Biodiesel Plant

Conroe, Texas

Assets Available for Acquisition

from

Aequitas Capital Management

Table of Contents

Opportunity Highlights Summary Plant Description Acquisition Status Competitive Advantages Summary Unit Operations Process Description Lines #1, #2 Selected Plant Pictures Contact Information

Opportunity Highlights
Potential 38 MMgy capacity Three years of production experience (18 MMgy) mid 2004 thru mid 2008 Multi-feedstock capability Close proximity to major feedstock markets and fuel markets Multiple transportation options:
Located adjacent to UP main line with spur available HWY I-45 is approximately two miles from site

Re-start in approximately eight weeks offering quick access to market US and Texas biofuels tax credits available Opportune time to invest:
Attractive asset valuations, US energy policies encouraging bio-diesel production

Plant is of modular design and could be re-located.

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Summary Plant Description

The plant, located Conroe, Texas was initially constructed in 2003 to manufacture fuel produced by a biodiesel process that converts plant oil or animal fats into methyl esters or biodiesel. Biodiesel is the main product. The quality of the Plants biodiesel was in accordance with the ASTM 6751-7b standard. The plant process was developed around a plugged flow reactor of in-house design. The plant was designed with two production lines, one for virgin, degummed oils and one for recycled oils and animal fats. Line 1 Feedstock: Virgin, Degummed Oils Production Capacity: 24.2 million gallons per year Maximum FFA: <1% Line 2 Feedstock: Recycled Oils/Animal Fats Production Capacity: 16.2 million gallons per year Maximum FFA: 4%
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Acquisition Status
The Plant began commercial operations in 2004, expanded its operating capacity in 2006 and 2007 and then in mid-2008 was shut-down because of high feedstock prices. The Plant assets were acquired by its Senior Lender, Aequitas Commercial Finance, through a negotiated settlement in March, 2009 Aequitas is offering the plant assets for sale. Aequitas will consider terms including financing, merger or joint venture. Long term lease of buildings and land available at attractive terms. The plant is of a modular design and could be re-located. Aequitas commissioned E3, an engineering firm that is experienced in designing and constructing biodiesel refineries to perform a preliminary feasibility study of the Plant including operating in place or re-location Interested acquirers may obtain a copy of this study. Aequitas will arrange to make E3 available for diligence calls. Aequitas can also assist in securing operations staff and management.

Competitive Advantages Feedstock

Flexible feedstock sourcing strategy
Cottonseed, canola, soy and other plant-based oils Animal fats including tallow, poultry and pork Texas is the worlds largest producer of cotton on a per acre basis and in the U.S. produces more than any other state Texas is the nations largest producer of beef tallow. Texas is a leader in poultry production.

Feedstock Availability

Competitive Advantages - Transportation

Located Adjacent to Union Pacific Main Line
Access to spur available with 45 car capacity 40 miles from Houston Ship Channel Approximately 2 miles away with direct access to all potential customers and feedstock producers

Port of Houston HWY I-45

Summary Unit Operations

Unit operations for process line 1:
1. Methanol/KOH Make-down 2. Tube Reactor 3. Decanter 4. Water Wash 5. Acid Wash 6. Coalescer 7. Drying

Common utility systems within the plant include:

Compressed Air Steam Boiler Well Water System CO2 Fire Extinguishing System (over reactor area)

Unit operations for process line 2:

1. Methanol/KOH Make-down 2. Tube Reactor 3. Decanter Stage 1 4. Decanter Stage 2 5. Water Wash 6. Acid Wash Stage 1 7. Acid Wash Stage 2 8. Coalescer 9. Drying

Summary Unit Operations

Tank Storage Tank Contents Line 1 Feedstock (Virgin Oils) Line 2 Feedstock (Oils/Fats) Methanol Glycerin Wash Water Waste Water FFA Biodiesel Product Storage Capacity Gallons 189,000 72,000 18,5000 72,000 158,100 10,000 55,000 49,000 Number of Tanks 10 4 1 4 19 2 6 4

Unallocated Storage

46,800

Process Description Line #1

Line 1 has a stated capacity of 24.2 million gallons per year using a virgin degummed oil feedstock. Methanol/KOH Make-down Area In this area the potassium hydroxide (KOH) catalyst is dissolved in methanol prior to being pumped to the Reactor area. This is done as a batch operation, with the KOH dumped from 50 lb bags into 330 gallon stainless steel totes filled with methanol. The methanol is recirculated through the totes until the KOH has dissolved and then transferred to storage tanks. The methanol/KOH solution is then pumped through a circulation loop to the Reactor area, through a fine filter to remove any undissolved particles. Unused methanol/catalyst circulates back to the storage tank. Including the dissolving tank volume, the line 1 makedown area has a capacity of 1,520 gallons Reactor Area The reactor area uses an in-house design plugged flow reactor to react the oil with the methanol/KOH solution to form biodiesel. The oil is supplied to the reactor area from a circulating loop from the oil storage tanks. A high pressure vane pump pulls from the oil line and pumps to the reactor inlet at approximately 3,000 psig. A high pressure triplex piston pump pulls methanol/KOH solution from the circulating line and also supplies it to the reactor inlet at 3,000 psig. The flow of methanol/KOH is regulated by a variable speed drive on the pump motor. The oil and methanol mix at the reactor inlet and pass through the reactor tubes. The reactor is composed of 25 coils of 22 foot long inch tubing filled with 1/8 inch steel beads. This provides high shear mixing in a plugged flow environment, which provides for a more rapid transesterification reaction. From the reactor the reacted crude biodiesel flows to the decanter.

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Process Description Line #1

Decanter The decanter is a 10,000 gallon tank (TP-1) that separates the glycerol phase from the biodiesel. The separated biodiesel is pumped by a stinger going into the top of the tank, to the Water Wash Tank. The separated glycerol at the bottom of the tank is pumped to the tank farm storage. Water Wash The biodiesel from the decanter is mixed with wash water in the transfer pump discharge line. The water/biodiesel mixture is pumped into a 10,000 gallon tank (TP-2) where the water separates from the biodiesel. The separated biodiesel is pumped by a stinger going into the top of the tank, to the Acid Wash Tank. The separated wash water at the bottom of the tank is combined with the water from the Acid Wash and pumped to the tank farm for treatment. The wash water is stored in a 1,550 gallon day tank, which is manually filled as needed from the clarified wash water tanks in the tank farm. Acid Wash The biodiesel from the water wash stage is mixed with acidified wash water in the transfer pump discharge line. The water/biodiesel mixture is pumped into a 10,000 gallon tank (TP-3) where the water separates from the biodiesel. The separated biodiesel is pumped by a stinger going into the top of the tank, to a Coalescer. The separated wash water at the bottom of the tank is combined with the water from the Water Wash stage and pumped to the tank farm for treatment. The acid wash water is stored in a 1,550 gallon day tank, which is manually filled as needed from the acid wash tanks in the tank farm.

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Process Description Line #1

Coalescer The coalescer separates any biodiesel-water emulsions, and returns the water to the Acid Wash Tank. The biodiesel flows to the drying area. Drying Biodiesel drying is accomplished through a falling film evaporator system that was originally designed to concentrate milk sugars. The biodiesel is dried under vacuum in the evaporator and then pumped to the tank farm for storage.

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Process Description Line #2

Line 2 has a stated capacity of 16.2 million gallons per year using a waste oil or animal fat feedstock. Methanol/KOH Make-down Area The line 2 area operates the same as the Line 1 Methanol/KOH Make-down Area. Including the dissolving tank volume, the line 2 makedown area has a capacity of 990 gallons. Reactor Area The line 2 reactor is identical to the line 1 reactor. Decanter The line 2 decanter is a two-stage system. The first stage is a 6,000 gallon tank (PFP-1) that separates the glycerol phase from the biodiesel. The separated biodiesel overflows by gravity from a nozzle near the top of the tank into the 3,000 gallon Second Stage Decanter Tank (PFP-2). The second stage decanter provides additional separation for glycerol and soaps. The separated biodiesel is pumped by a stinger in the top of the tank to the Water Wash systems. The separated glycerol at the bottom of both stages is pumped to the tank farm storage. Water Wash The biodiesel from the decanter second stage is mixed with wash water in the transfer pump discharge line. The water/biodiesel mixture is pumped into a 6,000 gallon tank (PFP-3) where the water separates from the biodiesel. The separated biodiesel is pumped by a stinger going into the top of the tank, to the Acid Wash Tank (PFP-4). The separated wash water at the bottom of the tank is combined with the water from the two Acid Wash stages and pumped to the tank farm for treatment. The wash water comes directly from the clarified wash water tanks in the tank farm area.

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Process Description Line #2

Acid Wash The biodiesel from the water wash stage is mixed with acidified wash water in the transfer pump discharge line. The water/biodiesel mixture is pumped into a two-stage wash system consisting of two 6,000 gallon tanks (PFP-4 & 5). The first stage separates the majority of the water from the biodiesel, and the second stage allows any remaining water to settle out. The separated biodiesel is pumped by a stinger going into the top of the tank, to a Coalescer. The separated wash water at the bottom of the two tanks is combined with the water from the Water Wash stage and pumped to the tank farm for treatment. The acid wash water is stored in a 1,550 gallon day tank, which is manually filled as needed from the acid wash tanks in the tank farm. Coalescer The coalescer separates any biodiesel-water emulsions, and returns the water to the Acid Wash Tank. The biodiesel flows to the drying area. Drying Biodiesel drying is accomplished through a falling film evaporator system that was originally designed to concentrate milk sugars. The biodiesel is dried under vacuum in the evaporator and then pumped to the tank farm for storage.

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Common Systems
Compressed Air Compressed air for plant cleaning and control use is supplied by a small air compressor mounted on a 50 gallon receiver. Fresh Water Fresh water is supplied by a well pump and filter system on the south end of the tank farm area. Wash Water Clarification Wash water is 100% recycled within the plant. This is done by acidifying the wash water to convert soaps back into fatty acids. The fatty acids then float to the surface of the water and are decanted into storage tanks. The clarified wash water is then recycled back into the wash lines. CO2 Fire Extinguishing System A CO2 gas fire smothering system has been installed over the reactor area. In the event of a fire this system will be manually activated, flooding the area with CO2 gas and smothering the fire. Boilers The plant has two boilers, one an 86.2 HP, 15 psig gas fired boiler, and the other a 150 HP, 150 psig oil fired boiler. The gas fired boiler is no longer in service. The oil fired boiler is fueled by biodiesel with propane for the pilot. This boiler supplies steam to the plant processes.

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Select Plant Pictures

Tankage and Rolling Stock Biodiesel Drying Columns

Boiler

Catalyst-Methanol Preparation

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Select Plant Pictures

Laboratory Line 1-2 Reactor

Line 1 Decanter-Wash

Line 2 Decanter-Wash

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Contacts for Further Information

Andy MacRitchie 503-419-3549 e-mail: amacritchie@aequitascapital.com

Thomas Sidley 503-419-3514 e-mail: tsidley@aequitascapital.com

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