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Thesis Seminar July   1st   2010
EVALUATION OF THE ECONOMIC FEASIBILITY OF   GRAIN SORGHUM, SWEET SORGHUM, AND SWITCHGRASS AS ALTERNATIVE FEEDSTOCKS  FOR E...
Research Sponsored by,USDA –ARS InitiativeOgallala Aquifer Program (OAP)
Acknowledgements•   Dr. Arden Colette•   Dr. Bob A Stewart•   Dr. Robert DeOtte•   Dr. Lal K Almas•   Texas AgriLife Exten...
Problem Description• Increasing need and prices of petroleum energy   – 50% growth in demand between 2005 and 2030• Limite...
World Ethanol Production, 2008                        3%                                            USA          40%      ...
U.S. Ethanol Production in Billions of Gallons                                  (1980-2007)                               ...
Role of Renewable Energy Consumption in the        Nation’s Energy Supply, 2008Source: U.S. Energy Information Administrat...
Factors Increasing Interest in Ethanol        Production in the U.S.• Low prices for feedstock used to produce ethanol• Th...
Ethanol• A clean burning, high octane, renewable fuel• Effective octane-boosting fuel additive or as a stand  alone fuel• ...
Objective  To analyze the potential of grain sorghum, sweet  sorghum and switchgrass for ethanol production in  the Texas ...
Grain Sorghum
Grain Sorghum• Grain sorghum (Sorghum bicolor L. Moench)• Water use efficient crop• 5th leading cereal crop in the World• ...
Grain Sorghum Production by State, 2009Source: Wisner, 2009
Diagrammatic Representation of Grain Feedstock to EthanolSource : Viraj Alcohols Limited
Sweet Sorghum
Sweet Sorghum• Sweet sorghum (Sorghum bicolor)• Water use efficient crop• Sugar rich stalks, alternative sugar sources• St...
General Process Flow: Production of Ethanol from Sweet SorghumSource: ISSAAS, 2007
Switchgrass
Switchgrass• Switch grass (Panicum virgatum L.)• A native C4, perennial warm season grass• High cellulosic content
Simple Process Flow of Switchgrass to Ethanol
Concept of Research• Separate study of each selected feedstock and ethanol  processing method• Ethanol processing cost of ...
Materials and Methods• Study area      - 26 counties of Texas Panhandle• Selection of alternative feedstock source      - ...
Panhandle
Current Situation of Selected Feedstocks     Production in Texas Panhandle• Grain sorghum  - Average (2005-09) harvested a...
Current Situation of Selected Feedstocks Production in Texas Panhandle - Continued• Sweet sorghum  - No published statisti...
Current Situation of Selected Feedstocks Production in Texas Panhandle - Continued• Switchgrass  - No published statistics...
Ethanol Conversion Rate for Each Selected               Feedstock• Grain sorghum: 2.9 gallons per bushel grains  (Source: ...
Crop Yield and Ethanol Produced per Acre         in the Texas Panhandle                                                   ...
Mean Yield of Sweet Sorghum and EthanolProduced per Acre from Two Experimental Stations                                   ...
Mean Yield of Switchgrass and Ethanol Produced   per Acre from Two Experimental Stations                                  ...
Sweet Sorghum Ethanol Production per          Acre used in Analysis                               EthanolSweet sorghum   T...
Switchgrass Ethanol Production per Acre             used in Analysis                               EthanolSwitchgrass     ...
Parameters• Farm-to-Wholesale Marketing Margin  - Per gallon cost of converting feedstock to ethanol• Current Price of Eth...
Estimated Farm-to-Wholesale Marketing Margin for Grain Sorghum   Processing Input                  Cost per gallon ($)   E...
Estimated Farm-to-Wholesale Marketing Margin for Sweet Sorghum   Processing Input                  Cost per gallon ($)   C...
Estimated Farm-to-Wholesale Marketing Margin for Switchgrass Processing Input                    Cost per gallon ($) Clari...
Estimated Farm-to-Wholesale Marketing Margin and   Derived Demand Price for Selected Feedstocks in the                 Pro...
Cultivation Practices for Irrigated Grain       Sorghum in Texas Panhandle• Irrigation Requirement: 14 acre inches• Seed r...
Cultivation Practices for Dryland Grain       Sorghum in Texas Panhandle• Seed rate: 2.25 lbs/acre• Fertilizer Application...
Cultivation Practices for Irrigated Sweet   Sorghum in Texas Panhandle Region• Irrigation Requirement: 15.75 acre inches• ...
Cultivation Practices for Dryland Sweet   Sorghum in Texas Panhandle Region• Seed rate: 30 lbs/acre• Fertilizer Applicatio...
Cultivation Practices for Irrigated  Switchgrass in Texas Panhandle Region• Establishment Cost• Irrigation Requirement: 14...
Cultivation Practices for Dryland  Switchgrass in Texas Panhandle Region• Establishment Cost• Fertilizer and Herbicide App...
Estimated Feedstock Production Cost per    Acre in Texas Panhandle RegionFeedstock                        Irrigated   Dryl...
• Total Gross Income  = Derived demand price of feedstock per gallon of ethanol *    Gallons of ethanol produced per acre
Total Gross Income per Acre for Selected                FeedstocksFeedstock        Irrigated      Dryland                 ...
• Net Return per Acre ($)  = Total Gross Income - Total Specified Expenses
Net Return per Acre for Selected FeedstocksFeedstock         Irrigated          Dryland                    $64.63         ...
• Economic Return or Residual Return/Acre  = Net Return – Cash Rent• Cash Rent  - Irrigated Land: $110/acre  - Dryland : $...
Economic Returns per Acre for Selected              FeedstocksFeedstock         Irrigated          Dryland                ...
Conclusion• Production of ethanol from grain sorghum, sweet  sorghum, and switchgrass is not economically  feasible in the...
Limitations of the Study• Lack of production information on the feedstocks for  the Texas Panhandle• Limited research on s...
Suggestions for Improving the EconomicFeasibility of Ethanol Production in the Panhandle• An increase in feedstock product...
Thank You!
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Thesis PPT - Girase J. R.

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EVALUATION OF THE ECONOMIC FEASIBILITY OF GRAIN SORGHUM, SWEET SORGHUM, AND SWITCHGRASS AS ALTERNATIVE FEEDSTOCKS FOR ETHANOL PRODUCTION IN THE TEXAS PANHANDLE

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Thesis PPT - Girase J. R.

  1. 1. Thesis Seminar July 1st 2010
  2. 2. EVALUATION OF THE ECONOMIC FEASIBILITY OF GRAIN SORGHUM, SWEET SORGHUM, AND SWITCHGRASS AS ALTERNATIVE FEEDSTOCKS FOR ETHANOL PRODUCTION IN THE TEXAS PANHANDLE By: Jnaneshwar R Girase Department of Agricultural Sciences West Texas A&M University
  3. 3. Research Sponsored by,USDA –ARS InitiativeOgallala Aquifer Program (OAP)
  4. 4. Acknowledgements• Dr. Arden Colette• Dr. Bob A Stewart• Dr. Robert DeOtte• Dr. Lal K Almas• Texas AgriLife Extension Service, Amarillo, TX• Agricultural Research Center at Clovis, New Mexico• Agricultural Research Center at Tucumcari, New Mexico
  5. 5. Problem Description• Increasing need and prices of petroleum energy – 50% growth in demand between 2005 and 2030• Limited oil and gas reserves – Depleting energy sources• Environmental concerns – Increase in atmospheric CO2 – Use of MTBE (Methyl Tertiary Butyl Ether) in gasoline
  6. 6. World Ethanol Production, 2008 3% USA 40% Brazil 56% China Other IndiaSource: Renewable Fuels Association, 2008
  7. 7. U.S. Ethanol Production in Billions of Gallons (1980-2007) U.S Ethanol Production 7 6.2 6 4.89 5Billion Gallons 4 4 3.4 3 2.81 2.12 1.77 2 1.4 1.63 1.4 1.47 1.2 1.35 1.3 0.845 1.1 1.1 0.83 0.87 0.9 0.95 1 0.61 0.215 0.71 0.375 0.35 0.43 0.175 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Years Source: American Coalition for Ethanol, 2007
  8. 8. Role of Renewable Energy Consumption in the Nation’s Energy Supply, 2008Source: U.S. Energy Information Administration, Annual Energy Review 2008
  9. 9. Factors Increasing Interest in Ethanol Production in the U.S.• Low prices for feedstock used to produce ethanol• The increasing price of crude oil• Elimination of Methyl Tertiary Butyl Ether (MTBE)• Concern about national energy security- over 60% of crude oil used in U.S. imported• Climate change concerns
  10. 10. Ethanol• A clean burning, high octane, renewable fuel• Effective octane-boosting fuel additive or as a stand alone fuel• Processed from starches, sugars, or celluloses
  11. 11. Objective To analyze the potential of grain sorghum, sweet sorghum and switchgrass for ethanol production in the Texas Panhandle by using three alternative ethanol processing methodologies:1. Starch based ethanol2. Sugar based ethanol3. Cellulose based ethanol
  12. 12. Grain Sorghum
  13. 13. Grain Sorghum• Grain sorghum (Sorghum bicolor L. Moench)• Water use efficient crop• 5th leading cereal crop in the World• 3rd leading cereal crop in the U.S.• Grain is used as a feedstock for ethanol production
  14. 14. Grain Sorghum Production by State, 2009Source: Wisner, 2009
  15. 15. Diagrammatic Representation of Grain Feedstock to EthanolSource : Viraj Alcohols Limited
  16. 16. Sweet Sorghum
  17. 17. Sweet Sorghum• Sweet sorghum (Sorghum bicolor)• Water use efficient crop• Sugar rich stalks, alternative sugar sources• Stalk is used as a feedstock for ethanol production
  18. 18. General Process Flow: Production of Ethanol from Sweet SorghumSource: ISSAAS, 2007
  19. 19. Switchgrass
  20. 20. Switchgrass• Switch grass (Panicum virgatum L.)• A native C4, perennial warm season grass• High cellulosic content
  21. 21. Simple Process Flow of Switchgrass to Ethanol
  22. 22. Concept of Research• Separate study of each selected feedstock and ethanol processing method• Ethanol processing cost of feedstock• Production cost of feedstock• Parameters- Ethanol gallons per acre, Total specified expenses, Ethanol price, Derived demand price, Farm to wholesale marketing margin etc.
  23. 23. Materials and Methods• Study area - 26 counties of Texas Panhandle• Selection of alternative feedstock source - Grain sorghum - Sweet sorghum - Switchgrass
  24. 24. Panhandle
  25. 25. Current Situation of Selected Feedstocks Production in Texas Panhandle• Grain sorghum - Average (2005-09) harvested acres: 357,700 acres - Average (2005-09) total production: 21,558,600 bushels Source: NASS, 2005-09
  26. 26. Current Situation of Selected Feedstocks Production in Texas Panhandle - Continued• Sweet sorghum - No published statistics - Experimental stage - TAMU Research Station, Bushland, TX - NMSU Program Station, Clovis, New Mexico
  27. 27. Current Situation of Selected Feedstocks Production in Texas Panhandle - Continued• Switchgrass - No published statistics - Experimental stage - TAMU Research Station, Etter, TX - NMSU Research Station, Tucumcari, New Mexico
  28. 28. Ethanol Conversion Rate for Each Selected Feedstock• Grain sorghum: 2.9 gallons per bushel grains (Source: Trostle 2008)• Sweet sorghum: 8.7 gallons per fresh wet ton (Source: Bean et al. 2009 and Marsalis 2010)• Switchgrass: 78 gallons per dry ton (Source: Holcomb and Kenkel 2008)
  29. 29. Crop Yield and Ethanol Produced per Acre in the Texas Panhandle Ethanol Grain sorghum Bushels/acre gallons/acre Irrigated 134 388.6 Dryland 36 104.4 Source: Texas Crop and Livestock Budgets 2010
  30. 30. Mean Yield of Sweet Sorghum and EthanolProduced per Acre from Two Experimental Stations Irrigated DrylandSweet sorghum Bushland Clovis Mean Bushland Clovis MeanFresh weight (T/A) 21.50 28.30 24.90 7.00 17.70 12.35Brix value ( Bx) 14.30 15.60 14.95 17.36 17.20 17.28Sugar@65% (T/A) 1.17 1.59 1.38 0.47 0.82 0.65Ethanol@65% (Gal/A) 182.40 251.00 216.70 68.60 126.00 97.30Seasonal precipitation (ac-inch) 8.50 14.10 11.30 8.50 13.30 10.90Irrigation (ac-inch) 22.80 8.70 15.75 5.30 0.00 -Note: T/A = Tons/Acre, Gal/A = Gallons/Acre, 65% = 65% Juice recovery, 95% = 95% Juice recovery
  31. 31. Mean Yield of Switchgrass and Ethanol Produced per Acre from Two Experimental Stations Blackwell SwitchgrassSwitchgrass Full Limited Dryland Etter Tucumcari MeanYield (DT/A) 4.90 3.90 4.40 2.50 1.40Ethanol (Gal/A) 382.20 304.20 343.20 195.00 109.20Precipitation (ac-inch) 5.82 - 5.82 - 5.82Irrigation (ac-inch) 14.70 - 14.70 - 0.00 Note: DT/A = Dry Tons/Acre, Gal/A = Gallons/Acre
  32. 32. Sweet Sorghum Ethanol Production per Acre used in Analysis EthanolSweet sorghum Tons/acre gallons/acreIrrigated 24.90 216.7Dryland 12.35 97.3
  33. 33. Switchgrass Ethanol Production per Acre used in Analysis EthanolSwitchgrass Tons/acre gallons/acreIrrigated 4.4 343.2Dryland 1.4 109.2
  34. 34. Parameters• Farm-to-Wholesale Marketing Margin - Per gallon cost of converting feedstock to ethanol• Current Price of Ethanol: $1.81/(E-100)Gallon (Source: DTN 2010)• Derived Demand Price of Feedstock to Produce One Gallon Ethanol = Price of Ethanol – Farm to Wholesale Marketing Margin
  35. 35. Estimated Farm-to-Wholesale Marketing Margin for Grain Sorghum Processing Input Cost per gallon ($) Enzymes 0.0550 Chemical: process & antibiotics 0.0225 Chemical: boil & cook 0.0060 Denaturants 0.0500 Yeasts 0.0250 Repairs & Maintenance 0.0150 Transportation 0.0075 Water 0.0123 Electricity 0.0450 Other 0.0200 Depreciation 0.1174 Interest 0.0726 Labor & Management 0.0206 Property Taxes 0.0017 Profit Margin 0.1000 Total Cost 0.5706 Source: Hofstrand 2010
  36. 36. Estimated Farm-to-Wholesale Marketing Margin for Sweet Sorghum Processing Input Cost per gallon ($) Cane processing 0.18 Administrative costs 0.10 Ethanol processing 0.28 Denaturant 0.08 Capital costs 0.11 Depreciation 0.21 Profit Margin 0.10 Total cost 1.06 Source: Outlaw et al. 2007
  37. 37. Estimated Farm-to-Wholesale Marketing Margin for Switchgrass Processing Input Cost per gallon ($) Clarifier polymer 0.0080 Sulfuric acid 0.0108 Hydrated lime 0.0219 Corn Steep liquor 0.0256 Purchased cellulose 0.1394 Ammonium Phosphate 0.0030 Makeup water 0.0085 Boiler chemicals 0.0003 Cooling tower chemicals 0.0005 Waste water chemicals 0.0027 Waste water polymer 0.0001 Interest cost 0.1000 Insurance & property tax 0.0500 Depreciation cost 0.3400 Administrative & other costs 0.1000 Profit Margin 0.1000 Total cost 0.9108 Source: Holcomb and Kenkel 2008
  38. 38. Estimated Farm-to-Wholesale Marketing Margin and Derived Demand Price for Selected Feedstocks in the Production of Ethanol Farm-to-Wholesale Ethanol Derived Marketing Margin Price Demand PriceFeedstock ($/gallon) ($/gallon) ($/gallon) I II II-IGrain sorghum 0.5706 1.81 1.2394Sweet sorghum 1.0600 1.81 0.7500Switchgrass 0.9108 1.81 0.8992
  39. 39. Cultivation Practices for Irrigated Grain Sorghum in Texas Panhandle• Irrigation Requirement: 14 acre inches• Seed rate: 5 lbs/acre• Fertilizer Application per Acre - Nitrogen (ANH3): 65 lbs - Phosphorus (Liquid): 50 lbs - Nitrogen (Liquid):60 lbs• Custom Herbicide and Insecticide Application• Custom Harvesting and Hauling• Operator Equipment and Labor
  40. 40. Cultivation Practices for Dryland Grain Sorghum in Texas Panhandle• Seed rate: 2.25 lbs/acre• Fertilizer Application per Acre - Nitrogen (ANH3): 30 lbs• Custom Herbicide and Insecticide Application• Custom Harvesting and Hauling• Operator Equipment and Labor
  41. 41. Cultivation Practices for Irrigated Sweet Sorghum in Texas Panhandle Region• Irrigation Requirement: 15.75 acre inches• Seed rate: 6.5 lbs/acre• Fertilizer Application per Acre - Nitrogen (ANH3): 225 lbs - Phosphorus (Liquid): 40 lbs• Custom Herbicide and Insecticide Application• Custom Harvesting and Hauling• Operator Equipment and Labor
  42. 42. Cultivation Practices for Dryland Sweet Sorghum in Texas Panhandle Region• Seed rate: 30 lbs/acre• Fertilizer Application per Acre - Nitrogen (dry): 80 lbs - Phosphate: 40 lbs• Custom Herbicide and Insecticide Application• Custom Harvesting and Hauling• Operator Equipment and Labor
  43. 43. Cultivation Practices for Irrigated Switchgrass in Texas Panhandle Region• Establishment Cost• Irrigation Requirement: 14.7 acre inches• Fertilizer and Herbicide Application per Acre - Nitrogen-32 in water: 20 lbs - Urea, solid (46% N): 45 lbs - 2,4-D Amine 4: 40 oz• Operator Equipment and Labor
  44. 44. Cultivation Practices for Dryland Switchgrass in Texas Panhandle Region• Establishment Cost• Fertilizer and Herbicide Application per Acre - Urea, solid (46% N): 45 lbs - 2,4-D Amine 4: 40 oz• Operator Equipment and Labor
  45. 45. Estimated Feedstock Production Cost per Acre in Texas Panhandle RegionFeedstock Irrigated DrylandGrain sorghum $413.35 $141.66Sweet sorghum $462.71 $193.07Switchgrass $349.05 $102.32Source: TAMU Crop Budgets 2010
  46. 46. • Total Gross Income = Derived demand price of feedstock per gallon of ethanol * Gallons of ethanol produced per acre
  47. 47. Total Gross Income per Acre for Selected FeedstocksFeedstock Irrigated Dryland $477.98 $128.41Grain sorghum (388.6*1.23) (104.4*1.23) $162.53 $72.98Sweet sorghum (216.7*0.75) (97.3*0.75) $308.88 $98.28Switchgrass (343.2*0.90) (109.2*0.90)
  48. 48. • Net Return per Acre ($) = Total Gross Income - Total Specified Expenses
  49. 49. Net Return per Acre for Selected FeedstocksFeedstock Irrigated Dryland $64.63 -$13.25Grain sorghum (477.98-413.35) (128.41-141.66) -$300.18 -$120.09Sweet sorghum (162.53-462.71) (72.98-193.07) -$40.17 -$4.04Switchgrass (308.88-349.05) (98.28-102.32)
  50. 50. • Economic Return or Residual Return/Acre = Net Return – Cash Rent• Cash Rent - Irrigated Land: $110/acre - Dryland : $25/acre Source: TAMU Crop Budgets 2010
  51. 51. Economic Returns per Acre for Selected FeedstocksFeedstock Irrigated Dryland -$45.37 -$38.25Grain sorghum (64.63-110.00) (-13.25-25.00) -$410.18 -$145.09Sweet sorghum (-300.18-110.00) (-120.09-25.00) -$150.17 -$29.04Switchgrass (-40.17-110.00) (-4.04-25.00)
  52. 52. Conclusion• Production of ethanol from grain sorghum, sweet sorghum, and switchgrass is not economically feasible in the Texas Panhandle Region• Consistent with the status of ethanol industry in the Texas Panhandle Region
  53. 53. Limitations of the Study• Lack of production information on the feedstocks for the Texas Panhandle• Limited research on selected feedstocks in the Texas Panhandle
  54. 54. Suggestions for Improving the EconomicFeasibility of Ethanol Production in the Panhandle• An increase in feedstock productivity• Decrease in production cost• An increase in the ethanol extraction• An increase in the price of ethanol
  55. 55. Thank You!

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