APTIisamemberofthe

group

Large-Scale Ethanol: Applied Process Technology International

3rd Annual Virginia Biomass Energy Conference: Exploring Issues of Scale
1st Session: Large Scale Projects: Opportunities and Challenges
Mark Alderfer Director of Operations APTI
Applied Process Technology International, LLC Confidential and proprietary information

University of Richmond

March 7, 2011

APTIisamemberofthe

group

Ethanol Industry

FarmerCooperatives:1530MGPY

2
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Ethanol Industry

Independents:4050MGPY

3
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Ethanol Industry

CommoditiesTraders:100+MGPY

4
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Ethanol Sunk Costs

1stGenerationEPCCosts
Greenfieldcosts Aftermarket
Valero VERASUN(3/2009)$477+M
770MGPYsevenfacilities

ASAholdings(12/2009)$200M220 MGPY RenewEnergy(12/2009)$72M 110MGPY GPRE Global(9/2010)$169M147MGPY Ottertail(2011)$50+M57.5MGPY

2005$1.51.7/MGPY 2008 $2.02.25/MGPY 2011 ???

$1.5 2.25 /MGPY

5

$1/MGPY
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Ethanol Operating Costs

Operatingcostbreakdown
Revenue Ethanolsales DDGSsales WDGSsales Cost Corn Naturalgas Denaturant Electric Salaries Other
Applied Process Technology International, LLC

Percent% 86.5 12.5 1.0

79.0 9.0 2.0 2.5 2.5 4.0

6
Confidential and proprietary information

APTIisamemberofthe

group

Ethanol Operating Costs

CommoditiesMarket Corn

7
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Ethanol Operating Costs

Commodities NaturalGas
PastYear History

8
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Ethanol Operating Revenue

CommoditiesMarket Ethanol

9
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Ethanol Operating Costs and Revenue

Commodities CornCrush

10
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Ethanol Industry 2011

CapacityandConsolidation
IndustryProduction2010
204Plants 14.142BGPYCapability 13.589BGPYProductionBio refineries 522BGPYconstruction/expansion

13.23BGPYProductionEthanol 397MGPYEthanolExported(record) 9MmetrictonsExported(record) EthanolImports9.7MGPY

IndustryLeaders Producer Capacity (BGPY) ADM 1.75 Poet 1.4 Valero 1.1 GPRE 0.7 Aventine 0.5

RFA3March2011

EthanolProducersMagazine2010

11
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Ethanol Industry 2011

ScaleversusROI
SmallProducers
Challenges Higherperunitcost Isolationism MinimalCapitaltoupgrade

IndustryLeaders
Advantages Overheadspreadmultipleplants Commonoperatingpractices CapitalupgradewithROI

SuccessFactors Notepaiddown Commoditieshedging MultipleCoProducts SupportiveLocalmarkets

SuccessFactors FinancialStability Commodities&LogisticsExpertise MaximizedProducts DiverseMarkets

12

Applied Process Technology International, LLC

Confidential and proprietary information

APTIisamemberofthe

group

AdvancedBioFuelsandFeedstock

13
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Advanced BioFuels Sunk Costs

CommercialScaleBioRefineries
Performers
Bluefire

Location
Fulton,MS

DOE Award*
$87.6M

Feedstock Type
SortedMSW WoodyBiomass

Conversion Technology
Biochemical ConcentratedAcid Hydrolysis Biochemical

Fuel/ Amount**
19Mgals ethanol/yr

Poet

Emmetsburg, IA Soperton,GA

$100M

CornCob

25Mgals ethanol/yr 26Mgals/yr mixedalcohol

Range Fuels

$76.2M

WoodyBiomass

Gasification+Mixed AlcoholSynthesis

Abengoa

Hugoton,KS

$100M

Agricultural Residues

Biochemicaland Combustion

11.4Mgalsethanol/yr& cogenerationof heat/power

up to $10 / MGPY
*Award amounts still under negotiation, based on contingencies, and go/no go decisions **Amounts by fuel are based on estimates. Co-gen of steam/heat and power and not included.
Applied Process Technology International, LLC Confidential and proprietary information

14

APTIisamemberofthe

group

Advanced BioFuels Operating Costs

CellulosicOperatingCosts
Poethasnearlyhalveditstotalproductioncoststo$2.35agallon, andexpectstofallbelow$2bytheribboncutting. Thedroppingenzymecostsmeantheywillonlyaccountfor25 percentoftheproductionpricebynextyear,Andersensaid. Thestudyshowedthemarketcurrentlypaysabout$10pertonfor biomassonanotforprofitbasistouseasanutrientreplacement. Ifitwaspurchasedforaforprofitsystem,thecostwouldprobably be$33ton.Puttingthebiomassintorectangularbalesadds$23a tonandtransportationaddstothatamountforatotalcostof$54a tondeliveredtotheplant.
ClimateWire,02/16/2010

15
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Advanced BioFuels Operating Costs

FeedstockLogistics

Applied Process Technology International, LLC

Confidential and proprietary information

16

APTIisamemberofthe

group

Advanced BioFuels Operating Costs

Productionvs.ConsumptionLocation

Applied Process Technology International, LLC

Confidential and proprietary information

17

APTIisamemberofthe

group

Advanced BioFuels Operating Costs

Transportation:Truck60%

Applied Process Technology International, LLC

Confidential and proprietary information

18

APTIisamemberofthe

group

Advanced BioFuels Operating Costs

Transportation Rail30%

Applied Process Technology International, LLC

Confidential and proprietary information

19

APTIisamemberofthe

group

Advanced BioFuels Operating Costs

Transportation Barge10%

Applied Process Technology International, LLC

Confidential and proprietary information

20

APTIisamemberofthe

group

Advanced BioFuels Operating Costs

TransportationPipeline0%

Applied Process Technology International, LLC

Confidential and proprietary information

21

APTIisamemberofthe

group

Advanced BioFuels Operating Costs

TransportationComparision

Barge 1500 Tons 453,600 gals One 15 Barge Tow =

Railcars 100 Tons 30,240 gals 255 Railcars =

Trucks 26 Tons 7,865 gals 870 Large Trucks

514

Total miles one ton can be carried per gallon of fuel 202 59
Confidential and proprietary information 22

Applied Process Technology International, LLC

APTIisamemberofthe

group

Advanced BioFuels Operating Costs

AccesstoTransportationModes MultipleModes Expansion Location,Location,Location BiomassSupply AccesstoCoasts Coproductsmarkets

Applied Process Technology International, LLC Confidential and proprietary information

23

APTIisamemberofthe

group

Government Incentives

EthanolIncentives
VolumetricEthanolExciseTaxCredit(VEETC), Blenderscredit
providesoilcompanieswithaneconomicincentivetoblendethanolwithgasoline.$0.45pergallonblended intogasoline.VEETCiscurrentlyauthorizedthroughDecember31,2011

SmallEthanolProducerTaxCredit Internal RevenueCode"Section40"TaxCredit

UnderSection40(b)(3)oftheIRC,ethanolproducersthatmanufacturelessthan60milliongallonsof ethanol peryearqualifyforataxcreditequaling10centspergallonon15milliongallonsoffuelethanol. Themaximumincentiveis$1.5millionannually. ThistaxcreditisonthebooksthroughDecember31,2010.

EPAE15mandate(2001+automobiles) DOELoans USDAPrograms

24
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Government Incentives

CellulosicIncentives
CellulosicTaxCredit
At$1.01agallon,cellulosicethanolenjoystwicethetaxcreditthatgoestothecornbasedvariety.

SpecialDepreciationAllowanceforCellulosic BiomassEthanolPlantProperty
Itallowsataxpayertotakeadepreciationdeductionof50%oftheadjustedbasisofanewcellulosicethanolplantin theyearitisputinservice.

TheprovisioniseffectivethroughDecember31,2012

25
Applied Process Technology International, LLC Confidential and proprietary information

APTIisamemberofthe

group

Thank You

Applied Process Technology International, LLC

Confidential and proprietary information