Biodiesel Competition

Granted, the SkunK spends time talking about the COES. He does not talk as much about the biodiesel portion of the business. Without our ability to value increase the raw corn oil into the unlimited biodiesel market, the COES would be just a neat parlor trick. Lets go over a few biodiesel competitors and what difficulties some (who do not have our equipment) are facing.

Competitors - There are approximately 20 companies that manufacture components, systems, and/or equipment to produce biodiesel.

Modular Systems
There are a few companies that advertise themselves as offering modular Biodiesel production systems. These include Greenline Industries, Greenshift, Inc., Epic Modular Process Systems; FORE Energy; and Xenerga. We believe we can deliver the same capacity with a much better value proposition including lower capital investment, accelerated time to market, and reduced operating expenses.

Turn-key Systems
Companies offering turn-key Biodiesel production systems include Axens North America; BioKing; Extreme Biodiesel; GS Clean Tech Corporation; Jatrodiesel, Inc; JetBio; MH Equipment Co; Midland Manufacturing; Murphy International Development, LLC; NextGen Fuel; QS Biodiesel, Ltd; Spray Processes Ltd; and the Renewable Energy Group.
Biodiesel Sales

As of January, 2008 there were about 172 U.S. companies with production capacity of 2.24BGY and another 55 companies under construction with 1.11 BGY that are expected to be completed within 18 months. In California, however, there are currently only 7 producers with stated capacity of 16.4MGY. The 6 California plants under construction/expansion have a stated capacity of 35.5MGY. The national average capacity of a US Biodiesel production facility is 7-9MGY

The information above was researched by CAVITATION TECHNOLOGIES, INC. I am not offering an opinion at all on them - they look like one start-up among many - I did like that they listed some of our competitors by name. With the price of soy biodiesel feed stock and the credit crunch they may be too optimistic in the increase in total USA capacity.

http://www.sec.gov/Archives/edgar/data/1376793/000114420408064042/v132199_8k.htm

Problems in Corn Biodiesel

The SkunK has spent some time pointing out that the soy based biodiesel business has come to a screeching halt due to the cost of soy oil. I have blogged on the Soy based biodiesel plants that now want to jump on the corn oil based biodiesel. In fact here is what "Soy Energy, LLC" who is still not operational, has to say on p. 15/3Q about the future of Biodiesel:

"However, due to the fact that we have changed our plant design to primarily utilize corn oil, we may pursue a smaller soybean crushing facility or may abandon this plan altogether."

What?!? A plant called "Soy Energy" is moving to process corn oil?? Where do they plan on getting at least part of the oil?

"On June 24, 2008, we entered into a Crude Oil Purchase Agreement with Little Sioux Corn Processors, LLLP (“LSCP”), effective as of June 19, 2008."

Where did Little Sioux Corn Oil get the original technology?

They were one of the original demonstration plants built with Greenshift COES Technology. They have since doubled ethanol capacity and added an ICM extraction system.

Who are they going with for the biodiesel technology?

"We anticipate that the Best Energies technology would allow us to use corn oil as the primary feedstock for the biodiesel plant and expect to pursue the use of corn oil as the primary feedstock for our biodiesel production process."

They better hope that technology works - since many are finding out using Raw Corn Oil is not like anything else. You need special equipment and pretreatments to handle raw corn oil. This is why the patented and patent pending cutting edge, modular, turnkey equipment that Greenshift sells under the NextGen Fuels is such a tight fit with the CleanTech COES Technology. One magnifies the effectiveness of the other.

But SkunK you sound like a commercial for carter's pills.

OK, listen to what the Soy based biodiesel plants who have tried to convert to corn oil say in their 3Qs:

"We are currently producing some of our biodiesel from crude corn oil that we obtain from ethanol plants. Crude corn oil, however, poses several unique challenges to the biodiesel production process. The technology utilized by the ethanol plant that extracts the crude corn oil may also cause the suitability of the crude corn oil for the biodiesel production process to vary. It is possible that special technologies may be necessary to pretreat crude corn oil and other alternative vegetable oils for utilization in the biodiesel production process. Accordingly, our use of alternative vegetable oil feedstocks, such as crude corn oil, may require us to make modifications to our equipment, purchase new equipment or repair equipment that could be damaged by the use of different feedstocks." p.26 3Q WESTERN IOWA ENERGY, LLC

And here is one more to show my point:

"Furthermore, our plant does not have the technology necessary to pretreat corn oil for utilization in the biodiesel production process. To use corn oil, we would either have to add pretreatment facilities at our plant or contract with another plant to pretreat the corn oil for our use." p. 24 3Q WESTERN DUBUQUE BIODIESEL, LLC

In conclusion, we went over a few of GERS competitors in the technology and construction Biodiesel Industry. Use that as you see fit. The SkunK pointed out the problems biodiesel plants who try to jump on the corn oil bandwagon are finding out. As these small outfits begin to 'experiment' with corn oil - it reminds me of a bumper sticker I seen yesterday:

"If you think hiring a professional is expensive - try hiring an amateur."

Good Luck, SkunK

PS - Looks like I was off by a day - should see the 3Q near the close - I will guess 1537 ET. I was also way off by the board reaction to the extension - It was "Eerily Mature" - or maybe just the "Observer Effect" lol
http://en.wikipedia.org/wiki/Observer_effect