Ethanol Plant Development in Pennsylvania

1
Ethanol Plant Development in Pennsylvania

• Scott Welsh, Project Manager

2
Getting Started- Project Formation

• Education of Constituents
• What is ethanol?
• How is it made?
• Why is it used?
• Why should we make it?
• Making the Business Case- Why make it here?

3
Yesterdays Ethanol IndustryFacilities of at
least 20 million gallon capacity
Corn Belt
Approximately 32 other facilities are
under 20 million gallons
4
Ethanol and Co-Product Markets
Where the End Use Markets Are
Ethanol Facilities of at least 20 Million Gallons
5
Tomorrows Ethanol Industry
Corn Belt
Approximately 32 other facilities are
under 20 million gallons
6
Forward Processing Business Model

• PA is a deficit in many products that are
  processed and consumed here.
• Locate processing facilities close to end markets
  to maximize logistics and market responsiveness.
• Gain efficiency from rail transport of single raw
  material rather than multiple products.

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Co-product Strategic Advantage

• Distillers Grains (DDGS)
• High protein content (30) and quality makes DDGS
  an excellent ruminant (cow) feed.
• South-central PA is a large dairy production
  area.
• Carbon dioxide market is strong compared to no
  market in many mid-western states.

8
Project Impact- Still Benefiting the Farmer

• Corn delivery co-op business structure is not an
  option.
• Penn-Mar Business was Structured to
• Maximize farmer control of development.
• Be attractive to non-farm investors.
• Providing a diversified agricultural investment
  for farmer investors.

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Protecting Livestock Producers

• Livestock production is central to PA
  agriculture.
• Protecting other buyers is consistent with good
  corn procurement strategy.
• Unit train (65 to 75 car designated train) corn
  delivery makes the system work.
• Penn-Mar will still be a good corn outlet at
  harvest.

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Benefiting the Dairy Industry

• Distillers grain is in demand now, but use is
  limited by
• Freight cost.
• Handling difficulties with rail delivery.
• Variability of quality and supply.
• Local supply will improve consistency of quality
  and supply and handling issues.

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Ag Impact- The Case for Diversity

• Project impact should not be measured just by
  direct, quantifiable impact on others (increase
  in corn price).
• Another corn buyer and feed producer will add
  strength to the Ag infrastructure.
• Another Ag business raises awareness of
  agriculture in the general public.

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Navigating the Approval Maze

• State and Local approvals will likely be the
  biggest cost and time factor in eastern project
  developments.
• Projects are not received with open arms like
  they are many places in the mid-west.

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Navigating the Approval Maze

• Regulations are frequently more stringent than in
  mid-western states.
• Local ordinances and processes vary considerably
  and are often subject to interpretation.
• Approval process is geared toward fully designed
  projects.

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Approvals- the Need for Education

• Educating the Review Agencies
• Permitting the first ethanol plant in a state is
  slow.
• Local ordinances dont refer to ethanol
  production.
• Need to provide information to support approval
  and to make reviewers comfortable.
• Educating engineers
• How does PA approval process work?
• The need for detail early in the design process.

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Public Relations

• PR Impacts the Entire Process.
• Education is key (once again).
• Making the Positive Case
• Renewable Domestic Energy.
• Benefits to Agriculture.
• Community Benefits- jobs and economic activity.

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Public Relations, Continued

• Defending/Overcoming the Industry
• Industry-wide improvements in efficiency and
  emissions/odor control are significant.
• Not all ethanol plants are the same- adopting the
  good and learning from the bad.
• Potential hazards are prevalent in our
  communities today and are not unique to ethanol.

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The NIMBY Factor

• The NIMBY mindset
• Local Control is good as long as supervisors do
  what I want, not what the ordinances say.
• Dont try to improve the world unless you will
  be perfect and do it somewhere else.
• Responding to NIMBYs
• Dont try to convince everyone.
• Focus on the facts.
• Prepare for their impact on timeline and cost.

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Summary. . .

• A solid business case can be made for ethanol
  production in Pennsylvania.
• Ag benefits are different than mid-west, but
  still real.
• The approval process is a central part of the
  development effort.
• Public relations are key, and will influence
  project cost and timeline.
• Education is needed through all parts of the
  process.

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Thank You. . .

• Scott Welsh
• Penn-Mar Ethanol, LLC
• 717-846-7177
• swelsh_at_pennmarethanol.com
• Visit our website at
• www.pennmarethanol.com