Post on 31-Jan-2018
transcript
BUSINESS PLAN
Proposed Biodiesel
Cultivation in Argentina
Using
Camelina sativa
Albarakat BioFuel Tech Saudi Arabia Tel 966591008032 Fax 96626687424 biogreen00@gmail.com URL http://biodiesel1.yolasite.com/
http://biogreentech.webstarts.com/index.html
Table of Contents
Table of Contents ..........................................................................................................................2 Executive summary .......................................................................................................................3 Mission and objectives ...................................................................................................................4
Company description .................................................................................................................4
Company locations and facilities ..................................................................................................5
Subsection 1. Introduction to sustainable biofuels ......................................................................6
Subsection 2. Camelina sativa cultivation .....................................................................................7
Camelina advantages from Montana research ...........................................................................8 Subsection 3. CO2 balance ...........................................................................................................9
Subsection 4. Food vs. fuel debate ............................................................................................ 10
Product description...................................................................................................................... 11
Seeds ..................................................................................................................................... 11
Oil .......................................................................................................................................... 11
Meal ...................................................................................................................................... 11
Biodiesel and biokerosene .................................................................................................... 12
Key biodiesel advantages and performance ............................................................................ 13
Technology of biodiesel production ........................................................................................ 13
Feedstock Prices .................................................................................................................. 13
Biodiesel production costs..................................................................................................... 14
Biodiesel production equipment ........................................................................................... 15
Quality management. ........................................................................................................... 16
Market for biodiesel and biokerosene ...................................................................................... 16 Key advantages of production of camelina in BA ............................................................................. 18
Technology of camelina oil production ..................................................................................... 18 Vegetable oil prices and production costs ....................................................................................... 20 Market for camelina oil ............................................................................................................... 24
Competitors ............................................................................................................................ 25
Production constraints .............................................................................................................. 25
Risks....................................................................................................................................... 25
SWOT analysis ........................................................................................................................ 26
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Executive summary
ArgBioInvest and GreenerPro propose to develop the sustainable cultivation of Camelina sativa in the Province of Buenos Aires, Argentina, focusing on biofuel production without its pitfalls. Our product range has been developed to accommodate this process and includes marketing, logistics, processing, production and cultivation of Camelina sativa as described in our Camelina Value Chain, or to put it more simply: from soil to tank. This product range will be adjusted continually to keep pace with a changing marketplace. We will offer a biofuel (feedstock) with the same performance as that of conventional diesel or kerosene, at a very competitive price and produced in a truly sustainable way. By introducing the Double Crop Strategy we avoid the pitfalls associated with using agricultural land for biofuels and the consequent interference with food production. We will also use marginal lands not currently producing food. Figure 1. Producing biodiesel is just one chain in the total process of creating a sustainable source of energy. The cultivation of camelina is an efficient way to convert solar energy into oil. The biofuel market is expanding rapidly worldwide due to growing ecological concerns and limited energy supply (‘peak oil’). Our target customers are in Europe. Our team’s skills cover all aspects of creating and managing the Camelina Value Chain: organizing, financing, auditing, marketing, promoting business and applying scientific and engineering principles to solve technical and organizational problems. Location Tres Arroyos Province of Buenos Aires, Argentina Project Sustainable production of vegetable oil and biodiesel Technology Cultivation of Camelina sativa and transesterification Producer Camelina Technology Center, a limited liability partnership Market development Displacement of fossil fuel market Product Sales Main market is biofuels 3
Mission and objectives
Our mission is to introduce and cultivate camelina successfully in Argentina by starting a Camelina
Technology Center. In essence we will promote cultivating camelina by carrying out field tests in the
first year and doing considerable promotional work. This will enable us to select the right camelina
variety for BA and to gather hard data about its performance, as well as attracting attention from the
farming community. In the second year CTC will guarantee to buy the full harvest from farmers who
participate. We organize buying and selling the seeds, oil and meal. It is also our mission to develop
and promote new markets for camelina products both in Argentina and worldwide. In short, we want
to create, develop and manage the complete Camelina Value Chain from the ground up. Figure 2. The Camelina Value Chain. Company description CTC is an alliance between Arg Bio Invest and Albarakat BioGreenTech. Based on its in-depth understanding of the Argentine agro-industrial sector, Arg Bio Invest is well-qualified to provide advice on the development of biomass and bioenergy projects. This experience of
having developed agro-industrial and forestation projects enables us to identify and to help with running any possible biomass or bioenergy businesses with an interdisciplinary team. GreenerPro CEO John Venema has seven years’ experience in oil chemistry, oil processing, biodiesel production, biodiesel plant design and construction. He is a recognized authority on the commercial development and production of medium-scale biodiesel plants and a promoter of sustainable oil crops. 4
Company locations and facilities CPC is based in Tres Arroyos, Buenos Aires Province, Argentina. It is in the middle of the main agricultural area of South Buenos Aires (about 3,500,000 ha) where sunflower and wheat are the most traditional crops. Soya, corn, canola and barley are secondary crops in this region. We have a well-equipped office, a presentation room, a 4x4 vehicle, laboratory equipment and relationships with the agronomic business environment. Figure 3. Argentina climate map. 5
Subsection 1. Introduction to sustainable biofuels There has recently been considerable controversy about the use of biofuels. The increase in food
prices suggested a direct link with the production of biofuels (biodiesel and bioethanol) as most
biofuels are derived from commodities like corn, rapeseed, wheat, palm and soya to mention just a
few. The primary reason for this sudden increase in food prices is still debated. Other causes could
be the high oil prices followed by the high price of agrochemicals, and speculation. Another problem mentioned is the use of agricultural land itself. This land might previously have been
used for food production or, worse, be a former rainforest. Palm and soya oil have a particularly bad
reputation for using former rainforest. Rainforest soils are very poor and need heavy chemical input to
maintain a high level of production. Soil erosion and mudflows are also common problems in areas
where the rainforests have been burned down. The result is that the frontier of freshly-burned
rainforest soil moves on while leaving behind dead soil and poor communities. The increased use of fresh water to cultivate these biofuel crops by irrigation has recently been criticized. We also have to mention leaking agrochemicals into the groundwater and
the evaporation of NOx into the atmosphere through using fertilizers. These important factors should also be taken into account for a true ‘low input’ crop. Clearly there is also a huge need for a more sustainable way of producing biofuels. Ideally
a biofuel crop should have all of the following characteristics to make it sustainable and
economically successful:
� No competition with the production of food crops (indirect land use) � Modest use of fresh water (350 mm annually) � Drought-tolerant � Possibility of growing on marginal dry lands � Modest use of agro(petro)chemicals � Reduced tillage to prevent soil erosion � Low capital investment needs (fixed and variable) � Producing both fuel and food or feed � Low conversion cost into desired biofuel � No threats to existing ecosystems as invasive species � For cooler regions it should be frost-tolerant � The crop must have undergone a process of ‘domestication’ � Little need for crop management � Mechanized harvesting is a must
Most of these characteristics are also used in the WWF’s definition of Second Generation Biofuel. The cultivation of Camelina sativa fulfills all these requirements and is therefore a truly
low-input and sustainable oil crop for temperate climate zones. 6
Subsection 2. Camelina sativa cultivation. Figure 4. The Camelina sativa in flower.
An oilseed crop closely matching these characteristics is
camelina (Camelina sativa L.). Camelina has been
cultivated since the Bronze Age in large parts of Europe
and Russia until the 1940s. Camelina has recently
enjoyed a revival in Montana and Oregon as a low-input
and low-cost alternative to its close relative canola. Camelina can be grown as a summer or winter annual in
milder climates. It matures in 85 to 100 days and is
therefore a short-season crop. Camelina seeds are quite
small, with a 1,000-seed weight of 1-2 grams. The oil
content ranges around 40 % for domesticated varieties. Camelina oil can be used in both edible and industrial
products. It has been used successfully and tested in
biodiesel production as Camelina Methyl Ester. Camelina oil is rich in both vitamin E and omega-3 fatty
acids. It is therefore a very healthy salad oil, but is not
suitable for deep frying. Other uses are in cosmetics as
skincare products, soaps and soft detergents. Camelina meal (the part of the seed which is not oil and remains after oil extraction) is low in glucosinolates and similar to soybean meal, with 45 percent crude protein and 11 percent fiber. It has been used successfully in animal feed.
Figure 5. Camelina seed (upper right) is very small compared to canola (upper left) and flax seed (bottom). 7
Camelina advantages from Montana research � Very low seeding rate (2.5 kg/ha) � True competitiveness of camelina in terms of weed control � Tolerant to fairly high saline conditions � Soil moisture should be 50 mm at planting or germination and 350 mm total
before harvesting � Drought and spring freezing tolerance � Resistant to flea beetles � As a rotational crop it increases the yields of following crops � Changes disease, insect and weed ecologies � Compatible with reduced tillage � Costs of production and yields similar to flax � Variable costs USD 190 versus USD 337 for wheat and canola � Possible allelopathic (natural defense against competitors) � Fatty acid profile (including hydroxy FA) is genetically very adaptable to its intended use � Camelina oil produces good quality biodiesel for colder climate zones
Fatty acid profile
100 40
90 30
80
20
70
60 10
50
0
40
30 -10
20
-20
10
0 -30
Saturated % Mono unsaturated % Polyunsaturated %
CFPP °C Linear (CFPP °C)
Figure 6. Relationship between oil composition and its freezing point (CFPP). A CFPP of better than -15 C° (like rapeseed) is fav orable in cold climates. Camelina MT5 has
the lowest CFPP (-25 C°). Palm oils and to some ext ent soya oils have unfavorable CFPP
values making them unsuitable for European and North American biodiesel production. Palm
and soya oils need to be blended with canola, rapeseed or even better, camelina. 8
Subsection 3. CO2 balance Biofuels are intended as environmentally-friendly alternatives to fossil fuels. There has been considerable debate recently on how environmentally-friendly they really are. The use of
fertilizers and the consequent release of NOx gases into the atmosphere are contributing to
global warming. Fossil fuel is used in the transportation and production of agrochemicals and the biofuel (feedstock) itself uses energy in refining etc. There is concern about the biofuel crops’ water usage, as well as that of the refinery. In general biodiesel performs better than bioethanol in this respect. The food versus fuel debate is still undecided. We believe it is all a matter of making the right choice. Some crops can be used simultaneously for food and fuel production. The meal from soya and camelina for example is an excellent food/feed. We advocate the use of a double crop strategy. The same land now in use for sunflower or soya can also be used in the same year but a different season for camelina. In this way we produce both fuel and food without interfering with current food production on other lands. In the following graph it can be seen that not every biodiesel is the same in its CO2 balance. The
differences are caused mainly by the CO2 costs in the cultivation (operational costs) of the oil crop.
These go mainly into the high energy costs for producing the fertilizers. Not surprisingly oils with a
high carbon footprint are more expensive to produce as energy prices are high. Biodiesel based on
soya and camelina is not only cheaper to produce, but its carbon footprint is among the lowest. It
saves up to 74% in CO2 gas emissions. Sunflower biodiesel only saves 52% in CO2. Because of its
high production costs sunflower oil is used predominantly for human consumption.
4500
4000
3500
3000 Fossil diesel use
2500
Biodiesel production
2000
Crushing + refining
1500
1000 Transport
500
Cultivation
0
Figure 7. CO2-eq emissions/ton biodiesel from different oil crops.
Rape Soy Sunflower Camelina Palm CO2 total emission/ton biodiesel 17101440 20601100 1730 CO2 saving when replacing diesel in % 6066 5274 59
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Figure 8. The CO2 cycle of biodiesel. The CO2 exhaust produced by vehicles running on biodiesel is the same CO2 the oil crops used in their photosynthesis to store energy resulting in vegetable oil. This cycle can be repeated an infinite numbers of times. The current use of vegetable oil for production is shown in the following graph. Because of
its CFPP properties rapeseed is popular in Europe despite its higher price. Camelina oil
exceeds these properties and could replace the use of rapeseed oil.
Worldwide oil feedstock for biodiesel
1%
5%
5%
Rapeseed
15% Palm
6% Soya
Sunflower
68%
Waste oil
Tallow
Figure 9. Any vegetable oil can be used to produce biodiesel. Important are the price and CFPP properties. Camelina oil is similar to rapeseed oil in many respects and could replace it. Subsection 4. Food vs. fuel debate The idea of turning crops into biofuel conjures up visions of our cars taking food out of the mouths of hungry people. In fact well over 70 percent of the grain and soya grown in the USA is used to feed animals, not people. The same is true for most of the developed world. Animal feed is cultivated everywhere instead and then consumers eat the meat, milk, eggs, cheese, etc. that the animals produce. In the USA there are about 325 million hectares of cropland and animal pasture. About 200 million of these hectares are used to produce animal feed and not for food consumed directly by human beings. If you want to increase food supplies (and decrease food prices), then become a strict vegetarian. While no-one wishes to minimize the problem of hunger in the world, this issue of ‘food vs. fuel’ requires facts and logic, not emotionalism. In fact the cost of grains to produce a USD 3 loaf of bread are just about 15 cents. What really influences the price you pay for your bread are the transportation costs, which are closely related to the price of (bio)fuel.
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Product description
Our first main activity will be to promote the cultivation of camelina to obtain the seeds. Part of the seeds will be processed by third-party expellers to obtain the oil and meal. A complete vertical integration including solvent extraction and the production of biodiesel is our long-term objective. That leaves us with three main products to begin with: Seeds The seed size is very small: 0.7x1.5 mm (more than 827,000 seeds per kilo) with a pale, yellow‐brown ridged surface. Some of us know it as (canary) bird seed. It has 29‐39% oil composition, 45-47% crude protein and 10-11% fiber. Oil Camelina oil has a high linolenic acid or omega-3 fatty acid (C18:3n-3) which makes up about
35-39% of the total oil content, with the remaining fatty acids being oleic (15-20%), linoleic
(18:2n-6, 20-25%), gondoic (5-10%) and erucic (4-5%). The oil is very rich in vitamin E. The oil
also has an excellent nutritional quality, as well as superior technical qualities. The biodiesel
produced from camelina oil has superior cold flow properties of -20 C°, much higher than palm
(+18 C°) or soya oil (-1 C°). It is even better tha n rape oil (-15 C°). This quality combined with the
low cost price constitutes a unique selling proposition for our product. Meal The cold pressed meal still contains 10-14% oil by weight, with a protein content of about 40%, allowing it to compete with soybean meal as an animal feed. Camelina meal can be used for production of omega-3 enriched feed products. When solvent extraction is used, and no oil remains in the meal, the (relative) protein content will increase to about 45-47%.
%Dry matter
Camelina cold press
Sunflower solvent extraction Figure 10. Meal composition of different oil crops. Camelina meal is much the same as rapeseed meal, but with a higher omega-3 content.
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In addition to the main products of oil, seed and meal, we will have another product not taken
into account in our calculations, as it has a future use not covered by our current operation.
Straw from camelina is a woody product that has value when used for torrefied pellets or as
input for cellulosic ethanol production once this technique becomes economically viable. Figure 11. Products of camelina sativa cultivation. Biodiesel and biokerosene The most important end-use of camelina oil will be the production of biodiesel. Biodiesel is a light
amber and clear liquid, without unpleasant odor or handling characteristics, of virtually the same
viscosity as mineral fossil diesel oil. Biodiesel is only biodiesel if it complies with EN14214 (Europe) or
ASTM 6751 (America). A detailed description of the biodiesel norm can be found on our website i.
Biodiesel fuel alone, or in combination with petroleum diesel fuel (blends B5, B20, etc., where the
number is the biodiesel percentage), can be used in most diesel engines with little or no engine
modification. The majority of US biodiesel consumption is B20, or a 20% blend of biodiesel. In Europe
the majority of the biodiesel sold is B5. B100 is essentially no longer available to consumers. Fleet
owners do their own blending and quickly adapt their own blend to actual price rates. Other biodiesel related (by)products we will or can sell are:
� Glycerol, export to China or to use as soil improver or soap feedstock � Fertilizer (potassium and phosphor) for use by our farmers.
Both products have very limited market value since the demand is already met by existing biodiesel
producers. More biodiesel production means more surpluses. There still is no killer application for
the raw glycerol from biodiesel production. In Germany most glycerol is fermented to biogas. Other processes have also been developed to convert vegetable oil to fuels similar to regular
diesel fuel (and thus able to take advantage of current diesel-optimized engines). These
processes are similar to those used in a petroleum refinery such as hydrotreating or hardening,
which involves treating the oil with hydrogen in the presence of a catalyst. The product of such
a reaction is called ‘green’ diesel. The co-product is propane rather than the glycerol
associated with biodiesel. Vegetable oils can also be treated in a petrochemical fluid catalytic
cracking (FCC) unit to give a kerosene-like product called biokerosene.
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Key biodiesel advantages and performance � Biodiesel is the only alternative fuel that runs in any conventional, unmodified diesel
engine. It can be stored exactly like petroleum diesel. Biodiesel shows similar fuel consumption, horsepower, torque, and haulage rates as conventional diesel fuel.
� Biodiesel can be used alone or mixed with petroleum diesel in any ratio.
� Using biodiesel can extend the life of diesel engines because it lubricates better than petroleum diesel fuel. Even biodiesel levels at five percent can provide up to a 65 percent increase in lubricity.
� Biodiesel is safe to handle and transport because it is as biodegradable as sugar (pure biodiesel degrades 85 to 88% in water within 28 days), 10 times less toxic than table salt and has a high flashpoint of about 200°C compared to petroleum dies el fuel, which has a flash point of 70°C.
� Biodiesel is a proven fuel with over 30 million successful European road kilometers.
� Combustion of biodiesel provides more than a 75–90% reduction in environmental pollution and a 90% reduction in tailpipe-borne cancer risks.
� Biodiesel is the only alternative fuel to meet all environmental and human health requirements for energy sources so far.
Technology of biodiesel production The process of converting vegetable oil into biodiesel fuel is called transesterification. It is a way to make the viscous oil less viscous by removing the glycerol ‘backbone’ and replace this with an alcohol. This is how the oil is adapted for use in a diesel engine. It is accomplished by mixing alcohol with a catalyst (sodium or potassium hydroxide) to make sodium (m)ethoxide. This liquid is then mixed with the vegetable oil. The entire mixture then settles out in two layers. Glycerol is left on the bottom and methyl esters, or biodiesel, is left on top. Finally, the methyl esters are washed, filtered and refined. Schematically, transesterification can be described as follows: 1,000 kg of oil + 160 kg (m)ethanol + 1 kg KOH (or NaOH) = 980 kg biodiesel (methyl
esters) + 180 kg (impure) glycerol. Feedstock Prices The cost of vegetable oil feedstock like soya or canola is the largest single component (>75%) of biodiesel production costs. Feedstock prices are inherently difficult to predict, but follow each other closely. That is because producers of biodiesel are always trying to lower the cost price of their product by replacing expensive oil for cheaper ones like palm instead of rapeseed oil in their blend. This mechanism corrects the prices for both high and low priced feedstock to a certain equilibrium. This blending of different types of oil based upon their current market price has its technical limitations. Palm en soya oil are among the lower priced feedstock but their use is limited in cold winter periods. Rapeseed oil is the feedstock of choice during winter time, especially in Europe. More information in figures 6, 9 and 18. 13
1% 1% 2%
1%10%
Feedstock
Manpower
Energy
Maintenance
85% Depriciation
Methanol
Figure 12. What are the costs that make up a liter of biodiesel? In Argentina, soybean oil dominates the vegetable oil market, comprising over 85% of the total vegetable oil volume. The combined and for the most part exported vegetable oil
production totals about 47 million MT per year ii. It is also used for biodiesel production. Sunflower oil is too expensive for use as a technical oil.
As can be seen from figure 18 the prices for feedstock were climbing fast in 2008, much faster
than anticipated by the U.S. Department of Agriculture (USDA). In fact the rising prices forced
factories in Germany to shut down as the cost price for the feedstock alone was higher than the
biodiesel sales price. The biodiesel sales price is always limited by the diesel price, typical for a
replacement market. This situation of not producing because of high feedstock prices is what we
want to avoid with the cultivation of camelina, in this business plan proposal. The idea of the proposed crop cultivation of camelina is to be independent of fluctuations in the stock
market prices of biodiesel feedstock. Cultivating camelina also opens other new market possibilities
as the demand for healthy consumption oils is increasing (BRIC countries, see figure 22). Biodiesel production costs The other biodiesel production expenses are the costs of chemicals and energy: 1 liter of
oil plus 0.13iii liter of methanol plus 0.005 gram of KOH. Prices for feedstock were
explained above; please refer to the table below for the costs of chemicals and energy.
Name Quantity required per L
Methanol
Catalyst
Electricity
Total Energy and Chemicals Figure 13. Biodiesel production costs are about 13 US cents per liter.
The cost of methanol (or ethanol) is the second largest single component (>7%) of biodiesel
production costs. Methanol is made out of natural gas and therefore it follows the price on the
world’s crude oil market. It can be replaced in the production of biodiesel with the more expensive
ethanol which has a biological origin. The average price for one tonne of methanol is around USD
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300 but did peak to USD 850 in January 2008 only to slip back to the normal price level of USD
333. This big difference only accounts for 6 cents extra in the biodiesel production expenses. Biodiesel production equipment Biodiesel production equipment is widely available on the market and we will use a 15 MT-per-day
plant as the solution base in this project. We have our own technology to build reactors. The
equipment set includes biodiesel reactors, pipelines, pumping stations etc., so we have a complete
technological solution. The biodiesel produced meets EN14214 Industry Standards. In addition to a processor we also need storage capacities, planned for one week
according to our manufacturing and logistics requirements. Process Simplified process description:
1. The seeds of the camelina are harvested and dried before storage and milling. 2. 45 tons of seed are crushed into meal and oil. 3. 15 tons of oil are collected after basic filtration. 4. First step is transesterification: here the oil and methanol meet. 5. After the reaction the biodiesel gets separated from the glycerol. 6. A second step is needed to complete the reaction. A much smaller amount of
methoxide is needed. The conversion rate will be >97%. 7. The second separator takes out the remaining glycerol. 8. Water wash or ion exchange methods remove any impurities from the biodiesel.
Methanol will be recovered and used again. 9. Methanol and methoxide mixing processor. It is also possible to use bioethanol to
make an even greener biodiesel with superior qualities. 10. After neutralization with phosphor the 80% pure glycerol will be stripped of the
methanol and stored for sale. Phosphor and potassium (KOH) will be used as fertilizer in the cultivation of camelina.
11. The final storage of the biodiesel in an airtight container before shipping. Figure 14. Biodiesel production process for high FFA feedstock.
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Quality management. Quality management is very important for our operation. Testing our products will be conducted by an independent laboratory with random samples double-checked by U.S. EPA-approved testing laboratories. It will use Gas Chromatography, NIR Spectrometer etc. We will have our own laboratory to perform the most common tests ourselves in order to control, assure and improve the quality of our products ourselves. Market for biodiesel and biokerosene The market for biodiesel can be divided into road transport and air transport. For road transport,
mandatory blending of biodiesel into diesel will increase from 5% to 10% in 2020 in Europe. This
will create a huge extra demand which the existing players will capitalize on. Extra demand can
come from the use of 100% biodiesel as a replacement fuel for regular diesel. As the figure
below shows, this demand decreased from 1.5 million tons to almost zero in 2009. The reason
for this is the high price of biodiesel at the pump stations due to increases in both road taxation
and feedstock (rapeseed) prices on one hand, and the sudden drop in crude oil prices on the
other. If the biodiesel price was lower than normal diesel as happened in 2006, it could be back
in demand again. Biodiesel produced from camelina oil has this potential. For air transport a special variety of biodiesel is needed. The so-called biokerosene can be either
fractionated biodiesel or hydrogenated and cracked camelina oil. Biokerosene is less viscous than
diesel and has superior CFPP properties (around -50 C°). KLM has shown special interest in the use
of camelina biofuel to power their planes; KLM did a successful test flight in November 2009.
Camelina oil attracted their attention because it not only fits the criteria for sustainability, but it also
does not contribute to high food prices. It can also be produced economically in large and sufficient
quantities. The use of camelina oil for producing biokerosene will have our special attention.
Biofuels use x Mt
4
3,5 3
2,5 2
1,5 1
0,5 0
2006 20072008 2009
DIN 51605 (PPO) Biodiesel 100% Blended biodiesel
Figure 15. The use of biodiesel in Germany has changed dramatically. The use of pure biodiesel has almost vanished due to high retail prices. This effect is reversible. DIN 51605 is the technical name for the use of pure rapeseed oil as a biofuel. This biofuel is popular with German farmers as it is cheaper than biodiesel. Camelina oil can be used by Argentinean farmers.
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In 2009 the biodiesel production capacity in Europe was 22 million tons but only 10 million tons is
actually produced. We see a similar picture in the rest of the world. If conditions are right again this
production capacity will be utilized to the maximum. One of these conditions is a crude oil price of
around USD 120 per barrel. The European diesel fuel market is about 220 million tons annually.
Fuel demand (mb/d) 2014
Mill
ion
s
8 7 6 5 4 3 2 1 -
Biofuels North Europe supply America
Kerosene Figure 16. The worldwide demand of the fuels diesel and kerosene in million barrels per day for
different economical regions as expected for the year 2014. (A barrel is 159 litres.) Source: IAE iv
It becomes very obvious from the data presented in figure 16 that the total expected biofuels production together is by far not able to satisfy the huge demand of petroleum. There are also more than enough opportunities for additional players on the biofuel market. 17
Key advantages of production of camelina in BA
There are several ways to introduce camelina cultivation in BA. We have chosen to follow a
double crop strategy with sunflowers as we don’t want to displace any current cultivation.
Camelina is typically planted in the autumn (Q3) and harvested in the spring (Q1), so producers
can cultivate and harvest camelina without interfering with the normal production of sunflower,
soya or wheat. There are about 600,000 ha under sunflower cultivation in BA alone. This means
the overhead costs like land rental and machinery for the farmer can be shared between two
crops in the same year, increasing revenue as an additional income to the farmer from the same
land. The overhead cost price for camelina oil is very low as a result, another reason for us to
follow the double crop strategy. As camelina grows off-season it will generate new employment
and offers new incentives for rural development. This effect will be even stronger if we expand
the camelina cultivation to low-quality soils, soils not currently in use. German experiments with
crop rotation have proved that camelina is actually a soil improver. It brings moisture and
nutrients to the topsoil to the benefit of the crop that follows camelina. Cultivating camelina is
also a win-win situation for both the farmer and the environment. Other important benefits for Argentina in general and BA in particular are:
� Huge acreage (the size of half of Italy) of both high and low quality soils suitable for camelina � Argentina has very good harbors for international cargo and bulk shipments of oil,
meal and seeds. � Well-developed infrastructure for the production, storage and transport of
vegetable oils and seeds based on soya and sunflower. � There is a large market for the important co-product meal (meat production) � Soils, wages etc. are low compared to North America and Europe. � Special Argentine legislation to promote the production of biofuels (biodiesel and
bioethanol). Argentina has a 5% mandatory blend of biodiesel for public stations.
Technology of camelina oil production Camelina is a relatively easy crop to grow and requires very few agricultural inputs compared to other crops. It can establish itself successfully through broadcast seeding on frozen ground in winter or early spring, even in previous crop stubble. Germination occurs after soil temperatures reach 3 degrees Celsius. Planting with grain drills gives the same results as surface broadcasting when there is adequate moisture on the soil surface. Camelina has generally been grown without the use of herbicides for weed control. Winter-seed
camelina germinates earlier than many weed species and is very competitive when seeded at high
density. Camelina is similar to canola in its sensitivity to residual soil herbicides. Harvesting can be with unmodified combines and is usually direct-combined standing.
Combine settings are similar to those used for canola and alfalfa. This means a major
advantage for the farmer as he has no additional need for equipment investment. Producing oil and the resulting meal (or cake) is usually done by expellers and solvent extraction. An
expeller requires a lower investment and when well done the resulting oil is called ‘cold pressed’. It is
tastier and healthier than the oil from solvent extraction. Solvent extraction however has a 10%
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increase in oil yield and as the name already suggests uses solvents (hexane) to extract the oil from the seeds. Combinations are possible in the so called ‘expander technology’. Solvent extraction plants are capital-intensive and are usually a viable choice if you want to extract more than 150 TPD seeds during 260 days per year. The oil usually goes to a refinery although this not always necessary in the case of cold
pressed oils. By refining you can remove unwanted substances from the oil like gums, FFA
and others. For technical oils refining is always needed to guarantee a minimum oil quality.
Oilseeds
Conditioning
Pre-Pressing
Solvent Extraction
Crude Oil
Degumming
Neutralisation
Bleaching
Deodorisation
RefinedOil
Figure 17 shows a solvent extraction process followed by a chemical refining (right) and a classical cold pressing operation (left).
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Vegetable oil prices and production costs
The cost of vegetable oil feedstock or the seeds is the largest single component of oil production costs. If the seeds contain 50% oil and you use solvent extraction, you have to buy 2 tons of seeds to get 1 ton of oil and 1 ton of meal. For mechanical expellers this ratio will be 0.85-1.15. Feedstock prices are difficult to predict as recent history shows.
$ 1.800
$ 1.600
$ 1.400
$ 1.200
$ 1.000
$ 800
$ 600
$ 400
$ 200
$ 0 2000 2001 2002 2003 2004 2005 2006 20072008 2009
RapeOil USD/t Soyoil USD/t Sunflower oil USD/t SoyaMeal USD/t SunflowerMeal USD/t RapeMeal USD/T Rapeseeds USD/t Soya USD/t Sunflower USD/t
Figure 18. Monthly average prices for oil and meal from 2000 There is clearly a relationship between the prices of seed, meal and oil. However vegetable oil prices
tend to fluctuate with greater volatility than meal prices because the oil is used not only as a food but
also as an energy source (pure or as biodiesel). Based on the price of crude (mineral) oil the
following graph explains what happens with the biodiesel production in relation to the price of
vegetable oil, in the situation where there is a 50% biodiesel plant overproduction capacity. 20
1,6
$/L
1,4 Negative operating margins
feed
stoc
k 1,2
1
0,8
oil
0,6
Vege
tabl
e
Positive operating margins
0,4
0,2
0
0 0,2 0,4 0,6 0,8 1 1,2 1,4 1,6
Biodiesel $/L
Figure 19. Break-even analysis of biodiesel production. If the price of vegetable oil is too high the biodiesel factory halts production as it is has negative operating margins. If the crude oil prices allow for a higher biodiesel price the plant begins to produce again. This extra demand will increase the price for vegetable oil back to the break-even point. At this point biodiesel plants halt their production again stopping further vegetable oil price increases. Thus the price of vegetable oil follows the price of crude oil thanks to price adjustment arising from changes in demand from the biodiesel industry. Rising food prices are mainly the result of rising crude oil prices. The real winners in this process are the suppliers of (soya) oil, farmers or millers. The production costs for seed cultivation itself can be divided as follows: Operating costs
���� Seed ���� Fertilizer ���� Soil conditioner ���� Manures ���� Chemicals ���� Custom operations ���� Fuel, lubrication, electricity ���� Repairs ���� Purchased irrigation water ���� Interest on operating capital
Allocated overhead
���� Hired labor ���� Opportunity cost of unpaid labor ���� Capital recovery of machinery and equipment ���� Rental rate land ���� Taxes and insurance ���� General farm overheads. 2
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In the table below we will summarize the production costs of major oil crops v in BA province with an estimation for the production costs of camelina in a double crop system.
This estimation is based on the data from Montana research institutes vi and farmers, which correspond well with recent production costs in BA. From their data we obtained accurate specifications of the low operating costs for camelina, which are comparable with flax. In their conditions camelina, as a family member, has similar or even higher yields than rapeseed. The maximum seed yield in Montana is 2200 kg/ha which should be easily matched by the very fertile soils of sunflower cultivation in the double crop system. The meal however has a higher price because it shares much the same properties as soya meal, with the main difference being its high vitamin E and omega-3 content. Some farmers get a very high price of USD 500/T. To be on the safe side we took the price of soya meal.
1 ha performance on oil CamelinaRapeseed Camelina
double cropcanola Soybean Sunflowermarginal
Total Seeds Yield kg 20002000 3000 20001400
Operating Costs USD 190.14336.93 305.12 331.25190.14
Seed Oil content % 3943 18 4239
Content Oil/ha kg 780860 540 840546
Content Oil/ha L 839924.73 581 903587
Cost of pressing USD 100100 150 10070
Remaining Meal kg 12201140 2460 1160854
Meal price ton FAS 267.69123.58 267.69 117.69268
Sales Meal USD 326.58140.88 658.52 136.52229
Liter gross cost price Oil USD -0.040.32 -0.35 0.330.05
Figure 20. Yields and cost price for BA crops based on meal prices.
Clearly, soya oil is very profitable thanks to the good selling price of the meal. Sunflower oil has a
high production cost. If we take the overhead costs into account the picture changes. Soya is still
doing well but camelina is doing better. One of the reasons is that it can be double cropped with
sunflower and the fixed overhead costs are already ‘paid’ by the sunflower crop. The cultivation of
another crop will not change the overhead costs for this farmer significantly. We stated an arbitrary
USD 50 for overhead costs but could also state this as zero. This is good news for the sunflower
farmer as he will use his land more efficiently and will see his income rising. From research we also
know that rotational use of camelina is beneficial for the crop that follows in both yields and pests.
Overhead costs 50 185184190 123
Liter net cost price Oil USD 0.02 0.52-0.030.54 0.26 The extraction method is the second biggest factor in the cost price for the oil. The resulting meal is
less valuable than the obtained oil. Therefore the more oil you can extract from the seeds the lower
the cost price of the oil. This is why the solvent extraction method described above gives cheaper oil
and is preferable to use in large plants for economical reasons (economy of scale). For our
calculations we have assumed USD 50 crushing costs per ton of raw material.
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For an average farming economic unit in BA with 500 ha this translates into the following
theoretical revenues after selling the oil and meal products:
Revenue for 500 ha: Camelina DC Rapeseed SoybeanSunflower Cam. marginal Sell price oil FAS 0.627 0.641 0.612 0.6230.627Sell oil 500 ha 262,758 296,474 177,660 281,396183,930Cost price oil 500 ha 6,778 240,678 -9,916 242,43677,266Net revenue in USD: 255,980 55,796 187,575 38,960106,665
Cultivation of camelina is the most profitable crop and even outperforms soya in a double
crop cultivation. If we take the full overhead costs for camelina into this calculation instead
of sharing it with sunflower as a double crop the net revenue drops to USD 176,000. Based on the seed prices the farmer normally receives for his products the revenues change.
Revenue for 500 ha: Cam.
Camelina Rapeseed Soybean Sunflower marginal
Seeds price ton FAS 279314279 286279
Sales seeds 1 ha 559629838 571391
Sell seeds 500 ha 279,259314,394418,889 285,606195,481
Cost price seeds 95,070168,466152,560 165,62695,070
Gross revenue 184,189145,928266,329 119,980100,411
Net revenue 159,18953,277174,543 24,90938,911
Figure 21 shows the revenue for a farmer when his income is based on selling his seeds. Soybean is the most profitable crop in this scenario followed closely by camelina. The difference in
revenue for selling seed alone versus selling camelina meal and oil is almost USD 100,000 in favor
of the latter. Pressing oil is also an attractive option to increase revenue, especially in the case of
camelina oil. A farmer with 500 ha produces about 3.8 tons of seed per working day. You will also
need about 13 farmers to fuel a 50 TPD solvent extraction plant (capital costs USD 500,000).
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Market for camelina oil There are very good opportunities to market our products. In many applications it can replace
the use of canola or rapeseed. Our seeds can be exported to Europe, North America and China
where they will be crushed into oil and meal, both in high demand on the local market. The
export of seeds is already currently done by competitors with rapeseed, soya and sunflower. A
major part of the seeds will be crushed in Argentina to obtain oil and meal. The market for camelina oil can be divided into technical and edible oils. The consumption of
edible oil in Asia is the world’s largest, and our export market has also increased by 10% every
year since 2002. In China alone the consumption of edible oil will reach 35,000,000 tons this
year (2010). It is expected that the demand for edible oil will grow by 3-4 million tons each year
and the demand for technical oil (biodiesel) will grow by another 4-5 million tons annually. People in the developed world consume 45-55 kg oils per year. Compare this with 10-15 kg
in China and it is obvious there is huge market potential. The WHO advises 20-25 kg per
year oil consumption per capita. Taking this into account yields the following chart:
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20
15
Population billion
10 Consumption KG Capita
Demand in 10.000.000 tons
5
0
1980 1990 2000 2010 2020
Figure 22. World edible oil consumption. The technical use of camelina oil in biodiesel has been tested and approved by Austrian vii
authorities. A KLM 747 recently did a successful manned test flight using a mixture of 50% kerosene/camelina oil. The use as a biokerosene opens an immense market and will be our main target; please see the section on biodiesel and biokerosene. The world’s total biodiesel production capacity can only account for a little (± 7%) percent of the petroleum market, and of this less than half has actually been utilized. This means that if our cost price for camelina oil is low enough we can sell virtually any amount of camelina oil as a (bio)fuel. The success of camelina oil as a technical oil is therefore very dependent on the price of mineral oil,
because for most industrial energy users, vegetable oil is only an alternative to mineral oil when the
price is right. This is the main reason the vegetable oil price follows this mineral oil trend. The price
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of mineral oil is expected to rise as structural demand rises year on year because of the
developing markets in Brazil, India and China (BRIC). Using camelina oil in biodiesel or BTL diesel also depends on current legislation. In this case the oil price has no influence on the market size as the use of a certain percentage mixture diesel/biodiesel is mandatory as in the EU. Mandatory blending, however, is much in debate as concerns for rising food prices are blamed on the production of biofuels. Ecological labeling of the biofuel feedstock can help to prevent this. Our product has all the right cards to be labeled as an ecologically sustainable feedstock for biofuels. The market for meal is increasing fast among the poorer nations in Asia as the standard of living
rises year on year and along with considerable population growth (see figure 3). Meat production
and aquaculture are very important for the economies of South America as they are one of the
biggest exporters of these products. An estimated one in four workers in Argentina depend on
this export market for their jobs. The vast majority of the meal in South America is soya meal.
Camelina meal can replace or be blended with the soya meal. Because of its high omega-3
content it is in high demand by farmers who want to produce meat, eggs, fish or dairy with an
elevated omega-3 content. This gives camelina meal a premium price. The extra availability of
camelina meal will lower the price of soya meal resulting in lower food prices overall as well as
for the animal products produced with this meal. Competitors In Argentina the main competitor for camelina is soya, followed by sunflower. The market for
soya is well established with major international players. As a new kid on the block camelina has
to outperform soya to convince farmers to grow camelina. This can be done if we follow a double
crop strategy with e.g. sunflower. The total revenue for the farmer will be the highest. On the
other hand camelina can grow where soya does not. In terms of the main product camelina oil
itself, the market for vegetable oil is almost unlimited as it can be used in biodiesel production
replacing the use of fossil fuels. The demand for fossil fuels is growing fast year on year with
dwindling oil reserves leading to a possible ‘peak oil’. It is thus expected that the crude oil price
continues rising making room for the use of camelina oil as a cheaper alternative. Production constraints The only physical constraint to the production of camelina is the availability of suitable land in
combination with the right climate and soil conditions. In BA alone there are 600,000 ha in use
for sunflower cultivation. Very close to Tres Arroyos there are several thousand hectares of
relatively marginal lands where we could cultivate camelina. In other southern and cooler
provinces there is also a huge potential of land in the order of millions of hectares, most of it
currently not used for agriculture because of soil and climate conditions. Here following the
Montana results, camelina could well be cultivated at even lower overhead cost for land rental. Risks A major threat is a possible new export tax on our products. This tax is in the range of
30-35%. It could be lowered to 14% by converting the oil to biodiesel or to 0% when we
sell the biodiesel in Argentina.
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SWOT analysis Strength Weakness Short supply lines, good infrastructure Camelina is still unknown in Argentina. No hard
data is available for this country. Best lands & appropriate climate Buying and storing seed is very capital intensive We can change from food to fuel whatever is
best for our revenue.
We have the knowledge to change from food to fuel production.
We produce a healthy, ecological and
sustainable product
We have the Argentinean doing-business knowledge
Opportunity Threats The growing number of health conscious consumers The growing population with a raising income demands more meat and dairy. Our byproduct meal is an important feed for animals. Growing demand for biofuels, specially of biofuel
for planes (biokerosene) and a possible oil crisis. We can switch to producing oils and biofuels ourselves.
New technology can replace the need for biofuel in itself or replace land based production to marine based production (algae). Very extreme climate conditions can damage the harvest
http://sites.google.com/site/biogreentech1/home
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