Bio Energy

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					      Bio Energy

What is going on out there with
         renewables ?
           Bill Beukema
   General Manager of
   SoyMor is a 30 million Gallon per year Bio
    Diesel Plant in Albert Lea MN
   SoyMor has been in operation since August
    2005
   SoyMor currently uses Soybean oil as its
    feed stock
   SoyMor was built and is currently managed
    by REG
Outline of Presentation
 What is Ethanol and Biodiesel
 Overview of current Renewables
  market
 Investment opportunities for rural
  America
 Current impact on production
  agriculture
 Future of renewables
         What is Ethanol
   Ethanol is a molecule
   Ethanol base raw material is
    – Shelled corn
    – Sugarcane
    – Cellulose
   Ethanol by-products include
    – DDG
    – Co2
   Ethanols conversion is
    – 1 bushel of corn = 2.8 gallons of ethanol
    – 1 bushel of corn = 18 lbs of DDG
    – 1 bushel of corn = 18 lbs of Co2
   Ethanol energy conversion is +1.35
        What is Biodiesel
   Biodiesel is a compound
   Biodiesel base raw material is
    – Oil seed ( SBO )
    – Animal Fat
    – Waste Grease
   Biodiesel by-products include
    – Glycerin
    – FFA
   Biodiesel conversion is
    – 1 bushel of SB = 1.5 gallons of Biodiesel
    – 1 bushel of SB = 1.1 lbs of Glycerin
   Biodiesel energy conversion is + 3.24
   Petroluem energy conversion is + .88
    Overview of current
    Renewable Market
   ETHANOL
    – 2005 DATA
        OVER 105 PLANTS
        TOTAL PRODUCTION OF 4.3 BILLION GALLONS
        153,725 JOBS CREATED FROM DIRECT
          ETHANOL PRODUCTION
        ? PLANTS CURRENTLY UNDER CONSTRUCTION
        OVER 1.1 BILLION GALLONS TO BE ADDED
        1.5 BILLION BUSHELS USED FOR ETHANOL 2005
    Overview of current
    Renewable Market
   ETHANOL
    – 2006-2007 Estimates
         3.5 BILLION BUSHELS PROJECTED FOR FOOD
           AND IND USE 06-07

         6.1 BILLION FOR FEED USAGE FOR 06-07

         2.1 BILLION FOR EXPORT USAGE FOR 06-07

         OVER ? BILLION GALLONS AT THE END OF 2007
     Overview of current
     Renewable Market
   Biodiesel
    – 2005 Data
        75 million gallons sold
        1 company marketed over half of all the
         product sold ( REG)
        For all practical purposes biodiesel acted like
         a niche product
     Overview of current
     Renewable Market
   Biodiesel
    – 2006 Data
        Over 120 million gallons of capacity added to
         the market place.
        Biodiesel became widely accepted
          – Terminal storage
          – Pipeline movement (Grow Mark)
        Investment
    Opportunities for rural
          America
   Both Ethanol and Biodiesel are experiencing
    tremendous Return on Equity
   To a producer Ethanol and Biodiesel are
    Hedge type investments
   Factors driving ROE
    –   U.S. interests in becoming GREEN
    –   Favorable tax treatment
    –   $78 dollar crude oil
    –   $ 3.00 gasoline and diesel pricing
    –   $2.00 corn $.255 sbo
  Current Impact on
Production Agriculture
   Hedge fund activity
   Supply and Demand
   Basis
   Supply agreements
   Acreage Shifts
   Increased sensitivity of the commodity value
   Shift from fair market value to margin
    management
   To date all of these have been Positive
    results ( past success does not guarantee
    future results )
            The Future of
            Renewables
   Long term 4 to 7 years
    – New technology will decrease the cost of
      production
    – Corn and Soybean acres will find a balance
      based on demand
    – Pricing points for retail will trade a at premium
      higher than the base commodity, but lower than
      the today's margin premium
    – Entities that respect Quality, understand
      commodity trading and invest appropriate
      amounts in R & D will own those who do not
           The Future of
           Renewables
   Short term 1 to 3 years
    – Commodity volitity will increase
    – Acre shifts will be more frequent
    – Global energy equation will continue to be
      difficult to manage
    – Industry will struggle the speed of
      maturity

				
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