Financial Analysis

  

Bionit is based on biomass which is plentiful and has a more stable cost structure than crude oil.  Bionit can be made from any biomass source such as forestry or agricultural waste or even recycled source separated organics from our garbage streams.  Methanol, which is the other component of the Bionit blend, is derived primarily from natural gas; some methanol is also made from coal.  So methanol, too, has a lower forecasted cost structure than diesel.

The price of methanol is compared to the cost of diesel (ex taxes) in the following scatter chart:

 

 

 

 

 

 

 

 

 

 

 

These monthly data points indicate several important trends, including:

  • Diesel always costs more than methanol
  • The average spread between diesel (ex tax) and methanol is $1.07 per gallon for this time period
  • In general the more diesel costs the greater the spread
  • The spread exceeded $2.50 per gallon when diesel was at its peak price last summer

 In the coming years as diesel’s price returns to and exceeds its peak, we expect the diesel methanol spread to return to or exceed the $2.50 per gallon already observed.  As long as diesel costs more than $3.00 per gallon and the relationship demonstrated above holds, the spread of $1.50 per gallon is sufficient to make Bionit blends an attractive alternative to customers and a profitable business for its owners.  Note that the price of diesel fuel in Europe is over $5.00 per gallon, and prices are not projected to decrease.  This spread analysis along with the cost structure of Bionit underpins the attractive economics of this business proposal.             

Manufacturing economics of the Bionit demonstration facility are compared below to those for a first commercial scale facility (10MM gpy and 50MM gpy, respectively).  The larger facility contains benefits of scale as well as some yield improvements anticipated to be developed during the laboratory optimization phase, and improvements from the operation of the demo facility.  The resultant cash cost of the renewable Bionit fuel is competitive with crude derived diesel, and its advantage will increase with time as the cost of crude escalates.  And, Bionit’s cost basis is far superior to the food stock based biodiesel alternatives.