Transcript Ethanol: A Nebraska Economic Development Target

Opportunities and
Challenges in the Nebraska
Ethanol Industry
Governor’s Ethanol Coalition
August 2007
Presentation by
Todd Sneller
Nebraska Ethanol Board
Historical Perspective
“Induced Employment”: Lincoln, NE- 1933; Governor’s car
being filled up with corn alcohol gasoline ( E-10)
Ethanol: An Economic Catalyst for
Nebraska
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“Unquestionably, the most important valueadded product to the State’s economy is,
and will continue to be, ethanol production.”
“Policy decisions at the federal level along
with increased demand for ethanol could
dramatically increase U.S. net farm income
and create many jobs over the next few
years.”
“Nebraska must communicate that it is eager
to attract desirable businesses such as…biofuel plants…through a combination of tax
breaks and innovative policies.”
Ethanol Production By Incentive
1985-2007
600,000,000
550,000,000
500,000,000
450,000,000
400,000,000
350,000,000
300,000,000
250,000,000
200,000,000
150,000,000
100,000,000
50,000,000
0
Years
No Incentive 1985-1989; LB1124 1990-2000; LB605 20012005; Overlap of LB605 & LB536; LB536 2003-2012
Oil: Hidden Costs
By including externalities, the true cost of oil may exceed $150 per barrel
Ethanol Plants in Nebraska
17 plants producing nearly 1.1 billion gallons per year
Location
mgy
bu/year
Hastings
65
24
Columbus
100
37
Abengoa Bioenergy Corp.
York
55
20
Cargill, Inc.
Blair
100
37
Aurora
35
13
Hastings
55
20
Plainview
32
12
KAAPA Ethanol
Minden
60
22
Trenton Agri Products, LLC
Trenton
45
17
U.S. Bio Platte Valley, LLC
Central City
96
36
Midwest Renewable Energy
Sutherland
20
7
Cornhusker Energy
Lexington
80
30
Mead
24
9
Jackson
55
20
Ord
118
44
Madrid
55
20
Ravenna
80
30
Operating
Chief Ethanol Fuels
ADM Corn Processing
Nebraska Energy
AGP Corn Processing, Inc.
Husker Ag
E3 BioFuels
Siouxland Ethanol
US Bioenergy - Ord
Mid America Bio Energy
Abengoa Bioenergy
Plants under construction
Husker Ag
Cargill
Midwest Renewable Energy
Abengoa Bioenergy Corp
KAAPA
Plainview
46
17
Blair
140
52
Sutherland
100
37
Ravenna
20
7
Minden
50
19
356
132
Sub-Total
Under Construction
Aventine Aurora West, LLC
Aurora
110
41
ASA Biofuels
Albion
118
44
E-Energy Adams, LLC
Adams
50
19
Cambridge
84
31
Norfolk
53
20
Atkinson
20
7
Carlton
100
37
Wood River
110
41
Fairmont
100
37
Mid American Agri Products, LLC
Elkhorn Valley Ethanol,LLC
NEDAK
ALTRA, Nebraska, LLC
BioFuels Solutions
Advanced Bio Energy, LLC
Emerging Issues
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Jobs/Training
Energy/Natural Gas/Coal
Transportation (Rail/truck)
Remediation
Safety Training
Water
Distillers feeds
Pipeline
E85 expansion/E10 Saturation
Annual NE Ethanol Production
Capacity and Corn Use
Status
(as of 07-2007)
Installed capacity
Under
construction
Permitted
Total
Ethanol
(Mil. gal)
Corn use
(Mil. bu)
950
300+
[25%]
+800
530
[40%]
+2,100
3,690
750
1,320
[97%]
Economic Benefits of Ethanol Production
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Increased Economic Value for Cattle/Dairy
Industry; Feed Manufacturing
Stimulates Transportation Sector; Rail/Truck
Quality Jobs; Retention of Skilled Workers
Plants Well Suited for Rural Communities
Expands Local Tax Base & Tax Revenues
Value-Added Industry; Promotes Export of
Finished Products
Growth Industry that Attracts Capital to the
State; Plant Expansion Potential Increases
Capital Outlay and Related Economic Activity
Stimulates Allied Industries and Enhances
Infrastructure
Ethanol Related Opportunities
Ethanol development provides opportunities
for expansion of Nebraska businesses and
industries. The impact of an expanded
ethanol industry extends well beyond the
agricultural sector.
Opportunities – Related Industries
Parts Providers
Boilers
Pipes/Fittings
Centrifuges/Separation
Pollution Control
Chemical Feed & Control Pumps/Motors
Computer Software
Refrigeration
Control Systems
Scales/Weight Systems
Conveyor Components
Tanks
Cooling Towers
Used Equipment
Dryers
Vacuum Systems
Evaporators
Water Treatment
Fans/Blowers
Fermenters
Filtration
Gauges/Valves
Grain Handling/Storage
Hammer Mills
Heat Exchangers
Jet Cookers
Laboratory Systems
Measurement/Analytical Systems
Mixers
Service Providers
Accounting
Lenders
Agricultural Services Lighting
Appraisals
Marketing
Chemicals
Marketing - CO2
Cleaning
Marketing - Distillers Grain
Construction
Marketing - E85
Marketing - Ethanol
Consulting
Market Research
Electric
Electrical Distribution Media Publications
Mobile Railcar Movers
Engineering
Natural Gas
Ethanol/Petroleum Distributors
Operation & Management Services
Fabrication
Fermentation IngredientsPermits
Personnel/Labor Support
Insurance
Plant/Design Builders
Laboratory Testing
Refractory Contractors
Legal
Risk Management
Lenders
Seed
Lighting
Current and Projected Job Demand
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July 2007 NE Ethanol Industry Jobs:
885 Direct Jobs at 17 Plants
1,500 Indirect (“induced”) Jobs
Six Plants w/ major expansion underway
-Expansions to be completed by 1Q ’08
-100 new Direct Jobs from expansions (est.)
-165 Induced Jobs from expansions (est.)
9 Plants Under Construction
-400 Direct Jobs in new plants by 1Q ’08
-630 Induced Jobs in new plants
1,300 new Direct and Induced Jobs by 1Q ’08
Ethanol Sector Jobs and Wages
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Ethanol jobs listed on Nebraska sites:
General Manager
Office Manager
Plant Manager
Commodities Manager
Controller
Process Supervisor
Maintenance Supervisor
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Lab Supervisor
Administrative Assistant
Accounts Payable
Commodities Administrator
Risk Management Assistant
Grain Merchandiser
Sales and Contracting
Average annual salary at Nebraska ethanol
plants in 2006 was $50,000.
Demand for transportation sector jobs is high.
Demand for skilled trade positions is high.
Future Challenges
Continued Development Will Require:
• Expansion of engineering and construction services
• Efficient permitting of new and expanding facilities
• Continued development of livestock industry to
provide new distillers feed markets and products
• Supply trained workers for ethanol and related businesses
• Support training and education programs at colleges
• Foster competitive business environment
• Increase supply of potential feedstocks for ethanol production
• Maintain a public policy framework that encourages the
production and use of biofuels
• Enhance transportation efficiency
• Create awareness of quality and quantity of ethanol related jobs
Putting Water Use in Context
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Virtually all types of manufacturing use
water at some point in the production
process.
Current ethanol processing technology
uses approximately 3 gallons of water for
each gallon of ethanol.
Ethanol process improvements indicate
water use can be reduced to 1.5 to 1.
Water Conservation Opportunities
• Reduce Energy Consumption (less cooling
tower evaporation & blowdown)
• Recycle waste and blowdown streams
• Treat makeup water (less blowdown)
• Use air or groundwater to reject heat (less
evaporation and blowdown)
Water Conservation Opportunities
Gallons Fresh Water/ Gallon Ethanol less than:
• <3 –
Current Best Practice
• 1.5 – Achievable with proven technology at
extra capital cost
• 0 – Possible in future with new
technologies
Putting Water Use in Context
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17 ethanol plants are currently
operating in Nebraska; 9 plants are
actively under construction; 37
additional plants have been proposed
for Nebraska sites. If ALL current
and proposed plants were operating,
they would use about two-tenths of 1
percent of the water pumped in the
state.*
*Based on USGS estimates.
Putting Water Use in Context
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A large (100 mgy) ethanol plant uses
the same amount of water annually
as it takes for four center-pivot
irrigation systems to water a section
of land.
In water-short area, ethanol plant
developers buy land that has
irrigation wells and convert the water
use from irrigation to ethanol
production.
Most Recent Studies Show Positive Net Energy Balance
for Corn Ethanol
60,000
40,000
Lorenz&Morris
Wang et al.
20,000
Net Energy Value (Btu/gallon)
Marland&Turhollow
0
-20,000
Agri. Canada
Shapouri et al.
NR Canada
Shapouri et al.
Wang
Kim &Dale
Graboski
Kim &Dale
Delucchi
Ho
Weinblatt et al.
Keeney&DeLuca
Pim entel
Pim entel
Pim entel
Pim entel
&Patzek
-40,000
Patzek
-60,000
-80,000
Cham bers et al.
-100,000
-120,000
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Energy balance here is defined as Btu content a gallon of ethanol minus fossil energy used to produce a gallon of ethanol
Total Energy Conclusions
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Corn-based fuel ethanol achieves moderate
percent reductions in GHG emissions, large
percent cuts in oil use. Its total production
is limited relative to transport fuel use.
Cellulosic ethanol can achieve much greater
percent GHG benefits than corn ethanol. Per
mile oil use benefits are comparable to corn
ethanol. Potential production is far greater.
Ethanol Production should
remain a targeted industry in Nebraska
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Ethanol production will continue to
be an economic stimulus for many
product and service sectors in
Nebraska.
It is an industry ideally suited for
rural communities.
Ethanol production will become an
increasingly more important part of
Nebraska’s economic base.
Slide Seven
Nebraska’s Competitive Advantage
for Ethanol Production
Nebraska continues to provide some of the highest returns
for ethanol investors.
Slide Four
Nebraska’s Competitive Advantage
for Ethanol Production
Corn Supply
• Nebraska had net exports of 459 million bushels of corn for the
2006-07 crop year.
• Net exports for current (2008-09) crop year are projected to be
195 million bushels – which would be a quantity sufficient to
produce an additional 550 million additional gallons of ethanol.
For more information, contact:
Todd Sneller
Nebraska Ethanol Board
Lincoln, NE
402-471-2941
www.ne-ethanol.org