WELCOME Kansas Agriculture and Rural Leadership Program
Agenda • Our history From idea to reality • Investment, reinvestment and financial performance • Today’s opportunities & leveraging our capabilities • Fun Facts about EKAE • How ethanol is made Video - look at the process • Questions
OUR VISION To be a recognized industry leader in efficient production of agriculture-based products while pursuing diversified growth through early adoption of advanced technologies. OUR MISSION To be a diversified agriculture and energy-based company that enhances unit holder value by producing high quality products and utilizing innovative technologies and best practices.
A Brief Look Back Where we've been. Where we're headed. 2001 “What If” coffee shop talk 2004 SEC registration and subscription sales 2005 Production starts in June 2008 Plant idled for 93 days due to boiler incident 2011 Localized drought forces grain purchases outside trade area 2012 Widespread drought slowed operations — and eventually led to suspended operations October 1 2013 WE'RE BAAACK! Restart operations September 16
From coffee shop concept to multi-million-dollar biofuels refinery 136,736,355 bushels of corn ground • 376,360,529 gallons of production • 384,583 lbs. of dry distillers • 34,977,220 lbs. of wet distillers • 34,977,220 lbs. of corn oil •
From coffee shop concept to multi-million-dollar biofuels refinery 750,000 hours of no lost-time accidents • (10 years) Diversity of revenue stream • Nameplate of 35 MGY; Now 48 MGY - Renewable diesel expansion - 32 jobs in 2005; now 50+ when Renewable • Diesel starts Improved unit holder value • Plant sustainability •
Economic Impacts • You get 2.8 - 2.9 gal of ethanol per bushel of corn • We also produce animal feed as a co-product – Dried Distillers Grains (10% moisture) • 70,000 ton/year (200 ton/day) – Wet Distillers Grains (65% moisture) • 115,000 ton/year (400 ton/day) • You get 17.3 lb of DDG/bu grain • The facility cost ~$50 million to construct • EKAE employs 52 people, with an annual payroll of ~$2.8 million
General Economic Impacts (from Ethanol Today, Mar06 – based on a 40mgy plant) • Construction generates a 1-time boost of $142million as spending circulates throughout the economy • A plant will spend $56million annually on goods and services, ranging from corn to labor to utilities • Expand the economic base of the local economy by $110.2 million • Generate an additional $19.6 million in household income • Generate at least $1.2 million in new tax revenue for state and local governments
EKAE Fun Facts • The plant was designed and built by ICM out of Colwich, KS • Our design capacity is for 35 million gallons per year of ethanol (100,000 gal/day) Actual 125,000 gal/day – Today rate of 45 Million gallons/day has been achieved • We will process 16 million bushel of corn per year (~45,000 bu/day) • The facility was built in 8 months • At one time there was 300 contractors on site for construction • In past, we use both corn and milo in our process (5%-20% milo) – Today, we are 100% EtOH • We reached full rate production in 3 days • We have a steam driven turbine in which we produce ~18% of our own electrical needs • Part of our water needs come from the discharge from the city wastewater plant in the form of gray-water.
Where does our corn come from? • Corn – We consume ~45,000 bushel/day – Roughly 75% comes from within a 70 mile radius – We originate our grain and buy direct from growers and from commercial grain sources – There is a link on our website in which you can access our daily price posting • Corn Farmers & choice! – Elevator, livestock producers or EKAE • Work with farmers producers – We need to earn the biz of the farmer and understand that the success of any local EtOH operation goes hand in hand with the success of the local grain producer – Provide innovative pricing designed to help both the farmer and EKAE – Work with them as a partner
Yields expected to increase 55 year trend in Red; suggests 160-165 bpa – greater if weather cooperates 180 160 140 120 100 80 60 40 These trends are likely to continue, which means yields should continue to increase over time, at an accelerating rate. Much of this improvement will be due to hybrid development. Genetic advances are being specifically targeted at enhancing yield; either increasing yield per se , or things like drought tolerance and nitrogen use efficiency that also increase yield.
US Harvested Corn Acres 90000 85000 80000 75000 70000 65000 60000 55000 50000 Also trending higher; farmer will pull back in 2014, but lower input costs will prevent a decline back to trend
Where do our products go? • EtOH – – Local truck markets • KC, Tulsa, Ok City, Joplin, Springfield, Wichita • Feed Products – Partnership (they built their biz around EKAE) – Wet Cake (WDG) • 9% protein, 3% fat, 35% dry solids • Stays within ~120 mile radius • Shorter shelf life during summer – Dried Distillers (DDG) • 25% protein, 8% fat, 10% moisture • Majority is sold within a 200 mile radius • Has the ability to be shipped anywhere in the US and even exported (Asia) • Corn Oil – Biodiesel / Renewable Diesel – Feeders
U.S. EtOH Bio-refinery Locations EtOH is, without question, the biggest thing to happen to the grain industry since the Russian Grain deal of the 1970’s.
Historical & projected Ethanol Demand (Based on the RFS) Reduction to advanced bio mandate would help US re-gain market share Reflects the large increase & future increase in US demand for EtOH.
Co-Product - DDGS • In ethanol production, every 56 lb bushel of grain = 2.8 gallons of ethanol + 17 lbs of high-protein animal feed known as dried distillers grain with solubles (DDGS) • DDGS serves as animal feed for beef and dairy cattle, swine, poultry, and fish • In 2014, the U.S. ethanol industry created more than 39 million metric tons of DDGS, enough to produce 7 quarter pound hamburgers for every person worldwide
EKAE Biofuels Core Competencies • Grain Origination • Trading/Risk management • Logistics • Plant operations • Processing knowledge as a Bio-fuels producer • Biofuels • Deep bio-fuel customer and industry relationships • Understanding of market pricing dynamics • Engaged, talented, experienced team EKAE will continue to focus on our core strengths and pursue future opportunities that leverage our strengths.
14.3 billion gallons produced vs. 15 • billion gallon capacity Gasoline Demand rising • Exports at high levels • Margins were very favorable for the • entire industry Actually revived failed project in the • industry • Record margins in the industry - 2nd best year ever at EKAE
Two fuels from one kernel of corn … True drop-in fuel; indistinguishable from • petroleum diesel Leverages technology & expertise already in place • Adds value to corn oil we already produce • Meets criteria for advance biofuel • Aligns with long-term business strategy •
Two fuels from one kernel of corn … Enhances existing customer relationships • Helps mitigate risk • Feedstock flexibility as commodity prices • fluctuate Higher value product maximizes profits from • corn oil recovery
Renewable Diesel Renewable Diesel leverages our strengths, experience and market knowledge. Can run with or without the EtOH plant • (commodity risk) Diversify our portfolio • Market acceptance • Leverage current skills & experience • Feedstock flexible • Better value proposition than traditional biodiesel •
Renewable Diesel Why Renewable Diesel for an Ethanol Plant? Corn oil production holds significant revenue • potential Simply taking product stream up the value chain • Diversified product offerings • Maximizes profits associated with corn oil recovery • Essentially adding value to our distillers corn oil!
Comparisons & Considerations BIODIESEL RENEWABLE DIESEL PROS PROS Lower capital costs True drop-in fuel Less complex operation High value co-products Increase value of DCO Integration options Low CI value of 13 gm CO2/mj Feedstock flexible Relatively short project timeline Extremely low CI value of 6 gm “Elegant” integration with ethanol plant
Comparisons & Considerations BIODIESEL RENEWABLE DIESEL CONS CONS Blend wall/blending Higher capital costs restrictions 7 labeling requirements Cold flow/seasonal Refinery-like operations concerns Less valuable co-products Project timeline 12-16 months
Renewable Diesel The competitive advantage True drop-in fuel • o Indistinguishable from petroleum diesel Meets ASTM standard D975 • o Same spec that petroleum refiners meet Fully feedstock flexible • o Wide range of vegetable oils, animal fats as well as DCO
Renewable Diesel The competitive advantage Valuable co-products • o Naphtha and propane Classified as Advanced Biofuel under • RFS2 o Generate 1.7 D4 RINs/gallon o $1/gallon tax credit if reinstated?
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