“Pete” Moss - Mississippi Biomass and Renewable Energy Council

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“Pete” Moss - Mississippi Biomass and Renewable Energy Council

Bioenergy DevelopmentChallenges and OpportunitiesSouthern Bioproducts And Renewable Energy ConferencebyPete MossFrazier, Barnes & Associates, LLCMemphis, TNApril 15, 2008www.frazierbarnes.comfbapete@frazierbarnes.com


Frazier, Barnes & Associates• Technical and Marketing Consulting Firm Established in 1996• Headquartered in Memphis, Tennessee• Specializes in Value-Added Processing of Agricultural BasedFeedstocks- Bioenergy Production (Ethanol, Biodiesel and Biomass)- Fractionation- Oilseed Processing/Vegetable Oil Refining- Biomass to Energy- “Green” Electrical Power Production• FBA Focuses on Project Development Services- Feasibility Studies/Business Plans- Project Development/Implementation- Process Technology Evaluation/Selection- Owners Representative Services- Capital Procurement & FinancingApril 15, 2008©FBA2


"At the moment there is enough oilin the market and no need tochange OPEC's output."OPEC secretary general, Abdullah al-Badrithe04.07.08, 6:32 AM ETApril 15, 2008©FBA3


Crude Petroleum FuturesData 1: Crude Oil1201008060402001/2/19861/2/19871/2/19881/2/19891/2/19901/2/19911/2/19921/2/19931/2/19941/2/19951/2/19961/2/19971/2/19981/2/19991/2/20001/2/20011/2/20021/2/20031/2/20041/2/20051/2/20061/2/20071/2/2008Dollars per BarrelSource: Energy Information AdministrationApril 15, 2008 ©FBA4


Gasoline Prices350Data 2: Conventional Regular Gasoline3002502001501005006/2/19866/2/19876/2/19886/2/19896/2/19906/2/19916/2/19926/2/19936/2/19946/2/19956/2/19966/2/19976/2/19986/2/19996/2/20006/2/20016/2/20026/2/20036/2/20046/2/20056/2/20066/2/2007Cents per GallonSource: Energy Information AdministrationApril 15, 2008 ©FBA5


Diesel Fuel PricesD ata 7: Low-S ulfur No. 2 D iesel FuelCents per Gallon400350300250200150100500Source: Energy Information AdministrationApril 15, 2008©FBA6


U.S. Soybean Processing PlantsSolvent Extraction over 600 TPDMechanical Extraction over 600 TPDWAMTNDMNMEORVTNHIDWYSDWIMINYCTMARICANVUTCONEKSIAMOILINKYOHWVPAMDDCVADENJTNNCAZNMOKARSCMSALGATXLAAKFLHIApril 15, 2008©FBA7


U.S. Biodiesel Plants: Active & Under ConstructionJuly 2007ActiveUnder Const.April 15, 2008©FBA8


April 15, 2008©FBA9


Steps to Commercializing a Bioenergy Project1. Feasibility Analysis2. Site Analysis3. Marketing Plan4. Business Plan5. Business Entity Formation6. Preliminary Engineering7. Equity and Finance Procurement8. Detail Engineering9. Plant Construction10. Plant Commissioning11. Initial OperationsApril 15, 2008©FBA10


Bioenergy Project Investment Factors**Feasibility Study**Business Plan- Initial & Final**Site Selection & Cost-Site Due Diligence & Environmental Assessment**Utilities: Water, Gas, Electricity, Sewer**Economic Development Planning- Tax Abatements, Enterprise Zones, Other Incentives**Feedstock Procurement Plan-Feedstock Cost, Quality, Supply Agreements**Permitting- Air, Water- Construction Permits, Operating Permits**Site Plan- Peliminary Layout, Roads and Rail Access**Capital Cost**Product Marketing Agreements- Biodiesel, Glycerin, Soybean Meal, Hulls**Transportation Services- Truck, Rail, Barge Rates and Logistics**Risk Management**Technology Selection and Vendor Negotiation- scope of work, Capital Cost, Operating Cost, Guarantees, Schedule **Plant Management & Staffing**EPC Determination**Competition**Petroleum Prices**Financing Arrangement- Equity, Partners, Terms**Government IncentivesApril 15, 2008©FBA11


Watch the Investment “Focus” Factors•Feedstock Availability, Cost and Security•Capital and Operating Cost•Capital Availability and Cost•Petroleum and Bioenergy Prices•Competition•Transportation Costs•By-Product Prices•Government Incentives•Technology ChangesApril 15, 2008©FBA12


Biggest Bioenergy Challenges• Secure your Feedstock• Secure Off-Take Agreements• Secure CAPITAL/FINANCING!April 15, 2008©FBA13


Potential Bioenergy Pitfalls10 Potential Pitfalls in Starting a New Bioenergy Project1. Lack of a clearly defined mission2. Inadequate planning3. Failure to use good advisors and consultants4. Lack of member leadership5. Lack of member communication6. Inadequate management7. Failure to identify and minimize risk8. Overly optimistic assumptions9. Not enough capital investment10. Inadequate communications to all stakeholdersApril 15, 2008©FBA14

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