A Producer

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A Producers PerspectiveonBiodiesel Quality and
BQ-9000Dr. Michael SzadyCommercial
Development ManagerDow Haltermann Custom
ProcessingFebruary 16, 2006
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Todays Agenda

• I. Importance of Quality

II. Dow Haltermann Culture of Quality

• IV. Dow Haltermann Perspective of Future of
  Biodiesel Quality
• Short term and Long term

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Biodiesel is Booming!

• Federal tax incentive passed and renewed through
  2008
• IL sales tax incentives
• MN mandate goes into effect
• Publicity
• Volume could triple
• 25 MMgal in 2004
• 50 MMgal thru 3Q05
• Dozens of new plants

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Great News! Right?...
In December, it was confirmed that some
biodiesel that did not meet the specification was
delivered to some Minnesota terminals. 1/11/06
Press Release NBB
Not Necessarily!

• MN mandate waived 2 times due to poor quality
• 1. Low on flash point
• 2. High on total glycerin

Biodiesel producers and terminal operators must
take immediate steps to control quality so that
biodiesel can move forward in Minnesota. Don
Louwagie, Chairman of MN Biodiesel Council
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Todays Agenda

• I. Importance of Quality

II. Dow Haltermann Culture of Quality

• IV. Dow Haltermann Perspective of Future of
  Biodiesel Quality
• Short term and Long term

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Houston Overview

• Plant site 60 acres
• 8 distillation columns (3 to 8 diameter, up to
  60 trays)
• 6 reactor trains (14 fixed bed reactors)
• 70 Rundown tanks (16 30,000 gal.)
• 74 Storage tanks (100,000 620,00 gal.)
• Barge (55), rail (12) and truck (33)
  loading/unloading
• RD / pilot plant
• Quality control laboratory
• On-site biological wastewater treatment
• ISO-9001 certified

Consistently high scores on Customer Quality and
Environmental Audits
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• Dow Haltermann Culture of Quality

• Current Customers include
• Fortune 500 Companies
• Mid-size to virtual companies
• Quality requirements
• Meet spec every single time
• ISO 90012000 certified
• Accreditation by DNV
• Biodiesel quality no different
• BQ-9000 certified

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Todays Agenda

• I. Importance of Quality

II. Dow Haltermann Culture of Quality

• IV. Dow Haltermann Perspective of Future of
  Biodiesel Quality
• Short term and Long term

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BQ-9000 What is it?

• Biodiesel industry response to ensuring quality
  product in the marketplace
• NBB coordinated effort
• Run by the National Biodiesel Accreditation
  Council
• Ensures effective quality management system
• Does not result in a BQ-9000 fuel
• Minimizes the chance that fuel from a
• producer/marketer does not meet ASTM D6751
• Similar to ISO-9000
• Simplified to account for small producers

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Objectives of BQ-9000

• To promote the commercial success and public
  acceptance of biodiesel
• To help assure that biodiesel fuel is produced to
  and maintained at the industry standard, ASTM D
  6751.
• To avoid redundant testing throughout the
  production and distribution system.

For more info see www.BQ9000.com
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Who is accredited as BQ-9000 Certified?

• Producers
• Quality system focus on production
• Sampling
• Testing
• Storage
• Retaining Samples
• Shipping

• Marketers
• Quality system focus on production
• Sampling
• Testing
• Storage
• Retaining Samples
• Blending
• Shipping

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Todays Agenda

• I. Importance of Quality

II. Dow Haltermann Culture of Quality

• IV. Dow Haltermann Perspective of Future of
  Biodiesel Quality
• Short term and Long term

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1. Competitive Advantage

• A Producers Short Term Perspective on BQ-9000

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Only 4 Accredited Producers (8)! 1. Peter
Cremer 2. West Central 3. Johann Haltermann (Dow
Haltermann) 4. Eastman Chemical
53 Production Plants (January 13, 2006)
Source National Biodiesel Board
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1. Competitive Advantage2. Customer Confidence

• Our Short Term Perspective on BQ-9000

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Customer Confidence Why should I trust your
biodiesel quality?

• Reports of poor quality biodiesel in marketplace
• Just because you can provide quality sample does
  not guarantee day-in-day-out ability
• BQ-9000 certification
• Quality system in place
• Third-party verification
• Minimizes chances of poor quality biodiesel being
  received

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1. Competitive Advantage2. Customer
Confidence3. Good Business

• Our Short Term Perspective on BQ-9000

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Good Business

• Reduces time and money spent investigating
  incidents
• Reduces redundant sample testing
• Becoming requirement to bid
• Customers differentiating bids
• Some even require certification to bid!

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• Our Long Term Perspective on BQ-9000

• Competitive Advantage
• Erodes over time
• Next step ISO-9000?
• Customer Confidence
• Customers wont buy unless its certified
• Good Business
• Product value decreases

ABCompany
BQ-9000
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In Summary The Future of Biodiesel

• Quality is important.
• Product must meet ASTM D6751.
• Short Term BQ-9000 is
• Source of competitive advantage/customer
  confidence
• Good business
• Long Term BQ-9000 will be requirement to do
  business

As a producer/marketer Are you prepared for the
long term?
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Production Increasing Rapidly. . .
Will quality limit the growth?
No!
Source U.S. Department of Agriculture Bioenergy
Program participants 2001-2004, 2005 est.
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Thank you.
Questions?
Comments.