Statewide Clean Cities Conference A Perspective of 2006

Statewide Clean Cities Conference A Perspective of 2006 and 2007 Astor Crowne Plaza Hotel January 25, 2007 New Orleans, LA

David Shiflett VP of Business Development, SE Region • • • With World Energy since May 2006 Area covers 11 states in SE 15 years experience in the oil and petroleum industry with large regional retailer and wholesaler

World Energy: A Global Leader • • Recognized and Respected brand Diversified BQ-9000 production Exporter • Premier source of quality fuel to petroleum companies worldwide “AGGREGATOR” • Largest supply infrastructure in the industry

Biodiesel Has Arrived!

And It's Here To Stay

The Biodiesel Curve

Distribution Locations Type of Seller Both Retail & Bulk Distribution(182) Bulk Distribution (1306) Retail Outlets (289)

What happened in 2006? • • Major focus on plant construction Intense interest from capital markets State Incentives remain important Petroleum prices were the main driver

2006 Encouraged Plant Construction • • High petroleum + Low Ag Fats/Oils = Be close to Production (Production Margin) Low petroleum + High Ag Fats/Oils = Be close to Customer (Opportunity to Buy with right infrastructure) Both markets are highly volatile “Disconnect” between Biodiesel and Diesel

International Markets • European market is largest; significant feedstock constraints (EU Directive) • Asian market is growing; significant source of palm oil • South America is growing; significant source of soybean oil

Is Europe a glimpse of our future?

Looking Ahead to 2007 • • • Too many plant deals Capital markets will cool Scale does matter Quality, quality, ASTM D 6751 Logistics will be the key Crude Oil? ?

Plant Logistics

Example A 50 mm gal/yr plant with rail service will have …. --2500 Rail car movements annually With 12 turns/year, the plant will need 200 RC’s How Available Are Rail Car’s: Delivery in 2008 (Maybe)? ? $800/month lease 10 year Lease?

Other Considerations • • How often do you get rail service? ? How fast can you load trucks? ? Glycerin disposal? Waste water disposal Nothing will shut a big Biodiesel plant down faster than not having big logistics!!!!!

The Nimble Player • Feedstock Sourcing • Robust Logistics Capability • Market & Risk Diversification • Reliable Supply to Customers? ?

Independent Model: Go it Alone! • Mandates / Incentives Trigger Motivation • Production delays • Quality Problems • Marketing Setbacks • Distribution Bottlenecks / Can’t get to Market • Discount Price reduce returns • Risks Improperly Managed • Projects falter

2007 Regulatory Issues? • RFS from 7. 5 b by 2012 • New Farm Bill • Tax Credit Extensions to 2015? ? • CCC Producer’s Credit

Cold Flow Properties • Biodiesel realizes cold temperature issues faster than most petroleum diesel • Untreated B 20 freezes 6 -10°F faster than #2 petroleum diesel, depending on: • • the cold flow properties of the biodiesel the cold flow properties of the petroleum diesel B 2 to B 5 nearly identical to Petroleum Diesel Utilize the same precautions! • • Utilization of an additive that enhances cold flow properties Storage of the vehicles in or near a building when not in use

Feedstock Differences • • Soy • • • Most common in US Largest availability Best Cold Temp Ops 35 Poultry / Tallow • • Lower feedstock cost Full Tax Benefit Limited Supply Poorer Cold Temp Ops 38 / 50 Recycled oils / fats • • • Lower cost / ½ tax benefit Limited supply Mid Cold Temp Ops 40 / 45 Imports: Palm • • • Very Large Supply Palm Has Full Tax Benefit Worst Cold Temp Ops 60

Enhanced Lubricity v B 2 has approx. 60% more lubricity than #2 Diesel

Emerging Markets for Growth • • • Federal and State Incentives Fuel Regulations – RFS ULSD markets High Crude Prices Bio. Heat

Checklist to Implementation ü ü ü ü ü Specify D 6751 Specify cloudpoint Use 20% blend or BXX Does not Void Warranty Pay more per gallon? * Clean tank Pour into tank Schedule early filter change Resume business as usual * pre-incentive?

World Energy Corporate Headquarters 90 Everett Avenue Chelsea, MA 02150 617 -889 -7300 www. worldenergy. net David Shiflett 10 West 8 th Ave Rome, GA 30161 706 -234 -7646 davids@worldenergy. net