Protec NC presentation

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EPact Seminar - June 16, 2009
Steve Walk [phone] steve_at_protecfuel.com www
.protecfuel.com
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Presentation Overview

• Who is Protec Fuel Management
• Why E85 and Why Now?
• 4 Factors for a Successful E85 Program
• Fuel Supply
• Strategic Site Selection
• Equipment
• Case Examples
• Promotion and Awareness
• Grants
• What Else is Coming?

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Who Is Protec

• Founded in 1999, headquartered in Boca Raton, FL
  with offices in Orlando, FL, Tulsa, OK,
  Georgetown, TX, and Minneapolis, MN.
• Protecs alternative fuel division offers turnkey
  fuel solutions for distributor, retailers and
  fleets including
• Strategic marketing and distribution programs for
  cellulosic ethanol plants
• Ethanol, biodiesel and Diesel Exhaust Fluid (DEF)
  fuel supply and logistics
• Term and spot pricing structures
• RINs compilation and marketing
• E85 and DEF Fueling equipment with optional solar
  power
• Identifying optimal E85 and DEF site locations
  layout
• Local marketing programs to help build volume and
  partnering with local support groups, i.e.
  Enterprise, GMC, Municipal Government, Military,
  etc
• Public Relations assistance

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Biofuels Division

• Protecs biofuels division offers turnkey fuel
  solutions for distributor, retailers and fleets
  including
• Strategic marketing and distribution programs for
  cellulosic ethanol plants
• Ethanol and biodiesel fuel supply and logistics
• Term and spot pricing structures
• RINs compilation and marketing
• E85 Fueling equipment
• Identifying optimal E85 site locations layout
• Local marketing programs to help build volume and
  partnering with local support groups, i.e.
  Enterprise, GMC, Municipal Government, Military,
  etc
• Public Relations assistance

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Protec Experience

• Approximately 250 E85 stations including
• Navy Exchange Service Command
• NASA, Army, Air Force, Marine Corps
• HEB Grocery Stores
• Kroger Grocery Stores
• Urbieta Oil
• State of North Carolina
• Florida Turnpike
• Universal Studios
• GM Dealership
• CPS Energy (San Antonio Utility Co.)

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Why E85 and Why Now?

• Obvious Factors
• Oil is finite - Petroleum Independence/National
  Security
• Environment
• RFS Mandate (Cant do it with E10 or E15)
• New OEM FFV Mandate for all vehicles (including
  hybrids) in US coming
• Increased incentives for cellulosic production
  closer to the end-user for E85 (direct delivery)
• First mover has market not enough volume for
  multiple sites
• RINs requirements and value increasing (new
  Advanced and Cellulosic RINs categories which are
  easily paired with E85)
• Any unforeseen (and unlikely) US ethanol problems
  does not mean E85 is going away Ethanol is the
  only commercially available alternative to
  gasoline and comes form numerous other sources
  besides corn
• Carbon cap and trade coming very soon
  (Waxman-Markey Legislation)

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Simple Math
Why E85 and Why Now?

• Savings
• Environment
• Quality
• Energy Security
• Carbon Credits
• RINs

Increased Margins Competitive Advantage

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Understanding Ethanol market

• What is Ethanol
• Denatured Fuel Ethanol - grain alcohol
• ASTM D 4806
• E85 - 85 ethanol, 15 gasoline. Approved for use
  in almost 8 million FFVs. 1350 e85 fueling sites
  out of total of 165,000 stations
• Ethanol is victim of own success
• E85 fuel receives a 0.36/gallon tax credit (e100
  is 0.43)
• Tax credit can be transferred in lower per gallon
  price
• Tax credit can be given to station owner if
  blending product
• Low gasoline prices and corresponding spread to
  ethanol prices
• Spread in May 09 -0.30/gallon
• Spread in December 09 0.45/gallon
• Spread in May 09 0.10/gallon
• Spread in June 09 -0.19/gallon

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Understanding Ethanol market

• Why offer e85 fuel
• 45 of Americans are seeking alternative,
  specifically ethanol-blended fuels
• 27 because of the environment
• 19 because of cost savings
• Additional 27 wanted to use ethanol after
  reading short paragraph about the benefits
• Government Fleet Mandates (EPACT) to use
  alternative fuels
• Carbon credits
• Diversified fuel supply during hurricane and
  other supply shortage scenarios

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Understanding Ethanol market
E10 0.043/gal Tax Credit
E85 0.36/gal Tax Credit
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Turnkey Ethanol Supply

• Keys
• Planning
• Logistics
• Consistency
• Reliable supply
• Customization
• Manage the Risk

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Manage Volatility and Risk
Price volatility in the petroleum markets is
unprecedented. For commercial, industrial and
transportation companies, the challenges of
today's fuel supply chain can be daunting and can
have a negative impact on your customers cash
flow and profitability.
2007 NYMEX Daily Heating Oil Prices
NYMEX RBOB CONTRACT NYMEX HEATING OIL CONTRACT
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Manage Volatility and Risk

• Two approaches to managing risk do nothing and
  hope market prices moves in a direction favorable
  to your business, or be proactive and selective
  in implementing and managing a strategy
• Utilizing financial tools to manage price risk
  should be viewed only as one of the many
  activities and not the total solution
• Ensure financial program(s) mirrors/correlates to
  price risk
• Maintain flexibility and control
• RFPs Have fuel separate from transport costs.
  The fuel costs can be better managed. (OPIS minus
  X)

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Site Selection
E85 Station Feasibility Analysis Report
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Site Selection

• Protec strategically maps out the home market of
  a distributor or retailer to locate large
  concentrations of fleet and private FFVs,
  traffic flow, destination points, dealerships,
  etc.
• High traffic location often doesnt work
• This program has consistently resulted in greater
  success for the retail site

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Site Selection Fleet

• Federal Fleets
• FFV mandate
• Data accuracy
• Check strategic plan (BRAC or NEVs)
• Equipment mandate satisfied by retail E85
• E85 mandate
• 5 miles and 15 minutes
• Fleet cards/management
• 3rd level data
• Equal to or less than gasoline
• Waivers/Enforcement
• Pollution and petroleum displacement tracking
• State, County and Local participation
• Retail certification program with government
  fleets

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Equipment

• Figure out what is most affordable and/or
  effective and what your local regulations allow
• All-inclusive skid mounted fueling systems
• Permanent UST fueling stations
• Retrofit or convert existing equipment
• Mobile-refueling
• Blender pump
• POS system
• Solar power

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Equipment

• Blender Pump
• Ability to offer multiple blends of ethanol (mid
  blendse20, e30, e85)
• Additional grade of fuel offering
• Station receives blenders credit

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NEXCOM - US Navy
The Navy Exchange Service Command (NEXCOM)
supports Executive Order 13149, Greening the
Government Through Federal Fleet and
Transportation Efficiency.

• Executive Order 13423 requires the increased use
  of alternative fuels of at least 10 annually.
  The purpose of the order is to ensure the Federal
  government exercises leadership in the reduction
  of petroleum consumption through improvements in
  fleet fuel efficiency and the use of alternative
  fuels.
• NEXCOM has been going green with delivery of
  alternative fuels since May 1, 2000.
• Armed Service Exchange Regulations (ASER) grants
  military exchanges the authority to sell
  alternatives fuels to the general public in
  unison with the governments lead on the use of
  alternative fuels.
• -Select NEXCOM station locations that are on
  base offer alternative fuels to Navy and general
  public accordingly.
• Current alternative fueling locations
• E85 Fuel (4 locations) Biodiesel (B20) Fuel (7
  locations) CNG (3 locations)
• Naval Air Station in Oceana, VA Naval Air
  Station in Oceana, VA Quarters K near Pentagon
• Quarters K near Pentagon Quarters K near
  Pentagon Naval Air in Jacksonville, FL
• Naval Surface Warfare in Crane, Indiana Naval
  Station in Norfolk, VA Naval Station in Mayport,
  FL
• Naval Station in Everett, WA Naval Weapons in
  Charleston, SC
• Naval Surface Warfare in Crane, IN
• Naval Submarine Base at Kings Bay, GA
• Naval Air Station in Pensacola, FL

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NEXCOM - US Navy
NEXCOM championed the concept of a long-term
supply agreement in exchange for venture capital
with its Public Venture (PPV) contract with
Protec Fuel Management.

• The opening of the Naval Air Station Oceana in
  Virginia Beach represented important firsts
• The first Public-Private Venture of this
  magnitude with e85 station.
• Protec Fuel paid for the station conversion in
  exchange for long term fuel supply
• Navy has 475 FFVs in fleet and surrounding 400
  FFVs in public
• First public-accessible e85 station in Hampton
  Roads

Video
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NEXCOM - US Navy

• Additional locations under proposal
• Naval Base at Pearl Harbor, Hawaii
• -New station construction (AST, 1 Dresser Wayne
  dispenser and POS system)
• Naval Air Station at Norfolk, VA
• -Replacement of CNG location and station (AST,
  1 Gilbarco dispenser and wireless POS system)
• Naval Air Station in San Diego, CA
• -New station construction (AST, 1 DW dispenser
  and wireless remote POS system interface)
• Naval Air Station in Pensacola, FL
• -Conversion of diesel tank and Tokheim
  dispenser
• Stennis Space Center in Mississippi
• -Conversion of diesel tank and DW dispenser
• Naval Weapons Station in Charleston, SC
• -Conversion

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Fundamentals for a similar PPV

• What is the estimated fuel usage?
• Likely determined by number of FFVs in fleet,
  adjoining fleets, public accessibility
• Usually minimum of 400 FFVs in fleet
• What are current geographical constraints?
• Help to determine conversion, new construction
  or skid mounted fueling station
• Conversion underutilized tanks, switch
  dispensers to blenders to free up tank, eliminate
  existing premium or mid-grade fuel, exchange
  diesel tank to e85 and have diesel fuel at nearby
  retail station
• New Construction new tank (UST or AST), canopy
  needed, tie into existing dispenser island
• Skid system all-in-one station including tank,
  dispenser, POS system.
• Can a long term fuel supply contract be executed
  in exchange for station?
• Any RFP guidelines/rules
• Take advantage of Native American Tribal
  8(a)program (Nueta Nation Enterprises -Tribal
  8(a) designation)
• Lease options are available

Depending on these factors, an agreement can be
made to have 50/50 split or 100 outside funded
station. After terms of agreement, the station is
owned by respective fleet. Fleet is responsible
for routine maintenance and service.
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Marketing and Public Relations
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Protec Marketing and Public Relations
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Quantify Program

• Quantify E85 program data to track and prove
  success
• Step 1 is to create a Fleet Emissions Baseline
  Report (FEBR)
• FEBR collects following data
• Make
• Model
• Vehicle Identification Number (VIN)
• GVWR
• Fuel type
• Vehicle age
• Average annual fuel consumption
• EPA/CARB NOx, ROG/CO2, and PM10 emissions rating
• Step 2, use data to create vehicle replacement
  strategy
• Step 3, create monthly and annual reports
  calculate emission reductions on a per vehicle,
  weight class and fleet basis

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Quantify Program
Example of data report
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Grants Incentives

• Federal
• The American Recovery and Reinvestment Act
• Tax credit raised to 50 up to 50,000
• Cover 50 of infrastructure
• Fed, State or Clean Cities
• Pilot Program
• 2009 American Recovery and Reinvestment Act
• Clean Cities Private Entity
• State Incentives - AFDC, GEFA

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Whats Coming

• Stimulus 2
• New Energy Policy
• E13 or E15
• Waxman Markey (carbon cap and trade)
• FFV mandate for almost all vehicles including
  hybrids

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• Questions
• Steve Walk
• Protec Fuel Management
• steve_at_protecfuel.com
• 651-442-7240
• www.protecfuel.com