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Refineries that allow cost effective
on-farm production of biodiesel
BA 468New Venture Lab
Overview• The Team
• Introductions
• The Problem• Rising fuel costs
• The Solution• Making biodiesel
• The Opportunity• On-farm production of
fuel
• The Process• How it works
• The Economics• How to make it viable
• The Way Forward• Where to from here
The Team• OSU Students
– Mike Peterson• Business & Psychology
– Andrew Stratton• Mechanical Engineering & Entrepreneurship
– Chris Fenot• Business & German
– Ryan Kirkpatrick• General Science & Chemistry & Entrepreneurship
• Project Mentor– Dan Whitaker
• Entrepreneur, Rogue Wave Software, Software Association of Oregon, Centralia Sawmill, Holderman Paving, Pixio Corporation
The Problem• High petroleum costs affecting economic
viability of rural industries– 69.45 as of June 1st 2006 (NYMEX)
• Limited viable fuel alternatives– Ethanol
• Gasoline Replacement• Not compatible with most current farm equipment
– Compressed Natural Gas• High Conversion Costs
– Biodiesel• Compatible with most farm equipment
The Solution
On-farm Production of Fuel
The Solution - Canola
• Canola is the preferred oil seed crop
– Canola will be used as a rotational crop– Canola cropping uses existing farm
equipment•No major capital investment to harvest
– Canola converts to:•Biodiesel•Glycerin•Seedcake
A ‘by-batch’ process…1. Mix, agitate, settle2. Drain off biodiesel3. Wash glycerin and
catalyst out of biodiesel
4. Let washed biodiesel settle
5. Drain off water
Results in…- Questionable quality
- Easy to make
mistakes
- Poor quality glycerin
Current Biodiesel Production Method
Current Biodiesel Production Method
The Opportunity
Breakthrough technology has now been developed by OSU scientists that
allows for:
• Small scale, high quality biodiesel production
• Increased purity of by-products
The Process
The TechnologyOregon State University and ONAMI
Developed by Dr. Goran Jovanovich
Microchannel Reactor
Benefits:
• Size benefits- reactor less than 12”x12”
•High quality biodiesel and USP glycerin
•No waste
•Greatly reduced reaction time (10 seconds vs. 4 hrs)
•Solid state catalyst
•Continuous flow technology
The Opportunity – Refinery
The AGRIFUEL200
A refinery that allows cost effective on-farm production of biodiesel
The AGRIFUEL200
•4”x4” mild steel frame•6’X6’X7.5’•Runs on electricity
•1-15 micron particulate and water filter
“Farmer tough”
The AGRIFUEL200
Benefits:– Compatible with a variety of seed
crops – Converts seed to high quality biodiesel– Creates by-products that have value
• Pharmaceutical grade glycerin • Seed Cake – High protein feedstock
– Operates unattended for up to 2 weeks
– 2 gallons of biodiesel per hour • Over 17,500 gallons per year• Equals approx $45,000 at current diesel
price
Refinery Development
• Technical development timeline– May 2006- August 2006
• Acquire seed press, filters, pumps and begin process testing
• Construct prototype chassis and all fluid control systems
– Sept 2006- Jan 2007• Receive finalized reactor and separator
design and begin production
Target Market
• Primary Market- Eastern Oregon and Western Washington– Canola farmers located in eastern Oregon and western
Washington• Average farm size of 3,006 acres is well above state and
national averages• No current canola limitations• Currently growing canola which allows for accurate
prediction of yields and customer revenue
• Secondary Market- Canada• Canola is consistently either the first or second most
valuable field crop in Canada• Farmers, grain handling companies, processors, and
researchers joined forces to support canola research and promote production
What it Means to the Customer
New Farmer Economics
Revenues $ per lb $ per acre
Biodiesel (in gal) 0.098 295.276
Glycerin (in gal) 0.020 59.055
Seed cake (in lbs) 0.053 157.500
Tax-credit (in $) 0.039 118.110
Total Revenue 0.210 629.941
Costs $ per lb $ per acre
Methanol input -0.009 -26.575
Cost machine per year -0.031 -94.350
Service Fee to AGRIFUEL SERVICES -0.010 -30.000
Internal Cost of running machine -0.010 -30.000
Total Cost -0.060 -180.925
Net Revenue $0.150 $449.016
$ per lb $ per acre
Increase in Revenue: $0.040 $119.016
Acreage 1
Yield 3000
Normal Revenue for Farmer
Price 0.11
Revenue 330
Business Model
Three revenue streams:
- Sale of Refineries
- Servicing Refineries
•Performing maintenance
•Changing Filters
•Supplying methanol
•Retrieval of glycerin and seed cake
- Margin from glycerin
Income Statement
The Way Forward• Year 1- 2007
• The entrepreneurial team will:• Begin development of initial refineries • Proceed beta testing of initial refineries • Assemble key business infrastructure• Begin sales in Eastern Oregon and Western Washington
• Milestones we would like to reach
• Sell 8 refineries• Secure production relationship• Secure sales relationships for by-products• Implement service team• Become active in canola legislation to allow for the use
of our refineries within the Willamette Valley
The Way Forward• Year 2- 2008
– Add second location • Concentrate sales in Canada• Add a salesman • Sell 30 units
– Expand product line • Larger units for CO-OPS and larger farms • Increase service capabilities
• Year 3-2009•Third sales location
– Midwest and Eastern locations
Where We are Today• Negotiating the specifics of our license
agreement with the university
• Waiting for the testing of larger scale micro reactor
• Completing design of machine – Dependent upon results of microreactor capability
• Researching Federal and State grants available for these kind of projects.– Though the USDA and ONAMI
• In the process of market and customer research
