Thesis PPT - Girase J. R

Thesis Seminar

July 1st 2010

EVALUATION OF THE ECONOMIC FEASIBILITY OF GRAIN SORGHUM, SWEET SORGHUM, AND

SWITCHGRASS AS ALTERNATIVE FEEDSTOCKS FOR ETHANOL PRODUCTION IN THE TEXAS

PANHANDLE

By: Jnaneshwar R Girase

Department of Agricultural Sciences

West Texas A&M University

Research Sponsored by,

USDA –ARS Initiative

Ogallala Aquifer Program (OAP)

Acknowledgements

• Dr. Arden Colette• Dr. Bob A Stewart• Dr. Robert DeOtte• Dr. Lal K Almas• Texas AgriLife Extension Service, Amarillo, TX• Agricultural Research Center at Clovis, New Mexico• Agricultural Research Center at Tucumcari, New

Mexico

Problem Description

• Increasing need and prices of petroleum energy– 50% growth in demand between 2005 and 2030

• Limited oil and gas reserves– Depleting energy sources

• Environmental concerns– Increase in atmospheric CO2– Use of MTBE (Methyl Tertiary Butyl Ether) in gasoline

World Ethanol Production, 2008

USA

Brazil

China

Other

India

56%

40%

3%

Source: Renewable Fuels Association, 2008

U.S. Ethanol Production in Billions of Gallons (1980-2007)

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20070

1

2

3

4

5

6

7

0.175

0.215

0.35

0.3750000000000030.43

0.6100000000000010.710000000000001

0.830000000000001

0.8450000000000010.8700000000000070.90.950000000000001

1.1 1.2 1.351.4

1.11.3

1.41.47

1.63

1.770000000000012.12

2.81

3.4

4

4.89

6.2

U.S Ethanol Production

Years

Bil

lion

Gal

lons

Source: American Coalition for Ethanol, 2007

Role of Renewable Energy Consumption in the Nation’s Energy Supply, 2008

Source: U.S. Energy Information Administration, Annual Energy Review 2008

Factors Increasing Interest in Ethanol Production in the U.S.

•Low prices for feedstock used to produce ethanol

•The increasing price of crude oil

•Elimination of Methyl Tertiary Butyl Ether (MTBE)

•Concern about national energy security- over 60% of crude oil used in U.S. imported

•Climate change concerns

Ethanol

• A clean burning, high octane, renewable fuel

• Effective octane-boosting fuel additive or as a stand alone fuel

• Processed from starches, sugars, or celluloses

Objective

To analyze the potential of grain sorghum, sweet sorghum and switchgrass for ethanol production in the Texas Panhandle by using three alternative ethanol processing methodologies:

1. Starch based ethanol

2. Sugar based ethanol

3. Cellulose based ethanol

Grain Sorghum

Grain Sorghum

• Grain sorghum (Sorghum bicolor L. Moench)

• Water use efficient crop

• 5th leading cereal crop in the World

• 3rd leading cereal crop in the U.S.

• Grain is used as a feedstock for ethanol production

Grain Sorghum Production by State, 2009

Source: Wisner, 2009

Diagrammatic Representation of Grain Feedstock to Ethanol

Source : Viraj Alcohols Limited

Sweet Sorghum

Sweet Sorghum

• Sweet sorghum (Sorghum bicolor)

• Water use efficient crop

• Sugar rich stalks, alternative sugar sources

• Stalk is used as a feedstock for ethanol

production

General Process Flow: Production of Ethanol from Sweet Sorghum

Source: ISSAAS, 2007

Switchgrass

Switchgrass

• Switch grass (Panicum virgatum L.)

• A native C4, perennial warm season grass

• High cellulosic content

Simple Process Flow of Switchgrass to Ethanol

Concept of Research

• Separate study of each selected feedstock and ethanol processing method

• Ethanol processing cost of feedstock

• Production cost of feedstock

• Parameters- Ethanol gallons per acre, Total specified expenses, Ethanol price, Derived demand price, Farm to wholesale marketing margin etc.

Materials and Methods

• Study area

- 26 counties of Texas Panhandle

• Selection of alternative feedstock source- Grain sorghum- Sweet sorghum- Switchgrass

Panhandle

Current Situation of Selected Feedstocks Production in Texas Panhandle

• Grain sorghum

- Average (2005-09) harvested acres: 357,700 acres

- Average (2005-09) total production: 21,558,600 bushels

Source: NASS, 2005-09

Current Situation of Selected Feedstocks Production in Texas Panhandle - Continued

• Sweet sorghum- No published statistics

- Experimental stage- TAMU Research Station, Bushland, TX

- NMSU Program Station, Clovis, New Mexico

Current Situation of Selected Feedstocks Production in Texas Panhandle - Continued

• Switchgrass

- No published statistics

- Experimental stage

- TAMU Research Station, Etter, TX

- NMSU Research Station, Tucumcari, New Mexico

Ethanol Conversion Rate for Each Selected Feedstock

• Grain sorghum: 2.9 gallons per bushel grains(Source: Trostle 2008)

• Sweet sorghum: 8.7 gallons per fresh wet ton(Source: Bean et al. 2009 and Marsalis 2010)

• Switchgrass: 78 gallons per dry ton(Source: Holcomb and Kenkel 2008)

Crop Yield and Ethanol Produced per Acre in the Texas Panhandle

Grain sorghum Bushels/acreEthanol

gallons/acre

Irrigated 134 388.6

Dryland 36 104.4

Source: Texas Crop and Livestock Budgets 2010

Mean Yield of Sweet Sorghum and Ethanol Produced per Acre from Two Experimental Stations

Sweet sorghum

Irrigated Dryland

Bushland Clovis Mean Bushland Clovis Mean

Fresh weight (T/A) 21.50 28.30 24.90 7.00 17.70 12.35

Brix value (°Bx) 14.30 15.60 14.95 17.36 17.20 17.28

Sugar@65% (T/A) 1.17 1.59 1.38 0.47 0.82 0.65

Ethanol@65% (Gal/A) 182.40 251.00 216.70 68.60 126.00 97.30

Seasonal precipitation (ac-inch) 8.50 14.10 11.30 8.50 13.30 10.90

Irrigation (ac-inch) 22.80 8.70 15.75 5.30 0.00 -

Note: T/A = Tons/Acre, Gal/A = Gallons/Acre, 65% = 65% Juice recovery, 95% = 95% Juice recovery

Mean Yield of Switchgrass and Ethanol Produced per Acre from Two Experimental Stations

Switchgrass

Blackwell Switchgrass

FullLimited Dryland

Etter Tucumcari Mean

Yield (DT/A) 4.90 3.90 4.40 2.50 1.40

Ethanol (Gal/A) 382.20 304.20 343.20 195.00 109.20

Precipitation (ac-inch) 5.82 - 5.82 - 5.82

Irrigation (ac-inch) 14.70 - 14.70 - 0.00

Note: DT/A = Dry Tons/Acre, Gal/A = Gallons/Acre

Sweet Sorghum Ethanol Production per Acre used in Analysis

Sweet sorghum Tons/acre Ethanol gallons/acre

Irrigated 24.90 216.7

Dryland 12.35 97.3

Switchgrass Ethanol Production per Acre used in Analysis

Switchgrass Tons/acreEthanol

gallons/acre

Irrigated 4.4 343.2

Dryland 1.4 109.2

• Farm-to-Wholesale Marketing Margin- Per gallon cost of converting feedstock to ethanol

• Current Price of Ethanol:

$1.81/(E-100)Gallon (Source: DTN 2010)

• Derived Demand Price of Feedstock to Produce One Gallon Ethanol

= Price of Ethanol – Farm to Wholesale Marketing Margin

Parameters

Estimated Farm-to-Wholesale Marketing Margin for Grain Sorghum

Processing Input Cost per gallon ($)

Enzymes 0.0550

Chemical: process & antibiotics 0.0225

Chemical: boil & cook 0.0060

Denaturants 0.0500

Yeasts 0.0250

Repairs & Maintenance 0.0150

Transportation 0.0075

Water 0.0123

Electricity 0.0450

Other 0.0200

Depreciation 0.1174

Interest 0.0726

Labor & Management 0.0206

Property Taxes 0.0017

Profit Margin 0.1000

Total Cost 0.5706Source: Hofstrand 2010

Estimated Farm-to-Wholesale Marketing Margin for Sweet Sorghum

Processing Input Cost per gallon ($)

Cane processing 0.18

Administrative costs 0.10

Ethanol processing 0.28

Denaturant 0.08

Capital costs 0.11

Depreciation 0.21

Profit Margin 0.10

Total cost 1.06

Source: Outlaw et al. 2007

Estimated Farm-to-Wholesale Marketing Margin for Switchgrass

Processing Input Cost per gallon ($)Clarifier polymer 0.0080Sulfuric acid 0.0108Hydrated lime 0.0219Corn Steep liquor 0.0256Purchased cellulose 0.1394Ammonium Phosphate 0.0030Makeup water 0.0085

Boiler chemicals 0.0003

Cooling tower chemicals 0.0005

Waste water chemicals 0.0027

Waste water polymer 0.0001

Interest cost 0.1000

Insurance & property tax 0.0500

Depreciation cost 0.3400

Administrative & other costs 0.1000

Profit Margin 0.1000

Total cost 0.9108

Source: Holcomb and Kenkel 2008

Estimated Farm-to-Wholesale Marketing Margin and Derived Demand Price for Selected Feedstocks in the

Production of Ethanol

Feedstock

Farm-to-Wholesale Marketing Margin

($/gallon)I

EthanolPrice

($/gallon)II

Derived Demand Price

($/gallon)II-I

Grain sorghum 0.5706 1.81 1.2394

Sweet sorghum 1.0600 1.81 0.7500

Switchgrass 0.9108 1.81 0.8992

Cultivation Practices for Irrigated Grain Sorghum in Texas Panhandle

• Irrigation Requirement: 14 acre inches• Seed rate: 5 lbs/acre• Fertilizer Application per Acre

- Nitrogen (ANH3): 65 lbs

- Phosphorus (Liquid): 50 lbs

- Nitrogen (Liquid):60 lbs

• Custom Herbicide and Insecticide Application• Custom Harvesting and Hauling

• Operator Equipment and Labor

Cultivation Practices for Dryland Grain Sorghum in Texas Panhandle

• Seed rate: 2.25 lbs/acre• Fertilizer Application per Acre

- Nitrogen (ANH3): 30 lbs

• Custom Herbicide and Insecticide Application• Custom Harvesting and Hauling• Operator Equipment and Labor

Cultivation Practices for Irrigated Sweet Sorghum in Texas Panhandle Region

• Irrigation Requirement: 15.75 acre inches• Seed rate: 6.5 lbs/acre• Fertilizer Application per Acre

- Nitrogen (ANH3): 225 lbs

- Phosphorus (Liquid): 40 lbs

• Custom Herbicide and Insecticide Application• Custom Harvesting and Hauling• Operator Equipment and Labor

Cultivation Practices for Dryland Sweet Sorghum in Texas Panhandle Region

• Seed rate: 30 lbs/acre• Fertilizer Application per Acre

- Nitrogen (dry): 80 lbs

- Phosphate: 40 lbs

• Custom Herbicide and Insecticide Application• Custom Harvesting and Hauling• Operator Equipment and Labor

Cultivation Practices for Irrigated Switchgrass in Texas Panhandle Region

• Establishment Cost• Irrigation Requirement: 14.7 acre inches• Fertilizer and Herbicide Application per Acre

- Nitrogen-32 in water: 20 lbs

- Urea, solid (46% N): 45 lbs

- 2,4-D Amine 4: 40 oz

• Operator Equipment and Labor

Cultivation Practices for Dryland Switchgrass in Texas Panhandle Region

• Establishment Cost• Fertilizer and Herbicide Application per Acre

- Urea, solid (46% N): 45 lbs

- 2,4-D Amine 4: 40 oz

• Operator Equipment and Labor

Estimated Feedstock Production Cost per Acre in Texas Panhandle Region

Feedstock Irrigated Dryland

Grain sorghum $413.35 $141.66

Sweet sorghum $462.71 $193.07

Switchgrass $349.05 $102.32

Source: TAMU Crop Budgets 2010

• Total Gross Income

= Derived demand price of feedstock per gallon of ethanol *

Gallons of ethanol produced per acre

Total Gross Income per Acre for Selected Feedstocks

Feedstock Irrigated Dryland

Grain sorghum$477.98

(388.6*1.23)

$128.41

(104.4*1.23)

Sweet sorghum$162.53

(216.7*0.75)

$72.98

(97.3*0.75)

Switchgrass$308.88

(343.2*0.90)

$98.28

(109.2*0.90)

• Net Return per Acre ($)

= Total Gross Income - Total Specified Expenses

Net Return per Acre for Selected Feedstocks

Feedstock Irrigated Dryland

Grain sorghum$64.63

(477.98-413.35)

-$13.25

(128.41-141.66)

Sweet sorghum-$300.18

(162.53-462.71)

-$120.09

(72.98-193.07)

Switchgrass-$40.17

(308.88-349.05)

-$4.04

(98.28-102.32)

• Economic Return or Residual Return/Acre

= Net Return – Cash Rent

• Cash Rent- Irrigated Land: $110/acre

- Dryland : $25/acre

Source: TAMU Crop Budgets 2010

Economic Returns per Acre for Selected Feedstocks

Feedstock Irrigated Dryland

Grain sorghum-$45.37

(64.63-110.00)

-$38.25

(-13.25-25.00)

Sweet sorghum-$410.18

(-300.18-110.00)

-$145.09

(-120.09-25.00)

Switchgrass-$150.17

(-40.17-110.00)

-$29.04

(-4.04-25.00)

Conclusion

• Production of ethanol from grain sorghum, sweet sorghum, and switchgrass is not economically feasible in the Texas Panhandle Region

• Consistent with the status of ethanol industry in the Texas Panhandle Region

Limitations of the Study

• Lack of production information on the feedstocks for the Texas Panhandle

• Limited research on selected feedstocks in the Texas Panhandle

Suggestions for Improving the Economic Feasibility of Ethanol Production in the Panhandle

• An increase in feedstock productivity

• Decrease in production cost

• An increase in the ethanol extraction

• An increase in the price of ethanol

Thank You!