Biofuels Working Group

Mack Findley North American Sales Manager Peter Cremer North America October 20, 2005

Commonly Asked Questions

What is biodiesel? Is it used as a pure fuel or blended with petroleum diesel? How do biodiesel emissions compare to petroleum diesel? Does biodiesel cost more than other alternative fuels? Will I need special storage facilities? Can I use biodiesel in my existing engines? Where can I purchase biodiesel? Do additives work for biodiesel and biodiesel blends in the winter? Does biodiesel need stability additives? Will microbes be more relevant in biodiesel blends?

Introducing:

A proud member of:

are our business

Marketing Packaging Blending Warehousing Service

Flaking Logistics Analysis Bulk Storage Kosher Certified

History & Highlights

1946: Peter Cremer started as a grain trading company 1970: Launched into Fats, Oils, Oleochemical business as an extension of feedstuffs business. 1991: Acquired oleochemical manufacturing capability, Prignitzer Chemical, Germany: Base manufacturing continued investment & integration into oleochemical business. 1998: Expansion into Southeast Asia with a marketing arrangement with a major Southeast Asian producer. 1999: Continued investment in North America with the launch of Peter Cremer North America: 2005 we have 110 employees in Cincinnati

Biodiesel: What is it?

A clean burning, oxygenated diesel fuel made from vegetable oils or animal fats that is capable of replacing part or all of your diesel needs!

Biodiesel: How is it made?

By reacting alcohol with natural fats, oils or greases through a conventional chemical process known as transesterification!

Raw Materials
Natural Fats & Oils Soybean Rapeseed Cottonseed Tallow / Poultry Yellow Grease

Alcohol Methanol Ethanol

Catalyst Sodium hydroxide Potassium hydroxide Sodium Methoxide

End Products
Methyl Ester (a.k.a. biodiesel) Glycerine

NEXSOL BD-0100 BIODIESEL ASTM D 6751 (B100)

Property Flash Point Water & Sediment Kinematic Viscosity, 40 C Sulfated Ash Sulfur Copper Strip Corrosion Cetane Cloud Point Carbon Residue 100% sample Acid Number Free Glycerin Total Glycerin Phosphorous Content Distillation temperature, Atmospheric equivalent Temperature, 90% recovered ASTM Method D93 D2709 D445 D874 D5453 D130 D613 D2500 D4530** D664 D6584 D6584 D4951 D1160 Limits 130.0 min. 0.050 max. 1.9 - 6.0 0.020 max. 0.05 max. No. 3 max. 47 min. Report to Customer 0.050 max. 0.80 max. 0.020 max. 0.240 max. 0.001 max. 360 max. Degrees C % mass mg KOH/gm % mass % mass % mass Degrees C Units Degrees C % vol. mm2/sec. % mass % mass

Biodiesel: How is it used?

As pure (100%) = B100 As a blend with petroleum diesel (20%) = B20 In low levels (1% - 5%) = B1 B5 Any blend concentration requested = B1 B99

Biodiesel: Who uses it?

Department of Defense Department of Energy National Forest Service U.S. Postal Service Numerous municipalities Numerous Utilities State DOTs Over 200 fleets nationally! City of Cincinnati, B30

Biodiesel: What are the benefits?

Energy Domestically produced Reduces dependence upon foreign oil Highest energy balance of any fuel Economy Creates manufacturing & agricultural jobs Expands agricultural markets Environment Reduces EPA targeted emissions Reduces sulfur emissions Reduces carcinogenic emissions Biodegrades as fast as sugar & less toxic than salt

Biodiesel: 5 Key Advantages

According to the Department of Energy

Easy to Use Drop in Solution

Flexible EPAct Credits Reliable Engine Performance Cleaner and Renewable

Biodiesel Demand
40,000,000 35,000,000 30,000,000
Gallons

25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 1999 2000 2001 2002 2003 2004 2005 Est

Biodiesel: Benefits
According to the Department of Energy

Cleaner and Renewable

For every 1 unit of energy needed for production 3.2 units energy are gained. Produced from a renewable agricultural product
B100 B20

Carbon Monoxide
Sulfur Dioxide Particulate Matter Unburned Hydrocarbons

-48
-100% -47 -67

-12
-20% -12 -20

Source EPA www.epa.gov/otaq/models/biodsl.htm

Biodiesel: Key Benefits

Significantly reduces tailpipe emissions Reduced dependency on foreign oil Significantly reduces carcinogenic pollutants B20 significantly reduces visible emissions

At B2 increases lubricity by up to 60%

The economical option for EPAct

Legislative Drivers
Excise tax credit (Code Section 6426) Passed within (JOBS) Act, Jumpstart Our Business Strength One penny per percentage of biodiesel per gallon for agri-biodiesel made from virgin vegetable oils and animal fats, and penny per percentage of biodiesel made from other feedstocks. The benefits are available to fuel blenders/distributors. Watch for activity within the state you operate www.biodiesel.org (tax incentive sections for updates)

Biodiesel: Costing
Biodiesel blends cost per gallon at a 20% blend: 20% biodiesel @ $1.95/gal ($2.95 - $1.00 / gal Blenders credit) + 80% #2 diesel @ $2.30/gal = Decrease cost 20% blend = $0.07/gal B20 can now be sold at parity or a discount to #2 diesel.

*Based on December, 2002 DOE Estimates.

Introducing

Biodiesel:
NEXSOL is a our BQ-9000 brand that is exclusively produced and marketed by Peter Cremer North America

Biodiesel: Peter Cremer North America?

56 year old, billion dollar company Global distribution and logistics network Oleochemical (Methyl Ester) expertise First BQ-9000 Certified Producer for the industry Registered with the EPA as a biodiesel producer, marketer, distributor and blender

What is BQ-9000
BQ-9000 is a set of quality management system requirements for the Biodiesel Industry. Incorporates elements from ISO 9001. Applies to producers and marketers Specific process requirements to ensure biodiesel meets ASTM D 6751 Created & Peer reviewed by industry stakeholders.

BQ 9000: Key Benefits

Extension of PCNAs existing ISO Quality System Insure all Nexsol Biodiesel production meets ASTM D6751 specifications OEMs demanding quality now have it Reduce barriers to try Biodiesel Differentiate through Quality

Help Biodiesel gain mainstream acceptance

Biodiesel: Currently 40 MM gallon market Projected

To Grow to 1.0 MMM gallons (Diesel Market 55 MMM gals)

How will it grow:

$1.00 / gallon federal excise tax credit on soy based Biodiesel $0.50 / gallon federal excise tax credit on RVO Biodiesel CCC Program through 2006 RFS, Renewable fuel standard in proposed Energy Bill Energy Bill was signed August 8th 2006, RFS & blenders credit through 2008.

Storage Tank Challenges

Distribution chain storage tanks create a challenging maintenance process Improper placement of water draw off Lack of attention to water evaluation, electronically or physically sticking tank with water paste Sticking before and after each fuel delivery

Maintaining Your Fuel Quality

Begin by specifying ASTM designed fuels, 6751 and 975 Reference cold weather performance and other special needs prior to ordering Be proactive with general housekeeping practices Maintain optimum storage conditions Execute a quarterly fuel analysis program to ensure a good prevent defense

Cold Weather Performance

Wax, water and fuel contaminants in a vehicle fuel system is a potential source for operational snafus A fuels CFPP, cloud point and pour point requires your attention as well your storage tank Focus on the absolute bottom-line operability level Blends of Biodiesel (>20%) will impact cold weather operability in direct relationship to the independent base analysis of your diesel fuel

Cold Flow Improvers

Used seasonally to provide cold weather protection Alters wax crystal growth Dosage level varies on wax content and temperature Tests used to monitor cold flow are pour, cloud, cold filter plugging point and low temperature filterability test Must be added to fuel before fuel reaches cloud point temperature to be effective Dont over additized, more is not better..

The Feature & Benefits - The Flow Science

Wax crystal modifiers reduce the size of the wax crystal and alters the shape as they precipitate from the diesel in low temperatures.
This reduces the incidences of vehicle failures during cold weather
Wax Modified - Smaller, Spherical Wax Crystals

Conventional Diesel - Large, Flat Wax Plates

Splash Blending
Biodiesel is slightly heavier than petroleum diesel with a gravity value of 0.88 versus 0.85, ideally, the biodiesel should be introduced second to the generic diesel fuel and should be agitated or recirculated in the storage tank Storage and use of pure biodiesel should be at temperatures above 55F Blends will not separate in the presence of water however execute proactive tank management Terminal options have been developed

Biodiesel: Additional Questions

2005 Existing Capacity: 150 MM gallons New 2006 Capacity: 100 MM gallons Ohio: PCNA 30 MM gallons, others planning to build 2006 Where B100 distribution:
Western Reserve Farm Co-op Jefferson, OH Town & Country Co-op Ashland, OH Blanchard Valley Findlay, OH McWherter Petroleum Delaware, OH 15 other distributors in Ohio ~$1.00 / gallon over #2 - $1.00 blenders credit =

Pricing Prediction:
parity to diesel

Long term Biodiesel will be an extension of the diesel fuel supply = 2% 55

billion gallon market, 1.0 billion gallon market

NBB Technical Library

National Biodiesel Board www.biodiesel.org 1-800-841-5849 Write Ask Ben
Educational Videos Available Informational Resources Technical Resources On-line database

Thank You

Questions??
Call us at 877-901-7262 or visit us on the web: www.petercremerna.com