Exhibit E
Sales of Port and Terminal as Distributor/Blender
Addendum to:
Sale of Operating Biodiesel Business, Fuel Terminal and Real Estate
Consolidated Energy Holdings, LLC
Prepared for James Gastineau
429 Murray Street, Suite 700
Alexandria, LA 71301
March 25, 2014
1
Introduction
This presentation provides an overview of the distinction and business opportunities of being a biodiesel blender/distributor vs. being a
biodiesel producer . . . and in particular how this relationship benefits both Vanguard and PAAL.
First, being a biodiesel producer has certain rules which must be followed regarding the management of Renewable Identification
Numbers (RINs).
..
These are at the heart of the EPA’s Renewable Fuel Standard (RFS) where refiners are required by the EPA to blend in renewable fuel with
their fossil-based fuels.
Each year the EPA increases the volume required. However, refiners have the option to opt out of blending and simply buy the credits
(the RINs). This process works the same way for ethanol.
So when a biodiesel producer (Vanguard) sells a gallon of biodiesel to a distributor (PAAL) they attach to that gallon a RIN. This RIN is
worth whatever the market is for RINs on any particular day. Anyone can be registered to buy and sell these RINs, and typically in a
speculative manner similar to buying futures or stocks.
However, in order for the distributor to transact (sell) the RIN, they are required to blend into the biodiesel 80% or less #2 diesel fuel.
Typically, distributors blend 80% #2 diesel with 20% biodiesel (called B20).
The EPA rules dictate that the biodiesel producer not be allowed to sell the biodiesel and keep the RIN for later sale. (As noted, the
biodiesel MUST be blended with 80% or less #2 diesel fue)l.
As almost every biodiesel producer is not a distributor, but having Vanguard own the PAAL facilities gives both entities certain market
advantages others do not typically have.
This presentation delineates this two company synergistic relationship as it relates to the local central Louisiana market for biodiesel
blends of #2 diesel fuel.
2
Location
..
MISSISSIPPI RIVER
INTRA-COASTAL
WATERWAY
 PAAL is EPA approved for
RFS2 program (#3096)
 IRS clearance as a biodiesel
blender (for tax credit)
 PAAL has a 40 year lease
with Port of Alexandria
for all liquids.
 Port is on the Red River which
connects to the Achafalaya River
and Intra-Coastal waterway south.
To the north and east: From the
Red River then via a canal to the
Mississippi River
PAAL fuel distribution
market area. Approx. 75
mile perimeter
Barge routes to
main refineries:
Citgo at Lake Charles;
Exxon/Mobil at
Baton Rouge
 PAAL: Port Asset Acquisition, LLC
Owned 100% by :
Consolidated Energy Holdings, LLC
429 Murray Street #700
Alexandria, LA 71301
318 442-8730
3
Facilities
..
 PAAL terminal is easily
accessible . Dotted blue
line marks road to port
from I-49 and secondary
arteries
LEGEND
A: Off-loading dock for barges. Up to 20,000 bbls each
B: Fuel storage tanks. Total capacity 4.5 million gals.
C: Biodiesel storage tank. Coiled and steam heated with
insulation. Holds 650,000 gals.
D: Fuel blending and loading racks with scales. Currently
handles two trucks simultaneously
E: Office, entry and exit gates
F: Rail spur. Connects to main line of Union Pacific Railway.
4
Facilities
..
 PAAL truck rack entrance
 State certified truck scale
 PAAL diesel-biodiesel blending unit
 PAAL dye injection system (right)
5
Facilities
..
 PAAL port loading facility
 2 Fuel storage tanks, 55,000 bbls each (total 4.5M gals)
 PAAL port loading facility
 Biodiesel storage tank,15,000 bbls (650,000 gals)
Tanks is insulated; and with steam heating coils
6
Market
 Tank trucks going to Archie fuel
terminal save two hours and
80 miles of fuel by going to
PAAL’s Alexandria, fuel rack for
#2 diesel and biodiesel blends
 Fuel brought to Archie from
Baton Rouge comes by barge
from Placid Refiners who own the
Archie terminal
 Fuel is brought to PAAL by barge
from either Lake Charles or Baton
Rouge.
 Currently, total volume of diesel
fuel dispensed at Archie is about
120k to 150k per day (18 to 22
trucks), Monday thru Friday.
 (A) PAAL port terminal rack to (B) Archie rack, 39
miles (55 minutes)
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The Opportunity
 Vanguard participate in the profit of blending biodiesel at PAAL
 Opportunity requires capital to bring in approx. 840,000 gals.
of #2 diesel/month
 Largest local Jobber will take 5 to 7 trucks per day of B20
35k to 49k gallons/day; 700,000 to 980,000 gals/month
Total biodiesel will equate to 150,000 to 200,000 gals/month
 Jobber must have at least a three to four cent/gal savings over
#2 diesel they currently buy at Archie to make this work
 Jobber automatically saves about 2 cents by NOT going to Archie
 There are six or so other distributors in the central Louisiana
market, combined it is estimated they would do about 2 to 3 truck
loads per day adding about 70,000 gals/month to total biodiesel
requirement
 Combined volumes will build to 1.5m gals per month by Year 2
 PAAL existing personnel will manage marketing effort
 PAAL will manage entire operation utilizing state of the art Emerson
fueling and automated real-time billing (payment capture) system.
8
The Opportunity
Critical Assumptions
1.
840,000 gals of #2 diesel first month
2.
5,000 of which is a heel in 2.25M gal storage tank
3.
Cost of #2 from Citgo at Lake Charles, $3.31/gal (3/13/14)
4.
Barge transport $0.09/gallon
5.
Cost vs. Archie +4 cents/gal
6.
Biodiesel supplied to 650k storage tank
7.
Cost of biodiesel $2.48 (after RIN transaction by PAAL)
8.
Vanguard margin split with PAAL 50/50
9.
In order to never loose money, PAAL takes a PUT hedge on
each 42,000 gals of both #2 and biodiesel, separately
10. No reserve account required as PUTS will be used
11. PUTS placed when in the money and for each block of
42k gallons sold
12. Hedging account brokerage fees (negligible) at < $300/mo.
9
The Opportunity
Margin Analysis for B20 at PAAL – Year 1
Inventory
Per Gal.
#2 Gals
Monthly Volumes
Whlse #2 Diesel
Freight of #2 to PAAL
TOTAL #2
$2.85
0.08
Price of B100*
Freight to PAAL
TOTAL B100
$2.45
0.00
$2.55
$343,000
0.00
$343,000
$2.45
20%
80%
0.49
2.34
2.83
Costs
B100
#2 Diesel
TOTAL COST
Pricing
Cost of #2 at Archie
Cost to PU at Archie
TOTAL COST AT ARCHIE
Cost of B20 at PAAL
Profit Margin
560,000
$1,596,000
44,800
1,640,800
$2.93
Biodiesel
Gals @20%
140,000
2.93
0.02
$2.94
-$0.04 discount
$2.90
$0.11
*AFTER PROJECTED RIN VALUE OF $0.80/GAL
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