INTEGRATED BIOREFINERY COMPLEXES: ENERGY & FOOD SECURITY, & RURAL DEVELOPMENT

Presented by:David Hallberg, CEO, PRIME Technologies, LLC

To the:GOVERNORS’ ETHANOL COALITION

Sioux Falls, SDAugust 1, 2003

IBR COMPLEXES ARE A “FOUR-CORNERED BOX”

The Wall Street Journal

Friday, August 16, 2002

“…proven technologies…never before have they been so integrated – nor on such a scale. It is an immense circle of life…”

Homeland Security Issues

Dispersed & decentralized gaseous and liquid fuel production

No fossil fuel (foreign or domestic) needed to produce renewable ethanol

Integrated Bio-Refinery (IBR) sites chosen for grain and cattle availability – not natural gas

Source and management identified beef & food products

Source verified cattle (in beef units) & milk (in dairy units) Management verified systems

Feed Hormones Antibiotics

The Patented PRIME Process…U.S. Patent # 6,355,456 Issued March 12, 2002

A “modified” ethanol unit, with no feed product drying or loadout equipment… …with boilers fueled by biogas generated

from waste streams treated in the…

Anaerobic Digesters… …kept at optimum temperatures by “waste

heat” from the ethanol plant. Feedstock for the AD unit comes from the ethanol plant thin stillage and manure generated in the…

Beef cattle feed lot… …where feed products from ethanol production are fed wet in

enclosed, protected habitats to facilitate “clean manure” harvest, pollution control and supply “finished” cattle to the…

Beef packing facility…

…where all cattle harvested are of known origin and handling protocol - all monitored by a computerized management system.

10% Principle

If 10% of U.S. Beef production came from PRIME system it would take:

45 IBR complexes Produce 1.035 billion gallons of ethanol

If 10% of U.S. Milk (via dairies vs. feedlots) came from the PRIME system it would take:

105 IBR complexes Produce 1.155 billion gallons of ethanol

If 10% of BOTH beef and milk markets were accessed via PRIME IBR systems:

Nearly 10% of U.S. corn production would be involved

Ethanol Plant

Takes in grain (corn, milo, barley)Produces Wet distillers grains – fed directly to feedlot Thin stillage – used as feedstock for AD unit Carbon Dioxide – aids in nutrient removal,

refrigerant in packing facility

Fueled by Biogas from AD unit

No evaporator or dryerNo thermal oxidizer

AD Unit

Fed by Manure from the feed lot Thin stillage from the ethanol plant

Heated by Waste heat from the ethanol plant (serves as cooling

tower)

Produces 100% of all gas needs

Facilitates Economic removal of

Nitrogen Phosphorus Potassium

Feed Lot

Consumes all wet distillers grains produced No drying No hauling

Produces manure feedstock for AD unitSupplies cattle to beef processing unit Source verified Management verified

Beef Processing

Small and specializedPremium beef quality control in “advanced technology” micro-processing facilitiesPaunch manure & offal to AD system for biogas maximizationEthanol unit CO2 available for meat refrigeration & processing needsCloses the loop on the “four-cornered box”

PRIME PATENT PRINCIPLES

“Closed loop” method technology utilizes residuals & wastes from one sub-system as feedstock for the othersSynergies & “economies of scope” result in lowest-cost, highly energy efficient, ethanol, & economically & environmentally sustainable approach to meeting strict new manure management standards (CAFO rules)Sub-systems have all been commercially provenIntegration plan allows for straightforward operations, redundancy & contingencies in event of upsets

FINANCIAL POINTS

Lowest ethanol capital costs Lowest ethanol natural gas/energy inputs Lowest ethanol O & M costs

Highest ethanol net protein values (lowest “net starch” costs)Substantially reduced transportation requirements

No rail access neededMaximum value from biogas substitution (zero external natural gas requirement)Greatest manure odor, pathogen, & water contamination control

Unique permitting capability

Energy Cost Savings

Eliminate: Evaporator Dryer DDGS Transport

With natural gas at $6 to $8/mcf 25 to 35 cents/gallon energy savings

over “standard” ethanol production facilities

Environmental Implications

Ethanol “Clean Air Fuel”

Feed lot PRIME rations rich in distillers grains reduce

enteric fermentation Anaerobic Digestion Manure treatment

Controlled odor Nutrient recovery – enough for 40% of replacement

crop Nitrogen Phosphorus Potassium

Energy Points

Low energy needs No feed dryer, no evaporator, no shipping

On-site energy source Anaerobic Digestion

Feed lot manure Ethanol plant thin stillage

Potentials Solar (photovoltaic cells) Wind (4 turbines per 320 acre site)

 Partial GHG Benefits  Tonnes

CO2E GWPTonnes

CE

Ethanol 11,015 1 3,005

Methane 5,195 21 29,745

Enteric Fermentation

965 21 5,520

TOTALS     38,27017,175

Issues

Where are the complexes?Why not build hundreds of them?Why so difficult to build the first complex?

PRIMARY BARRIERS

Anti-corporate farming laws restrict capital formation options (exceptions needed)

Commercial demonstration challenge for first facility poses technology risks to lender (government support needed to bridge gap)

Cultural differences b/ ethanol & beef – dairy operations must be managed

Competitive pressures 80% of beef markets controlled by 3 entities “Big 3” restrict mainstream marketing

GEC ACTION REQUESTS

Help to inform farmer & rancher constituents of technology’s potential application to their state Urge Department of Homeland Security to actively support IBR’s as dispersed liquid- and gaseous-fuel production centers that are “off-grid” resourcesRecognize IBR technology concept as cost-effective management tool for manure pollution control for beef and dairy operations

FEDERAL GOV’T REQUESTS

Enact RFS and renewable fuels tax code provisions in Senate energy bill Establish favorable conditions for expanded ethanol uses, esp. ETBE & E-85 (ETBE instead of MTBE = 800+million GPY of new ethanol demand; E -85 provides “platform” to ethanol role in future hydrogen economy)

Incentivize IBR complexes by encouraging GHG credit trading