 billion gallons/year
B2 = 1.4 billion gallons/year
B10 = 5.7 billion gallons/year
B20 = 11.4 billion gallons/year
Mississippi Market Potential
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Total petroleum diesel consumption
–760 million gallons/year
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@ B2 = 15 million gallons/year
 @ B20 = 300 million gallons/year
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Farm Use @ B2 = 1.6 million gallons/year
 Farm Use @ B20 = 32 million gallons/year
Commercialization Options
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Stand-alone production facility
– Biodiesel from virgin oils and recycled fats
purchased on the open market
– Simple Payback > 10 years (no subsidy)
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Integrated Facility
– Process Mississippi grown soybeans into oil,
biodiesel, and other co-products
– Simple Payback ~ 7-8 years (no subsidy)
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Current federal subsidies reduce payback
periods by about 3 years
Paybacks based on 13 million gallons/year plant
Study Recommendations
Production Side Incentives
Consider producer payments
Consider blender credits to offset excise tax on
sales of biodiesel
 Direct investment in integrated soybean
storage/processing and biodiesel production and
distribution facilities
 Consider tax credits on equipment used for
biodiesel production, distribution or blending
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Recommendations
Market Adoption Incentives
Adopt the use of biodiesel blends in state fleets and other
municipal fleets such as school buses
 Special monetary incentives for on-farm biodiesel consumption.
 Encourage the use of biodiesel blends in private fleets by offering
monetary incentives
 Adopt use of biodiesel for stationary applications such as
generators
 Encourage use of biodiesel in the marine transportation sector.
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Invest in renewable energy education
Invest in research and development focused on lowering the
production cost of biodiesel and finding additional uses for
biodiesel and the byproduct glycerin
State Legislative Actions
House Bill 1130 (2002)
 Considered to be one of the strongest pieces of legislation in the nation in
support of ethanol.
 The bill authorized a producer’s payment of 20 cents per gallon of ethanol
produced up to a maximum of 6 million dollars per fiscal year, per plant.
 These payments my last up to 10 years from the start of production and
are set to expire in 2015. [Money not appropriated in 2002]
House Bill 1596 (2003)
 2003 regular session authorized the Mississippi Land, Water and Timber
Resources Board to set aside $1,000,000 for the purpose of providing
funds to the Mississippi Department of Agriculture and Commerce for use
in making payments to ethanol producers under Section 69-51-5 during the
State Fiscal Year 2003 – 2004.
House Bill 928 (2003)
 As sent to the Governor in the 2003 Regular Session, amended House Bill
1130 to include an unspecified producer payment for Biodiesel as well.
Issues pertaining to definition of biodiesel and method of calculation for
the producer payments require additional clarification.
Barriers for BioFuels
Cost
Integration into the current Fuel
Distribution System
Need Legislative
Support
Biofuels are
Questions?
Contact Information:
Mississippi Alternative Energy Enterprise
601-960-3610
www.msenergy.ms