Biorefining Biorefining Chemical Engineering Team Chemical - - PowerPoint PPT Presentation

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Biorefining Biorefining Chemical Engineering Team Chemical - - PowerPoint PPT Presentation

Biorefining Biorefining Chemical Engineering Team Chemical Engineering Team Tejas Patel, John Truong, Tony Tran, Trenika Iland, Tejas Patel, John Truong, Tony Tran, Trenika Iland, Bambo Ibidapo- -Obe, Jeremy Constantino, Adam Adler, Obe,


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SLIDE 1

Biorefining Biorefining

Chemical Engineering Team Chemical Engineering Team Tejas Patel, John Truong, Tony Tran, Trenika Iland, Tejas Patel, John Truong, Tony Tran, Trenika Iland, Bambo Ibidapo Bambo Ibidapo-

  • Obe, Jeremy Constantino, Adam Adler,

Obe, Jeremy Constantino, Adam Adler, Blake Adams Blake Adams

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SLIDE 2

Presentation Outline Presentation Outline

Purpose Purpose

– – What is What is biorefining biorefining

Plant Design Plant Design

– – Fermentation processes Fermentation processes – – Purification processes Purification processes – – Utilities Utilities – – Waste Waste – – Economics of each process Economics of each process

Business Plan Proposal Business Plan Proposal – – Mathematical Model Mathematical Model

– – Model Description Model Description – – Inputs into the Model Inputs into the Model – – Results of Model Results of Model – – Sensitivity and Risk of Model Sensitivity and Risk of Model

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SLIDE 3

Overview of Biorefining Overview of Biorefining

What is a bio based product? What is a bio based product? – – Made from renewable resources Made from renewable resources – – Plant material as main ingredient Plant material as main ingredient – – Biodegradable Biodegradable Why bio Why bio-

  • refining?

refining? – – National and local policies promote bio National and local policies promote bio-

  • refining

refining – – Strict environmental regulations Strict environmental regulations

Increased cost of products made from fossil fuels Increased cost of products made from fossil fuels

– – Extraction, processing, disposal Extraction, processing, disposal

– – Advantages Advantages

Rural economic development, lower economic costs, Rural economic development, lower economic costs, environmentally safe environmentally safe

http://www.pnl.gov/biobased/docs/prodplas.pdf

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SLIDE 4

Scope of Project Scope of Project

Each of these acids are generated using nearly identical fermentation processes with different bacteria which dictate the end result

Figure 1: Chemicals, Microorgansims, and End Products of Fermentation Processes

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SLIDE 5

Scope of Process Scope of Process

http://www.pnl.gov/biobased/docs/prodplas.pdf

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SLIDE 6

Market Analysis / Demand Market Analysis / Demand

www.the-innovation-group.com/ChemProfiles.htm

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SLIDE 7

1000 2000 3000 4000 5000 6000 7000 8000 2005 2010 2015 2020 2025

Year Mass (10

6 lb m)

Acetic Acid Citric Acid Fumaric Acid Succinic Acid Lactic Acid Ethanol Propionic Acid

Market Demands for Products Market Demands for Products Years 2005 Years 2005-

  • 2025

2025

Assumptions:

  • growth due to environmental profile
  • industrial applications increase due to biodegradable advantages
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SLIDE 8

0.5 1 1.5 2 2.5 3 2005 2010 2015 2020 2025

Year Price per Unit Mass (US$/lb

m)

Acetic Acid Citric Acid Fumaric Acid Succinic Acid Lactic Acid Ethanol Propionic Acid

Price Projections for Products Price Projections for Products Years 2005 Years 2005-

  • 2025

2025

Assumptions:

  • an increase in demand will result in over capacity and competition among suppliers
  • as a result, a reduction of prices with a corresponding increase in the amount of sales is expected
  • more competition will drive prices down and supply up
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SLIDE 9

Process Description Process Description

Simulations for Fermentation/Purification Simulations for Fermentation/Purification

– – Model Descriptions Model Descriptions

Fermentation Fermentation

– – Formation of each acid Formation of each acid – – Bacteria Considerations Bacteria Considerations

Conversions Conversions

Simulations Simulations

– – Outline of Fermentation Outline of Fermentation – – Outline of Purification Processes Outline of Purification Processes

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SLIDE 10

Models Models

Citric Acid Citric Acid Succinic Acid Succinic Acid Propionic Acid Propionic Acid Fumaric Acid Fumaric Acid Acetic Acid Acetic Acid

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SLIDE 11

Fermentation Fermentation

Glucose + Water Bacteria

Acetic Acid

Clostridium thermocellum

Citric Acid

Aspergillus niger

Succinic Acid

Anaerobiospirillum succiniciproducens Propionibacterium acidipropionici

Propionic Acid

Acid

Propionic Acid Propionic Acid 66.7% 66.7% Propionibacterium Propionibacterium acidipropionici acidipropionici Fumaric Fumaric Acid Acid 69% 69% Rhizopus Rhizopus Succinic Acid Succinic Acid 87% 87% Anaerobiospirillum Anaerobiospirillum succiniciproducens succiniciproducens Citric Acid Citric Acid 66.7% 66.7% Aspergillus Aspergillus niger niger Acetic Acid Acetic Acid 100% 100% Clostridium Clostridium thermocellum thermocellum Product Product Yield Yield Bacteria Name Bacteria Name

Our Scope

Lactic Acid Lactic Acid 95% 95% Lactobacillus Lactobacillus delbrueckii delbrueckii Ethanol Ethanol 66.7% 66.7% Saccharomyces Saccharomyces cerevisiae cerevisiae

Similar processes Similar processes Formation Formation – – 10:1 mass ratio of water to 10:1 mass ratio of water to glucose glucose – – Heat sterilization Heat sterilization – – Compressed Air Compressed Air – – Ammonia Ammonia – – Batch Reaction Batch Reaction

Ethyl Lactate Subgroup

Fumaric Acid

Rhizopus

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SLIDE 12

Bacteria Bacteria

All the fermentation processes are catalyzed by All the fermentation processes are catalyzed by the appropriate bacteria the appropriate bacteria They are grown along with They are grown along with inoculum inoculum seeds in seeds in small laboratory vessels small laboratory vessels Once the nutrients and Once the nutrients and inoculum inoculum seeds are seeds are grown sufficiently, they form a slurry which is grown sufficiently, they form a slurry which is transferred to the fermentors transferred to the fermentors Cost of using bacteria was found to be $0.80 Cost of using bacteria was found to be $0.80 per ton per ton

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SLIDE 13

Process Description Process Description Citric Acid Citric Acid

Blending/Storage Capacity: 21,000 gal Units: 3 Cost: $110,000 Sterilizer Units: 3 Cost: $200,000 Throughput: 80m3/hr Fermentor Capacity: 350,000L Units: 5 Cost: $1.2 Million Ion Exchange Column Cost: $75,000

O H CO O H C O O H C

2 2 7 8 6 bacteria 2 6 12 6

8 6 2 27 2 + + → +

Water – 1249786 kg/batch Glucose – 112480.7 kg/batch, 89.9%mass Salts – 12525 kg/batch, 10.1% Nutrients waste Ammonia: 62489.3 kg/batch Air: 6242930 kg/batch

Exit Stream Mass % Byproducts – 7.1% Glucose – 0.4 Water – 85.9 Citric Acid – 3.78 Flowrate – 1,400,000 kg/batch Stream to Purification

Rotary Drum Capacity: 65 m2 Units: 2 Cost : $ 115,250

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SLIDE 14

Purification Processes Purification Processes

Citric Acid Citric Acid Succinic Acid Succinic Acid Propionic Acid (Sodium Propionate) Propionic Acid (Sodium Propionate) Fumaric Acid Fumaric Acid Acetic Acid Acetic Acid

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SLIDE 15

Citric Acid Citric Acid

Capacity: 27,500 L Units: 3 Cost: $323,000 Capacity: 65 m3 Units: 2 Cost: $115,250 Capacity: 35,000L Units: 7 Cost: $364,200 Capacity: 47 m2 Units: 2 Cost: $91,200 Capacity: 30,000L Units: 1 Cost: $35,000

Citric Acid: 56975.4 kg/batch Water: 75236.6 kg/batch Ca(OH)2: 35000 kg/batch

Product Precipitation

Calcium Citrate: 80363.9 kg/batch 48.06 % Water: 10,000 kg/batch Ca(OH)2 waste: 20.36% Water: 79.64% Total 18125.5 kg/batch Sulfuric Acid: 75000 kg/batch Gypsum Formation Air: 237.1 kg/batch Citric Acid: 54268.7 kg/batch 23.2 %mass Water: 100,000 kg/batch Gypsum: 40146.5 kg/batch 45.4 mass% Sulfuric Acid: 32061.7 kg/batch Water: 155303 kg/batch Ca Citrate: 4018.2 kg/batch

Citric Acid Product: 54268.7 kg/batch

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SLIDE 16

Acetic Acid Acetic Acid

Units: 1 Cost: $60,000 Units: 1 Trays: 10 Cost: $95,000

Acetic Acid: 1780 kg/hr Water: 1591 kg/hr Acetic Acid: 64.7 lbmol/hr Water: 333 lbmol/hr EtAc: 777.9 lbmol/hr EtAc: 68600 lb/hr Water: 2500 lb/hr Water: 30.2 lb/hr Acetic Acid: 2.23 lb/hr Water: 333 lbmol/hr EtAc: 777.9 lbmol/hr Acetic Acid: 64.4 lbmol/hr Water: 2.33 lbmol/hr 96.5% Purity

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SLIDE 17

Citric Acid Citric Acid

FCI vs Capacity

y = 1.6241x + 4.3017 R

2 = 0.9955

20 40 60 80 100 120 140 160 10 20 30 40 50 60 70 80 90 Capacity (MM lb) FCI (MM

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SLIDE 18

Annual Operating Cost Annual Operating Cost Citric Acid Citric Acid

22.50 22.50 Total ($ MM) Total ($ MM) 1.01 1.01 Operating supplies Operating supplies 4.43 4.43 Maintenance and repairs Maintenance and repairs 3.01 3.01 Utilities Utilities 1.34 1.34 Operating labor Operating labor 12.68 12.68 Raw materials Raw materials 35 MM lb 35 MM lb Capacity Capacity

Operating cost breakdown

Raw materials 56 % Maintenance 19.7 % Operating labor 13.4 % Utilities 5.9 % Supplies 5.5 %

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SLIDE 19

Citric Acid Citric Acid

Operating cost vs Production

y = 0.31x + 0.652 5 10 15 20 25 30 10 20 30 40 50 60 70 80 90 Capacity (MM lb/yr) Operating cost (MM $

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SLIDE 20

Model Considerations Model Considerations

48.1 48.1 66.0 66.0 59.9 59.9 63.3 63.3 Final Conversion Final Conversion to Sell(%) to Sell(%) 2.97 2.97 3.79 3.79 4.24 4.24 4.83 4.83 Fermentation Fermentation Broth Mass (%) Broth Mass (%) Propionic Acid Propionic Acid Citric Citric Acid Acid Succinic Succinic Acid Acid Acetic Acetic Acid Acid

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SLIDE 21

Mathematical Model? Mathematical Model?

Venture Design Options Venture Design Options

– – Irreducible Structure Irreducible Structure – – Reducible Superstructure Reducible Superstructure

Raw Material Markets Plant Locations 3 Product Markets 7 Products Begin Operations Raw Material Markets Plant Locations 7 Products 3 Product Markets Begin Operations

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SLIDE 22

Mathematical Model? Mathematical Model?

  • Minimize Operating Cost
  • Maximize Net Present Value

30 Raw Material Markets 45 Plant Locations 3 Product Markets 7 Products

28,350 Combinations

  • GAMS Optimization Software
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SLIDE 23

Business Plan Business Plan (Mathematical Model) (Mathematical Model)

Input Input FCI based on Capacity FCI based on Capacity Operating Costs based Operating Costs based

  • n Capacity
  • n Capacity

Raw Materials & Raw Materials & Chemicals Chemicals Locations & Distances Locations & Distances Demand Demand Material & Mass Material & Mass Balances Balances Product Prices Product Prices

Output Output Plant location Plant location Plant capacity Plant capacity Plant expansion (2 Plant expansion (2 year intervals) year intervals) Product markets Product markets Raw materials Raw materials NPW NPW

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SLIDE 24

Mathematical Model Mathematical Model

Deterministic Deterministic

– –Maximizes the Net Present Value Maximizes the Net Present Value – –Disregards possible variation in Inputs Disregards possible variation in Inputs

Stochastic Stochastic

– –Maximizes the Net Present Value Maximizes the Net Present Value – –Considers Variations in inputs Considers Variations in inputs – –Scenario Generation Scenario Generation – –Risk Assessment Risk Assessment

0.5 1 1.5 2 2.5 3 2000 2005 2010 2015 2020 2025 2030

Time Raw Material Price ($) Scenarios Mean

0.2 0.4 0.6 0.8 1 250000000 270000000 290000000 310000000 330000000 350000000 370000000

NPV ($) Probability

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SLIDE 25

Mathematical Models Mathematical Models

Two mathematical models: Two mathematical models: Biorefining Biorefining

– – Seven different processes Seven different processes

Ethyl lactate Ethyl lactate

– – Research analysis on one Research analysis on one product (ethyl lactate) product (ethyl lactate)

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SLIDE 26

Mathematical Model Mathematical Model

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SLIDE 27

Mathematical Model: Locations Mathematical Model: Locations

Most economic raw material Most economic raw material Potential plant locations Potential plant locations Possible market locations Possible market locations

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SLIDE 28

Raw Material Locations Raw Material Locations

Raw material density graphs Raw material density graphs were used to determine were used to determine potential locations of raw potential locations of raw material supply material supply USDA USDA-

  • NASS: Crop yield by

NASS: Crop yield by county for 2002 county for 2002 Data was obtained for each of Data was obtained for each of the 5 raw materials considered the 5 raw materials considered

– – Wheat Wheat – – Oats Oats – – Corn Corn – – Rice Rice – – soybeans soybeans

http://www.usda.gov/nass/aggraphs/cropmap.htm

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SLIDE 29

Raw Material Locations Raw Material Locations

Pheonix Pheonix, Yuma, Bakersfield, Fresno, Napa, Greeley, Pueblo, Louisville, , Yuma, Bakersfield, Fresno, Napa, Greeley, Pueblo, Louisville, Cedar Cedar-

  • Rapids, Dubuque

Rapids, Dubuque Mountain Mountain-

  • Home, Danville, Peoria, Quincy, Evansville, Fort

Home, Danville, Peoria, Quincy, Evansville, Fort-

  • Wayne, Meade, Bastrop, Denton, Billings

Wayne, Meade, Bastrop, Denton, Billings Lexington, Clovis, Las Lexington, Clovis, Las-

  • Cruces, Roswell,

Cruces, Roswell, Cincinatti Cincinatti, Dayton, Heppner, Dumas, El , Dayton, Heppner, Dumas, El-

  • Paso, Yakima

Paso, Yakima

30 locations were 30 locations were considered as considered as possible sources for possible sources for raw material supply raw material supply Locations were Locations were chosen based on chosen based on crop yield of raw crop yield of raw materials materials

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SLIDE 30

Potential Plant Locations Potential Plant Locations

Economic growth of cities Economic growth of cities was used to determine was used to determine potential plant locations potential plant locations Plant locations Plant locations considerations considerations

– – Population Population – – Number of existing Number of existing companies in area companies in area – – Expected rate of area Expected rate of area growth growth

http://www. www.publicforuminstitute.org/nde/reports/lma.pdf

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SLIDE 31

Potential Plant Locations Potential Plant Locations

Anniston, Tuscaloosa, Gadsden, Talladega, Hot Anniston, Tuscaloosa, Gadsden, Talladega, Hot-

  • Springs, Los

Springs, Los-

  • Angeles, Dubuque, Ottumwa, Fort

Angeles, Dubuque, Ottumwa, Fort-

  • Wayne

Wayne South South-

  • Bend, Columbus, Monroe, Detroit, Grand

Bend, Columbus, Monroe, Detroit, Grand-

  • Rapids, Kalamazoo, Minneapolis, St

Rapids, Kalamazoo, Minneapolis, St-

  • Cloud, Fergus

Cloud, Fergus-

  • Falls

Falls Mankato, Joplin, Tupelo, Greensboro, Hickory, Manchester, Keene, Mankato, Joplin, Tupelo, Greensboro, Hickory, Manchester, Keene, Cleveland, Dayton, Toledo Cleveland, Dayton, Toledo Youngstown, Findlay, Tulsa, Eugene, Medford, Greenville, Dallas, Youngstown, Findlay, Tulsa, Eugene, Medford, Greenville, Dallas, Ft Ft-

  • Worth, Waco, Longview, Lufkin

Worth, Waco, Longview, Lufkin Sherman, Milwaukee, Racine, Green Sherman, Milwaukee, Racine, Green-

  • Bay, Appleton,

Bay, Appleton, Wasau Wasau, Sheboygan , Sheboygan

46 Potential plant 46 Potential plant locations locations Location choices Location choices Based on: Based on:

– – Agricultural supply Agricultural supply – – Economic growth Economic growth

  • f location
  • f location
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SLIDE 32

Product Market Locations Product Market Locations

Markets broken Markets broken down by the down by the following Regions: following Regions:

– – West West – – Central Central – – East East

The markets are for The markets are for all 7 processes all 7 processes

West Central East

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SLIDE 33

Mathematical Model: Locations Mathematical Model: Locations

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SLIDE 34

Mathematical Model: Process Mathematical Model: Process

Most profitable plant Most profitable plant Which of the 7 processes to develop Which of the 7 processes to develop Plant Capacity: Reactant & product Plant Capacity: Reactant & product flow rates flow rates

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SLIDE 35

Material Balance Equations Material Balance Equations

Mass flow rate of Mass flow rate of product/reactant product/reactant = = stoichiometric stoichiometric coefficient * mass flow rate of coefficient * mass flow rate of reactant reactant Mass flow rate of Mass flow rate of product/reactant product/reactant = = Σ Σ of the process

  • f the process’

’ mass flow rate of chemicals from one process to another mass flow rate of chemicals from one process to another + + Σ Σ of mass flow rate of

  • f mass flow rate of sold/purchased

sold/purchased chemicals chemicals aA aA + + bB bB cC cC + + dD dD

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SLIDE 36

Reactants Reactants

This relationship is based on the reaction coefficient of each m This relationship is based on the reaction coefficient of each material aterial Compared to the main chemical & the conversion data for the reac Compared to the main chemical & the conversion data for the reaction. tion. Process H2O Glucose Salt Air Cal Hyd Sulf Acid Succinic Acid 2.3 3 0.36 4.22 1.65 3.93 Citric Acid 2.2 3 3.14 6.14 2.93 3.69 Lactic Acid 2.1 3 3.10 5.41

  • Ethanol

2.3 3 3.10 5.41

  • Acetic Acid

2.3 3 2.05 3.37

  • Propionic Acid

2.4 3 1.30 4.13

  • Fumaric Acid

2.1 3 2.36 5.18

  • Reactants
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SLIDE 37

Products Products

Relationship between the main chemical and other products in the Relationship between the main chemical and other products in the reaction reaction The relationship is based on mass balance rather than mole balan The relationship is based on mass balance rather than mole balance ce All the main chemical will have All the main chemical will have mu mu value of 1 value of 1 Process Product CO 2 Gypsum Calcium Succinic Acid 1 0.067 0.63

  • Citric Acid

1 0.141 0.74 0.089 Lactic Acid 1 0.101

  • Ethanol

1 0.101

  • Acetic Acid

1 0.069

  • Propionic Acid

1 0.134

  • Fumaric Acid

1 0.101

  • Products
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SLIDE 38

Mathematical Model: Process Mathematical Model: Process

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SLIDE 39

Mathematical Model: NPW Mathematical Model: NPW

Net Present Worth Net Present Worth Plant expansion Plant expansion Selling price of product Selling price of product How much to invest (TCI) How much to invest (TCI)

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SLIDE 40

Model Constraints Model Constraints

Constraint on Capacity: Capacity of the process Constraint on Capacity: Capacity of the process ≥ ≥ mass flow rate of the product mass flow rate of the product Constraint on expansion: it must be over Constraint on expansion: it must be over $10,000 FCI $10,000 FCI Supply of chemicals Supply of chemicals ≥ ≥ sum of the process sum of the process’ ’ mass flow rate of purchased chemicals mass flow rate of purchased chemicals Demand of chemicals Demand of chemicals ≥ ≥ sum of the process sum of the process’ ’ mass flow rate of sold chemicals mass flow rate of sold chemicals Limit on TCI: Manually defined for set maximum Limit on TCI: Manually defined for set maximum TCI TCI

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SLIDE 41

Model Equations Model Equations

Cash Flow = Revenue Cash Flow = Revenue – – (Revenue (Revenue – – Depreciation)*Taxes Depreciation)*Taxes Revenue = Sales Revenue = Sales – – Total Costs Total Costs Total Costs = Raw Material Costs + Operating Total Costs = Raw Material Costs + Operating Costs Costs Operating Costs = operation cost based on Operating Costs = operation cost based on capacity ($/ capacity ($/lbm lbm) * mass flow rate of product + ) * mass flow rate of product + fixed investment + transportation costs fixed investment + transportation costs

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SLIDE 42

Objective Function to Maximize Objective Function to Maximize

CF = Cash Flow CF = Cash Flow tp tp = time period, 1 time period is 2 years = time period, 1 time period is 2 years total of 11 time periods from 2005 total of 11 time periods from 2005-

  • 2027

2027 i = nominal interest rate, 5% i = nominal interest rate, 5% Vs = salvage value, 10% of FCI Vs = salvage value, 10% of FCI Iw Iw = working capital, 15% of FCI = working capital, 15% of FCI Project Lifetime Project Lifetime – – 22 years 22 years ) ) 1 ( * ) ( ) 1 ( (

, plant tp plant plant plant tp tp plant tp plant

TCI i FCI Iw Vs i CF NPW − + + + + ∑ ∑ =

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SLIDE 43

Ethyl Lactate Overview Ethyl Lactate Overview

Extension of Previous Study Extension of Previous Study 2 Processes: Ethanol & Lactic Acid 2 Processes: Ethanol & Lactic Acid

– – Esterification Esterification-

  • Pervaporation

Pervaporation

Ethyl Lactate Ethyl Lactate

Create Real World Fit Model Create Real World Fit Model

– – Biomass/Waste Water Biomass/Waste Water

– – CO CO2

2 Production/Disposal

Production/Disposal – – Mathematical Model Considerations Mathematical Model Considerations – – Provide insight to large process model Provide insight to large process model

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SLIDE 44

Biomass/Waste Water Biomass/Waste Water

Biomass Waste Possibilities Biomass Waste Possibilities

– – Return to fermentation unit for reuse Return to fermentation unit for reuse – – Sale biomass product to markets Sale biomass product to markets

Waste Water Waste Water

– – Capital cost for water purification exceed storage cost Capital cost for water purification exceed storage cost – – Municipal water storage $100,000/yr Municipal water storage $100,000/yr

Mathematical Model Input Mathematical Model Input

– – Biomass sales and waste water costs Biomass sales and waste water costs

Net Increase in NPV by 0.1% Net Increase in NPV by 0.1%

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SLIDE 45

CO CO2

2 Analysis

Analysis

Sale and Shipping of CO Sale and Shipping of CO2

2

– – 500 ton/yr CO 500 ton/yr CO2

2 -

  • $75/ton

$75/ton

Minimal profit Minimal profit

– – CO CO2

2 Recovery unit

Recovery unit

$20 million capital cost $20 million capital cost

Release CO Release CO2

2 into

into Atmosphere Atmosphere

– – Aug. 23, 2003, President Bush:

  • Aug. 23, 2003, President Bush:

Clean Air Act Clean Air Act says that CO says that CO2

2 can

can’ ’t be t be regulated as a pollutant regulated as a pollutant – – Petroleum based products emit Petroleum based products emit 4000X ethanol processes 4000X ethanol processes

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SLIDE 46

Model Considerations Model Considerations

Raw materials Raw materials

– – Corn, wheat, barley, oat, beets, rice Corn, wheat, barley, oat, beets, rice

Cost at markets Cost at markets

– – Raw material to glucose conversions Raw material to glucose conversions

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SLIDE 47

Transportation Modeling Transportation Modeling

Transportation Cost Transportation Cost

– – Cost to ship raw materials and Cost to ship raw materials and products products

Linearly variable with Linearly variable with distance distance

– – Distance to raw material and Distance to raw material and product markets determined product markets determined – – Amount shipped Amount shipped

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SLIDE 48

Market Demand/Capacity Market Demand/Capacity

Demand Demand

– – Determined for each product market Determined for each product market – – 1 year later 1 year later

More competition More competition

– – Assumed 80% of Demand Supplied to Market Assumed 80% of Demand Supplied to Market – – Actual demand determined by model Actual demand determined by model

Capacity Constraints/Expansion Capacity Constraints/Expansion

– – No expansion first two years No expansion first two years – – Cannot expand 2 years consecutively Cannot expand 2 years consecutively

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SLIDE 49

Depreciation/Investing Depreciation/Investing

Depreciation Depreciation

– – Continuous straight line depreciation Continuous straight line depreciation – – Equipment depreciable for 10 year period Equipment depreciable for 10 year period

Capital Investments Capital Investments

– – 1 initial capital investment

1 initial capital investment – – Revenue used to re Revenue used to re-

  • invest in capital investments for

invest in capital investments for future expansions future expansions

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SLIDE 50

Estimated Sale Price Estimated Sale Price

0.7 0.8 0.9 1 1.1 5 10 15 20 Time (yr, 1 = 2005) Selling Price ($/lb)

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SLIDE 51

Results Results

Single Raw Material: Single Raw Material:

– – Corn Corn

Build three plants immediately: Build three plants immediately:

– – Youngstown, OH Youngstown, OH – – Toledo, OH Toledo, OH – – Anniston, AL Anniston, AL

Build one plant in year #5: Build one plant in year #5:

– – Dayton, OH Dayton, OH

NPW = $38.8 million NPW = $38.8 million Investment = $40.2 million Investment = $40.2 million ROI = 4.8% ROI = 4.8%

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SLIDE 52

Locations Locations

slide-53
SLIDE 53

Total Product Flow Rate Total Product Flow Rate

5 10 15 20 25 30 35 40 45 5 10 15 20 25 year (1 = 2005)

million lb/year

Anniston Dayton Youngstown Toledo

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SLIDE 54

Capacity vs. Flow Capacity vs. Flow -

  • Anniston

Anniston

2 4 6 8 10 12 14 16 18 20

5 10 15 20 25

Year (1 = 2005) Million lb/year

Product Flow Total Capacity

slide-55
SLIDE 55

Plant Operating Costs Plant Operating Costs

2 4 6 8 10 12 5 10 15 20 25

Year (1 = 2005) Million $/year

Anniston Dayton Youngstown Toledo

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SLIDE 56

Uncertainty Results Uncertainty Results

Single Raw Material: Single Raw Material:

– – Corn Corn

Build three plants immediately: Build three plants immediately:

– – Toledo, OH Toledo, OH – – Dayton, OH Dayton, OH – – Anniston, AL Anniston, AL

ENPV = $34.4 million ENPV = $34.4 million ICI = $44.0 million ICI = $44.0 million ROI = 3.9% ROI = 3.9% Value at Risk at 5% = $14.3 million Value at Risk at 5% = $14.3 million

slide-57
SLIDE 57

Locations Locations

slide-58
SLIDE 58

Product Flow Rate Product Flow Rate

5 10 15 20 25 30 35 40 45 5 10 15 20

Year (1 = 2005) Million lb/year .

Anniston Dayton Toledo

slide-59
SLIDE 59

Risk Analysis Risk Analysis – – Ethyl Lactate Ethyl Lactate

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 20000000 40000000 60000000 80000000

NPV ($) Cumulative Probability

slide-60
SLIDE 60

Risk Histogram Risk Histogram – – Ethyl Lactate Ethyl Lactate

2 4 6 8 10 12 10000000 14000000 18000000 22000000 26000000 30000000 34000000 38000000 42000000 46000000 50000000 54000000 58000000 62000000 More

NPV ($)

Frequency .00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00%

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SLIDE 61

Ethyl Lactate Conclusion Ethyl Lactate Conclusion

With uncertainty With uncertainty

– – 3 plants 3 plants – – NPV = $34.4 million NPV = $34.4 million – – ICI = $44.0 million ICI = $44.0 million

Use this model for all processes Use this model for all processes

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SLIDE 62

Mathematical Model Results Mathematical Model Results

Plant Location Plant Location

– – Dubuque, Iowa Dubuque, Iowa

Raw Material Raw Material

– – Corn Corn

Maximum Initial Capital Available Maximum Initial Capital Available

– – $150 million $150 million

Net Present Value Net Present Value

– – $295 million $295 million

Return on Investment Return on Investment

– – 10% 10%

slide-63
SLIDE 63

Potential Plant Production Potential Plant Production

7 Potential Products 7 Potential Products Venture Will Include Production of 4 Venture Will Include Production of 4

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SLIDE 64

Plant Production Specifications Plant Production Specifications

Succinic Acid Succinic Acid

– – Annual Production: 63 million pounds Annual Production: 63 million pounds – – Fixed Capital Investment: $120,000,000 Fixed Capital Investment: $120,000,000 – – Annual Operating Cost: $40,000,000 Annual Operating Cost: $40,000,000

slide-65
SLIDE 65

Plant Production Specifications Plant Production Specifications

Ethanol Ethanol

– – Annual Production: 81 million pounds Annual Production: 81 million pounds – – Fixed Capital Investment: $130,000,000 Fixed Capital Investment: $130,000,000 – – Annual Operating Cost: $42,000,000 Annual Operating Cost: $42,000,000

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SLIDE 66

Plant Production Specifications Plant Production Specifications

Propionic Acid Propionic Acid

– – Annual Production: 13 million pounds Annual Production: 13 million pounds – – Fixed Capital Investment: $9,600,000 Fixed Capital Investment: $9,600,000 – – Annual Operating Cost: $3,000,000 Annual Operating Cost: $3,000,000

slide-67
SLIDE 67

Plant Production Specifications Plant Production Specifications

Fumaric Acid Fumaric Acid

– – Annual Production: 3 million pounds Annual Production: 3 million pounds – – Fixed Capital Investment: $2,200,000 Fixed Capital Investment: $2,200,000 – – Annual Operating Cost: $600,000 Annual Operating Cost: $600,000

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SLIDE 68

Plant Production Plant Production

0.00 50.00 100.00 150.00 200.00 250.00 300.00 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Prodcut Flow Rate (MM lbm)

Succinic Acid Ethanol Propionic Acid Fumaric Acid

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SLIDE 69

Market Distribution Market Distribution

21% 62% 17%

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SLIDE 70

Capital Investment Distribution Capital Investment Distribution

Succinic Acid, $117,960,000, 46% Ethanol, $125,780,000, 49% Propionic Acid, $9,588,000, 4% Fumaric Acid, $2,156,200, 1%

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SLIDE 71

Revenue From Product Sales Revenue From Product Sales

$0 $200,000,000 $400,000,000 $600,000,000 $800,000,000 $1,000,000,000 $1,200,000,000 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

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SLIDE 72

Uncertainty Analysis Uncertainty Analysis

0.2 0.4 0.6 0.8 1 250000000 270000000 290000000 310000000 330000000 350000000 370000000

NPV ($) Probability

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SLIDE 73

Risk Histogram Risk Histogram-

  • Biorefining

Biorefining

Histogram

5 10 15 20 25 30 35 250000000 280000000 320000000 360000000 More

NPV ($)

Frequency

.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00%

Expected NPV = $321 MM

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SLIDE 74

Conclusion Conclusion

Plant Location: Plant Location:

– – Dubuque, IA Dubuque, IA Expected NPW of Expected NPW of $321 million $321 million

– – Initial Capital: $150 Initial Capital: $150 million million

Agricultural Product Agricultural Product

– – Corn Corn

Plant Production Plant Production Specification Specification

– – Succinic Succinic Acid Acid – – Ethanol Ethanol – – Propionic Propionic Acid Acid – – Fumaric Fumaric Acid Acid

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SLIDE 75

Further Questions Further Questions… …