BioFuels Activities in Mississippi Sumesh Arora Mississippi Alternative Energy Enterprise - Mississippi Technology Alliance Southern Bio-Products Conference March 5, 2004 What are BioFuels? Significance of Biofuels National Security Increased Energy Independence Creates Jobs – improved farm economy Environmental Benefits Biodiesel Emissions EPA: A comprehensive Analysis of Biodiesel Impacts on Exhaust Emissions: Draft Technical Report EPA420-P-02-001, Oct. 2002 Why Use Ethanol? 10% ethanol-gasoline blend reduces carbon monoxide emissions by up to 30%. Over 10% all gasoline in the US contained ethanol in 2002. All new vehicles are ethanol-ready. Ethanol reduces our demand for imported gasoline by 100,000 barrels each day. BioFuels Activity in Mississippi Very Progressive… Projects in Mississippi BioFuels Ethanol Biodiesel Commercial Commercial Pilot Scale Pilot Scale Research Research Feasibility Studies Legislative Demonstrations ETHANOL C2H6O Ethanol Process and Feedstocks US Capacity: 2.85 billion gallons/year – 72 Plants, 10 under construction – > 90% derived from cornstarch (fermentation) Gasification of biomass Syngas fermentation Other potential ethanol feedstocks: – Wheat, sorghum, potatoes, wood waste, corn cobs, straws, corn hulls, corn stover, grasses (switch grass), kenaf, bagasse, MSW Ethanol Plant Activity Southern Ethanol 45 MM gal/year Mississippi Ethanol 1 MM gal/year EOH Energy LLC 50 MM gal/year Southern Ethanol 30 MM gal/year Amory Greenville Vicksburg Aberdeen Winona Pearson BioEnergy 3 MM gal/year Commercial Ethanol Activity Southern Ethanol Company, LLC First company to announce sites in Amory and Vicksburg Amory construction expected to begin in early 2004 and complete by mid 2005 A 30 mm gal/year plant may consume about 12 million bushels of corn per year which translates to about 30,000 bushels of corn per day A sizeable portion of the corn used could be locally grown TDF (Tire Derived Fuel) will be a unique feature of the Amory plant Greenville may be a third site EOH Energy, LLC Announced in April 2003 to construct a corn-based ethanol plant in Greenville Plant capacity of more than 50 million gallons of ethanol per year Expected investment in the plant is about $58 million Plant expected to open in the fall of 2004 Working with one of the major ethanol plant design and construction companies in the US to build this plant Ethanol Pilot Scale Activities Pearson Bioenergy Inc., Aberdeen, MS Involved in pioneering work in non-fermentation based waste biomass to ethanol technology. A 400 pound per hour pilot plant completed in early 2004 is in limited operation A 3 million gallon per year prototype plant is expected to open mid - 2004 The pilot plant capable of evaluating of various biomass feedstocks Mississippi Ethanol, LLC, Winona, MS Innovative gasification process to convert biomass into ethanol The design for a 1 million gallon per year ethanol pilot plant is complete Expected start date of the pilot plant is in the summer of 2004. This plant will utilize 30 dry tons per day of wood waste as the feedstock A 1/10th scale version of this plant is being assembled at Mississippi State University (MSU) for research purposes This project is getting technical assistance from MSU engineering faculty and staff of the university’s Diagnostic Instrumentation and Analysis Laboratory (DIAL). Ethanol Research Activities Biomax Gasifier Mississippi State University is home to one of only six of such gasification units in the world The object is to efficiently convert various biomass materials into gases, and subsequently into energy-related and valueadded chemicals such as ethanol and acetate. The machine, which arrived on campus in August 2003, is built by Community Power Corporation (CPC) of Littleton, Colorado. Joint research project between MSU and Oklahoma State University Two-year-old U.S. Department of Agriculture grant that evenly divides about $1 million a year between the two schools. Experimenting with grasses and residues from various crop processes such as cotton gin waste, rice husks and chicken litter. More Research Activities The Mississippi University Research Consortium for the Utilization of Biomass formed in 2000 Funding from the US Department of Energy and the State of Mississippi Total funding is $8.1 Million over a six year period Members include Mississippi State University (lead university), Jackson State University, University of Mississippi, and University of Southern Mississippi The mission of the Consortium is to develop technologies that are capable of producing valuable products from Mississippi-grown biomass resources, development of additional research capabilities within Mississippi, and the education of future engineers and scientists within Mississippi with expertise in the production of chemicals from biomass feeds. Ethanol Research… Syngas Fermentation – The MSU Team has isolated cultures capable of producing ethanol at a rate several times that of the best rates reported in literature Acid Hydrolysis – USM has greatly improved conversion performance via better reactor design and operation and is developing new membrane separation systems JSU has developed a pre-treatment technique that improves fermentation of the hydrolyzate by removing inhibitors prior to fermentation. Enzymatic Conversion – UM is working on the isolation of novel enzymes Mississippi-Land Use BIODIESEL Excellent choice as a low sulfur, high lubricity, fuel additive Biodiesel Process Catalyst CatalystMixing Purification MethanolRecovery Quality Control Methyl Ester Methanol Recycled Methanol Vegetable Oils, Used Cooking Oil, Animal Fats Pharmaceutical Glycerin Transesterification Crude Biodiesel Glycerin Purification If desired Neutralizing Acid Neutralization Phase Separation Re-neutralization MethanolRecovery Crude Glycerin Biodiesel Plant Activity Biodiesel of Mississippi 15 MM gal/year Renewable Fuels, Inc 2 MM gal/year Tunica Marks Nettleton Biodiesel of Mississippi 40 MM gal/year Meridian EECo 400 gal/day Commercial Biodiesel Activity Environmental Energy Corporation (EECo), Meridian EECo is the first producer of biodiesel in the state Current production capacity is about 400 gallons per day with potential of 2,000 gallons per day Operation uses yellow grease from regional independent restaurants Renewable Fuels, Inc. (RFI), Tunica Evaluating biodiesel production technologies and feedstock sources for year Considering a 1.5 million to 3 million gallon per year plant This plant is expected to be able to use yellow grease and soybean oil Biodiesel of Mississippi, Nettleton Approximately 15 million gallons per year plant under construction in Nettleton Currently awaiting necessary environmental permits from Mississippi Department of Environmental Quality (MDEQ) Based solely on soybean oil as the feedstock Since 1 gallon of soybean oil yields one gallon of biodiesel, this plant is expected to use: – – – 15 million gallons of soybean oil annually Requirement of roughly 10.7 million bushels of soybeans or 240,000 acres (assuming a soybean yield of 45 bushels per acre) Considering co-locating a biodiesel plant with the Bungee soybean oil processing facility in Marks, Mississippi. Biodiesel Research Activity Develop numerous potential candidate lipid feedstocks included blended feedstocks DOE Potential feedstock candidates in the Southeast US include: – poultry and swine fats MSU – oils extracted from genetically manipulated plants – novel plant species typically not considered lipid feedstocks – and other lipid sources selected based on a thorough technical and economic assessment. Evaluate innovative extraction techniques such as: – co-solvent amended supercritical extraction – propane extraction Extraction and separation of novel secondary products, such as selected lipids (lecithin) and fatty acids (DHA and EPA), prior to transesterification will be researched Improve environmental performance including reducing oxide emissions and utilization of more environmentally friendly process chemical reagents. Potential ability to customize product performance to customer needs. Research team consists of process engineers, mechanical engineers, plant scientists, biochemists, economists, chemists, biologists, and microbiologists. Feedstocks = 70% production cost Biodiesel Demonstration Mississippi Development Authority – Energy Division grant to the Lauderdale County School District for the 2003-2004 school-year 9 buses at West Lauderdale Elementary School are currently operating on a B10 blend Biodiesel is being purchased from the local biodiesel producer in Meridian No operational problems reported to date Feasibility Studies Ethanol Feasibility Study – – – Sparks Companies, Inc. & MSU Cooperative Extension Service was asked by the Mississippi, Alternative Energy Enterprise to conduct a statewide feasibility study regarding the prospects of ethanol production There were two areas of primary concentration the overall state potential for ethanol production and the assessment of five specific production sites Study completed in January 2003 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 Index (1981 = 100, Base Year) Corn Yield Index: MS vs. US 250 225 200 Mississippi 175 150 125 100 75 50 US 25 0 Mississippi Index US Index MS Corn Production Mississippi: Corn Production 70,000 60,000 This is a record production of 66.3 million bushels of corn 40,000 30,000 20,000 10,000 19 50 19 52 19 54 19 56 19 58 19 60 19 62 19 64 19 66 19 68 19 70 19 72 19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 Bushels (000's) 50,000 Major Commercial Grain Elevators McAlister Grain Alabama Friars Point Arkansas Gunnison Bunge Tom Soya Jimmy Sanders Jimmy Sanders Cleveland Bunge Greenwood Greenville West Point Coop Elevator Greenwood Brooksville Farmers Grain Terminal Belzoni Bunge Mayersville Farmers Grain Terminal Yazoo City Satartia Bunge Tom Soya Storage Capacity 5,000,000 to 6,080,000 (1) 2,000,000 to 5,000,000 (4) Bunge 1,000,000 to 2,000,000 (4) 100,000 to 1,000,000 (8) 40,000 to 100,000 (1) Vicksburg Production Density (Bushels per Sq. Mile) Bunge Louisiana Natchez 25,000 to 58,900 10,000 to 25,000 5,000 to 10,000 2,500 to 5,000 1,000 to 2,500 500 to 1,000 0 to 500 (251) (272) (204) (219) (268) (209) (494) © 2002 Sparks Companies, Inc. Bu ng e, Na Bu tc ng he e z , Ji Sa Bu m To m ta ng y rti m e, Sa a So I nd n de ya ia To rs no G m ,C ra la So in le ve ya C Fa o. G , W lan rm ra d er in es s C t G Po o. ra ,B in in t r oo Te ks rm vil in le al ,B Bu el ng zo e, ni M Bu Vi cA ck ng sb lis e, ur te M rG g ay ra er in sv ,F ille r ia Bu rs ng Po e, in t G Bu un ng n e, is on Ya B J z u im oo C ng oo m Ci e, y pe ty G Sa ra r e nd tiv e nv e er El s, ille ev R os at or ed ,G al e re Bu en Fa ng wo rm e, er od Vi s ck G ra sb in ur ,G g re en vi lle 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Capacity in Bushels MS Grain Commercial Elevators, Capacity Capacities of MS Port, River, Terminal and Subterminal Elevators 8,000,000 7,000,000 6,000,000 Report Summary – General Theme: the State should proceed with caution, this is predicated on the following conclusions 1 2 3 4 5 Supply-Side Issues - there needs to be continued expansion in MS corn production - critical for ethanol success (MS net importer of corn for animal feed) There are significant regional differences in corn production The animal livestock industry plays a vital role in the balance of corn in MS Some proposed production areas/sites are significantly better relative to the other sites There are important financial variables/issues to consider Major Drivers to the Model Revenue – MS Producer Payment – DDG Prices – Ethanol Prices Costs – Feedstock – Energy Prices - Natural Gas – Cost of Capital Biodiesel Feasibility Study Completed in February 2004 MISSISSIPPI DEVELOPMENT AUTHORITY ENERGY DIVISION US DOE/SSEB Mississippi Land, Water and Timber Resources Board Biodiesel Study Participants MSU ChemE Department of Agriculture and Commerce Chemical Engineering ASU SFDC MDAC MBC FBA Frazier Barnes & Associates Small Farms Development Center MSU GRI GeoResources Institute Feedstock Availability Average Cost: $0.23/lb Average Cost: $0.25/lb •Soybean Oil: 38.6 million gallons •Cottonseed Oil: 16.0 million gallons •Yellow Grease: 6 million gallons Average Cost: $0.11/lb Soy Based Biodiesel Potential Yellow Grease Based Biodiesel Potential Weighted County Scores Cumulative Weighted County Scores Biodiesel Technology Oilseed Processing Technology Review Mechanical Extraction vs. Solvent Extraction Biodiesel Technology Review & Providers Biodiesel produced must meet or exceed the ASTM specifications as per the standard D6751 Catalyst Conversion Vendors Capital Costs Operating Costs Product Yield and Quality Economy of Scale Feedstock Flexibility Who Can Use Biodiesel? Anyone who uses Petroleum Diesel…Annual US Consumption …57 billion gallons/year B2 = 1.4 billion gallons/year B10 = 5.7 billion gallons/year B20 = 11.4 billion gallons/year Mississippi Market Potential Total petroleum diesel consumption –760 million gallons/year @ B2 = 15 million gallons/year @ B20 = 300 million gallons/year Farm Use @ B2 = 1.6 million gallons/year Farm Use @ B20 = 32 million gallons/year Commercialization Options Stand-alone production facility – Biodiesel from virgin oils and recycled fats purchased on the open market – Simple Payback > 10 years (no subsidy) Integrated Facility – Process Mississippi grown soybeans into oil, biodiesel, and other co-products – Simple Payback ~ 7-8 years (no subsidy) Current federal subsidies reduce payback periods by about 3 years Paybacks based on 13 million gallons/year plant Study Recommendations Production Side Incentives Consider producer payments Consider blender credits to offset excise tax on sales of biodiesel Direct investment in integrated soybean storage/processing and biodiesel production and distribution facilities Consider tax credits on equipment used for biodiesel production, distribution or blending Recommendations Market Adoption Incentives Adopt the use of biodiesel blends in state fleets and other municipal fleets such as school buses Special monetary incentives for on-farm biodiesel consumption. Encourage the use of biodiesel blends in private fleets by offering monetary incentives Adopt use of biodiesel for stationary applications such as generators Encourage use of biodiesel in the marine transportation sector. Invest in renewable energy education Invest in research and development focused on lowering the production cost of biodiesel and finding additional uses for biodiesel and the byproduct glycerin State Legislative Actions House Bill 1130 (2002) Considered to be one of the strongest pieces of legislation in the nation in support of ethanol. The bill authorized a producer’s payment of 20 cents per gallon of ethanol produced up to a maximum of 6 million dollars per fiscal year, per plant. These payments my last up to 10 years from the start of production and are set to expire in 2015. [Money not appropriated in 2002] House Bill 1596 (2003) 2003 regular session authorized the Mississippi Land, Water and Timber Resources Board to set aside $1,000,000 for the purpose of providing funds to the Mississippi Department of Agriculture and Commerce for use in making payments to ethanol producers under Section 69-51-5 during the State Fiscal Year 2003 – 2004. House Bill 928 (2003) As sent to the Governor in the 2003 Regular Session, amended House Bill 1130 to include an unspecified producer payment for Biodiesel as well. Issues pertaining to definition of biodiesel and method of calculation for the producer payments require additional clarification. Barriers for BioFuels Cost Integration into the current Fuel Distribution System Need Legislative Support Biofuels are Questions? Contact Information: Mississippi Alternative Energy Enterprise 601-960-3610 www.msenergy.ms