The Ethanol Project A Feasibility Study Government and Policy.
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Transcript of The Ethanol Project A Feasibility Study Government and Policy.
![Page 1: The Ethanol Project A Feasibility Study Government and Policy.](https://reader036.fdocuments.in/reader036/viewer/2022062304/56649dc85503460f94abe056/html5/thumbnails/1.jpg)
The Ethanol Project
A Feasibility Study
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Government and Policy
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•Public Education about Ethanol
•Direct Financial Incentives for Producers and Customers
•Possible use in all state vehicles
Progressive State Actions
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•Recent Energy Bill secures market and increases demand – new plants will be needed
•New plants must follow same guidelines as commercial refineries
•Currently no other regulations, but more may follow
Policies Regulating Ethanol Production
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•Prospects for local Ethanol plant is positive
•New legislation supports the initiative
•No major obstacles, regulatory or otherwise, facing new plant
Overall Assessment
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Supply
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•Whenever possible, the feed stock will come from local suppliers. However, price will dictate the supplier of our input materials
•If it is cheaper to truck in corn from outlying areas or haul corn in by railcar, then the material will be sourced that way
Where will the corn come from?
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•In Delaware about 160,000 acres of corn are planted each year
•At an average yield of about 100/bu per acre that produces 16 million bushels per year
•Total production on the Delmarva peninsula in 1999 was over 39 million bushels
•So, local producers grow more than enough corn to meet the needs of our proposed facility
Local Corn Production
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•Manufacturing states we need 8,712,000bu/yr
•Delaware produces on average, 100 bushels per acre
•So, if all the corn is sourced from within Delaware a total of about 87,120 acres is needed
What acreage is needed of Corn to supply needs?
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•The cost of the crop is based on the price from the source with the added cost of transportation
•Assuming a crop price of $1.94/bu
•Trucking would add .08/bu
•Railcars would add .70/bu
What is the projected cost of the crop delivered into the plant?
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•Since all our corn requirements can be met
locally and we need 8,712,000
bushels per year, then with a cost of
$1.94/bu of corn and truck hauling cost
of $.08/bu
•Our total cost for corn each year would be
about $17,598,240
Total cost of crop
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Total cost of crop cont.
•In addition to our variable input costs, the
fixed costs of land, rail sidings, and storage
facilities would also have to be considered as
a part of the total capital costs by the
manufacturing division
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Manufacturing
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1) Produce ethanol from corn at a minimum expense
2) Produce several co-products to enhance company profits
Objectives
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1) Corn supply could be transported on-site at a cost lower than that of production.
2) Corn prices will remain low enough to make production feasible.
3) Local customers will utilize all of our ethanol and co-products.
Assumptions
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4) Competition from Delmarva Poultry industry will not detract from profits of either.
5) Price assumptions
•Corn @ $1.94 per bushel.
•Production cost @ .88 per gallon.
Assumptions cont.
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•Plant production capacity: 25 million gallons per year (330 Working Days)
•Production Process: Wet Milling
•Production Results
1)25 million gallon requires 8.8 million bushels of corn.
2)Initial capital investment = $ 27.9 million.
Results
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3) Annual operational cost = $ 22 million per year / $ 66,667.04 per day.
4) Corn/Ethanol Transportation Considerations
• Assuming 4000 bushels of corn per car, we require 33 cars in per week.
• Assuming 10,000 gallons ethanol per car, we require 38 cars out per week.
Results cont.
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1)Distillers Grain
2)Corn Gluten meal, 60%
3)21% Protein feed
4)Corn Oil
5)Carbon Dioxide
Co-products
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Wet milling Process
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Marketing
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Recommendations
• Acquire help from American Coalition for Ethanol in regards to product development and advertising
• Sell product to refineries– 80% gas– 20% ethanol
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Recommendations cont.
• The blend can be used in most engines– End of the line consumer: Typical car owner
• Pursue a contract with a rent-a-car business– Only buy 80/20 blend– Shows a market for our product
• Secondary product: Corn Glutton Meal– 60% protein– No negative side effects
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Secondary Product
• Target poultry industry
• Establish a contract with Perdue or like company– Corn costs rise– Offer our meal at a reasonable price
• Auctions
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