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Statewide Clean Cities Conference A Perspective of 2006 and 2007

Statewide Clean Cities Conference A Perspective of 2006 and 2007. Astor Crowne Plaza Hotel January 25, 2007 New Orleans, LA. David Shiflett VP of Business Development, SE Region. With World Energy since May 2006 Area covers 11 states in SE

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Statewide Clean Cities Conference A Perspective of 2006 and 2007

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  1. Statewide Clean Cities Conference A Perspective of 2006 and 2007 Astor Crowne Plaza Hotel January 25, 2007 New Orleans, LA

  2. David ShiflettVP of Business Development, SE Region • With World Energy since May 2006 • Area covers 11 states in SE • 15 years experience in the oil and petroleum industry with large regional retailer and wholesaler

  3. World Energy: A Global Leader • Recognized and Respected brand • Diversified BQ-9000 production • Exporter • Largest supply infrastructure in the industry • Premier source of quality fuel to petroleum companies worldwide • “AGGREGATOR”

  4. Biodiesel Has Arrived!

  5. And It's Here To Stay

  6. The Biodiesel Curve

  7. Type of Seller Both Retail & Bulk Distribution (182) Bulk Distribution (1306) Retail Outlets (289) Distribution Locations

  8. What happened in 2006? • Major focus on plant construction • Intense interest from capital markets • State Incentives remain important • Petroleum prices were the main driver

  9. 2006 Encouraged Plant Construction • High petroleum + Low Ag Fats/Oils = Be close to Production (Production Margin) • Low petroleum + High Ag Fats/Oils = Be close to Customer (Opportunity to Buy with right infrastructure) • Both markets are highly volatile • “Disconnect” between Biodiesel and Diesel

  10. International Markets • European market is largest; significant feedstock constraints (EU Directive) • Asian market is growing; significant source of palm oil • South America is growing; • significant source of soybean • oil

  11. Is Europe a glimpse of our future?

  12. Looking Ahead to 2007 • Too many plant deals • Capital markets will cool • Scale does matter • Quality, quality, ASTM D 6751 • Logistics will be the key • Crude Oil????

  13. Plant Logistics

  14. Example A 50 mm gal/yr plant with rail service will have …. --2500 Rail car movements annually With 12 turns/year, the plant will need 200 RC’s How Available Are Rail Car’s: Delivery in 2008 (Maybe)?? $800/month lease 10 year Lease?

  15. Other Considerations • How often do you get rail service?? • How fast can you load trucks?? • Glycerin disposal? • Waste water disposal Nothing will shut a big Biodiesel plant down faster than not having big logistics!!!!!!!!!!

  16. The Nimble Player • Feedstock Sourcing • Robust Logistics Capability • Market & Risk Diversification • Reliable Supply to Customers??

  17. Independent Model: Go it Alone! • Mandates / Incentives Trigger Motivation • Production delays • Quality Problems • Marketing Setbacks • Distribution Bottlenecks / Can’t get to Market • Discount Price reduce returns • Risks Improperly Managed • Projects falter

  18. 2007 Regulatory Issues? • RFS from 7.5b by 2012 • New Farm Bill • Tax Credit Extensions to 2015?? • CCC Producer’s Credit

  19. Cold Flow Properties • Biodiesel realizes cold temperature issues faster than most petroleum diesel • Untreated B20 freezes 6-10°F faster than #2 petroleum diesel, depending on: • the cold flow properties of the biodiesel • the cold flow properties of the petroleum diesel • B2 to B5 nearly identical to Petroleum Diesel • Utilize the same precautions! • Utilization of an additive that enhances cold flow properties • Storage of the vehicles in or near a building when not in use

  20. Feedstock Differences • Soy • Most common in US • Largest availability • Best Cold Temp Ops 35 • Poultry / Tallow • Lower feedstock cost • Full Tax Benefit • Limited Supply • Poorer Cold Temp Ops 38 / 50 • Recycled oils / fats • Lower cost / ½ tax benefit • Limited supply • Mid Cold Temp Ops 40 / 45 • Imports: Palm • Very Large Supply Palm • Has Full Tax Benefit • Worst Cold Temp Ops 60

  21. Enhanced Lubricity • B2 has approx. 60% more lubricity than #2 Diesel

  22. Emerging Markets for Growth • Federal and State Incentives • Fuel Regulations – RFS • ULSD markets • High Crude Prices • BioHeat

  23. Checklist to Implementation • Specify D6751 • Specify cloudpoint • Use 20% blend or BXX • Does not Void Warranty • Pay more per gallon?* • Clean tank • Pour into tank • Schedule early filter change • Resume business as usual * pre-incentive?

  24. World Energy Corporate Headquarters 90 Everett Avenue Chelsea, MA 02150 617-889-7300 www.worldenergy.net David Shiflett 10 West 8th Ave Rome, GA 30161 706-234-7646 davids@worldenergy.net

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