Overview of Distillers Corn Oil and Feed · PDF fileOverview of Distillers Corn Oil and Feed Fat ... (mostly Palm Oil) ... Economics of Corn Oil Extraction for EtOH Plant

Overview of Distillers Corn Oil and Feed Fat

Joe Riley

General Manager

FEC Solutions

Feed Energy History

1986 Feed Energy Founded

1987 Sioux City Production Facility

Opened

2000 Pacific Junction Production Facility

Opened

2002 Patent Granted for Method for Soapstock

Acidulation

2006 FEC Solutions Formed

All facilities earned Safe Food/Safe Feed

Certification

R&D Director, Mohan Dasari, Receives

Presidential Green Chemistry Award

2010 Decision Innovation Solutions

Formed

2010 Riverhead Resources Formed

2014 Corn Oil ONE facility starts up

2014 Pure Lipid Technologies Formed

U.S. Crushing Company

Two Fundamental Markets• Fuel

• Feed

Where should each fat molecule go? Feed or Fuel???

• Mono• Saturated/Unsaturated mix

• Swine

• Poultry

• Fish

• Ruminant• Different animal

• Acidosis

• Rumen Protected fat (mostly Palm Oil)

Raw Materials Feed Energy Processes• Enzymatic Gums

• Soap Stock

• Lecithin (Wet/Dried)

• Tank Bottoms

• Biodiesel By-Products

• Fatty Acids

• Distillates

• Skimmed Oil

• Oleo chemical byproducts

• Glycerin refining byproducts

• Beef Tallow

• Pork Grease

• Corn Oil Refining products

• Canola Oil refining products

Triglyceride

Triglyceride

Distillers Oil, Feed Grade

• 90% Total Fatty Acids (90% oil)

• 2% Unsaponifiable• (other stuff – mineral oil, Tocopherols, surfactant, etc.)

• 1% Insoluble (solids)

Ethanol Industry

• 227 EtOH Plants

• >95% extracting Oil (Slower historic adoption rate due to litigation, which seems to have been resolved)

• Use of Surfactant and upstream grinding technology are driving higher extraction rates (litigation could stifle best utilization of surfactants in the industry)

• Best Plants are getting 1 lbs/ground bushel of corn

• Low performers are getting 0.5lbs/ground bushel of corn

• 0.8-0.9 lbs/ bushel is the tipping point for DDGS value sustainability

Corn Oil Use Projections

Condensed Distillers Soluble (Syrup)

Ethanol Diagram

Source: Ethanol Producer Magazine

How much Corn Oil?

•3 Billion Pounds!!•1228 Trucks/Week!•175 Trucks/Day!!• (1 Truck load is 46,500 lbs)

Corn Oil Financial Impact

0.026$ 0.15$ 0.18$ 0.21$ 0.24$ 0.27$ 0.30$

0.40 0.002$ 0.006$ 0.011$ 0.015$ 0.019$ 0.023$

0.45 0.003$ 0.008$ 0.013$ 0.018$ 0.022$ 0.027$

0.50 0.004$ 0.010$ 0.015$ 0.020$ 0.026$ 0.031$

0.55 0.005$ 0.011$ 0.017$ 0.023$ 0.029$ 0.035$

0.60 0.007$ 0.013$ 0.019$ 0.026$ 0.032$ 0.039$

0.65 0.008$ 0.015$ 0.022$ 0.029$ 0.036$ 0.043$

0.70 0.009$ 0.016$ 0.024$ 0.031$ 0.039$ 0.046$

0.75 0.010$ 0.018$ 0.026$ 0.034$ 0.042$ 0.050$

0.80 0.011$ 0.020$ 0.028$ 0.037$ 0.046$ 0.054$

0.85 0.012$ 0.022$ 0.031$ 0.040$ 0.049$ 0.058$

0.90 0.014$ 0.023$ 0.033$ 0.043$ 0.052$ 0.062$

0.95 0.015$ 0.025$ 0.035$ 0.045$ 0.055$ 0.066$

1.00 0.016$ 0.027$ 0.037$ 0.048$ 0.059$ 0.069$

Current economic impact to most plants who are extracting oil ($/gal)

Corn Oil Financial Impact: $/Gallon at different price

and production intervalsCorn Oil: $/pound

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Economics of Corn Oil Extraction for EtOH Plant• Input summary:

• 50MGPY ethanol producer

• 2.80 denatured yield

• DDG price $170/ton (opportunity cost)

• Variable costs (scales with plant size):

• Additive: $180K annually

• Maintenance: $60K annually

• Electricity: $0.06 per Kwh

• Natural Gas: $4.00 per mmBtu

• Takeaway

• Today, plants are $0.015 to $0.037 per gallon more profitable as a result of corn oil extraction

• Oil extraction is one of the quickest economic paybacks available to plants today

• Every 0.10 #/bushel extracting is the equivalent of about .46 GPM for a 50MGPY plant (0.93 GPM for a 100MPGY)

• Plants who have high volume of syrup sales will have much higher returns and payback

California’s Diesel Fuel Market

• In 2012, CA consumed 2.6 billion gallons of taxable diesel fuel (on track for same consumption this year)

• 2% = 52 million gallons

• 5% = 130 million gallons

• 10% = 260 million gallons

California’s LCFS Reduction Schedule

Year Avg Carbon Intensity (gCO2e/MJ) % Reduction

2010

2011 94.47 0.25

2012 94.24 0.50

2013 93.76 1.00

2014 93.29 1.50

2015 92.34 2.50

2016 91.40 3.50

2017 89.97 5.00

2018 88.55 6.50

2019 87.13 8.00

2020 and beyond 85.24 10.00

(94.71) Reporting Only

CA Diesel Fuel & Substitutes Average Carbon Density Requirements

Total Vegetable Oil Supply, 31,598,197, 72%

Total Animal Fats Supply, 12,528,424, 28%

Total Animal Fats/Veg Oil Supply 44,126,621 (1,000 lbs)

Total Demand Animal/Veg Livestock, 7,198,327

Total Veg for Biodiesel, 8,392,880

Total Animal Fats Biodiesel , 1,097,243

Feed And Biodiesel Demand for Fats and Oils 16,688,449 (1,000 lbs)

Soybean Oil, 22,765,801, 72%

Canola Oil, 1,301,943, 4%

Corn Oil (Ethanol), 2,248,203, 7%

Corn Oil (Wet Mills), 3,402,560, 11%

Yellow Grease, 1,879,689, 6%

Total Veg Oil Supply 31,598,197 (1,000 lbs)

Poultry Fat, 2,155,183, 17%

Tallow, edible, 1,401,344, 11%

Tallow, inedible, 6,183,376, 49%

Tallow, technical, 1,098,042, 9%

Lard, 336,352, 3%

Choice white grease, 1,354,128, 11%

Total Animal Fats Supply 12,528,424 (1,000 lbs)

Broilers, 3,203,507, 45%

Layers, 673,077, 9%

Turkeys, 1,012,531, 14%Hogs, 1,642,729, 23%

Cattle, 666,483, 9%

Livestock & Poultry Use of Veg Oils/Animal Fats 7,198,327 (1,000 lbs)

Veg Oils, 8,392,880, 88% Animal Fats, 1,097,243, 12%

Biodiesel Use of Veg Oils/Animal Fats 9,490,123 (1,000 lbs)

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

Total Anim/VegSupply

Net SupplyAnimal/Veg After

Biodiesel

Net Animal VegAfter LivestockConsumption

Fats and Oils Availability (1,000 lbs)

Key Takeaways For Corn Oil

• New Technology to clean up corn oil to create more access to markets

• Corn oil supply has increased greatly the past few years

• More supply to come, but mostly by way of process improvements

• Strong usage into feed, but greatest potential into biomass-based diesel production

Q & A

Joe Riley

General Manager

[email protected]

www.fecsolutions.com

Thank You

Joe Riley

515-537-4000

[email protected]

www.feedenergy.com

www.fecsolutions.com

www.cornoilone.com