Biofuels: Boom or Bust for Montana Producers November 9, 2007

 Biodiesel Market  Byproducts Market  Feedstock  Size  Process  Production/Operation Costs  Construction Costs  Return on Investment  Risks

 Source: CARD, Iowa State University

 One Million Gallon Plant (an example)  Oils from restaurants and food processing  Tallow from beef packing  Oilseed crops ▪ Canola ▪ Safflower ▪ Sunflower ▪ Rapeseed ▪ Mustard ▪ Soybean ▪ Camelina

 Product Revenue  Biodiesel$x.xx / gallon  Glycerin (fuel oil).00 / lb. ▪ 0.75 lbs. per gallon  Meal $120.00/ ton ▪.067 tons per gallon

 Subsidy Revenue  Tax credit for small producers 0.10/gal.  Tax credit – State (MT) 0.10/gal.

 Processing (assumptions)  Feedstock, canola (+ handling & cleaning) ▪ $0.151/pound  Crushing and filtering ▪ $50 /ton  Methanol ▪ $0.14/gallon of biodiesel  Catalyst ▪ $0.08/gallon of biodiesel

 Processing (assumptions)  Neutralizer ▪ $0.01/gallon of biodiesel  Natural gas/electricity ▪ $0.02/gallon of biodiesel  Cost of plant operation (labor, maintenance, administration ▪ $0.15/gallon of biodiesel

 Assumptions Annual Production (million gallons) Capital Cost/Gallon 0.5$

 Important Fixed Costs  Depreciation (economic) and interest ▪ 10 years / 6 percent $0.15 per gallon of biodiesel

 What’s missing...  Land  Buildings  Registration, licenses and certification  Permits  Utility installation  Wastewater treatment  Rail spur development

 Revenue (1 million gallon/year plant)  Biodiesel$ 3,060,000  Glycerin 0  Meal 804,000  Total 3,864,000  Total with subsidies 4,064,000

 Processing Costs  Total processing3,910,638  Capital costs  Interest and depreciation 150,000  Total Costs 4,060, /g  Net income (EBIT) 3,362

 Oil supply  Crude oil prices  Blending  B100  Demand for biodiesel and byproducts  Distribution  Longevity of the Federal Excise Tax Credit

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