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Home My WebLink About900201.tiff RESOLUTION RE: APPROVE APPLICATION FOR AGRICULTURAL PROCESSING FEASIBILITY GRANT PROGRAM AND AUTHORIZE CHAIRMAN TO SIGN WHEREAS, the Board of County Commissioners of Weld County, Colorado, pursuant to Colorado statute and the Weld County Home Rule Charter, is vested with the authority of administering the affairs of Weld County, Colorado, and WHEREAS , the Board has been presented with an Application for the Agricultural Processing Feasibility Grant Program, and WHEREAS, said Application is to be submitted on behalf of United Power, Incorporated, and WHEREAS, after study and review, the Board deems it advisable to approve said Application, a copy being attached hereto and incoporated herein by reference. NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld County, Colorado, that the Application for the Agricultural Processing Feasiblity Grant Program be, and hereby is, approved. BE IT FURTHER RESOLVED by the Board that the Chairman be, and hereby is , authorized to sign said Application. The above and foregoing Resolution was, on motion duly made and seconded, adopted by the following vote on the 28th day of February, A.D. , 1990 . n BOARD OF COUNTY COMMISSIONERS ATTEST: l� WELD NTY, COLORADO Weld County erk and Recorder AV, eti and Clerk to the Board eneey R. Bran r, hairman mil' : � Y �ne ounty tkeL-�J Ge a Kennedy, Pro-Tem Deputy County rk APPR VED AS TO FORM: onstance L. ar ert C.W. Kirb ounty Attorney Gordo FICC// 9O0201 UNITED POWER UNITED POWER, INCORPORATED P.O.BOX 929,BRIGHTON,CO 80601 TELEPHONE:(303)659-0551•ENTERPRISE 222 FAX(303)659-0551,X 261 February 23, 1990 Colorado Department of Agriculture c/o Rosemary Biggens 406 State Service Building 1525 Sherman Street Denver, Colorado 80203 Weld County Commissioners c/o Mr. Don Warden P. O. Box 758 Greeley, Colorado 80632 Gentlemen: Thank you for the opportunity to request assistance under the 1990 Agricultural Processing Feasibility Grant program. United Power is a member-owned rural electric utility serving 13,500 consumers in parts of five counties north and west of Denver. This application is being made on behalf of the agricultural and environmental interests of our consumers. A preliminary study investigating the feasibility of locating ethanol-producing facilities north of Denver was completed in January 1990 and financed by United Power (study enclosed). The study indicates that a unique and desirable combination of resources and markets are present to sustain a viable ethanol plant. We are encouraged by these preliminary findings and believe it is in the best economic interests of our agricultural consumers and best environmental interests of all Colorado residents to pursue a more comprehensive look into the feasibility of locating ethanol-producing facilities in Colorado. The preliminary study proposed that a smaller-scale plant producing about five million gallons per year of ethanol should be further considered for development. The plant would be located adjacent to feedlot operations and sized to utilize plant by-products for nutritional needs of about 25,000 head of cattle. Large local markets for oxygenated fuel and fuel derivatives as well as meat products would help ensure the plant's long-term economic viability. For every bushel of grain processed, about two and one-half gallons of ethanol are produced. A plant producing five million gallons of ethanol per year would employ about 20 people in addition to people employed in conjunction with the adjacent cattle feeding operation and potential such as animal feed, fish farming and fertilizer productions. A CONSUMER OWNED UTILITY!. 900201 Colorado Department of Agriculture Weld County Commissioners Page 2 February 23, 1990 We respectfully request assistance on this ethanol feasibility study from the Colorado Department of Agriculture and the Weld County Commissioners. Sincerely, Union Rural Electric Association, Inc. dba UNITED POWER, INC. Charles E. Klarich Director of Community Relations CEK:asb Enclosures 900201. wn STATE OF COLORADO ��OF•CO� DEPARTMENT OF AGRICULTURE Division of Markets r1 a.� 1' $1525 Sherman Street - Denver,Colorado 80203 [ - 'revs (303) 866-3561 qn ;l 1c 4L. Roy Romer F"J 0 3 ,.� Governor ; 1 Steven W.Horn Commissioner • C rr'- )� s•�Sn� Robert G.McLavey t Union F `' �L vl Deputy Commissioner January 1, 1990 Dear Sir/Madam: The 1990 Agricultural Processing Feasibility Grant Program is open for applications. Enclosed are guidelines which provide an explanation of the program and an application. Please note that the deadline for submission of all applications is March 1, 1990. Sincerely, tr Business Development Specialist RB:jc Encl. • • 900201 . ' • . .' Agric ural Processing Feasibility Gr Program GUIDELINES The purpose of this program is to assist local governments and local private enterprises in determining the feasibility of developing. facilities in Colorado for the processing of agricultural commodities. This grant program is made possible through funding by the Colorado Economic Development Commission administered by the the Colorado Department of Agriculture. Applicant: Applicants must be Colorado local governments. Local private enterprises must present their projects to the local government and have the contract submitted in conjunction with the local government. The proposed project must be located within Colorado. Applications: Applications must be received at the Colorado Department of Agriculture on or before March 1, 1990. A decision on whether the grant will be awarded will be made within 45 days of the deadline. Maximum Award: The maximum award per project is $15,000. Deciding Authority: The Commissioner of Agriculture will determine grant awards after considering recommendations of a review committee. If the award amount differs from the budget proposal, a new budget must be submitted and approved by the commissioner. Payment Schedule: Unless other arrangements are made, 40 percent (40%` of the money will be given to the applicant within 30 days of granting the award and completion of the required State of Colorado contractual agreement. Thirty percent (30%) will be paid after acceptance of the interim report and the final thirty percent (30%) will be paid upon delivery of the final report or study. Final report will be cue June 28, 1991 . Extensions are possible °emending on the nature of the study. Matching Contribution: All awards must be matched by at least a one-to-one cash or in-kind contribution by the applicant. In-kind contributions can be in the form of time, travel , or any other type of expenditure for wnich a dollar value can be assignee. Conditions of Awards: • Grant recipients will be required to meet with an advisory committee composed of individuals from the Colorado Department of Agriculture, Colorado Office of Business Development, Colorado Department of Local Affairs and Colorado State University at the onset of the study and as deemed necessary by the committee. Recipients are also responsible for keeping the committee advised of the progress and status of the study. Final Products: Applicants must agree to develop a report or study which analyzes the feasibility of processing an agricultural commodity produced in Coloraoo . The aware can be used for an entire study, or for one or more specific components of a feasibility study such as engineering, marketing of the final product, production of the raw commodity in Colorado, financing, etc. All data developed by this study will become public information. Criteria for Granting Awards: Awards will be grantee on the oasis of the following criteria : 1 . Impact of the project on agriculture in the region. — 2. Impact upon nearby communities. 3. Support of the community, agricultural interests, investors and financial institutions. • Interviews with applicants may be required. • Further Information: For further information contact: Rosemary Biggins Colorado Department of Agriculture 406 State Services Building n 1525 Sherman Street 90t fJj Denver, Colorado 80203 (303) 866-3561 I k APPLICATION For The Agricultural Processing feasibility Grant Program 1. Applicant Local Government Weld County Commissioners, State of Colorado Name of contact person Mr. Don Warden, County Administrator Nailing address 915 10th Street, P. O. Box 758 Greeley, Colorado 80632 Telephone number (303)356-4000 2. Name/Title of proposed project Ethanol Production Feasibility Study applicable to Agricultural & Environmental Districts , 3. Location of project Site to be determined in feasibility study 4. Amount of grant funds requested $ 15,000.00 5. Describe the processing facility which will be studied. Include information you may have on the type , amount, and source of raw material • which will be processed and potential markets. Indicate whether the project will compete with similar processing facilities in the region. (Enclose additional information which is available on the project) . A five-million gallon per year ethanol production facility. a. Closed system (as described in Exhibit A) . b. Will utilize products exclusively grown in Colorado capable of producing ethanol . c. Market area for ethanol in Denver Metro area, which is now required to use oxygenated fuels. d. There is not a plant in Colorado using similar technology. • 6. Describe how •the grant will be used. To complete the partial funding of the second phase of a feasibility study. a. Various agencies in Colorado are participating in the feasibility study. b. To determine the feasibility of an ethanol production facility for processing agricultural products. c. Grant proceeds to be used for paying a portion of consultant fees (as described in Exhibit B) . 7. Describe the impact the project will have on the community ( i .e. , jobs , • payroll , spinoff industries, etc. ) . An ethanol production facility as described in this study, if built, would provide certain economic benefits. a. Approximately 20 new jobs. b. A valuable market for agricultural products. c. Benefits to the region in capital investments, added tax revenue and improved air quality. d. Reduced dependence on foreign oil imports contributing to U.S. energy depen- dence through the promoticn and use of ethanol products. e. Valuable by-products for beef and dairy operations, carbon dioxide for research (Exhibit C), fish for food consumption, fertilizer and many more potential benefits. 900201 • APPLICATION -- -- ' Agricultural -Processing Feasibility Grant Program Page 2 8. . To what degree has feasibility of this project already been investigated? (Include previous studies , financial backing, etc. ) A summary of a preliminary analysis of an ethanol production facility in combina- tion with beef and dairy operation is attached (Exhibit D) . 9. Describe who would operate the facility. Indicate their experience in developing other processing or manufacturing facilities and/or experience with the agricultural commodity being processed. This feasibility study is being developed by -United Power, Inc. of Brighton, CO as an economic development project. a. To clarify the feasibility of building plants at strategic locations in Weld County for ethanol production. b. Ownersship, operating responsibility, prganizatioraa) structure s and financing will be e 1r component o is study to a compietea e later. 10. BUDGET INFORMATION. Indicate the amount of grant money and in-kind contribution to be spent on each function or activity. Activity Grant In-Kind or Cash* Total a. Personnel • $ $.1,000.00 $ 1,000.00 b. Travel 1,508.00 1,508.00 c. Equipment d. Supplies e. Contractual** $15,000.00 13,800.00 28,800.00 f. Other 10% Contingency 3.]20.00 3.120.00 o. h. i. Total $ 15,000.00 (.19.428.00 $ 34.428.00 *Contributions must be documented. Exhibit E attached ** What is included in contractual (services, consultant, etc. ) A copy of the contract with Raphael Katzen Associates is attached (Exhibit B) . The qualification of Raphael Katzen Associates also is attached (Exhibit F) . Indicate below amount of funds contributed by other public sources. - United Power guarantees payment of the balance of $14,120 for the study. Because of time constraints United has not yet made presentations to organizations expressing interest in participating in this study, which include the Colorado Corn Administra- tive Committee and the University of Northern Colorado Agronomy Division. United will proceed with making these presentations concurrently with your review of this application. 11. Please enclose a draft letter of agreement between the local government and private enterprise, stipulating each party's responsibilities in fulfilling the contract. Letter of Agreement attached. 12. Please enclose letters of support from groups such as farm organizations, commodity groups, financial instutitions, and/or local government - advisory groups. 13. Please document available financing for project (financial statement of private enterprise, letters of agreed financial support from lending institutions, community members , friends , family, etc. ) . What Additional amount will need to be raised if project proves to be feasible?- • Ownership structure, site location and financing will be addressed after economic feasibility issues have been resolved, during the third phase of this study. 14 . hail application to be received by March 1 , 1990 to: Colorado Department of Agriculture c/o Rosemary Biggins 406 State Services Building 1525 Sherman Street Denver, Colorado 80203 Signed: Date: _ Applicant Title 900201 - ti EXHIBIT A REEVE AGRI-ENERGY DGTRESSED GRAN / MAXI "' ETHANOL WARM FISH PLANE WATER ~ POND A 1 h . IRRITATION . �•••AN FORAGE AND GRAS �. SOLIDS THIN SILAGE HAY WASTE FER• � CRAM SEPARATION 1 i SOLIDS ICX Dmagi- 1 IN RATION Faxar ` ELECTRICITY — •s i STEAM re BOILER t BEEF GRAM • "/ • NATURALr , GENERATOR GAS WE IL FIGURE 2 900201 .- s4 EXHIBIT B Rkcal RAPHAEL KATZEN ASSOCIATES INTERNATIONAL, INC. CONSULTING ENGINEERS 7162 READING ROAD SUITE 1200, CINCINNATI, OHIO 45237 November 29, 1989 Rev. February 19, 1990 United Power, Incorporated P. O. Box 929 18551 E. 160th Avenue Brighton, Colorado 80601 Attention Mr. Charles Klarich Re: WH 003 Consulting Engineering Services Gentlemen: In accordance with our discussions, we are submitting this proposal for Consulting Engineering Services required in con- nection with the process design and related services for a 5 million gallon per year fuel grade ethanol plant to be located near Denver, Colorado. These services are to cover the feasi- bility study and preparation of the Cost Estimate for the process battery limits of the ethanol plant. The specific services which we will provide under this agreement shall include the following: Feasibility Study and Cost Estimate Development of material and energy balances for the process operation of the plant, from feedstock un- loading, storage, milling and transfer to the mashing operation, to production and delivery to bulk storage and outloading of fuel grade ethanol and wet by-pro- duct(s) . Development of Process Flow Diagrams (PFD's) showing process equipment items, flow lines, and key point tabulation of flows, conditions, and compositions of process streams, including effluent flows for the ethanol plant. Preparation of process description, including key operating conditions. Development of projected plant capital investment (plus or minus 20%) for the installed "battery lim- its" facility without byproduct drying capabilities. S0OZCI TELEPHONE513-351-7500 • TELEFAX513-351-0810 • TWX810-461-2930 RAPHAEL KA1 2 ASSOCIATES INTERNATIONAL, INC. United Power, Incorporated -2- November 29, 1989 Rev. February 19, 1990 Development of feasibility level estimate for: a. Feedstock requirements including type, quality, and quantity. b. Quality and quantity of product(s) and by-product(s) to be produced. c. Chemical and yeast requirements including enzymes, lime, caustic, cleaning solutions, nutrients, dry yeast, etc. d. Operating personnel requirements. e. Any recommendations for owner follow-up (e.g. water source(s) , feedstock source(s) , effluent requirement(s) , etc. ) . Preparation of Equipment List and preliminary sizing and specifications for process equipment. - Development of quality and quantity requirements at normal and peak load for steam, water, electric power. Identification of quantity and characteristics of waste streams from the plant. - Development of a cash flow analyses over 5 years for plant battery limits. Develop sensitivity analyses based on feedstock quantity and quality changes, ethanol price changes and wet feeds pricing changes. Because of the proprietary nature of information to be presented by RKAII, we will require a confidentiality agreement to be in effect (copy attached) . We propose to provide these feasibility study and cost estimate services indicated above in accordance with require- ments of the project schedule. A lump sum fee of $28 , 800 (inclusive of $2 , 800 per our previous agreement) shall be due, payable as follows: $ 2 , 800 upon completion of the 2-day meeting, $10, 000 upon acceptance of this proposal, $16, 000 upon issuance of the final report. 900201 RAPHAEL KATZL . ASSOCIATES INTERNATIONAL, INC. United Power, Incorporated -3- November 29, 1989 Rev. February 19, 1990 Any further travel, as requested by United Power, Incorporated, will be outside the scope of the study and will be billed at $740 per day per engineer, plus out-of-pocket expenses. If there are any changes in scope defined above, the extra work shall be paid for on the basis of a revised proposal and agreement for the extra cost of work incurred in connection with the changes. All invoices shall be due and payable within fifteen days of date of issue. Invoices not paid within thirty days of date of issue shall be subject to an interest charge of 1% per month retroactive to the invoice date. Should the project be terminated for reasons beyond control of RKAII, any work performed by RKAII not yet invoiced shall be paid for on a time and expense basis, and no other termination charges will be applicable. This proposal is valid for 90 days from date of issuance by RKAII and contingent on approval of a mutually agreeable Confidentiality Agreement. We trust that the foregoing proposal is in accordance with your requirements, and according to our understanding of the scope of work. Your acceptance of this proposal shall be indicated by signing and returning a copy. RKAII anticipates the feasibility study will be completed 45 days after your acceptance. We appreciate the opportunity to submit this proposal and look forward to working with United Power on this project. t ruly yours, 2Philipson, P.E. Vice President UNITED POWER, INCORPORATED Accepted Title Date PWM:aw 900201 i C p. `�, t v %...as t•' s 0 Gp.555' > " a %r $ n R ;•EE eoE 4 r aS E�. = o 0 _ _+ W E•' T C - • EE 90.1 ....4- teeo$08'� 8 • Sago _ ie dt "t4 e2 a -�:Es 2.5 C = eC y .. " EL E ° T �' A� oAgx °oE� �a�i�' E'o�a' � Ey °� °—� °' W °• > ! . " e, T" W Cy, N. w 5, r Motu C Et -. � •• o• ' F M• N C O F QJ - •CJ o C Q...l �• E3 of a - - - i ". - a �" p - met - $ -° -Ea C8ch" E• cWuaaa'2.7 ,, V ,rJ al e �C5 N g g ° 0 a t CC C y L2 Wp C t '.. 5 . t U ? > mI - rT" Os 04 °..,i ' g "8d „atai E � V 'C 8W Cd '� ; 0 E ›.••Sy rg Tt . am c I op o 8 8 r. .y "t• 5.E • a— u c. ° 030' Ody.�. O.eao ° oy, ano2 , ° II' != 9II1H11 ▪ d1tJ4i : F` % ', ice ; ; d So € •o". moww++ Z W 9 K .:\ �° , E H t W @ y � .. go eo c cEi y•°o•E Y3 0ECe ..g I >,..- U ` ciii -.. .Cd Fuu•q ' ,g° Es QUO /` ° � E :. ` r og33� n .' rE >, 1:'° o q y, ,ry A "t== a, 3 E N C—'en c C T cp 3 $ T �t MO " " 3 " " P. , ■1� 5 xa . c-';, 5g°TC ? .. egd H Ca -tv 3 .C��. e'� a`f I0 t° 3 0 o of .d '0 t k.... d i t 'w C^`c t c.- d 8 co C C O.�O f .I - UU 2 �Tes .y��S{ 003 . 0>" C Pend .T. C lISc am 6o� a ' eo°d " a° ^2 " .,°'�i.i2 "s3 o1 900201 . wit fritCairmU T7 gy ^ ,N 0. Y +...=., T`9,"rya£- R ' _. . - EXHIBIT D RAPHAEL KA, .N ASSOCIATES INTERNATIONAL, INC. WE 752 February 19, 1990 MEMORANDUM To: Mr. Charles Klarich United Power, Incorporated From: M. Kent Kemmerling Raphael Katzen Associates International, Inc. Subject: Meeting summary The motor fuel ethanol industry has developed from the emotion-driven, "farm based" , entrepreneurial industry of the late 1970' and early 1980's, to the major corporation-dominated industry of the 1990's. Most early ethanol projects were small and suffered from one or more of the following; poor planning, poor design, underfinancing or unscrupulous developers. Larger corporations, such as Archer Daniels Midland, used existing corn wet milling operations as the base for plant development and expanded the products derived from corn to include ethanol. The federal government, in order to stimulate an ethanol industry, instituted an excise tax remission program for gasoline containing ethanol. The effect of the tax remission has been to increase the value of ethanol by $0. 60 per gallon. The remission program is due to expire in 1992 . As a result, essentially no new ethanol projects have been initiated since 1985. Proposals are before the Congress to extend the tax credit to the year 2001. In recent discussions with lobbyists and industry "insid- ers" , the extension is expected to pass in the third quarter of 1990. Our President has publicly announced his support for clean burning renewable fuels such as ethanol. With this driving force, the industry is experiencing exciting times. Even so, only well-conceived and executed projects make economic sense. 900201 RAPHAEL KA. N ASSOCIATES INTERNATIONAL, INC. Mr. Charles Klarich -2- February 19, 1990 Acceptable profit margins are based on efficient operations, proper management and a competitive advantage. As Denver-area residents are aware, the instituting of an oxygenated fuels program to reduce auto emissions has been a success. Ethanol addition to gasoline increases the oxygenation, but is not the only additive that can accomplish this goal. MTBE (methyl tertiary butyl ether) also can be used. However, more MTBE is required for a given oxygen level compared to ethanol. But MTBE has the advantage of being fungible in the pipeline transportation system for gasoline. Also, the production of MTBE is more readily controlled by the oil companies and related industries since the base materials for synthesis are derived from hydrocarbon sources. (Ethanol is viewed as being a "farm- based" commodity with all the associated independence from the petroleum "umbrella" . ) MTBE is formed from combination of methanol and isobutylene. Methanol (wood alcohol) is a toxic and somewhat corrosive alcohol, and isobutylene is a natural byproduct of gasoline refining and can be derived from natural gas. The primary U.S. supplies of methanol are operating near maximum capacity. Twenty five percent of the current usage is supplied by foreign imports. Addition of new methanol production capacity in the U.S. requires a major capital expenditure and can not be justified at current methanol prices. Basically, all the sources of "cheap" methanol in the U.S. are in use. Importation from foreign sources (primarily Saudi Arabia) is becoming the only option as the demand for MTBE increases. In the Denver area, (Commerce City and Cheyenne, Wyoming) MTBE production facilities are being installed. The same basic process used for MTBE synthesis can be used to produce ETBE (ethyl tertiary butyl ether) - methanol is re- placed by ethanol. Congressional action is currently under way 9(1•02C1 RAPHAEL KATZ, ASSOCIATES INTERNATIONAL, INC. Mr. Charles Klarich -3- February 19, 1990 to extend the $0. 60 federal tax credit to ethanol used for ETBE production. This gives ETBE a competitive advantage relative to MTBE. Some major MTBE producers have publicly announced plans to switch to ETBE if the tax credit is extended. Indications are that this tax credit will be accepted into law in the very near future. This opens a new market for ethanol and indicates a joint cooperative effort between the petroleum and the agricul- tural industry. As more and more cities adopt an oxygenated fuels program, MTBE shortages will occur. The gap will have to be filled by ETBE and ethanol. The Congress and our President have stressed the importance of improving the air quality in U.S. cities. The Clean Air Act is currently being debated in Congress and a form of the legisla- tion is sure to pass and be adopted into law. The current debates focus on the use of 2 .7% or 3 . 1% oxygen content in non-attainment areas. There is not enough MTBE currently avail- able to meet 2 .7% oxygen content and only ethanol can be used to meet 3 . 1% oxygen content. Passage of the Clean Air legislation has been expected to increase the annual demand for ethanol from the current 1 billion gallons up to 2-3 billion gallons. To compete with the large ethanol production plants that produce multiple products from the processed corn, smaller facilities must have a "gimmick" . This "gimmick" can be the use of off-grade grain, the feeding of wet by-products, processing waste materials and any number of other conditions that allow the producer to reduce the cost of production. The "gimmick" em- ployed is generally site-specific allowing the plant to fill a local niche. Reeve Agri-Energy, in Garden City, Kansas, has been extremely successful at incorporating a 2. 2 million gallon per year ethanol plant with an 8, 000 head feedlot. He feeds the by-product wet and uses the liquid by-product as the source of 900201 RAPHAEL KA. .N ASSOCIATES INTERNATIONAL, INC. Mr. Charles Klarich -4- February 19, 1990 water for the cattle. His feeding costs have been reduced 5-10% . This scenario has the following advantages: 1. The capital and operating cost of the project is reduced by 40-50% since no drying or waste treatment equipment are required. 2. The waste exiting the ethanol plant is termed "indus- trial waste" with all the associated restrictions. Once consumed by livestock, the resulting manure is an "agricultural waste" that has less stringent disposal requirements and can be land applied with less "red tape" . 3 . If freight is minimized and full feed value is charged, the contribution of wet feed revenues to ethanol production is significantly greater than for dried feed sales. While the wet feeding scenario has merit in the Brighton area, one must keep in mind that approximately seven gallons of solids-containing liquid must be consumed by cattle for every gallon of ethanol produced. This water stream contains between 35-45% protein on a dry matter basis and has been demonstrated to have significant feed value, but contains 95% water and, there- fore, can not be transported far. With Coors and Anheuser-Busch in the area, a part of the education process on the value of wet feeds is complete. This is a significant advantage, since incorporation of wet feeds is a new concept in parts of the rural U.S. From our observations and conversations, an ethanol plant of approximately 5 million gallons per year capacity selling wet by-products is realistic. A larger plant purchasing grain and producing ethanol and distillers dried grains with solubles (DDGS) is unlikely to be profitable. A five million gallon per 900201 RAPHAEL KAT I ASSOCIATES INTERNATIONAL, INC. Mr. Charles Klarich -5- February 19, 1990 year plant will require two million bushels of corn annually, produce 33,000, 000 pounds per year of high protein wet feeds (on a dry matter basis) plus 33, 000, 000 pounds of carbon dioxide (which will be discarded) . Approximately 20 employees would be necessary for plant operation, 22 , 000 pounds per hour of steam would be required and the annual usage of electrical power would be (assuming $0. 04kwh) at least $400, 000. With an evaporator to concentrate the dilute water stream (thin stillage) the electrical requirements will be much higher. A estimated 125 gpm of water will minimally be required, but can be offset if a feedlot or dairy would use the thin stillage as the water source in lieu of their normal fresh water. This concept is not new and is the basis for the competitive advantage in cattle feeding demonstrated at Reeve Agri-Energy. A rough estimate of the capital cost of the project is at least $10, 000, 000, however a more detailed analysis is needed to determine any regional differences in anticipated expenses. The return on investment can not be determined without further study. However, this venture is no different than any other business - attention to detail and efficiency are essential for satisfactory cash flow. In summary, Federal policies on air quality, the demand for fuel additives to increase the oxygen content in gasoline, the diminishing supply of cheap methanol for use in MTBE and the developing ETBE technology make ethanol a logical alternative. However, the extension of current tax laws must be clarified before capital investment in an ethanol plant is justified. It is expected that these laws will be in place by the third quarter of 1990. Colorado has taken a leadership role in the improvement in air quality. Your Governor has demonstrated his support for 900201 RAPHAEL KA. .4 ASSOCIATES INTERNATIONAL, INC. Mr. Charles Klarich -6- February 19, 1990 agriculture, ethanol and clean air and may provide an even more attractive tax structure to develop an ethanol project. With careful planning and the cooperation of area feeders, a success- ful ethanol project appears feasible in the Brighton, Colorado area. MKK:mck 90020►1 EXHIBIT E CONTRIBUTIONS TO DATE BY UNITED POWER, INC. PERSONNELL $1,000.00 TRAVEL (ENGINEERS) 1,508.00 1ST PHASE - FEASIBILITY STUDY, RAPHAEL KATZEN ASSOCIATES 2,800.00 TOTAL: $5,308.00 90201 . EXHIBIT G 4A DAILY TIMES-CALL SATURDAY,FEBRUARY 24,1Ya0 - ' EDirofiIALS {..r AF-+•§-WW.i 1 rx crtl a-.. T 1 ... r ... ' -..,Ti ti Daily Times-Call editorial Alternative;tbiended fuels -;' ar :�-,r•,° s: :$war& `.}:Y,,3.P's 1;d5`}^e a= 41'14;�_,; _ . heipTclearfair pollution : t qM��.- �wy; `� �c. .F 'P« .,.* r .1. It must be remembered that ' .."ALTHOUGHi THE, Bushy •passing new clean air legislation is administration is backing away.; essential to the nation.The posture • i_ from mandating alternative fuel;'ing in the U S:'Senate must be 1 ' ' cars.in areas la ed`most b watched rl '" '-` a'- > = . iAT9 is "' 'a�" •t-: Pm Y pork-barrel exe that a `-'3;27::",'•' ; *F<�.w„-..rti; i �${* y,+1" rL V r;, smog,tAie"elo ent of such ve-, mmnlwr ofY .: hides should remain high on the'' are not included in clean airlegis list of possible solutions in quest of;` lation t n' eluduld render it mean �,` iiri t clean air,sible solutions Di n.,+.•rr .wr•- ess•r„.,...,„.:„.,..!:...4,, ,,,.. ri'i'a - ai r+:N', ,,,..€'a54r7 " -from _with strident opposition,D'; If the United States is to succeed from t e nation's'automakers and,:;in the national priority of cleaner, --:E.,:,-::' • - from senators who represent re-t air,the laws must be uniformly ap • gions where the automobile mduC plied and the costs shared by ev-3 try_ is strong;,the:Bush' eryone..y;:-'ydty,.,., .„-na administration. ism seeking-meni The`essence,of the le ' tion sores to gain support for a number4.-must be to encourage rtnaner burs `_ of alternative fuels that will cut the ".ing;fuels; to` encourage,Bevel ' emissions from vehicles-.'97-$41 opment of alternative fuels and to t The technology exists t6 power advance technology to help reduce vehicle engines with cleaner burn-4.._ from the traditional car ing fuels than gasoline.. Natural bon-based fuels that have always gas and liquifled petroleum cur ' been vital to providing the trans rently are used to power some ve-, portation and energy needs of the hides safely and'much more : United States efficiently than gasohne '"'"' -Air pollution is a`massive soda There are other alternatives that_"tal problem Clean air is a goal can:be useful` Colorado's Fr ont?Y worth applying all the nation's pro- Range is emerging asa leader in gresssive thinking and imagination = burning gasoline:.blended: with''; to acheive.'r.;� inrr ethanol or,MTBE The program'slit- Some sacnfces will be required having an effect on helping keep l.' but the results will • .be___ very much the air cleaner.; �44 � -x c et worthwhile:.-a'-'ii:sa ��E•laa CF Yk.� �.ijRK"ti,. R'. Sr S 7, 3 A •`Yi..-.F- i+ z 41 �. 5 4 — r--a r r t ' .". •' Y •' F T 4.:44:".- F{ -i K .�' l.- rt..-7-,-;.-..:•:•-•••.-.--, v.V.. iv . e. .- `'1E M yY' Y � HY� 9®0204 . V/1 y V?ok4ado 'thain &) 'f r IA + 'lam e • • °'rr, n A. to United Power February 23, 1990 P.O. Box 929 Brighton, Colorado 80601 Subject: Ethanol Plant Ladies & Gentleman; When George Bush was campaigning for the Presidency, he stated in a speech in Seattle: "we are all passengers together on a boat that has been damaged". He also stated: "let us seek once again a world where our air and water are metophors for a purity and not a threats to our lives" . We would trust that all of us-- regardless of our political affiliation--will hold the President to his promise to improve the environment in which we live. Clean air in the front range is not a virtue that is readily noticeable, therefore, Colorado Grain & Milling Co. of Dacono, Colorado has done research to the extent that they are excited about the construction of an ethanol plant in the Tri-Town area. This is enhanced because there are 1 . 4 million emission tested gasoline burning vehicles with another 25% or 350, 000 none emission tested vehicles operating in the front range. These 1 .75 million gasoline burning vehicles use 6 to 8 hundred million gallons of gasoline. Creating a great demand for oxygenated fuels . It is estimated that there is 7 million bushel of corn, 2 million bushel of wheat, 1 .2 million bushel of barley produced within the Tri-Town area. with the prospect of 2 . 5 million bushel of grain to supply the production of a 5 million gallon ethanol plant, it would enhance another market for grains grown in this area, which could increase profits for agriculture. The by-products of an ethanol plant would be marketed through livestock producers within the area. It is estimated that there iS 125, 800 head of cattle on feed, 9300 head of dairy cattle, 90 , 000 head of sheep and 15, 000 head of swine within this trade area. Data from livestock producers that have fed ethanol plant by products show a 10% efficiency in the production of meat and milk. Again, resulting in a better economical bottom line for agriculture. page 1 of 2 900201 Wo/An a do • 6 _AN,- --,4 1 Iiiel • • 1 t ,firI c Lei 0/,s"inn r The possibility of 25 to 30 employees operating a 5 million gallon ethanol plant in th Tri-Town area, would have an economical impact that this community has been deprived of in the pass. Colorado Grain & Milling CO. is committed to encourage and promote the construction of an ethanol plant because of their belief in the economical advantage to the area, for the improvement of air quality and the contribution it would have to improve the economics of agriculture. The best hope for positive action is that we curb the exploitation and abuse of our natural resources . We must work with, not against, mother nature. Sincerely #4(7.-ado Grai & Milling Co. 6005 HWY 52, P.O. Box 220 Dacono, Colorado 80514 page 2 of 2 • 900201 B10MASENERGY. PROGRA01 REPORT Ms.Sue Frcesehle Ft.79 18.47 Cole Boulevard Western Area Power Administration P.0., Box SWZ • Golden 90401 (903)CO 291.1616 EXHIBIT H put on a pound of gain on an animal,' en are used to produce the 2.2 million Reeve Agri Energy: Reeve said. gallons of ethanol. Reeve Cattle Coco- Ethanol and Cows Together, the two by-products fur- pany • the feedlot part of the family- nish about 20 percent of the feed the owned business•irrigates 4,500 acres of Do Mix cattle need. alfalfa,corn,and wheat to feed the cattle. Being able to feed the cattle next to Recently, Reeve Agri Energy began Mixing fresh water, grains, enzymes, the ethanol plant eliminates the neces- raising a North African fish, tilapia,in and yeast yields ethanol for vehicles, sity of drying the stillage for transport. the recycled water used in the ethanol- byproducts for cattle feed, and warm 'One big advantage for us from an en- making processes.The fish thrive in the water for raising fish. ergy standpoint is that we feed the aril- warm water and,like the cattle,eat the That's the recipe for the successful lage wet,which cuts energy costs in half. stillage from the ethanol plant operation of an ethanol plant on a farm It takes as much energy to dry the sill- The 500,000 to 1 million pounds of ti- and 10,000 head feedlot near the south- lage as it does to make the ethanol in the lapin raised at Reeve Agri Energy annu- western Kansas city of Garden City.As first place,'Reeve said. ally is helping meet the increasing far as owner Lee Reeve knows, Reeve The ethanol produced in Garden City American appetite for fish. • Agri Energy is the only business any- is marketed in Texas, Kansas and Ne- After feeding the cattle the by-prod- where that integrates an ethanol plant braska,where it is mixed with gasoline ucts and raising the fish in the warm with a feedlot by feeding the plant by to produce a cleaner-burning, higher- water, about the only waste from the products to cattle. octane fuel, ethanol plant is some exhaust from the Uncertainties caused by drought,the Reeve Agri Energy buys 800,000 boilers,Reeve said. oil business, and governmental policy bushels of grain per year. Damaged Operating the plant requires seven fluctuations on incentives for ethanol grain stored at governmental expense employees; one operator monitors the plants probably have kept other feedlot and good grains from surrounding farm- computers to make sure the biologic mix operators from making the commitment to get into the ethanol business, Reeve eno°counts'°r Men K"Let said. .r_..-. •. .. - _ 'Critics of ethanol plants used to say �1 r . 'tif .. s that they took more energy to make y s' S � ' r - - ethanol than was in it,' said Reeve. - it"c �, `But, the way we do it, the energy re- • ifs.. - - / •n-y “"'-Y quirement is very low....no one creates -'-',--??...7,. y,=�• energy;all you do is move it around.' r ' II ti - The integration of the feedlot with the ethanol plant began in 1982,when .y >' �"' "kit the plant began operating with the help Irt?ec " of a 10 percent energy tax credit on the ('! _ r: Yv. + t ��'- ethanol plant,an investment tax credit "- _ ' and rapid depreciation of investment -i ' t♦�'4Mti t. - • available at the time. r,'. sow S ---"Ii r• :-sa.� -r- 'yy-- Feed for cattle was the main reason "y---:� --� •i`— e- r• for building the plant that produces 2.2 -' `C-ar--, -1 , �_. " - t -} t - it* million gallons of ethanol a year. Bra ,„, -f 3 cause ethanol is made from grain • ' t starches,one-third of the plant material " • �j� : �-f f _ `_ is left behind as stillage and stillage �"" __ I liquid,both excellent sources of protein for cattle, 'Because of the quality of protein[of - -:. • ethanol plant by-products], university t- `- , �} research as well as our own experience i shows that there is as much as a 10 ! percent higher efficiency with a stillage- Reeve Agri Energy's ethanol plant adjoins the feedlot. The plant produces based ration.Th at is,it takes less feed to 2.2 million gallons of ethanol a year. 9Q•t2®g APRIL/MAY 1989•110LOGUE 27 BIOMASS ENERGY PROGRAM REPORT • mutton w hew he ten Fourche's bentonite are major foundries �- - that use powdered bentonite for metal .F - casting and wastewater treatment plants �' i that use granular bentonite for sewage lagoons and wastewater treatment ponds. Smaller amounts of white ben- �, _ tonne are sold for making cosmetia, :;. t drugs and detergents. All the bentonte comes from Amen- 21 can Colloid's nearby open-pit bentonite �ti -. mine: Enough of a market exists for the r bentonite to require the burning of8,000 s ! tons of wood chips a year to keep the one +. rotary burner stocked.And,that fuel is >t �; a � 41.. f ;_ .e . , r - free except for the cost oftransporting it "' �- ..)-2,- ' .•? - r . -.f• ' from two lumber mills,one 17 miles and j •= .: • . P •• r' • •. one 8 miles from the plant. _ r •• • fir Ifthelumbermillsdidn'thavetaken • - S t. -: -' -. ,- _ ;r for the good-sized chips made from peel- . ; �-' R r], ' % -, - ‘ ✓„`- ing posts, they would have to obtain ' t , z .� ;� •sue .qv t'y permits to bury them. 41--' - ` _ � American Colloid's plant I mile out- - , side the town of 4,200 people is not the Tilapia, a Northern African fish, thrives on stillage from Reeve Agri only industry glad to haul away the Energy's ethanol plant. wood chips.A furniture maker in Rapid City 60 miles from Belle Fourche presses is correct and the others provide support percent saves the 55-employee plant the wood chips into boards. help.These people have to have training about$180,000 a year in costs ofheating Should the domestic oil-drilling in- in chemistry and computers,specialties the raw bentonite. That's about half dustry revive or should other markets they might otherwise have to move to what the plant had been paying for crude develop for the ben tonite,American Col. large cities to use. oil or natural gas, said Plant Manager loid might have to bring in wood chips Providing markets for America's vast Scott Honeyman,who came to the plant from mills farther away. Depending on grain surplus and technical jobs in rural in 1987. Heating the bentonite to get the wood-chip market, it might even areas and helping the overall society by less than 10 percent moisture destroys have to pay more than the cost of trans- reducing emissions from automobiles the desirable properties of the highly portation,Honeyman said. make the ethanol industry a perfect one impermeable clay. 'I don't know what would happen if for helping revitalize the economy of The plant converted three of its four we had all three wood-chip dryers work- rural areas,said Reeve,a member of the rotary dryers to wood chips in 1978 to ing.But right now,we're doing fine;the Board of Directors of the Garden City save money.The fourth dryer uses natu- manager said. Chamber of Commerce. ral gas to bring up its temperature,then The Belle Fourche plant is one of two switches to ground coal. ofAmerican Colloid's 17 plants that burn For more information,call Reeve at 3161 Converting the fourth rotary dryer to wood chips for drying bentonite. The 275-7541. For more information about handle the area's wood chips from nearby others - in Wyoming, Mississippi, Ala- the Western Regional Biomass Energy lumber mills is probably a moot issue at bama,Illinois,Iowa,Missouri,and Ohio Program, call Sue C. Froeschle, 303/ this point,however. -are not located where wood is plentiful. 231.1582. As Honeyman said, "We're at less And, the one other plant that can burn than 25 percent capacity now and are wood chips uses coal instead due to only using one of the wood-chip rotary limited availability. Wood Energy Used to Dry dryers due to the decline in the oil- Twelve of the 17 plants the 63-year- Bentonite drilling industry.' old firm owns process raw bentonite;the Bentonite was in great demand when other five mix bentonite with other the oil-drilling industry was booming in materials for foundries. Located at the edge of the Black Hills of the 1970's and early 1980's. The mate. South Dakota,American Colloid's ben- rial was used to line the drill holes to For more information, call Honey. Conte processing plant in Belle Fourche keep water out. Many bentonite plants man at 605/892.2591. For more infor- is taking advantage of one of the area's overbuilt during that period in hopes of motion about the Western Regional Bio- natural resources•wood. taking full advantage of the boom. mass Energy Program,call Sue C.Froes- Burning wood chips to get the moil. Now, with the oil boom turned to chic,303/231.1582. 9GG2(l ture content of the bentonite down to 10 bust, the major customers for Belle • EXHIBIT Y FACES ABOUT ETHANOL AND THE ETHANOL INDUSTRY: ■ Ethanol,also known es ethyl alcohol,comes from renewable energy resources.It is an alcohol product of fermented corn or other agricultural products Virtually all U.S.fuel ethanol is produced from corn. ■ The new regulation by the Environmental Protection Agency(EPA)to lower the lead content in reg- ular gasoline to.10 gram per gallon effective Jan. 1.1986,will mean a demand for alternative octane enhancers to replace the role of lead as an octane booster.Ethanol is an economical and superior alternative. ■ When added to gasoline at a 10 percent quantity,ethanol can raise the fuel's octane level by an average of 3 points.The octane rating is a measure of a fuel's ability to resist knock and ping in gasoline engines.A typical regular grade of gasoline has an octane rating of 89;unleaded gasoline a rating of 87;and premium unleaded a rating of 91 to 93. Because of its octane-boosting capability,for each barrel of ethanol used at•the refinery,up to two barrels of crude oil axe saved. • The new EPA rule directly affects those motorists who drive can and trucks powered by regular leaded gasoline Although there are fewer cars today that run on regular gasoline,the sale of regular gasoline still accounts for a significant 35 percent of gasoline sales — N The EPA rule also will act to stop illegal fuel switching by motorists who use regular gasoline in their vehicles designed for unleaded gasoline.A 1983 survey by the EPA indicated that about 16 percent of the vehicles that should use unleaded gasoline were being misfueled with regular gasoline Misfueling dam- ages emission control devices,thus increasing air pollution emissions. N. Ethanol is not a new fuel additive for regular gasoline.Regular gasoline blended with ethanol has been sold in some states for several years.However,the majority of ethanol-enhanced fuel today is sold as super unleaded or premium unleaded gasoline. • . • The use of ethanol-blended gasoline requires no engine modification.And all domestic automobile manufacturers,and all foreign automobile manufacturers except Peugeot,approve the use of ethanol- blended gasoline under their warranties ■ Engines fueled by ethanol-blended gasoline should run cleaner and smoother,which could lead to better gas mileage. • Ethanol will continue to play an important role in the future as an octane enhancer in gasoline because highcompression engines being manufactured by the automobile industry require higher octane motor fuels • In 1984,the sales of ethanol-blended gasoline represented 5.6 percent of the national gasoline sales. ■ Ethanol-blended gasoline has a proven performance record In 1984,motorists using fuel blended with ethanol drove more than 80 billion miles with satisfactory performance. ■ Among the companies selling ethanol-blended gasoline are:Mobil Oil,Amoco Oil.Texaco.Ashland. Chevron, Union Oil,Citga Southland,and many independents and major convenience store chains. (Over) • 9.0201 • • • • ■ Ethanol is not a new fuel source.Both pure ethanol gasolines and ethanol-blended gasolines were used on a limited basis for automobiles in the United States from the early 1900a to the 1930s,according to the Renewable Fuels Association in Washington,D.C. ■ The use of ethanol faced a resurgence in the late 1970s as a result of the Arab oil embargoes of 1973 and 1979. It was promoted as a means of extending the nation's gasoline supply by mixing 10 percent ethanol and 90 percent gasoline. ■ Ethanol technology is available and operational without the need for pilot programs unproven, of bee ail able use of synthetic fuels on a commercial-scale basis still is largely and they in sufficient quantities for some time ■ There currently are about 60 operating fuel ethanol plants across the country. ■ In a period of six years.ethanol production has grown from about 10 million gallons in 1978(which pro- duced 100 million gallons of ethanol-blended gasoline),to more than 430 million gallons in 1984(which produced 4.3 billion gallons of ethanol-blended gasoline),according to the Renewable Fuels Association. ■ Because it is both an octane enhancer and a gasoline extender,ethanol plays an important role in reducing the amount of oil imported to the United States Based on the industry's estimate that one barrel of ethanol used at the refinery saves up to two barrels of crude oil,the 430 million gallons of fuel ethanol produced last year reduced U.S.oil imports by about 20 million barrels That represents a savings of more than$560 million in imported oil costs based on a price of$28 for a barrel of oil,according to the Renewable Fuels Association. If 2 billion gallons of ethanol are produced in 1990,U.S oil imports would be reduced by 95.2 million barrels per year,and the United States could save$2.6 billion in its annual oil import bill. ■ Unlike some petroleum derivatives,ethanol is an environmentally benign material,and the tailpipe emissions of ethanol-blended gasoline are lower than either leaded or unleaded gasoline.Also,ethanol is not corrosive ■ In 1980,about 16 million bushels of corn were used in ethanol production.By contrast,about 175 million bushels of corn were used in 1984. ■ Ethanol production also has an impact on corn prices Generally,there is a 3-cent to 7-cent increase in the value of a bushel of corn per year that is attributable to the present amount of corn used by the ethanol industry,the Renewable Fuels Association cites.And if the target of a 1 billion bushel corn market for ethanol production is reached,it could increase the value of corn by as much as 30 cents a bushel,the association reports.The target is about equal to the amount of surplus corn that has been produced annually in recent years. f The production of ethanol also has helped reduce the federal farm support programs.According to a study completed in 1984 by the General Accounting Office(GAO),the ethanol indt.atry's demand for corn - in 1982 reduced the federal agricultural support program outlays by$129 million. • ■ A thriving ethanol industry also means jobs.In 1982 alone,the industry was responsible for creating about 19,600 new jobs. • ■ Fuel ethanol also can contribute to national energy security.According to the study by the GAO,fuel ethanol could be stockpiled similar to the Strategic Petroleum Reserve to reduce the country's vulnerability to oil supply disruptions. • The ethanol industry currently receives a 6-cent-a-gallon exemption on the federal excise tax for gaso- line which is effective until 1992.Also,about 30 states offer exemptions that range from 1 cent a gallon to 16 cents a gallon,with most states offering an exemption of 2 cents to 5 cents a gallon. ■ The National Corn Growers Association consists of 14,000 members in 16 affiliated state associations and it is dedicated to the expansion of existing markets and the development of new markets for this vital American industry. Ire # • • 900201 • • { WHAT INCREASED ETHANOL PRODUCTION MEANS FOR THE AGRICULTURAL ECONOMY: ■ The increased demand for corn will help deplete some of the grain surpluses and,consequently,improve the value of the nation's corn sop The improved value,however,would not have a significant impact on consumer food prices ■ A stronger,more stable market for corn will bring more money to the hands of many financially- strapped farmers ■ The rural economy surrounding the farmer will be strengthened by the increased purchasing power of the fanner.Every$1 a fanner spends generates an additional$7 in the economy.Also,new jobs will be created,and the tax bases of rural communities will improve as a result • The improved corn market will help to better balance agricultural supply and demand.Consequently, the federal government—and the taxpayers—could save millions of dollars in deficiency payments to farmers as well as storage fees and loan expenses• QUESTIONS AND ANSWERS: THE IMPACT OF INCREASED ETHANOL PRODUCTION ON THE . AGRICULTURAL ECONOMY. IN How many bushels of corn are needed to make a gallon of ethanol? Each 56-pound bushel of corn yields about 2.5 gallons of ethanol plus a variety of usable co-products • What are some of the co-products? • The co-products include an excellent high-protein livestock feed material,with the original vitamins, minerals and protein intact,and carbon dioxide,which is used by the food processing industry to freeze food and by the soft drink industry for carbonation. ■ How much corn was used last year in ethanol production,and how does that compare to past years? In 1984,about 175 million bushels of corn were used in the production of more than 430 million gallons of ethanol. In 1980, about 16 million bushels of corn were used in ethanol production. The National Corn Growers Association is calling for the use of 1 billion bushels of corn by 1990.That target is about equal to the amount of surplus corn that has been produced annually in recent years. • What impact will increased ethanol production have on the value of the corn crop? Generally,ethanol production increases the value of a bushel of corn from 3 cents to 7 cents per year, according to the Renewable Fuels Association.If the target of a 1 billion bushel corn market for ethanol production is reached,it could increase the value of corn by as much as 30 cents a bushel,the association reports ■ How much would increased ethanol production bolster the farm economy? A study completed in 1994 by the General Accounting Office(GAO)found that a projected production level of 1 billion gallons of ethanol annually by 1990 would generate a net farm income of$3.59 billion. ■ What would be the impact on food prices? The GAO study cited above projected that consumer food prices would only be minimally affected until ethanol production reached about 2 billion gallons annually. If the target of 1 billion bushels of corn for ethanol production is reached,that will produce 2.5 billion gallons of ethanol.However,that production level should not have an appreciable effect on food prices,the Renewable Fuels Association says. 900201 (eve:) • ■ How much would the federal government and the taxpayers save in terms of government farm support programs with increased ethanol production? The demand for corn for ethanol will help reduce the need for programs like the Payment-In-Kind program or the land diversion programa The GAO study cited earlier also found that in 1982,the ethanol industry's demand for corn reduced the federal agricultural support program outlays by$129.2 million. It should be noted that even though tax incentives for the ethanol industry cost the federal government about$114 million in lost tax revenue,the difference between these two figures represents a net gain of $15 million in the government coffers. • What impact does ethanol production have on agricultural exports? While ethanol can be used in the United States,its co-products can be exported.For example,exports of ethanol's co-products in 1982 reached$269 million,according to the GAO study. # # • • 9002061 � . •.. 4. .. a r . - ;Lir- WHAT INCREASED ETHANOL PRODUCTION MEANS FOR THE CONSUMER: ■ Corn ethanol is a proven,high quality octane enhancer that is readily available today. • Ethanol in gasoline poses significantly fewer health and environmental problems than lead. ■ The use of ethanol-enhanced gasoline requires no engine modifications,and engines should run cleaner and smoother. • Motorists who had used leaded gasoline should notice reduced maintenance costs using ethanol• blended gasoline. • All domestic automobile manufacturers,and all foreign automobile manufactures except Peugeot, approve the use of ethanol-blended gasoline under their warranties. ■ Only a minimal impact on food prices is expected if more corn is used for ethanol production. QUESTIONS AND ANSWERS: THE IMPACT OF INCREASED ETHANOL PRODUCTION ON THE CONSUMER. • • • How will a person see reduced maintenance costs? Lead and its scavengers,which includes EDB,form corrosive salts that foul spark plugs,corrode exhaust systems and create the need for more frequent oil changes.Reducing the lead content in gasoline reduces these maintenance costs.The Environmental Protection Agency.(EPA)estimates that the new rule will produce savings of about$900 million a year. One area of maintenance savings will be in the replacement of damaged catalytic converters installed on automobiles designed for unleaded fuel.Some motorists with cars designed for unleaded gasoline use leaded gasoline instead because it's cheaper.But the use of leaded fuel damages the catalytic converter. • How many people switch fuels and use leaded rather than unleaded gasoline in their automobiles? • A 1983 survey by the EPA indicated that about 16 percent of the vehicles that should use unleaded gas- oline were being misfueled with leaded gasoline,and some major emission control mechanism had been altered on 28 percent of the vehicles. ■ Wont the reduction of lead in gasoline cause greater engine wear? No.The approved lead limit of.10 gram per gallon will provide the lubrication necessary for valve protection,according to studies used by the EPA. ■ How will ethanol play an important role as an octane enhancer? When added to gasoline at a 10 percent quantity,ethanol can raise the fuel's octane level by an average of 3 points.The octane rating is a measure of a fuel's ability to resist knock and ping in gasoline engines.A typical regular grade of gasoline has an octane rating of 89;unleaded gasoline a rating of 87;and premium unleaded a rating of 91 to 93. • What other octane boosting alternatives are there to lead? Among the fucls and gasoline additives that act as octane enhancers are:methanol,Oxinol(TM), butane pentane,toluene,benzine and methyl tertiary butyl ether(MTBE). However,comparing such factors as the cost of the final product,engine performance,and health and environment benefits,ethanol is superior to these alternatives.• • (over) 900201 L 1 V WHAT INCREASED ETHANOL PRODUCTION MEANS FOR THE NATIONAL ECONOMY • Increased ethanol production will necessitate more production plants and,consequently,more jobs. That will help boost local economies and tax bases. • A larger domestic market for corn will help increase the value of corn and decrease surpluses That in turn could help reduce the budget outlays for farm programs • • Increased ethanol production will reduce U.S oil imports and help increase the value of agricultural exports The reduction of oil imports will help keep more U.S trade dollars at home where they can be used for business investments and to create jobs. ■ The switch from lead to ethanol in gasoline will reduce health costs as a result of fewer health and environmental problems QUESTIONS AND ANSWERS: THE IMPACT OF INCREASED ETHANOL PRODUCTION ON THE NATIONAL ECONOMY. ■ How has ethanol production helped the national economy? A study by the General Accounting Office(GAO)completed in 1984 showed that ethanol production had resulted in a total output and investment of about$1.6 billion in 1982.It also found that the ethanol industry was responsible for the creation of about 19,600 new jobs in that same year.Those jobs,in turn, created expanded tax bases for local,state and federal governments. IN What is the economic ripple effect of ethanol production? For every gallon of fuel ethanol produced,an estimated$4 in new economic activity is created,the Renewable Fuels Association cites ■ How has ethanol production helped reduce oil imports? ' The 430 million gallons of fuel ethanol produced last year reduced U.S oil imports by about 20 million barrels.That represents a savings of more than$560 million in imported oil costs based on a price of$28 for a barrel of oil,according to the Renewable Fuels Association. If 2 billion gallons of ethanol are produced in 1990,U.S oil imports would be reduced by 95.2 million barrels per year,and the United States could save$2.6 billion in its annual oil import bill. f How does ethanol production help the U.S.trade deficit? Besides reducing the amount of oil imported,ethanol production strengthens the value of agricultural exports by raising their prices.The ethanol industry is credited with improving the nation's merchandise trade deficit by about$210 million in 1982,according to the General Accounting Office study. ■ How has the ethanol industry helped reduce the federal farm support programs? According to the GAO study cited above,the ethanol industry's demand for corn in 1982 reduced the federal agricultural support program outlays by$129 million. ■ What other savings are there with ethanol? According to an Environmental Protection Agency report,ethanol benefit estimates exceed the costs by about a three-to-one ratio.The net benefits of the lead limit of.10 gram per gallon is predicted to be more than$1 billion per year for the period from 1986 to 1992.And the limit of.50 gram for the second half of this year alone should result in net benefits totaling more than$250 million.These benefits include re- duced health problems from lead as well as reduced vehicle maintenance and better fuel economy. $ # 900201 • ESL I�� WHAT INCREASED ETHANOL PRODUCTION MEANS FOR PUBLIC HEALTH AND THE ENVIRONMENT: • ■ Lead in the environment poses a national health problem,and regular gasoline is a major contributor to lead exposure ■ Studies have shown that high levels of lead in blood will affect the physical and mental well-being of children. ■ Research also has established a possible link between lead and high blood pressure • Automobiles that run on ethanol-blended gasoline emit less air pollutants,such as hydrocarbons and carbon monoxide There also are no emissions of the cancer-causing ethylene dibromide(EDE),which is found in leaded gasoline.And there is a reduction in lead emissions,which can affect the physical and mental health of children and adults QUESTIONS AND ANSWERS: THE IMPACT OF INCREASED ETHANOL PRODUCTION ON PUBLIC HEALTH AND THE ENVIRONMENT. • • How much does leaded gasoline contribute to lead exposure?And how is lead exposure linked to health problems? Leaded gasoline is responsible for about 80 percent of all lead emissions into the air,according to the Environmental Protection Agency(EPA).And studies have shown that lead in gasoline is a major source of lead in blood. Also,airborne concentrations of lead in urban areas exceed natural concentrations by as much as 5,000 times • Who is affected most by lead exposure? Children 6 years old and younger are most vulnerable to lead,especially those who live in large cities and near areas of heavy traffic. Airborne lead is the single most serious source of lead exposure for children,responsible for an esti- mated 35 percent to 40 percent of the blood lead found in children.Lead is absorbed into the body through the lungs and/or intestinal tract Concerned about lead exposure and children's health,the Chicago City Council has approved a ban on the sale of leaded gasoline in that city. ■ How does lead exposure affect children? High blood lead levels in children will affect their mental and physical health.High concentrations of blood lead can cause brain damage,anemia,kidney disorders,loss of appetite,abdominal pains,vomiting, impaired learning ability and altered behavior. Concerned about the adverse effects of lead on children,the Centers for Disease Control(CDC)recently lowered its definition of lead toxicity. Lead in the blood is measured in micrograms per deciliter(ug/dl).The CDC lowered its lead toxicity level from 30 ug/dl to 25 ug/dl. 7 How will the reduction in lead in gasoline affect children's health? The Environmental Protection Agency estimates that in the absence of its new regulation,more than 300,000 children would suffer blood lead levels of above 25 ug/dl in 1986.However,the EPA predicts that the new regulation will reduce that number by more than 170,000. (ever) 900201 • . • ■ Isn't methanol the same as ethanol? Na While ethanol is derived from renewable sources,such as corn or other agricultural products, methanol is produced from non-renewable:oal and natural gas. All domestic automobile manufacturers,and all foreign automobile manufacturers except Peugeot, approve the use of ethanol-blended gasoline under their warranties However,many manufacturers pro- hibit.or limit,the use of methanol-blended gasoline under their warranties,warning that the use may void the warranty. ■ What's the difference between gasohol and ethanol-blended gasoline? • There is no difference.The name"gasohol"was given to ethanol-blended gasoline in the 1970s,and is now referred to as super unleaded or premium unleaded.The use of ethanol-blended gasoline increased in the late 1970s as a result of the Arab oil embargoes of 1973 and 1979. IN Has ethanol-enhanced regular gasoline been sold before? Yes Regular gasoline blended with ethanol has now been sold in some states for several years.However, the majority of ethanol-enhanced fuel today is sold as super unleaded or premium unleaded. • What petroleum companies are selling ethanol-blended gasoline? The companies include:Mobil Oil,Amoco Oil,'Ibxaco,Ashland,Chevron,Union Oil,Citgo,Southland, and many independents and major convenience store chains. ■ What impact will the use of ethanol-blended gasoline have on fuel economy? After several fill-ups with ethanol-blended gasoline,the engine should run cleaner and smoother,which could lead to better gas mileage,according to the Renewable Fuels Association. ■ Will a vehicle that runs on regular leaded gasoline require any engine modifications to use ethanol-blended gasoline? Na Ethanol-blended gasoline will actually clean the fuel system,loosening dirt and grime.In some cases, motorists with older cars with rusty and dirty fuel systems may have to have engine filters checked more frequently when first switching to ethanol-blended gasoline. • What impact will the new EPA regulation have on the price of regular gasoline? Because no alternative octane enhancing additives are as inexpensive as lead,motorists can expect to see some increase in the pump price for regular gasoline - ■ What is the performance record of automobiles using gasoline with 10 percent ethanol? In 1984,motorists using fuel blended with ethanol drove more than 80 billion miles with satisfactory performance.And in that same year,the sales of ethanol-blended gasoline represented 5.6 percent of the national gasoline sales ' • What impact will increased ethanol production have on food prices? A study completed in 1984 by the General Accounting Office found that consumer food prices would be only minimally affected until ethanol production reached about 2 billion gallons annually. If the target of 1 billion bushels of corn for ethanol production is reached,that will produce 2.5 billion gallons of ethanol.However,the production level should not have an appreciable effect on food prices,the Renewable Fuels Association reports. # # 900201 e i F - . ♦ - '7 6 WHAT INCREASED ETHANOL PRODUCTION MEANS TO THE AUTOMOTIVE INDUSTRY: ■ All U.S automobile manufacturers,and all foreign manufacturers except Peugeot,approve the use of ethanol-blended gasoline under their warranties. ■ Engines that were designed to use leaded gasoline should not be affected by ethanol-blended gasoline, and no engine modifications are necessary. ■ Ethanol has a proven performance record.Automobiles have been using ethanol-blended gasoline since the late 1970s,and it has been mad-tested for billions of miles with satisfactory performance. ■ The new regulation by the Environmental Protection Agency will curb the illegal use of leaded gasoline in automobiles designed to use unleaded gasoline. ■ Although automobiles in the United States have been designed to use unleaded fuel since 1975,leaded gasoline still accounts for more than one-third of the U.S gasoline market. ■ Ethanol,which is an octane enhancer,will continue to play an important role in the future because new high-compression engines being manufactured by the automobile industry require gasoline with high octane levels • QUESTIONS AND ANSWERS: THE IMPACT OF INCREASED ETHANOL PRODUCTION ON THE • AUTOMOTIVE INDUSTRY. ■ Will the use of ethanol-blended gasoline cause engine damage or problems for those vehicles • that previously had run on leaded gasoline? No.not under normal driving conditions.In some engines,lead creates a protective coating that reduces valve wear.However,the lead limit of 10 gram per gallon will provide the necessary lubrication for valve protection,according to studies used by the Environmental Protection Agency(EPA).Consequently, • ethanol-blended fuel should not cause excessive engine wear. ■ Has ethanol-enhanced regular gasoline been sold before? Yes. Regular gasoline blended with ethanol has now been sold in some states for several years. However, the majority of ethanol-blended fuel today is sold as super unleaded or premium unleaded. ■ What is the performance record of automobiles using gasoline with 10 percent ethanol? Ethanol-blended gasoline has been on the market since the late 1970s.In 1984 alone,motorists using fuel blended with ethanol drove more than 80 billion miles with satisfactory performance. ■ Since the introduction of vehicles designed to run on unleaded gasoline,how much is leaded gasoline used today? Today, leaded gasoline still accounts for about 35 percent of the gasoline market. ■ What happens if leaded gasoline is used in a vehicle designed for unleaded fuel,and how prevalent is the problem? If leaded fuel is used, it will damage the vehicle's catalytic converter,the EPA reports This will cause increased emissions of pollutants,and it can be costly to the owner in terms of lost fuel efficiency and replacine the catalytic converter. A 1983 survey by the EPA found that about 16 percent of the vehicles that should use unleaded gasoline were being fueled by leaded gasoline ■ What impact will the use of ethanol-blended gasoline have on fuel economy? After several fill-ups with ethanol-blended gasoline,the engine should run cleaner and smoother,which could lead to better gas mileage,according to the Renewable Fuels Association. • • (aver) 300201 • • ■ What ldnd of health problems can adults suffer if they have high blood lead levels? Adults with high blood lead levels can suffer headaches,anemia,abdominal pain,coma and brain damage.Also,pregnant women face more of a risk from lead exposure because the developing fetus is exposed to the same amount of lead in the blood. Lead also has been linked to blood pressure If this relationship is verified,it will have important implications for the public health benefits of the new EPA regulation because high blood pressure has been acsnriated with various cardiovascular diseases,including stroke and heart attacks. • How much will the new EPA gasoline lead limits save in terms of health costa? According to estimates in an EPA report released in March 1984,the health benefits of banning leaded gasoline,in monetary terms,could reach$236 million per year. • Besides the lead emissions,how else does leaded gasoline pollute the environment? Motor vehicles are the major source of emissions of three air pollutants:carbon monoxide,hydrocarbons and oxides of nitrogen.Hydrocarbons and oxides of nitrogen both contribute to the formation of ozone More than 500 geographic areas in the country continue to have problems with ozone and carbon monox- ide,which is a deadly poison. Ethanol is an environmentally benign material.Automobiles that run on ethanol-blended gasoline show significantly reduced hydrocarbon and carbon monoxide tailpipe emissions compared to leaded gasoline bon emissions Also,one study by the EPA reported that in most cases,carbon monoxide and hydrocar were lower with ethanol-blended gasoline than even unleaded gasoline.The study found that in most cases,carbon monoxide emissions were reduced 25 percent or more with ethanol-blended gasoline corn- pared to unleaded gasoline. ■ How does the use of leaded gasoline in-vehicles designed for unleaded fuel affect auto emissions? The use of leaded fuel will damage the vehicle's catalytic convert*the EPA reports.This will cause increased emissions of pollutants. ■ But is there that much leaded gasoline sold today to make much difference since most cars manufactured in recent years use unleaded gasoline? Yes.Leaded gasoline still accounts for about 35 percent of today's gasoline market. I How will the use of ethanol-blended gasoline reduce the amount of the cancer-causing EDB in the environment? EDB,or ethylene dibromide,is added to leaded gasoline to prevent excessive lead deposits in engines, but it is not added to ethanol-blended or unleaded gasoline.One study reports that about 300,000 pounds of EDE are emitted annually from engine tailpipes.The use of ethanol-blended gasoline and other alter- natives to leaded fuel will reduce the greatest exposure risk to EDB that exists in the environment. # # # • • 900201 a va WHAT INCREASED ETHANOL PRODUCTION MEANS TO THE PETROLEUM INDUSTRY: ■ While lead has been the most inexpensive means of raising the octane level in regular gasoline,ethanol is a cost-effective,environmentally-acceptable alternative.Its use is expected to minimize additional and costly refinery investments by the petroleum industry. ■ The petroleum industry should be able to meet the demand for regular gasoline with the help of ethanol. • Ethanol.blended fuels are not new.They have been on the market since the late 1970a. ■ Several large petroleum companies have already expanded the sale of ethanol-blended gasoline'at pumps across the nation. QUESTIONS AND ANSWERS: THE IMPACT.OF INCREASED ETHANOL PRODUCTION ON THE PETROLEUM INDUSTRY. • S What is ethanol-blended gasoline? Ethanol•blended gasoline is a mixture of 10 percent ethanol and 90 percent gasoline . ■ Has ethanol-enhanced regular gasoline been sold before? • Yes.Regular gasoline blended with ethanol has now been sold in some states for several years.However, the majority of ethanol-blended fuel today is sold as super unleaded or premium unleaded. ■ Since automobiles manufactured today use unleaded gasoline,how much is leaded gasoline used today? Tbday,leaded gasoline still accounts for about 35 percent of the gasoline market. ■ What financial impact will the restrictions on the use of lead have on the manufacturing of gasoline? Because no alternative octane enhancing additives are as inexpensive as lead,it is expected that there will be some increase in the cost of manufacturing gasoline. ■ What's the difference between gasohol and ethanol-blended gasoline? There is no difference.The name-"gasohol"was given to ethanol-blended gasoline in the 1970s,and is now referred to as super unleaded or premium unleaded.The use of ethanol-blended gasoline increased in the late 1970s as a result of the Arab oil embargoes of 1973 and 1979. ■ Will the petroleum industry be able to manufacture enough regular gasoline with the lower lead requirements to meet demand? The Environmental Protection Agency(EPA)believes that the new regulation will not cause disrup- tions in supply.The agency also is convinced refiners can meet the new limits with existing equipment. With ethanol,refiners can retrofit existing production equipment rather than buy new equipment. ■ How does ethanol boost octane levels in gasoline? When ethanol is added to gasoline at a 10 percent ratio,it can raise the fuel's octane level by an average of 3 points.The octane rating is a measure of a fuel's ability to resist knock and ping in gasoline engines.A typical regular grade of gasoline has an octane rating of 89;unleaded gasoline a rating of 87;and premium unleaded a rating of 91 to 93. ■ What other octane boosting alternatives are there to lead? Among the fuels and gasoline additives that act as octane enhancers are: methanol,Oxinol(TM), butane,pentane, toluene,benzine and methyl tertiary butyl ether(MTBE). However,comparing such factors as the cost of the final product,engine performance,and health and environment benefits,ethanol is superior to these alternatives. (over) 900201 ■ Will a motorist using regular gasoline notice any changes in automobile maintenance costa with the lead phasedown? - Lead and its scavengers form corrosive salts that foul spark plugs,corrode exhaust systems end create the need for more frequent oil changes.Reducing the lead content in gasoline reduces these maintenance costs The EPA estimates that the new rule should produce savings of about$900 million a year. ■ Will a vehicle that runs on regular leaded gasoline require any engine modifications to use ethanol-blended gasoline? No. Ethanol-blended gasoline will actually clean the fuel system,loosening dirt and grime In some cases,motorists with older can with rusty and dirty fuel systems may have to have engine filters checked more frequently when first switching to ethanol-blended gasoline • Will automobiles in the future need ethanol-blended fuels? Yes.The role of ethanol as an octane enhancer for gasoline will continue to be important because high- compression engines being manufactured by the automobile industry require higher octane motor fuels.In the absence of lead,the petroleum industry will still need an octane enhancer,such as ethanol,to boost the octane in gasoline to the level required by these engines. # # • 900201 • ■ Isn't methanol the same as ethanol? No. While ethanol is derived from renewable sources,such as corn or other agricultural products, methanol is produced from non-renewable coal and natural gas All domestic automobile manufacturers,and all foreign automobile manufacturers except Peugeot, approve the use of ethanol-blended gasoline under their warranties.However,many manufacturers pro- hibit,or limit,the use of methanol-blended gasoline under their warranties,warning that the use may void the warranty. ■ How many gallons of gasoline do U.S.motorists use in a year? U.S motor vehicle gasoline consumption was about 100 billion gallons in 1984. • How much of that was ethanol-blended gasoline? In 1984,about 5.6 billion gallons of ethanol-blended gasoline were sold,which composed 5.6 percent of the market,according to the Renewable Fuels Association. • In how many states was ethanol-blended gasoline sold last year? All but seven states:Rhode Island,New Jersey,New York,Alaska,Delaware,West Virginia and Mississippi. ■ How is ethanol perceived by refiners and manufacturers? Ethanol is viewed as being readily acceptable and considered technically suitable • What companies are involved in ethanol-blended gasoline sales? The companies include:Mobil Oil.Amoco Oil,Texaco.Ashland,Chevron,Union Oil,Citgo,Southland, and many independents and major convenience store chains. ■ Who are some of the larger fuel ethanol producers? Among the top fuel ethanol producers usirig corn are:Archer Daniels Midland Ca;South Point Ethanol;Pekin Energy Ca;New Energy Inc;A.E.Staley Ca;and Kentucky Agricultural Energy Corp. • # # # • 900201 No. COUNTY OF WELD, STATE OF COLORADO SIANDAUH AI;RLIillui THIS AGREEMENT, made and entered into this day of , 19 , by and between the COUNTY OF WILD, State of Colorado, hereinafter -called the County, and United Power hereinafter celled the Contractor. - - " - WITNESSETH: That the Contractor for and in consideration of the covenants , -conditions, agreements , and stipulations of the County hereinafter expressed, does' hereby agree to furnish to the County services and materials , as follows , and/or as described on exhibits attached to and incorporated herein. (Set forth service to be rendered by Contractor, County Department receiving service, Contractor's qualifications, and additional provisions incorporated. ) United Power shall direct the project grant attached hereto and incorporated herein by reference as Exhibit A. United Power shall direct all parties providing in-kind services as part of this grant. United Power shall be responsible for filing all necessary reporting requirements for state compliance and reimbursement per the grant documents (Exhibit A) . CONTRACT PERIOD will be from - _ - - - - through COMPENSATION: County agrees to pay Contractor for services performed hereunder at a rate of $ XXX per XXX and/or $15,000.00 as reimbursed per state contract attached hereto as Exhibit A. The total amount paid by County to Contractor under this agreement shall not exceed the sum of $ 15,000.00 ADDITIONAL PROVISIONS set forth on the reverse side hereof constitute a part of this agreement. IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the day and year first above written. • COUNTY OF WELD CONTRACTOR By United Power Chairman , Board of County - Conmi ss i oners Title Approved As To forme —— -— Address Purchasing — -'-- -" - • Director of Finance & 900201 Administration • • SS; or E. I .N. ADDITIONAL PROVISIONS 1 . Contractor agrees that it is an independent Contractor and that its officers and employees do not become employees of County nor are the entitled to any employees benefits as County employees as a result of the execution of this agreement. 2. Contractor shall indemnify County, its officers and employees against liability for injury or damage caused by any negligent act or omission of any of its employees or volunteers or agents in the performance of this agreement and shall hold County harmless from any lous occasioned us a result of the performance of this contract by Contractor. The Contractor shall provide necessary workman's compensation insurance at Contractor's own cost and expense. 3. No officer, member or employee of County and no member of their governing bodies shall have any pecuniary interest, direct or indirect, iu this agreement or the proceeds thereof. No employe of Contractor nor any member of as employee 's family shall nerve on a County ' boaril , committee or hold any ouch position which either by rule, practice or action nominates, recommends, aupervises Contractor's operations, or authorizes funding to Contractor. 4. Contractor may not assign or transfer this agreement, any interest therein or claim thereunder without the prior written approval of County. 5. Payment to Contractor will be made only upon presentation of n proper claim by Contractor subject to the approval of the County Department or Agency for which the services have been performed. 6. County shall have access to Contractor's financial re•cordn tot purposes of audit. Such records shall he complete cud available for audit 90 days after final payment hereunder and shall be retained and available for audit purposes for five years after final po}ment hereunder. 7 . County may terminate this agreement at ray time by giving Contractor a Len day written notice of such sooner termination and may be terminated at any time without notice upon a material breach of the terms of this agreement by Contractor. 8. Time is of the essence in each and all the provisions cf this agreement. 9. No alteration or variation of the terns of this agttemeut shall be valid unless made in writing amid signed by the parties hereto. 10. Contractor assures that it will comply with Title VI of the Civil Rights Act of 1964 and that no person shall, on the groundn of race, creed, color, sex or national origin be excluded from participrtion in, be denied the benefits of , or be otherwise subjected to discrimination under this agreement. • 9002A.. Hello