US Fuel Ethanol Industry – A Current Snapshot Presented by Greg Krissek September 26, 2007

As of January 2007 In operation(113) 5.48 bgy Construction (65) 5.35 bgy

What we’ve been expecting - Ethanol Production Growth in the U.S. through 2008 Average growth = 2950 mmgy gal./yr. Average growth = 770 mmgy gal./yr. Average growth = 75 mmgy gal./yr. Requires ~ 4 billion bushels of corn

What others have been projecting - Ethanol Production Growth in the U.S Renewable Fuels Association – 9/14/ operating plants – 6.8 BGY capacity 85 construction projects – 6.6 BGY capacity Pro Exporter – 8/20/07 capacity as of: 12/31/ BGY 6/30/ BGY 12/31/08 – 11.5 BGY

Kansas Update

Source: American Coalition for Ethanol

Current Congressional Activity for Energy Legislation Senate Approved legislation with new RFS starting at 8.5 BGY in 2008 and growing to 36 BGY in 2022 (advanced biofuels after 15 BGY in 2015) Increased CAFÉ provisions but unable to approve a tax title House of Representatives Approved energy legislation without a fuels title (no RFS) No provision for CAFÉ Awaiting low carbon standard legislation White House 2007 State of Union address called for 35 BGY by 2017 Substantive, procedural and calendar issues slowing process - and next is the election cycle

Source: Chicago Board of Trade

With EPAct of 2005, the Price Relationship of Ethanol is now to RBOB Gasoline: currently inverted (ethanol price below RBOB) even with high crude oil prices Source: Chicago Board of Trade 10/06 Begin winter contracts prices narrow 4/07 Begin summer contracts prices invert Price relationship $.25/gal or higher

oline is blended with ethanol Today nearly fifty percent of U.S. gasoline is blended with ethanol Source: Pro Exporter Network

Current Demand (6.2 BGY) and Potential Growth (8.6 BGY) of U.S. Ethanol Usage to E10 – June 2007 PADD 1 RFG – 1.7 BGY Voluntary – 300 MGY New E10 – 3.8 BGY PADD 2 RFG MGY; Voluntary 1.6 BGY New E10 – 1.7 BGY PADD 3 RFG MGY; Voluntary 40 MGY New E10 – 1.5 BGY PADD 4 RFG – 50 MGY; Voluntary 80 MGY New E10 – 370 MGY PADD 5 RFG – 1.0 BGY Voluntary 200 MGY New E10 – 1.2 BGY Source: ProVista Renewable Fuels Marketing

Beyond E10 - E85 and FFV’s – over 30 models available today

FLEX FUEL (E85) VEHICLES Potential is growing rapidly

Kansas Biofuels Stations

The Face of Investors is Changing ● – Farmer-owned cooperatives and LLC’s Pool of investors able to raise more capital to build larger plants Reduced risk Plant able to ride out market fluctuations because of corn-delivery agreements with farmer/investors ● Today - Larger investors Market stabilization draws big investors Potential returns Take advantage of economy of scale ● Banks being selective

Energy Prices Lead Plant Designers to Evaluate Alternative Energy Sources ● Land Fill Gas ● Corn fiber ● Biomass Ag Residue Solid waste Wood chips ● Waste steam … but reliability, consistent availability, conversion technology and cost are crucial

Process Optimization

Industry Challenges and Opportunities Challenges Tight margins for ethanol plants Fuel terminal infrastructure and distribution shortfalls Vehicle engine technology Battling in the court of public opinion Opportunities Low prices cure low prices Blender pumps and high blend fuels Political support remains strong Additional feedstocks

Questions? Greg Krissek Western Plains Energy - Campus, KS