The Ethanol Project A Feasibility Study

Government and Policy

Public Education about Ethanol Direct Financial Incentives for Producers and Customers Possible use in all state vehicles Progressive State Actions

Recent Energy Bill secures market and increases demand – new plants will be needed New plants must follow same guidelines as commercial refineries Currently no other regulations, but more may follow Policies Regulating Ethanol Production

Prospects for local Ethanol plant is positive New legislation supports the initiative No major obstacles, regulatory or otherwise, facing new plant Overall Assessment

Supply

Whenever possible, the feed stock will come from local suppliers. However, price will dictate the supplier of our input materials If it is cheaper to truck in corn from outlying areas or haul corn in by railcar, then the material will be sourced that way Where will the corn come from?

In Delaware about 160,000 acres of corn are planted each year At an average yield of about 100/bu per acre that produces 16 million bushels per year Total production on the Delmarva peninsula in 1999 was over 39 million bushels So, local producers grow more than enough corn to meet the needs of our proposed facility Local Corn Production

Manufacturing states we need 8,712,000bu/yr Delaware produces on average, 100 bushels per acre So, if all the corn is sourced from within Delaware a total of about 87,120 acres is needed What acreage is needed of Corn to supply needs?

The cost of the crop is based on the price from the source with the added cost of transportation Assuming a crop price of $1.94/bu Trucking would add.08/bu Railcars would add.70/bu What is the projected cost of the crop delivered into the plant?

Since all our corn requirements can be met locally and we need 8,712,000 bushels per year, then with a cost of $1.94/bu of corn and truck hauling cost of $.08/bu Our total cost for corn each year would be about $17,598,240 Total cost of crop

Total cost of crop cont. In addition to our variable input costs, the fixed costs of land, rail sidings, and storage facilities would also have to be considered as a part of the total capital costs by the manufacturing division

Manufacturing

1)Produce ethanol from corn at a minimum expense 2) Produce several co-products to enhance company profits Objectives

1) Corn supply could be transported on-site at a cost lower than that of production. 2) Corn prices will remain low enough to make production feasible. 3) Local customers will utilize all of our ethanol and co-products. Assumptions

4) Competition from Delmarva Poultry industry will not detract from profits of either. 5) Price assumptions $1.94 per bushel. Production per gallon. Assumptions cont.

Plant production capacity: 25 million gallons per year (330 Working Days) Production Process: Wet Milling Production Results 1)25 million gallon requires 8.8 million bushels of corn. 2)Initial capital investment = $ 27.9 million. Results

3) Annual operational cost = $ 22 million per year / $ 66, per day. 4) Corn/Ethanol Transportation Considerations Assuming 4000 bushels of corn per car, we require 33 cars in per week. Assuming 10,000 gallons ethanol per car, we require 38 cars out per week. Results cont.

1)Distillers Grain 2)Corn Gluten meal, 60% 3)21% Protein feed 4)Corn Oil 5)Carbon Dioxide Co-products

Wet milling Process

Marketing

Recommendations Acquire help from American Coalition for Ethanol in regards to product development and advertising Sell product to refineries –80% gas –20% ethanol

Recommendations cont. The blend can be used in most engines –End of the line consumer: Typical car owner Pursue a contract with a rent-a-car business –Only buy 80/20 blend –Shows a market for our product Secondary product: Corn Glutton Meal –60% protein –No negative side effects

Secondary Product Target poultry industry Establish a contract with Perdue or like company –Corn costs rise –Offer our meal at a reasonable price Auctions