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PRELIMINARY OFFICIAL STATEMENT DATED JULY 31, 2007
NEW ISSUE
BOOK-ENTRY-ONLY
BANK QUALIFIED
In the opinion of Gilmore & Bell, P.C., Lincoln, Nebraska, Bond Counsel, under existing law and assuming continued
compliance with certain requirements of the Internal Revenue Code of 1986, as amended, the interest on the Series 2007A
Bonds (including any original issue discount properly allocable to an owner thereof) is excluded from gross income for
federal and Nebraska income tax purposes and is not an item of tax preference for purposes of the federal alternative
minimum tax imposed on individuals and corporations. The Series 2007A Bonds are “qualified tax–exempt obligations”
within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See “TAX MATTERS” herein.
$2,315,000*
COMMUNITY REDEVELOPMENT AUTHORITY
OF THE CITY OF BEATRICE, NEBRASKA
TAX INCREMENT REVENUE BONDS
(BEATRICE BIODIESEL, LLC PROJECT)
SERIES 2007A
Dated: August 1, 2007
Due: As shown on the inside cover
The Series 2007 Bonds are issuable only as fully registered bonds, without coupons, in the denomination of $5,000 or
any integral multiple thereof. Principal of the Series 2007A Bonds will be payable on each June 1 and December 1 as shown
on the inside cover page beginning on December 1, 2009. Interest will be payable on each June 1 and December 1 beginning
on December 1, 2007.
The Series 2007A Bonds are subject to optional and mandatory redemption prior to maturity under certain
circumstances as described herein.
The Series 2007A Bonds are special, limited tax obligations of the Community Redevelopment Authority of the City of
Beatrice, Nebraska (the “Authority”) issued pursuant to the Constitution and laws of the State of Nebraska and a resolution
adopted by the Authority’s members (the “Resolution”). Wells Fargo Bank, N.A. will serve as trustee, paying agent and
registrar for the Series 2007A Bonds (the “Trustee”). The Series 2007A Bonds are payable solely from certain tax increment
revenues resulting from increases in taxable valuation of the property included in a redevelopment area located in the City of
Beatrice, Nebraska (the “City”), which are pledged to the payments of the Series 2007A Bonds pursuant to the Resolution.
Proceeds of the Series 2007A Bonds will be used to finance certain public redevelopment costs incurred in connection
with the construction of a biodiesel facility located in the City.
THE SERIES 2007A BONDS SHALL NOT BE A DEBT OF THE AUTHORITY OR THE CITY, AND
NEITHER THE AUTHORITY NOR THE CITY SHALL BE LIABLE ON SUCH SERIES 2007A BONDS, EXCEPT
TO THE EXTENT OF CERTAIN PLEDGED TAX INCREMENT REVENUES AUTHORIZED BY LAW, NOR IN
ANY EVENT SHALL THE SERIES 2007A BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES
OTHER THAN THOSE OF THE AUTHORITY PLEDGED TO THE PAYMENT OF THE SERIES 2007A BONDS.
THE SERIES 2007A BONDS AND THE INTEREST THEREON DO NOT NOW AND SHALL NEVER
CONSTITUTE AN INDEBTEDNESS OF THE AUTHORITY OR THE CITY WITHIN THE MEANING OF ANY
STATE CONSTITUTIONAL PROVISION OR STATUTORY DEBT LIMITATION OR RESTRICTION, NOR
SHALL THE SERIES 2007A BONDS AND THE INTEREST THEREON EVER GIVE RISE TO ANY
PECUNIARY LIABILITY OF THE AUTHORITY OR THE CITY (EXCEPT WITH RESPECT TO THE TAX
INCREMENT REVENUES PLEDGED TO THE PAYMENT OF THE SERIES 2007A BONDS), OR A CHARGE
AGAINST ITS GENERAL CREDIT OR TAXING POWERS. SEE “SECURITY AND SOURCES OF PAYMENT”
AND “THE TAX INCREMENT REVENUES” HEREIN.
An investment in the Series 2007A Bonds involves a high degree of risk, and prospective purchasers should read
the section herein captioned “BONDOWNERS’ RISKS.” The Series 2007A Bonds may not be suitable investments
for all persons, and prospective purchasers should carefully evaluate the risks and merits of an investment in the
Series 2007A Bonds, should confer with their own legal and financial advisors and should be able to bear the risk of
loss of their investment in the Series 2007A Bonds before considering a purchase of the Series 2007A Bonds.
_____________________________________________
MATURITY SCHEDULE – SEE INSIDE COVER
_____________________________________________
The Series 2007A Bonds are offered only in book-entry form, when, as and if issued, subject to the approval of legality
by Gilmore & Bell, P.C., Lincoln, Nebraska, Bond Counsel. Certain legal matters will be passed upon for the Authority and
the City by John W. Carlson P.C., Beatrice, Nebraska, for the Company by its counsel, Dalke Smith & Reis, Beatrice,
Nebraska, and for the Underwriter by Gilmore & Bell, P.C., Kansas City, Missouri. It is expected that the Series 2007A
Bonds will be available for delivery through The Depository Trust Company, New York, New York, on or about August ___,
2007.
The Date of this Official Statement is August ___, 2007.
_________________________________
* Preliminary, subject to change.
$2,315,000*
SERIES 2007A
MATURITY SCHEDULE*
Serial Bonds
Maturity
Date
6/1/2009
12/1/2009
6/1/2010
12/1/2010
6/1/2011
12/1/2011
6/1/2012
12/1/2012
6/1/2013
12/1/2013
6/1/2014
12/1/2014
6/1/2015
12/1/2015
6/1/2016
12/1/2016
6/1/2017
12/1/2017
6/1/2018
12/1/2018
6/1/2019
12/1/2019
6/1/2020
12/1/2020
6/1/2021
12/1/2021
Principal
Amount
$ 55,000
60,000
60,000
60,000
65,000
65,000
65,000
70,000
70,000
70,000
75,000
75,000
80,000
80,000
85,000
85,000
90,000
90,000
95,000
95,000
100,000
100,000
105,000
110,000
110,000
300,000
Interest
Rate
Price or
Yield
_________________________________
*
Preliminary, subject to change; serial maturities may be aggregated into one or more term bonds with mandatory sinking fund
payments per the serial maturity schedule.
No dealer, broker, salesman or other person has been authorized by the Authority, the City or the
Company to give any information or to make any representations with respect to the Series 2007A Bonds
offered hereby other than those contained in this Official Statement, and, if given or made, such other
information or representations must not be relied upon as having been authorized by any of the foregoing.
This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there
be any sale of the Series 2007A Bonds offered hereby by any person in any jurisdiction in which it is unlawful
for such person to make such offer, solicitation or sale. Certain information set forth herein has been furnished
by the Authority, the City, the Company and other sources which are believed to be reliable, but such
information is not guaranteed as to accuracy or completeness and is not to be construed as a representation by
the Authority, the City or the Company. The information and expressions of opinion herein are subject to
change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall,
under any circumstances, create any implication that there has been no change in the matters described herein
since the date hereof.
The Series 2007A Bonds have not been registered with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, or under any state securities or “blue sky” laws. The
Series 2007A Bonds are offered pursuant to an exemption from registration with the Securities and
Exchange Commission. In making an investment decision, investors must rely on their own examination
of the terms of this offering, including the merits and risks involved. These securities have not been
recommended by any federal or state securities commission or regulatory authority. Furthermore, the
foregoing authorities have not confirmed the accuracy or determined the adequacy of this document.
Any representation to the contrary may be a criminal offense.
The Underwriter has reviewed the information in this Official Statement in accordance with,
and as part of, its responsibilities to investors under the federal securities laws as applied to the facts
and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or
completeness of that information.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOTT OR
EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SERIES 2007A BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
______________________________
CAUTIONARY STATEMENTS REGARDING FORWARDLOOKING STATEMENTS IN THIS OFFICIAL STATEMENT
______________________________
Certain statements included or incorporated by reference in this Official Statement constitute
“forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act
of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of
the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the
terminology used such as “plan,” “expect,” “estimate,” “anticipate,” “projected,” “budget” or other similar
words.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN
SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY
FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. NEITHER THE AUTHORITY, THE CITY NOR ANY OTHER
PARTY PLANS TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING
STATEMENTS IF OR WHEN THEIR EXPECTATIONS, OR EVENTS, CONDITIONS OR
CIRCUMSTANCES UPON WHICH SUCH STATEMENTS ARE BASED OCCUR.
(i)
TABLE OF CONTENTS
Page
Page
Risk of Patent Infringement ................................ 26
Risks Related to the Company’s Debt ................ 27
Risks Related to Marketability............................ 27
Risks Related to Tax Issues................................. 27
TAX MATTERS ................................................ 27
Opinion of Bond Counsel.................................... 27
Other Tax Consequences ..................................... 28
CONTINUING DISCLOSURE........................ 29
LITIGATION..................................................... 29
LEGAL MATTERS .......................................... 29
NO RATINGS .................................................... 30
UNDERWRITING ............................................ 30
MISCELLANEOUS .......................................... 30
INTRODUCTION................................................1
Purpose of the Official Statement ......................... 1
The Project............................................................. 2
The Authority......................................................... 2
The City ................................................................. 2
The Company......................................................... 2
The Series 2007A Bonds....................................... 2
Security for the Series 2007A Bonds .................... 3
Bondowners’ Risks................................................ 3
The Underwriter..................................................... 3
Continuing Disclosure ........................................... 4
Definitions, Summaries of Documents and
Additional Information...................................... 4
THE SERIES 2007A BONDS .............................4
General................................................................... 4
Redemption............................................................ 4
Book–Entry Only System...................................... 5
Registration, Transfer and Exchange .................... 7
SECURITY AND SOURCE OF PAYMENT
FOR THE SERIES 2007A BONDS ................8
THE TAX INCREMENT REVENUES .............9
Source of Tax Increment Revenues ...................... 9
Real Property Valuation and Tax Collection
Procedures ......................................................... 9
NEBRASKA DEVELOPMENTS RELATED
TO BUDGETS AND TAXATION..................9
PROJECTED TAX INCREMENT AND
DEBT SERVICE COVERAGE ....................10
THE PROJECT .................................................10
Description of Project.......................................... 10
Sources and Uses of Funds.................................. 11
THE REDEVELOPMENT PLAN AND
REDEVELOPMENT CONTRACT .............11
BONDOWNERS’ RISKS ..................................12
General................................................................. 12
Risks Associated with Collection of Tax
Increment Revenues ........................................ 12
Risk of Non-Payment of Taxes ........................... 14
Tax Lien Foreclosure........................................... 14
No Mortgage of the Project ................................. 14
Risks Related to Construction of the Biodiesel
Plant ................................................................. 15
Risks Related to Biodiesel Production................ 18
Risks Related to Beatrice Biodiesel as a
Development-Stage Company ........................ 22
Risks Related to Biodiesel Industry .................... 23
Risks Related to Regulation and Governmental
Action .............................................................. 25
Risk of Technological Advances ........................ 26
APPENDIX A:
THE PROJECT
APPENDIX B:
TECHNICAL
PROJECT
REPORT
ON
THE
APPENDIX C:
THE CITY OF BEATRICE, NEBRASKA
APPENDIX D:
SUMMARY OF RESOLUTION AND
CONTINUING DISCLOSURE AGREEMENTS
APPENDIX E:
THE REDEVELOPMENT CONTRACT
APPENDIX F:
FORM OF
COUNSEL
(ii)
OPINION
OF
BOND
OFFICIAL STATEMENT
$2,315,000*
SERIES 2007A
INTRODUCTION
This introduction is only a brief description and summary of certain information contained in this
Official Statement and is qualified in its entirety by reference to the more complete and detailed
information contained in the entire Official Statement, including the cover page and appendices hereto,
and the documents summarized or described herein. A full review should be made of the entire Official
Statement.
Purpose of the Official Statement
The purpose of this Official Statement is to furnish information relating to (1) the Community
Redevelopment Authority of the City of Beatrice, Nebraska (the “Authority”), (2) the Authority’s
Redevelopment Plan (the “Plan”), (3) the Authority’s $2,315,000* Tax Increment Revenue Bonds
(Beatrice Biodiesel, LLC Project), Series 2007A (the “Series 2007A Bonds”), (4) Beatrice Biodiesel,
LLC (the “Company”), and (4) a biodiesel production project undertaken by the Company as further
described herein (the “Project”).
THIS OFFICIAL STATEMENT IS FURNISHED SOLELY FOR THE PURPOSE OF
CONSIDERATION OF AN INVESTMENT IN THE SERIES 2007A BONDS BY INVESTORS
WITH THE EXPERIENCE AND FINANCIAL EXPERTISE TO UNDERSTAND AND
EVALUATE THE RISKS INHERENT IN THE INVESTMENT. THE SERIES 2007A BONDS
ARE UNRATED. PURCHASE OF THE SERIES 2007A BONDS WILL CONSTITUTE AN
INVESTMENT SUBJECT TO SIGNIFICANT RISKS, INCLUDING THE RISK OF
NONPAYMENT OF PRINCIPAL AND INTEREST AND THE LOSS OF ALL OR PART OF
THE INVESTMENT. THERE CAN BE NO ASSURANCE THAT THE PROJECT WILL BE
COMPLETED IN A TIMELY AND SUCCESSFUL MANNER NOR THAT THE TAX
INCREMENT
REVENUES
GENERATED
FROM
ACTIVITY
WITHIN
THE
REDEVELOPMENT AREA WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF,
PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2007A BONDS. SEE “SECURITY AND
SOURCE OF PAYMENT.”
PROSPECTIVE PURCHASERS SHOULD CAREFULLY
EVALUATE THE RISKS AND MERITS OF AN INVESTMENT IN THE SERIES 2007A BONDS,
CONFER WITH THEIR OWN LEGAL AND FINANCIAL ADVISORS AND BE ABLE TO
BEAR THE RISK OF LOSS OF THEIR INVESTMENT IN THE SERIES 2007A BONDS
BEFORE CONSIDERING A PURCHASE OF THE SERIES 2007A BONDS.
SEE
“BONDOWNERS’ RISKS.”
The Project
The Project is a nameplate 50 million gallon per year biodiesel facility located on a 19-acre site in
the northwestern portion of the City of Beatrice in Gage County, Nebraska. The biodiesel will be sold
primarily to the local and regional markets. The Plant will also produce approximately 50 million pounds
of glycerin per year, which will be sold to one or more of the following industries: animal food additive,
chemical, cosmetic, and pharmaceutical. See “THE PROJECT” and Appendix A.
The Authority
The Authority was created by the City as a separate public body corporate and politic, exercising
public and essential governmental functions and having all the powers necessary or convenient to carry
out and effectuate the purposes and provisions of the Nebraska Community Development Law, Sections
18-2101 through 18-2154, Reissue Revised Statutes of Nebraska, 1997, as amended (the “Act”). The
Authority has a five-member governing body appointed by the Mayor, with the approval of the City
Council, whose members serve for staggered terms of five years.
The City
The City is located in the southeastern corner of Nebraska and serves as the county seat of Gage
County. The City is 39 miles south of Lincoln, 99 miles southwest of Omaha, and 179 miles northwest of
Kansas City. The estimated population of the City is 12,496. See Appendix C for certain economic and
demographic information regarding the City.
The Company
The Company is a Nebraska limited liability company, was formed on January 9, 2006 for the
purpose of owning and operating a biodiesel facility. The Company is a wholly-owned subsidiary of U.S.
Canadian Biofuels, Inc (“USCB”). USCB is a Delaware corporation formed to develop renewable fuels
projects in the U.S., and is a wholly owned subsidiary of Agri Energy Limited (formerly Australian
Ethanol Limited). Agri Energy Limited is based in Melbourne, Australia, and is publicly traded on the
Australian Stock Exchange, under the symbol AAE. See “THE PROJECT – Project Participants” in
Appendix A.
The Series 2007A Bonds
The Series 2007A Bonds are being issued pursuant to a resolution of the members of the
Authority, as from time to time amended and supplemented (the “Resolution”). The Authority is issuing
the Series 2007A Bonds pursuant to its authority under the provisions of Section 12 of Article VIII of the
Nebraska Constitution and the Act (the “Redevelopment Law”), and the Resolution.
The net proceeds of the Series 2007A Bonds (after payment of costs of issuing such bonds, fully
funding a debt service reserve account, and providing for capitalized interest) will be used to finance or
reimburse the costs of acquiring, constructing, reconstructing, improving, extending, equipping or
furnishing certain public improvements incurred in connection with the construction of a biodiesel facility
within the Project area that comprise the Project, including, but not limited to (i) the acquisition of real
property, and (ii) to reimburse certain costs of construction of the Project as described under the caption
“THE PROJECT” and in Appendix A. The remaining costs of the public improvements within the
Project area will be paid from proceeds of $307,000 approximate principal amount of Tax Increment
Revenue Bonds (Beatrice Biodiesel Project), Taxable Series 2007B (the “Series 2007B Bonds”) issued
on a subordinate basis to the Series 2007 A Bonds under the Resolution. The Series 2007B Bonds will be
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purchased by the Company. Under the Resolution, principal of, premium, if any, and interest on all of the
Series 2007A Bonds must be paid before any payments on the Series 2007B Bonds may be made.
Security for the Series 2007A Bonds
The Series 2007A Bonds and the interest thereon are special, limited tax obligations of the
Authority, secured solely by a pledge of certain incremental tax revenues as described herein (the “Tax
Increment Revenues”), any moneys on deposit in a capitalized interest account funded concurrently with
the issuance of the Series 2007A Bonds in the amount of $259,401.44* (the “Capitalized Interest
Fund”), money on deposit in a reserve fund (the “Debt Service Reserve Fund”), consisting of a Bond
Proceeds Account funded upon issuance with proceeds of the Series 2007A Bonds in the amount of
$231,500*, and a Business Interruption Reserve Account which will be funded over time up to the
amount of $231,500* from excess Tax Increment Revenues, and any unexpended proceeds of the Series
2007A Bonds, as provided in the Resolution. The Series 2007A Bonds are not secured by a mortgage on
the Project. See the captions “SECURITY AND SOURCE OF PAYMENT,” “THE TAX
INCREMENT REVENUES” and “NEBRASKA DEVELOPMENTS RELATED TO BUDGETS
AND TAXATION” herein.
THE SERIES 2007A BONDS SHALL NOT BE A DEBT OF THE AUTHORITY OR THE
CITY, AND NEITHER THE AUTHORITY NOR THE CITY SHALL BE LIABLE ON SUCH
SERIES 2007A BONDS, EXCEPT TO THE EXTENT OF CERTAIN PLEDGED TAX
INCREMENT REVENUES AUTHORIZED BY LAW, NOR IN ANY EVENT SHALL THE
SERIES 2007A BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN
THOSE OF THE AUTHORITY PLEDGED TO THE PAYMENT OF THE SERIES 2007A
BONDS. THE SERIES 2007A BONDS AND THE INTEREST THEREON DO NOT NOW AND
SHALL NEVER CONSTITUTE AN INDEBTEDNESS OF THE AUTHORITY OR THE CITY
WITHIN THE MEANING OF ANY STATE CONSTITUTIONAL PROVISION OR
STATUTORY DEBT LIMITATION OR RESTRICTION, NOR SHALL THE SERIES 2007A
BONDS AND THE INTEREST THEREON EVER GIVE RISE TO ANY PECUNIARY
LIABILITY OF THE AUTHORITY OR THE CITY (EXCEPT WITH RESPECT TO THE TAX
INCREMENT REVENUES PLEDGED TO THE PAYMENT OF THE SERIES 2007A BONDS),
OR A CHARGE AGAINST ITS GENERAL CREDIT OR TAXING POWERS
Bondowners’ Risks
Purchase of the Series 2007A Bonds involves a certain degree of risk. See “BONDOWNERS’
RISKS” for certain factors that prospective purchasers should consider prior to purchasing any of the
Series 2007A Bonds.
The Underwriter
The Underwriter has reviewed the information in this Official Statement in accordance with, and
as part of, its responsibilities to investors under the federal securities laws as applied to the facts and
circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of
such information.
-3-
Continuing Disclosure
The Authority and the Company will covenant in separate continuing disclosure agreements (the
“Continuing Disclosure Agreements”) to provide certain financial information including information
relating to Tax Increment Revenues and to provide notices of the occurrence of certain enumerated
events, if deemed by the Authority and the Company to be material. See “Summary of the Continuing
Disclosure Agreements” in Appendix D.
Definitions, Summaries of Documents and Additional Information
Appendix A contains information about the Project, Appendix B contains a technical report
about the Project, Appendix C contains information regarding the City and Appendix D contains
definitions of certain words and terms used in this Official Statement and summaries of the Resolution
and the Continuing Disclosure Agreements. Such definitions and summaries do not purport to be
comprehensive or definitive. A copy of the First Amended and Restated Redevelopment Contract is
included in Appendix E hereto. All references herein to the specified documents are qualified in their
entirety by reference to the definitive forms of such documents. During the period of the offering of the
Series 2007A Bonds copies of such documents and the other documents described herein will be provided
by the Underwriter to any prospective purchaser requesting such documents by contacting Piper Jaffray &
Co., One Hallbrook Place, 11150 Overbrook Road, Suite 310, Leawood, KS 66211-2298. Following the
offering period such documents will be provided to any prospective purchaser requesting the same upon
payment of the cost of complying with such request by the Trustee provided such request is submitted in
writing to the Trustee at its principal corporate trust office at the following address: Wells Fargo Bank,
N.A., 1248 “O” Street, 4th Floor, Lincoln, NE 68508. Appendix F contains the proposed form of opinion
which is anticipated to be rendered by Bond Counsel at the time of delivery of the Series 2007A Bonds.
THE SERIES 2007A BONDS
General
The Series 2007A Bonds will be issued in fully registered, book-entry-only form. See “BookEntry-Only System” under this caption. The Series 2007A Bonds will be issued in the denominations of
$5,000 or any integral multiple thereof, not exceeding the amount maturing in any one year, and will
mature on the dates and in the amounts and bear interest at the rates, as set forth on the inside front cover
of this Official Statement.
Wells Fargo Bank, N.A., with a corporate trust office located in Lincoln, Nebraska, is trustee,
registrar and paying agent (the “Trustee”) for the Series 2007A Bonds. The principal and interest due at
maturity or upon prior redemption are payable upon presentation and surrender of the Series 2007A
Bonds at the office of the Trustee. Interest due prior to maturity or earlier redemption is payable on each
June 1 and December 1, beginning December 1, 2007, by check or draft of the Trustee mailed directly to
the persons who are the registered owners as of the close of business on the the 15th calendar day (whether
or not a business day) next preceding an interest payment date (the “Record Date”).
Redemption
Optional Redemption. The Series 2007A Bonds maturing on or after __________ 1, 20__ are
subject to redemption at the option of the Authority prior to their stated maturity at any time on or after
__________ 1, 20__, in whole or in part at any time, in such principal amounts and from such maturity or
maturities as shall be determined by the Authority in it sole and absolute discretion, and by lot in integral
-4-
multiples of $5,000 within a maturity, at a redemption price equal to the principal amount thereof,
together with the interest accrued thereon to the date of redemption thereof, but without redemption
premium.
Mandatory Sinking Fund Redemption. The Series 2007A Bonds maturing on ___________ 1,
20__ are subject to mandatory redemption and payment prior to maturity pursuant to the mandatory
redemption requirements of the Resolution on the dates and in the principal amounts set forth below, at a
redemption price equal to 100% of the principal amount thereof, plus accrued interest thereon to the
redemption date:
TERM BONDS MATURING _________ 1, 20__
Redemption
Date
Principal
Amount
Special Mandatory Redemption. The Series 2007A Bonds maturing on or after ___________ 1,
20__ are subject to special mandatory redemption by the Authority on each interest payment date
commencing ___________ 1, 20__, at the redemption price of 100% of the principal amount being
redeemed, together with accrued interest thereon to the date fixed for redemption, in an amount equal to
the amount which is on deposit in a Redemption Account in the Debt Service Fund to be funded from
excess Tax Increment Revenues after full funding of the Debt Service Reserve Fund.
Notice and Effect of Call for Redemption. A notice of redemption shall be mailed by first class
mail by the Trustee not less than thirty (30) days prior to the redemption date, to each owner whose Series
2007A Bonds are called for redemption. Each notice of redemption shall state the distinguishing
designation of the Series 2007A Bonds to which such notice relates, the date of issue of the Series 2007A
Bonds, the redemption date, the redemption price, the place or places of redemption (including the name
and appropriate address or addresses of the Trustee), the CUSIP number (if any) of the maturity, and, if
less than all of such maturity, the distinctive certificate numbers of the Series 2007A Bonds of such
maturity to be redeemed and, in the case of Series 2007A Bonds to be redeemed in part only, the
respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that
on said date there will become due and payable on each of said Series 2007A Bonds the redemption price
thereof or of said specified portion of the principal amount thereof in the case of a Series 2007A Bond to
be redeemed in part only, together with interest accrued thereon to the date fixed for redemption, and that
from and after such redemption date, interest thereon shall cease to accrue, and shall require that such
Series 2007A Bonds be then surrendered at the address or addresses of the Trustee specified in the
redemption notice. Any such redemption notice may contain a statement to the effect that CUSIP
numbers have been assigned by an independent service for convenience of reference and that neither the
Authority nor the Trustee shall be liable for any inaccuracy in such numbers. Failure of any owner to
receive notice or any defect in any such notice shall not affect the sufficiency of the proceedings for
redemption.
Book–Entry Only System
The Depository Trust Company (“DTC”), New York, New York, will act as securities depository
for the Series 2007A Bonds. The Series 2007A Bonds will be issued as fully–registered securities
registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be
-5-
requested by an authorized representative of DTC. One fully–registered bond certificate will be issued
for each maturity of the Series 2007A Bonds, each in the aggregate principal amount of such maturity,
and will be deposited with DTC or held by the Trustee as Fast Agent for DTC.
DTC is a limited–purpose trust company organized under the New York Banking Law, a
“banking organization” within the meaning of the New York Banking Law, as amended, a member of the
Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform
Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC holds securities that its participants (“Participants”)
deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions such
as transfers and pledges, in deposited securities through electronic computerized book–entry changes in
Participants’ accounts, thereby eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. DTC is owned by a number of its Direct Participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly (“Indirect Participants”). The Rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of the Series 2007A Bonds under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Series 2007A Bonds on DTC’s records. The ownership
interest of each actual purchaser of the Series 2007A Bonds (“Beneficial Owner”) is in turn to be
recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic statements of their holdings, from
the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Series 2007A Bonds are to be accomplished by entries made on
the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Series 2007A Bonds, except in the event that use
of the book–entry system for the Series 2007A Bonds is discontinued.
To facilitate subsequent transfers, all securities deposited by Participants with DTC are registered
in the name of DTC’s partnership nominee, Cede & Co. or such other name as requested by an authorized
representative of DTC. The deposit of the Series 2007A Bonds with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Series 2007A Bonds; DTC’s records reflect only the identity of the Direct
Participants to whose accounts the Series 2007A Bonds are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct
Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Redemption notices shall be sent to Cede & Co. If
less than all of the Series 2007A Bonds are being redeemed, DTC’s practice is to determine by lot the
amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to
the Series 2007A Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting
-6-
rights to those Direct Participants to whose accounts the Series 2007A Bonds are credited on the record
date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Series 2007A Bonds will be made to Cede & Co. or such
other name as requested by an authorized representative of DTC. DTC’s practice is to credit Direct
Participants’ accounts on each payable date in accordance with their respective holdings shown on DTC’s
records unless DTC has reason to believe that it will not receive payment on a payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or registered in “street name,”
and will be the responsibility of such Participant and not of DTC (nor its nominee), the Trustee or the
Authority, subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to Cede & Co., or such other name as requested by an authorized
representative of DTC, is the responsibility of the Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and the disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Series
2007A Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such
circumstances, in the event that a successor securities depository is not obtained, bond certificates are
required to be printed and delivered. The Authority may decide, in accordance with the operational
arrangements of the securities depository, to discontinue use of the system of book–entry transfers
through DTC (or a successor securities depository). In that event, Series 2007A Bond certificates will be
printed and delivered.
The information in this section concerning DTC and DTC’s book–entry system has been obtained
from sources that the Authority and the Trustee believe to be reliable, but the Authority and the Trustee
take no responsibility for the accuracy thereof, and neither the Participants nor the Beneficial Owners
should rely on the foregoing information with respect to such matters but should instead confirm the same
with DTC or the Participants, as the case may be.
Registration, Transfer and Exchange
Series 2007A Bonds are transferable only upon the books of the Authority which shall be kept for
such purpose at the principal office of the Trustee, upon surrender thereof, together with a written
instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly
authorized attorney, subject to the terms, conditions and limitations and upon payment of any charges of
the Trustee and the Authority to reimburse it for any tax, fee or other governmental charge required to be
paid with respect to such exchange or transfer. Upon such transfer, a new fully registered Series 2007A
Bond or Series 2007A Bonds of the same maturity and in any authorized denomination for the same
aggregate principal amount will be issued to the transferee or transferees in exchange for the Series
2007A Bond to be transferred, subject to the terms and conditions set forth in the Resolution. The
Trustee may deem and treat the person in whose name any Series 2007A Bond is registered as the
absolute owner thereof, whether or not the Series 2007A Bonds shall be overdue, for the purpose of
receiving payment and for all other purposes and neither the Authority nor the Trustee shall be affected
by any notice to the contrary.
For every such exchange or transfer of Series 2007A Bonds, the Trustee shall require the payment
by the registered owner requesting such transfer of any tax or other governmental charges payable with
respect thereto and may charge a sum not exceeding the actual cost for each new Series 2007A Bond.
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No exchange or transfer of any Series 2007A Bonds shall be required to be made during the 15
days next preceding an interest payment date for the Series 2007A Bonds.
SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2007A BONDS
The Series 2007A Bonds are limited tax obligations of the Authority, and the Authority is liable
on the Series 2007A Bonds to the extent of (i) proceeds of the Series 2007A Bonds deposited to the
Capitalized Interest Fund; (ii) Tax Increment Revenues deposited to the Debt Service Fund; and (iii)
moneys on deposit in the Debt Service Reserve Fund. Tax Increment Revenues generated from the
Project area are pledged solely to and are available only for debt service payments on the Series 2007A
Bonds and other bonds issued with respect to such Project under the terms of the Resolution. The full
faith and credit of the Authority is not pledged to payment of the Series 2007A Bonds. See “THE TAX
INCREMENT REVENUES” herein for further discussion.
The Series 2007A Bonds are being issued pursuant to the Resolution. The Series 2007A Bonds
are special, limited tax obligations of the Authority secured solely by a pledge of certain tax revenues
consisting of such part of the real estate taxes levied each year upon the real estate located within the
approximately 19-acre Project area during a 15-year period (the “Increment Period”) equal to the
difference between (1) the aggregate amount of real estate taxes produced by the annual levy at the rate
fixed each year on the then-current valuation of real estate located within the Project area and (2) the
aggregate amount of taxes which would have been produced by such annual levy on the valuation of the
real estate located within the Project area at the time the Authority approved the Project (the “Tax
Increment Revenues”). Tax Increment Revenues generated from the Project area are pledged solely to
and is available only for debt service payments on bonds issued with respect to the Project pursuant to the
terms of the Resolution. See “THE TAX INCREMENT REVENUES.”
The Resolution creates a Debt Service Reserve Fund for the Series 200&A Bonds, consisting of a
Bond Proceeds Account funded upon issuance with proceeds of the Series 2007A Bonds in the amount of
$231,500*, and a Business Interruption Reserve Account which will be funded over time up to the
amount of $231,500* from excess Tax Increment Revenues.
THE SERIES 2007A BONDS SHALL NOT BE A DEBT OF THE AUTHORITY OR THE
CITY, AND NEITHER THE AUTHORITY NOR THE CITY SHALL BE LIABLE ON SUCH
SERIES 2007A BONDS, EXCEPT TO THE EXTENT OF CERTAIN PLEDGED TAX
INCREMENT REVENUES AUTHORIZED BY LAW, NOR IN ANY EVENT SHALL THE
SERIES 2007A BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN
THOSE OF THE AUTHORITY PLEDGED TO THE PAYMENT OF THE SERIES 2007A
BONDS. THE SERIES 2007A BONDS AND THE INTEREST THEREON DO NOT NOW AND
SHALL NEVER CONSTITUTE AN INDEBTEDNESS OF THE AUTHORITY OR THE CITY
WITHIN THE MEANING OF ANY STATE CONSTITUTIONAL PROVISION OR
STATUTORY DEBT LIMITATION OR RESTRICTION, NOR SHALL THE SERIES 2007A
BONDS AND THE INTEREST THEREON EVER GIVE RISE TO ANY PECUNIARY
LIABILITY OF THE AUTHORITY OR THE CITY (EXCEPT WITH RESPECT TO THE TAX
INCREMENT REVENUES PLEDGED TO THE PAYMENT OF THE SERIES 2007A BONDS),
OR A CHARGE AGAINST ITS GENERAL CREDIT OR TAXING POWERS
-8-
THE TAX INCREMENT REVENUES
Source of Tax Increment Revenues
The Redevelopment Law provides that a portion of ad valorem taxes levied by public bodies
upon real property in a particular redevelopment project may be allocated for a 15-year period to payment
of debt service in respect of indebtedness incurred in the financing of such redevelopment project. The
portion of the ad valorem taxes to be so allocated is defined as that amount which is produced by the levy
at the rate fixed each year on the valuation in excess of the redevelopment project valuation at the time
the redevelopment plan is approved and is defined herein as the “Tax Increment Revenues” with respect
to the Project.
Real Property Valuation and Tax Collection Procedures
Ad valorem taxes on real property in the City and other political subdivisions within Gage
County, Nebraska (the “County”) are levied by the County Board of Commissioners and collected by the
County Treasurer on behalf of the City and all such other political subdivisions. Property valuations are
established by the County Assessor on all taxable real property within the County as of January 1 of each
year. Real property taxes are levied on September 15 of each year, become due on December 31 and
become delinquent on March 1 and September 1 of each year following the year in which the tax levy is
made.
Debt service payments on Series 2007A Bonds will be paid from the Tax Increment Revenues
received on March 1 and September 1 each year. All such money will be held in the Special Funds
created by the Resolution. See the caption “PROJECTED TAX INCREMENT AND DEBT
SERVICE COVERAGE” herein.
NEBRASKA DEVELOPMENTS RELATED TO BUDGETS AND TAXATION
The Nebraska Legislature has enacted legislation intended to reduce the level of property taxation
and political subdivision expenditures in the State. Such legislation imposes budget limitations and
requires reductions in the rate of taxation for general property taxes. Budget limitations relating to cities,
villages, counties and other political subdivisions (Sections 13-518 to 13-522, Reissue Revised Statutes of
Nebraska, as amended, and related sections, the “Budget Limitations”) limit the growth in amounts that
may be budgeted with respect to certain restricted funds. Restricted funds include property taxes, but do
not include amounts required to pay interest and principal on bonded indebtedness. The Budget
Limitations currently provide for a base limitation of 2.5% upon increases. Such base limitation is
subject to review by the Nebraska Legislature from year to year. The base limitation may be exceeded by
an additional 1% upon an affirmative vote of at least 75% of the governing body. These limitations are to
be enforced through the office of the Auditor of Public Accounts of the State of Nebraska and state aid
may be withheld from governmental units that fail to comply. The Budget Limitations do not apply to the
revenues of proprietary funds unless such revenues are devoted to general fund purposes.
Tax levy limitations (Section 77-3442, Reissue Revised Statutes, as amended, and related
sections, the “Levy Limitations”) provide for overall limitations on the tax levies of political
subdivisions, including counties. The Levy Limitations provide for an express exclusion from the
limitations for property tax levies for bonded indebtedness. Under the Levy Limitations the rates for
levying property taxes have been reduced for each type of governmental unit in the State of Nebraska.
The rate for cities and villages is set at 45¢ per $100 of taxable valuation with an additional 5¢ available
for payments under interlocal cooperation agreements.
-9-
The future methods for providing for financing cities, schools and other local units may be altered
depending upon future actions to be taken by the Nebraska Legislature, further decisions of the Nebraska
Supreme Court and federal courts and future initiative petitions proposed by voters.
PROJECTED TAX INCREMENT AND DEBT SERVICE COVERAGE
The following table shows estimated Tax Increment Revenues expected to be generated by the
Project, anticipated debt service on the Series 2007A Bonds at an estimated average annual interest rate of
5.99% and the amount by which estimated Tax Increment Revenues exceed estimated debt service on the
Series 2007A Bonds.
Year
Ended
1/1/2008
1/1/2009
1/1/2010
1/1/2011
1/1/2012
1/1/2013
1/1/2014
1/1/2015
1/1/2016
1/1/2017
1/1/2018
1/1/2019
1/1/2020
1/1/2021
1/1/2022
Estimated
TIF
Revenues
$305,971
305,971
305,971
305,971
305,971
305,971
305,971
305,971
305,971
305,971
305,971
305,971
305,971
Funds Available for Debt Service
Estimated
Reserve
Reserve
Capitalized
Earnings
Released
Interest
$ 45,217
135,650
$10,418
10,418
10,418
10,418
10,418
10,418
10,418
10,418
10,418
10,418
10,418
10,418
10,418
$231,500*
Total
Funds
Available
$ 45,217
135,650
316,388
316,388
316,388
316,388
316,388
316,388
316,388
316,388
316,388
316,388
316,388
316,388
547,888
Debt
Service
$ 45,217
135,650
249,179
247,893
251,339
249,384
246,800
248,250
249,100
249,350
249,000
248,050
246,500
249,350
431,300
Estimated
Coverage
1.000
1.000
1.270
1.276
1.259
1.269
1.282
1.274
1.270
1.269
1.271
1.276
1.284
1.269
1.270
* The amount in the Bond Proceeds Account of the Debt Service Reserve Fund will be available as a credit toward debt service
due during the year ended January 1, 2022.
THE PROJECT
Description of Project
The Project consists of construction of a nameplate 50 million gallon per year biodiesel facility
(the “Plant”) located on a 19-acre site in the northwestern portion of the City of Beatrice in Gage County,
Nebraska. The Plant is adjacent to a spur that accesses the Burlington Northern Santa Fe Railroad. The
Plant will use approximately 375 million pounds of soybean oil per year. The biodiesel will be sold
primarily to the local and regional markets. Approximately 60% of the biodiesel will be delivered by
truck and 40% by rail to nearby major diesel racks in Aurora, Nebraska, Omaha, Nebraska and Kansas
City, Missouri. The Plant will also produce approximately 50 million pounds of glycerin per year, which
will be sold to one or more of the following industries: animal food additive, chemical, cosmetic, and
pharmaceutical.
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Construction of the Project commenced in August 2006 and, as of June 20, 2007 approximately
74% of construction has been completed. The Company expects the construction of the Project to be
completed in August 2007 with full production of biodiesel expected to begin in September 2007. See
Appendix A for a further description of the Project and Appendix B for a technical report on the
Project’s design and technology.
Sources and Uses of Funds
The following table summarizes the estimated sources and uses of funds to pay that portion of the
Project being financed with proceeds of the Bonds. See “Capital Costs and Schedule” in Appendix A for
sources and uses of funds to pay the entire costs of the Project.
Sources of Funds
Par Amount of Series 2007A Bonds
Accrued Interest
TOTAL SOURCES
$
$
Uses of Funds
Deposit to Project Fund
Deposit to Capitalized Interest Fund
Deposit to Debt Service Reserve Fund
Deposit to Debt Service Fund
Total Underwriter’s Discount and Costs of Issuance
TOTAL USES
$
$
THE REDEVELOPMENT PLAN AND REDEVELOPMENT CONTRACT
The Plan, adopted in 2007, delineates a redevelopment strategy for an approximately 19-acre
parcel. The Plan contemplates the development of the area as an industrial site. The improvements
financed by the Series 2007A Bonds, while authorized by the Redevelopment Law, constitute
improvements which will be owned and used primarily by the Company.
Under the provisions of a First Amended and Restated Redevelopment Contract (the
“Redevelopment Contract”), the Company is obligated to build the Project and maintain certain insurance
on the Project. See Appendix E containing a copy of the Redevelopment Contract.
A copy of the Plan is available for inspection at the City offices.
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BONDOWNERS’ RISKS
The following is a discussion of certain risks that could affect payments to be made with respect
to the Series 2007A Bonds. Prospective purchasers of the Series 2007A Bonds should carefully consider
the risk factors set forth below, as well as the other information appearing in this Official Statement,
before making any investment in the Series 2007A Bonds. The following information summarizes some,
but not all factors that should be considered before purchasing any of the Series 2007A Bonds.
General
The Series 2007A Bonds are special and limited obligations of the Authority, and are payable
solely from and secured by (i) proceeds of the Series 2007A Bonds deposited to the Capitalized Interest
Fund; (ii) Tax Increment Revenues deposited to the Debt Service Fund; and (iii) moneys on deposit in the
Debt Service Reserve Fund. See “SECURITY AND SOURCE OF PAYMENT FOR THE SERIES
2007A BONDS” herein. The ability of the Company to realize revenue in amounts sufficient to pay
property taxes (a portion of which will represent the Tax Increment Revenues) on the Project when due is
affected by and subject to conditions which may change in the future to an extent and with effects that
cannot be determined at this time. No representation or assurance can be given that the Company will
realize revenues in amounts sufficient to pay property taxes, the other obligations of the Company and the
cost of operating the Project. Certain of the risk factors discussed below should be considered in
evaluating the Company’s ability to make such payments.
The receipt of future revenues by the Company is subject to, among other factors, the successful
construction of the Project, federal and state laws, regulations and policies affecting the biodiesel industry
and the policies and practices of major biodiesel producers, raw material providers, biodiesel purchasers,
and by-product purchasers. The effect on the Company of recently enacted laws and regulations and
recently adopted policies, and of future changes in federal and state laws, regulations and policies, and
private policies, cannot be determined at this time. Failure to obtain, or the loss of, contracts with raw
materials providers or purchasers of biodiesel or by-products by the Company could also adversely affect
its future revenues.
Future economic conditions, which may include an inability to control expenses in periods of
inflation, and other conditions, including demand for biodiesel and its by-products, the availability and
affordability of insurance, availability of biodiesel plant personnel, technological advances, transportation
costs, the capability of management of the Company, economic and demographic developments in the
United States, the State of Nebraska and the geographic area of the Company, and competition from other
biodiesel producers or producers of alternative fuels, together with changes in prices, costs and
governmental laws, regulations and policies, may adversely affect revenues and expenses and,
consequently, the ability of the Company to pay property taxes (a portion of which will represent the Tax
Increment Revenues).
Risks Associated with Collection of Tax Increment Revenues
Property Valuation. Increases or decreases in the values of the property in the Redevelopment
Area and in the tax rates of the taxing jurisdictions in which the Redevelopment Area is located will often
have a significant impact on tax increment revenues. This impact can be difficult to measure, however.
The Redevelopment Area consists solely of land owned by the Company which was substantially
undeveloped until the construction of the Project. Thus, the sufficiency of the Tax Increment Revenues
for the payment of principal of and interest on the Series 2007A Bonds is dependant upon the successful
and timely completion of the Project without defect, the successful operation of the Project, and the
valuation for real estate tax purposes in an amount sufficient to generate Tax Increment Revenues in the
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amount required to pay the principal of and interest on the Series 2007A Bonds. Tax Increment Revenues
consist solely of real estate taxes and do not include personal property taxes. A significant portion of the
Project is equipment and other personal property. Tax revenues from taxes on personal property are not
pledged to, or available for, payment of principal of or interest on the Series 2007A Bonds. While a
sudden and significant increase in real property values in a tax increment district may result in an increase
in Tax Increment Revenues, other economic impacts are less predictable. For example, if real property
values in a taxing jurisdiction in which the Redevelopment Area is located are increasing substantially
this might result in a reduction in local tax rates. Such a reduction could lead to a reduction in Tax
Increment Revenues, particularly if the redevelopment area has not experienced the same increases in real
property values as the jurisdiction generally.
Changes in Law. Legislative changes to the method of imposing and collecting taxes can have a
significant impact on Tax Increment Revenues. The Nebraska State Legislature has the power and
authority to modify such tax rates, as well as the general formula for calculating tax increment revenues,
at any time in the future, including during the period while the Series 2007A Bonds remain outstanding.
Such alterations could directly affect the amount of Tax Increment Revenues available to pay debt service
on the Series 2007A Bonds.
Local Tax Levy Risk. The local tax levy varies depending on local fiscal needs and other sources
of financing for local government. The total local tax levy (in dollars per $100 of valuation) in the past
six years for real property located within the Redevelopment Area has been as follows:
Year
2001
2002
2003
2004
2005
2007
Total Tax Levy
$2.087766
1.972115
1.998408
2.014050
2.001224
1.993815
The above levies are for taxes payable in the following year. The real property included in the
Redevelopment Area was not part of the City for the above mentioned years and thus the taxes levied by
the City were not applicable to such real property. During 2006, the City annexed the real property in the
Redevelopment Area. Thus City taxes will be levied on such property in 2007 for taxes payable in 2007.
The total levies shown above are the levies that would have applied in such years had the Redevelopment
Area been within the City during the years indicated.
The local tax levy used for projections of Tax Increment Revenues available to pay debt service
on the Series 2007A Bonds is $1.993815 per $100 of valuation for all years from 2007 and thereafter
without any increase. There can be no assurance that the tax levies will not decrease. The total
consolidated levy will vary from the $1.993815 per $100 of valuation used in the projections and those
changes may be material and adverse. An aggregate reduction in local tax levies by the City, county,
school district and miscellaneous taxing jurisdictions would reduce the local tax levy and therefore the
amount of Tax Increment Revenues. In addition, the legislature could alter local government financing
mechanisms in a way that reduces reliance on local property taxes. For example, increased state aids,
grants or other revenue sources could reduce the need of one or more of the local governments to levy
property taxes, which in turn would reduce the total local tax levy applicable to the Project.
Judicial Review of Validity of Tax Increment District. Bond Counsel will deliver its opinion at
closing that the Redevelopment Area was validly created and is validly existing under the laws of the
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State of Nebraska, but there can be no assurance that such judicial review will not be sought in the future,
and if sought, no assurance can be given as to the outcome.
Risk of Non-Payment of Taxes
The Series 2007A Bonds are not general or moral obligations of the Authority. The Series 2007A
Bonds are limited obligations of the Authority, payable only to the extent of (i) proceeds of the Series
2007A Bonds deposited to the Capitalized Interest Fund; (ii) Tax Increment Revenues deposited to the
Debt Service Fund; and (iii) moneys on deposit in the Debt Service Reserve Fund. The Authority has no
obligation to make payments with respect to the Series 2007A Bonds except as provided in the
Resolution. In the event that individual property owners fail to pay their taxes when due, the amount of
Tax Increment Revenues may not be sufficient to pay principal and interest when due on the Series
2007A Bonds.
Tax Lien Foreclosure
The Series 2007A Bonds are payable solely from and secured by (i) proceeds of the Series 2007A
Bonds deposited to the Capitalized Interest Fund; (ii) Tax Increment Revenues deposited to the Debt
Service Fund; and (iii) moneys on deposit in the Debt Service Reserve Fund. A statutory tax lien is
imposed upon all property and rights to property in the Redevelopment Area, in favor of all governmental
subdivisions having taxing authority over the Redevelopment Area, on December 31 next following the
date of levy of such real property taxes imposed on such parcel, but not with respect to other sources of
funds for payment of the Series 2007A Bonds, and will continue to exist until paid or extinguished as
provided by law. Generally in the event that generally applicable property taxes are not paid in full in the
amounts and at the times such property taxes are due and payable, then the County Treasurer, on behalf of
the County, as the party responsible for the collection of such delinquent taxes, can collect the tax by sale
of a tax sale certificate. For property located in the Redevelopment Area, the property owner generally
has until the first Monday of March after such taxes become delinquent to redeem such property by the
payment of the delinquent amount together with any additional taxes, costs, penalties and interest. If such
property taxes are not paid, a tax sale certificate for the property may be sold at any time on or after the
first Monday of March after such taxes become delinquent. In the event that no third parties purchase a
tax sale certificate, either the County may purchase such certificate for its own benefit or the delinquent
property taxes may go unpaid. Upon any such sale of a tax sale certificate, any sale proceeds, after the
payment of fees and expenses, will be remitted to the various taxing jurisdictions. In addition, interest
paid on delinquent taxes does not constitute tax increment revenues and its not pledged or available to
debt service on the Series 2007A Bonds. When property has been sold for delinquent taxes and a tax sale
certificate or tax deed has been issued, after waiting any applicable time period, the holder of such tax
sale certificate or tax deed may, instead of demanding a deed in accordance with Nebraska law, or, in the
event a deed has been issued, by surrendering such deed to an appropriate court, file a lawsuit in the
district court of the county in which the property is located to foreclose the lien for taxes represented by
the tax sale certificate or tax deed and all subsequent taxes paid by the tax sale certificate or tax deed
holder.
No Mortgage of the Project
Payment of the principal of and interest on the Series 2007A Bonds is not secured by any deed of
trust, mortgage or other lien on the Project or any portion thereof; however, under the Redevelopment
Act, Tax Increment Revenues that are due and owing constitute a lien against the real estate in the
Redevelopment Area from which they are derived. Upon a default in the payment of any Tax Increment
Revenues, the lien for unpaid Tax Increment Revenues may be enforced in the manner described above.
-14-
Risks Related to Construction of the Biodiesel Plant
The Company will depend on its technology provider, whose failure to perform could force the
Company to abandon business, hindering its ability to operate profitably.
The Company’s plant will be designed by Axens North America, Inc. (“Axens”), a wholly owned
subsidiary of Axens IFP Group Technologies of Rueil-Malmaison Cedex, France, which, in turn, is a
wholly owned subsidiary of Institut Français du Pétrole (“IFP”). Axens has 14 years experience in
designing biodiesel facilities. The Company will be highly dependent upon Axens to properly design the
plant.
Facilities of the size proposed for the Company’s biodiesel plant, designed to produce 50 million
gallons of biodiesel per year, are limited in number. There are two plants of this same design and
technology operating successfully in France and Sweden. The cost and feasibility of such a plant are
based upon the estimates of Axens, which has prior experience in the design and construction of biodiesel
facilities utilizing this technology limited to the “sister” plant in Sete, France. The Company may
encounter unforeseen costs or difficulties in the construction, start up, or operation of the plant which
could affect the Company’s profitability or force the Company to abandon its business.
The Company expects that it will also be highly dependent upon Axens to train personnel in
operating the plant. If the completed plant does not operate to the level anticipated by the Company in its
business plan, the Company will rely on Axens to adequately address such deficiency. Axens may not be
able to address such deficiency in an acceptable manner. Failure to do so could cause the Company to
halt or discontinue production of biodiesel, which could damage the Company’s ability to generate
revenues.
The Company will depend on its plant design engineer CJS, whose failure to perform could
force the Company to abandon business, hinder the Company’s ability to operate profitably.
The Company will be highly dependent upon CJS to design the details of the plant from the
Axens process design.. The Company entered into an Engineering Services Agreement with CJS on
January 25, 2006, which includes development of the design details.
Facilities of the size proposed for the Company’s biodiesel plant are limited. CJS has limited
prior experience in the design of biodiesel facilities. As a result of CJS’ inexperience, the Company may
encounter unforeseen costs or difficulties in the design or construction of the Company’s plant which
could affect the Company’s profitability or substantially delay start up.
The Company expects that it will also be highly dependent upon CJS to train personnel in plant
operations not relating to the Axens process. If the completed plant does not operate to the level
anticipated by the Company in its business plan, the Company will rely on CJS to adequately address
such deficiency. CJS may not be able to address such deficiency in an acceptable manner. Failure to do
so could cause the Company to halt or discontinue production of biodiesel, which could damage the
Company’s ability to generate revenues.
Any failure of subcontractors to perform their contractual obligations may result in increased
costs or delays.
As the general contractor, the Company has awarded construction contracts to numerous parties.
Although plant construction is more than 85% complete, if any subcontractor fails to perform its
obligations under the Company’s agreements, unforeseen expenses and delays may result. Unforeseen
-15-
expenses and delays may reduce the Company’s ability to generate revenue and profitability and may
significantly damage the Company’s competitive position in the biodiesel industry.
The Company may need to increase cost estimates for construction of the biodiesel plant.
The Company is constructing this plant on a total project budget of $60,000,000, inclusive of a
$7,500,000 cost overrun facility, based in large part upon cost estimates from CJS. The Company
anticipates that Alberici, the Company’s Construction Manager, will manage the construction of the plant
within the project budget. However, CJS has limited prior experience in the design and construction of
biodiesel plants and as a result, may not be able to accurately estimate the cost of the design and
construction of the plant or the total cost of the Company’s project. In addition, potential modifications to
the Axens design or technology may require engineering or equipment changes. Consequently the final
price of the plant may be materially higher.
The Company’s total project cost may also be affected by other factors. There may be design
changes or cost overruns associated with the construction of the plant. Shortages of materials necessary
to construction could affect the final completion date of the project. The Company has budgeted
$3,891,000 for construction contingency to help offset higher construction costs, and has placed an
additional $7,500,000 in escrow with the Company’s lender as an overrun facility. However, this may
not be sufficient to offset increased costs. Any significant increase in the estimated construction cost of
the plant could delay the Company’s ability to generate revenues because the Company’s revenue stream
may not be able to adequately support the increased cost and expense attributable to increased
construction costs.
Construction delays could result delay in the Company’s production and sale of biodiesel and
glycerin.
The Company currently expects that the earliest date its plant will be operating is third quarter
2007; however, construction projects often involve delays in obtaining permits, construction delays due to
weather conditions, or other events that delay the construction schedule. In addition, changes in interest
rates or the credit environment or changes in political administrations at the federal, state or local level
that result in policy changes towards biodiesel or this project, could cause construction and operation
delays. If it takes longer to construct the plant than the Company anticipates, it would delay the
Company’s ability to generate revenue and make it difficult for the Company to meet its debt service
obligations.
Defects in plant construction could result lowered production of biodiesel and its co-product,
glycerin, or could put the Company at increased risk for fire, leak or explosion.
Defects in workmanship or design are not uncommon in construction projects and there is no
assurance that such defects will not occur in the Company’s plant. Under the terms of the construction
agreements and purchase orders the Company has issued, its vendors have warranted that the material and
equipment furnished to build the plant will be new, of good quality, and free from material defects in
material or workmanship at the time of delivery. In addition, all parties are contractually obligated to
resolve any deficiencies. The Company will rely on Alberici, the Company’s Construction Manager to
adequately address any deficiencies in material, workmanship or design, as a portion of their incentive fee
is tied to startup delays caused by defects in quality or workmanship. However, there is no guarantee that
Alberici or the subcontractors will be able to correct such deficiencies in an acceptable manner or
otherwise will have the financial resources to correct or pay for such deficiency as may be required. Any
subcontractor’s failure to correct any defects in material, workmanship or design could delay the
commencement of operations of the plant, or, if such defects are discovered after operations have
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commenced, could cause the Company to halt or discontinue the plant’s operation. Halting or
discontinuing plant operations could delay the Company’s ability to generate revenues and make it
difficult for the Company to meet the Company’s debt service obligations and could negatively affect the
Company’s ability to execute its plan of operation.
In addition, defects in materials or workmanship could put the Company at an increased risk of
loss due to fire, explosion or leak. Biodiesel is a flammable substance and if there is a defect in the
production process the Company could be at an increased risk of a biodiesel leak, which could lead to fire
or explosion. Further, with natural gas as the Company’s anticipated energy source for biodiesel
production, there is a risk of fire or explosion due to a defect in materials and/or workmanship in the
plant. A loss due to fire, explosion or leak could cause the Company to slow or halt production.
Any failure of the production technology supplied by Axens for the Company’s plant could
cause the Company to discontinue production of biodiesel, which could damage the Company’s ability
to generate revenues.
The Company will be highly dependent upon Axens, a French company, for the supply of
technology for its biodiesel plant. Axens’ engineers, leading designers, and suppliers have been involved
in biodiesel projects outside the United States with a combined annual production of nearly 300 million
gallons. However, the Axens technology has not been previously incorporated in the design and
construction of a biodiesel plant in the United States. As such, their technology is, as yet, unproven in the
United States. While the Company’s agreement with Axens provides a production warranty, failure of
the Axens technology could cause the Company to halt or discontinue production of biodiesel. Halting or
discontinuing plant operations may have a material adverse effect on the Company’s operations, cash
flows and financial performance.
An assertion by a third party as to the rights to the technology could cause the Company to halt or
discontinue production of biodiesel, which could damage the Company’s ability to generate revenues.
The Company does not currently know of any third party claim to the technology nor does the Company
have reason to believe that there are shortcomings in the technology.
Changes in production technology could require the Company to commit resources to updating
the biodiesel plant or could otherwise hinder the Company’s ability to compete in the biodiesel industry
or to operate at a profit.
The Company expects advances and changes in the technology of biodiesel production to occur.
Such advances and changes may make the Company’s biodiesel production technology less desirable or
obsolete. The plant is a single-purpose facility and has no use other than the production of biodiesel and
associated products. Much of the cost of the plant is attributable to the cost of production technology,
which may be impractical or impossible to update. Changes in technology could cause the Company to
operate the plant at less than full capacity for an extended period of time or cause the Company to
abandon its business.
Any delay or unanticipated cost in providing rail infrastructure to the plant could significantly
impact the Company’s ability to operate the plant.
The Company expects rail service to be available at the proposed site from the Burlington
Northern Santa Fe (“BNSF”) mainline. The existing mainline runs from the northwest to the southeast
into Beatrice, Nebraska. The Company has worked with BNSF on the engineering of an additional 6500
foot rail siding at its facility, which will be used only by the Company. The rail design has been
approved, and contracts for construction have been awarded. The Company has reached a final
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agreement with BNSF for the provision of rail service. Increased costs for rail access or a delay in
obtaining rail access could significantly impact the Company’s ability to operate the plant since the
Company expects to ship approximately half of its biodiesel by rail and to receive the majority of its
feedstock by rail.
Risks Related to Biodiesel Production
The Company will depend on key suppliers, whose failure to perform could force the Company
to abandon business, hinder the Company’s ability to operate profitably.
The Company does not anticipate building a soy crushing facility, in the short term, to supply its
own raw soy oil or feedstock and will be dependent upon relationships with third parties, including
feedstock suppliers. Therefore the Company must rely on maintaining its established feedstock
agreements with third parties in order to operate the Company’s business. The Company has entered into
a Vegetable Oil Procurement Agreement with CHS to procure its feedstock. The Company has
agreements in place with Barton Solvents and Praxair for the supply of methanol and nitrogen
requirements, respectively. The Company has also contracted with Moving Parts, LLC, a CHS referral,
for certain risk management services. The Company will be highly dependent upon the services of CHS
to procure feedstock at the best prices, and upon Moving Parts to maintain the Company’s financial
margin. If CHS or Moving Parts terminates the relationship with the Company or does not perform its
obligations as agreed, the Company’s operations and financial performance may be harmed. The
Company’s reliance on CHS may place the Company at a competitive disadvantage. In addition, if
feedstock suppliers do not perform their obligations pursuant to any agreement the Company enters into
with them, the Company may be unable to specifically enforce such agreements.
The Company does not intend to use a third-party management company to manage the
operations of the proposed biodiesel facility and the Company will be dependent on the Company’s
ability to recruit qualified production managers and other production personnel to successfully operate
the facility.
The Company does not anticipate hiring a third-party management company to operate the
Company’s biodiesel facility and has hired its own production personnel that the Company believes are
capable of successfully operating the facility at capacity. The Company’s biodiesel production facility
will utilize the Axens technology. This technology has not been utilized in the United States and
therefore the Company could not hire production personnel with experience in operating a biodiesel plant
utilizing the same technology. The Company’s inability to hire production personnel with experience or
training in biodiesel production or the specific Axens technology may result in its inability to operate the
proposed plant at capacity, or at all.
The Company will be dependent on others for sales of its products, which may place the
Company at a competitive disadvantage and reduce profitability.
The Company does not intend to have a sales force of its own to market biodiesel or glycerin.
The Company has entered into an agreement with Provista to provide biodiesel marketing services. As a
result, the Company will be dependent on Provista to market biodiesel at the best prices. If Provista
breaches the contract or does not have the ability, for financial or other reasons, to market all of the
biodiesel the Company produces, the Company will not have any readily available means to sell
biodiesel. The Company’s lack of a sales force and reliance on Provista to sell and market the
Company’s products may place the Company at a competitive disadvantage. In addition, the Company is
in final negotiations with Cargill to market the Company’s glycerin; however, there is no guarantee that
the Company will be able to enter into a contract with Cargill on terms favorable to the Company or at all.
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If the Company’s glycerin broker terminates its relationship or does not perform its obligations as agreed,
the Company’s operations and financial performance may be harmed. The Company’s failure to sell all
of its biodiesel and glycerin products may result in less income from sales, reducing the Company’s
revenue.
Declines in the prices of biodiesel and its co-products will have a significant negative impact on
the Company’s financial performance.
The Company’s revenues will be greatly affected by the price at which the Company can sell
biodiesel and its co-product, glycerin. These prices can be volatile as a result of a number of factors over
which the Company has no control. These factors include the overall supply and demand, the price of
diesel fuel, level of government support, and the availability and price of competing products. The total
production of biodiesel continues to rapidly expand at this time. Demand may not rise to meet the
increase in supply, and increased production of biodiesel may lead to lower prices. Any lowering of
biodiesel prices may reduce the Company’s revenues.
Glycerin prices in Europe have already declined over the last several years due to increased
biodiesel production and saturation of the glycerin market. Those increased supplies could outpace
demand in the United States as well, which would lead to lower prices for the Company’s products.
Increased expenses and decreased sales prices for the Company’s products may result in less income,
which would decrease revenues.
Competition from other sources of fuel may adversely affect the Company’s ability to market
biodiesel, which could impair the Company’s ability to operate profitably.
Although the price of diesel fuel has increased over the last several years and continues to rise,
diesel fuel prices per gallon remain at levels below or equal to the price of biodiesel. In addition, other
more cost-efficient domestic alternative fuels may be developed and displace biodiesel as an
environmentally-friendly alternative. If diesel prices do not continue to increase or a new fuel is
developed to compete with biodiesel, it may be difficult to market biodiesel.
The Company’s business is sensitive to feedstock prices. Changes in the prices and availability
of feedstock may hinder the Company’s ability to generate revenue.
The Company’s results of operations and financial condition will be significantly affected by the
cost and supply of feedstock. Changes in the price and supply of feedstock are subject to and determined
by market forces over which the Company has no control. Because there is a small, but increasing,
correlation between the price of feedstock and the price of biodiesel, the Company may not be able to
pass along increased feedstock prices to the Company’s biodiesel customers. As a result, increased
feedstock prices may result in decreased revenues. If the Company experiences a sustained period of high
feedstock prices, such pricing may reduce the Company’s ability to generate revenues and its profit
margins may significantly decrease or be eliminated.
Biodiesel production at the Company’s plant will require significant amounts of feedstock. The
Company anticipates that its biodiesel plant will process primarily soybean oil, and the cost of feedstock
will represent approximately 85% of the Company’s cost of production. In the past, the price of soybean
oil has been volatile, fluctuating between sixteen cents and thirty-five cents per pound over the last three
years. Soybean prices may also be affected by other market sectors because typical soybeans are
comprised of 80% protein meal and only 20% oil. Soybean oil is a co-product of processing, or
“crushing” soybeans for protein meal for livestock feed. Currently, soybean crush capacity is
concentrated among four companies, Cargill, Inc., Bunge, Archer Daniels Midland and Ag Processing
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Inc., which represent more than 80% of crushing operations in the United States. Of these companies,
Cargill, Archer Daniels Midland and Ag Processing Inc. have constructed or are constructing biodiesel
plants and the Company expects to compete with them and other plants for feedstock origination.
Competition for soy oil may increase the Company’s cost of feedstock and harm its financial
performance.
The demand for soy oil may exceed the supply which could significantly increase the
Company’s cost of feedstock.
There are currently 10 soy oil extraction plants located in Nebraska that could be potential
providers of soybean oil to the Company’s biodiesel plant. These plants are capable of generating
590,000,000 million pounds of soybean oil per year. The Company’s plant will process approximately
375,000,000 million pounds of soybean oil per year. In addition to the active biodiesel plants, several
plants are in the development stage that will require feedstock from the same regional pool as the
Company. It is possible with the number of biodiesel projects in the development stages that the demand
for soy oil may outpace its supply. Several of the producers of soy oil such as ADM and Cargill are also
beginning to use their own soy oil in their own biodiesel facilities. This may further reduce the
Company’s ability to obtain a sufficient supply of soy oil at reasonable prices, if at all.
The Company may engage in hedging transactions which involve risks that can harm its
business.
Once the plant is operational, the Company will be exposed to market risk from changes in
commodity prices. Exposure to commodity price risk results from the Company’s dependence on
soybean oil in the biodiesel production process. The Company may seek to minimize the risks from
fluctuations in the prices of soybean oil through the use of hedging instruments. Hedging means
protecting the price at which the Company buys feedstock and the price at which the Company will sell
its products in the future. The effectiveness of the Company’s hedging strategies is dependent upon the
cost of soybean oil and the Company’s ability to sell sufficient amounts of its products to use all of the
soybean oil for which the Company has futures contracts. There is no assurance that the Company’s
hedging activities will successfully reduce the risk caused by price fluctuation which may leave the
Company vulnerable to high soybean oil prices. The Company has engaged Moving Parts to provide
certain risk management services, which includes the possibility of engaging in hedging activities.
Alternatively, the Company may choose not to engage in hedging transactions. As a result, the
Company’s results of operations and financial conditions may also be adversely affected during periods in
which soybean oil prices increase.
Hedging activities themselves can result in higher costs because price movements in soybean oil
contracts are highly volatile and are influenced by many factors that are beyond the Company’s control.
There are several variables that could affect the extent to which the Company’s derivative instruments are
impacted by price fluctuations in the cost of soybean oil. However, it is likely that commodity cash prices
will have the greatest impact on the derivatives instruments with delivery dates nearest the current cash
price. The Company may incur such costs and they may be significant.
Asian soybean rust and other plant diseases may decrease the Company’s ability to obtain a
sufficient feedstock supply.
The Company’s feedstock supply is highly dependant upon the availability and price of soybeans.
Asian soybean rust is a plant fungus that attacks certain plants including soybean plants. Asian soybean
rust is abundant in certain areas of South America, and its presence in the United States was recently
confirmed. Left untreated, it can reduce soybean harvests by as much as 80%. Although it can be killed
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with chemicals, the treatment increases production costs for farmers by approximately 20%. Increases in
production costs and reduced soybean supplies could cause the price of soybeans to rise and increase the
cost of soybean oil as a feedstock to the Company’s plant. Such increase in cost would increase the cost
of producing the Company’s biodiesel and decrease the Company’s revenue from operations.
Concerns about fuel quality may impact the Company’s ability to successfully market its
biodiesel.
Industry standards impose quality specifications for biodiesel fuel. Actual or perceived problems
with quality control in the industry may lead to a lack of consumer confidence in the product and hinder
the Company’s ability to successfully market its biodiesel. For example, a batch of biodiesel that failed to
meet industry specifications in Minnesota recently resulted in a 10-day emergency variance from the
state’s 2% biodiesel requirement in order to allow for time to fix the problem. Although industry
representatives attributed the problem to start-up glitches in the state’s new biodiesel plants, similar
quality control issues could result in a decrease in demand for the Company’s product. The Company’s
biodiesel will be ASTM certified before leaving the plant, a current market trend which reduces the
likelihood of distribution of off-spec biodiesel.
Cold weather may cause biodiesel to gel, which could have an adverse impact on the
Company’s ability to successfully market its biodiesel.
The pour point for a fuel is the temperature at which the flow of the fuel stops. A lower pour
point means the fuel is more flowable in cold weather. The pour point of 100% soy-based biodiesel is
approximately 25°F. The pour point for tallow-based biodiesel is approximately 60°F. The pour point
for #2 diesel fuel is approximately -30°F. When diesel is mixed with soy-based biodiesel to make a 2%
biodiesel blend, the pour point is -25°F. Therefore, the Company believes it will need to blend soy-based
biodiesel with petroleum diesel in order to provide a biodiesel product that will have an acceptable pour
point in cold weather. Generally, biodiesel that is used in blends of 2% to 20% is expected to provide an
acceptable pour point for colder markets comparable to the No. 2 petroleum diesel pour point. In colder
temperatures, lower blends are recommended to avoid fuel system plugging. This may cause the demand
for the Company’s biodiesel in northern markets to diminish during the colder months.
The tendency of biodiesel to gel in colder weather may also result in long-term storage problems.
At low temperatures, fuel may need to be stored in a heated building or heated storage tanks. This may
cause a decrease in demand for the Company’s product in colder climates due to increased storage costs.
Automobile manufacturers and other industry groups have expressed reservations regarding
the use of biodiesel, which could negatively impact the Company’s ability to market its biodiesel.
Because it is a relatively new product, the research of biodiesel use in automobiles and its effect
on the environment is ongoing. Some industry groups and standards, including the World Wide Fuel
Charter, have recommended that blends of no more than 5% biodiesel be used for automobile fuel due to
concerns about fuel quality, engine performance problems and possible detrimental effects of biodiesel on
rubber components and other parts of the engine. Although some manufacturers have encouraged use of
biodiesel fuel in their vehicles, cautionary pronouncements by others may impact the Company’s ability
to market its product.
The trucking industry opposed the imposition of the Minnesota 2% biodiesel requirement, citing
concerns regarding fuel expense and lack of infrastructure necessary to implement the requirement. Such
concerns may result in opposition to similar proposed legislation in other states in the future and may
negatively impact the Company’s ability to market its biodiesel, although the American Trucking
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Association altered its position on biodiesel in October 2005 by passing a resolution advocating the use of
5% biodiesel blends by the trucking industry.
In addition, studies have shown that nitrogen oxide emissions from pure biodiesel increase by
10%. Nitrogen oxide is the chief contributor to ozone or smog. New engine technology is available and
is being implemented to eliminate this problem. However, these emissions may decrease the appeal of
the Company’s product to environmental groups and agencies who have been historic supporters of the
biodiesel industry, which may result in the Company’s inability to market its biodiesel.
Risks Related to Beatrice Biodiesel as a Development-Stage Company
Beatrice Biodiesel has no operating history, which could result in errors in management and
operation.
The Company is a recently formed company and have no history of operations. The Company
may not be able to manage start-up effectively and properly staff operations, and any failure to manage
the Company’s start-up effectively could delay the commencement of plant operations. Such a delay is
likely to further hinder the Company’s ability to generate revenue and satisfy the Company’s debt
obligations and could make governmental grants unavailable to us. The Company is experiencing
substantial growth involving the construction and start-up of operations of the plant and the hiring of
employees. This period of growth and the start-up of the plant are likely to be a significant challenge to
Beatrice Biodiesel.
The Company has no experience in the biodiesel industry, which increases the risk of the
Company’s inability to build and operate the biodiesel plant.
The Company is a development-stage company with no revenues. The Company does not
currently own or operate any biodiesel facilities. The Company has no experience in constructing or
operating a biodiesel plant. The Company is presently, and will likely continue to be for some time,
dependent upon the US Canadian Biofuels’ officers and senior management. Most of these individuals
are experienced in business generally but have no experience or very limited experience actually in
organizing and building a biodiesel plant, or in governing and operating a company. The Company’s
CFO has experience as CFO of a publicly held company. The Company’s Chairman is also chairman of a
publicly held company in Australia. These individuals have no expertise in the biodiesel industry.
The manager for the plant does not have experience in the biodiesel industry or experience
operating a production plant similar to the proposed plant. Mr. Frahm does, however, have experience in
managing a chemical production facility.
The Company has a history of losses and may not ever operate profitably.
Through June 30, 2007, the Company has invested approximately $37,000,000 in startup and
capitalized construction expenditures. The Company plans to spend an additional estimated $2,600,000
to complete the construction and startup of its operations. The Company is dependent on external debt
funding for majority of the funds necessary to complete this project and, in addition to the construction
financing, the Company is also dependent on financing for working capital once operational. There is no
assurance that the Company will be successful in completing construction within the anticipated time line
or budget and operate a biodiesel plant. Even if the Company successfully meets all of these objectives
and begins operations at the biodiesel plant, there is no assurance that the Company will be able to
operate profitably.
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Risks Related to Biodiesel Industry
The biodiesel manufacturing industry is a feedstock limited industry. As more plants are
developed and go into production there may not be an adequate supply of feedstock to supply the
demands of the industry, which could threaten the viability of the Company’s plant.
The number of biodiesel manufacturing plants either in production or in the planning or
construction phase continues to increase at a rapid pace. The Company has engaged a third party
originator, CHS, Inc., to obtain the Company’s feedstock; however, the Company does not have any
commitments or agreements for the supply of feedstock from suppliers. As more plants are developed
and go into production there may not be an adequate supply of feedstock to satisfy the demand of the
biodiesel industry. Consequently, the price of feedstock may rise to the point where it threatens the
viability of the Company’s project.
New plants under construction, decreases in the demand for biodiesel and glycerin or failure of
demand to grow in proportion to supply, may result in excess production capacity which could decrease
the Company’s revenues and adversely impact the Company’s financial condition.
The biodiesel manufacturing industry is experiencing rapid growth. In 2005, approximately 75
million gallons of biodiesel were produced in the United States. However, many biodiesel plants do not
operate at full capacity and the National Biodiesel Board estimates the current dedicated biodiesel
production capacity of these plants is about 580.5 million gallons per year. Further, current plant
construction and expansion are expected to result in another 1.4 billion gallons of annual biodiesel
production capacity, for total annual production capacity of 1.98 billion gallons. In contrast, the
estimated annual consumption of biodiesel in 2005 was 75 million gallons. Thus, the estimated annual
consumption of biodiesel for existing plants and plants currently under construction far exceeds the
current estimated annual consumption of biodiesel. In a study prepared for the National Biodiesel Board,
LECG, LLC predicts that the national demand for biodiesel fuel will increase to 650 million gallons by
2015, far below the expected production capacity. If biodiesel production capacity continues to expand at
its current pace, and demand does not grow to meet the available supply, excess production capacity will
result and the Company may be unable to market the Company’s products at profitable prices. If this
happens, the Company would expect the price for biodiesel to decline. Any decrease in the price at which
the Company can sell its biodiesel will negatively impact the Company’s future revenues. Increased
expenses and decreased sales prices for biodiesel may result in less income, which would decrease the
Company’s revenues.
The biodiesel industry is becoming increasingly competitive and the Company competes with
larger, better financed entities as well as the companies that supply the Company’s inputs which could
impact the Company’s ability to operate profitably.
Commodity groups in the Midwest, and the enactment of favorable federal and state legislation,
have encouraged the construction of biodiesel plants, and there are numerous other entities considering
the construction of biodiesel plants. Nationally, the biodiesel industry may become more competitive
given the substantial construction and expansion that is occurring in the industry. In September 2006, the
National Biodiesel Board estimated there were 86 active plants with an annual production capacity of
580.5 million gallons annually. Another 65 plants are currently under construction and are expected to be
completed in the next 18 months. An additional 13 plants are expanding their existing operations. The
additional combined capacity of these plants under construction is estimated at 1.4 billion gallons per
year. Biodiesel plants are operating or have been proposed in at least 43 states. At least two other
companies have proposed plants in Nebraska, including plans by:
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Horizon Biofuels, Inc. for a 5 million gallon plant near Fremont, Nebraska; and
Northeast Biodiesel, for a 2.5 million gallon plant near Scribner, Nebraska.
Further, investors should understand that the Company faces a competitive challenge from larger
biodiesel plants and from biodiesel plants owned and operated by the companies that may supply the
Company’s inputs. Cargill, Inc., a large supplier of soybean oil, completed construction of a 37.5 million
gallon plant in Iowa Falls in May 2006. Another large corporation and supplier of soybean oil, Archer
Daniels Midland Co. (“ADM”) plans to construct an 85 million gallon plant in North Dakota. These
companies have significantly greater resources than the Company has to market biodiesel and expand
their production of biodiesel should they choose to do so. Moreover, these plants may not face the same
competition the Company does for inputs as the companies that own them are suppliers of the feedstock
inputs. In light of such competition, there is no assurance that the Company will be able to compete
effectively in the industry. The Company may generate less income as a result.
Competition from other diesel fuel lubricity additives for ultra low sulfur diesel may be a less
expensive alternative to biodiesel, which would cause the Company to lose market share.
The Environmental Protection Agency (“EPA”) has issued regulations to reduce the amount of
sulfur in diesel fuel in order to improve air quality. These regulations affect all diesel fuel that will be
made available for retail sale beginning in October 2006. The removal of sulfur from diesel fuel also
reduces its lubricity which must be corrected with fuel additives, such as biodiesel which has inherent
lubricating properties. The Company’s biodiesel plant is expected to compete with producers of other
diesel additives made from raw materials other than soybean having similar lubricity values as biodiesel,
such as petroleum-based lubricity additives. Many major oil companies produce these petroleum-based
lubricity additives and strongly favor their use because they may be used in lower concentrations than
biodiesel. In addition, much of the infrastructure in place is for petroleum-based additives. As a result,
petroleum-based additives may be more cost-effective than biodiesel. Therefore, it may be difficult to
market the Company’s biodiesel as a lubricity additive,.
There are substantially different risks in the biodiesel industry than those in the ethanol
industry.
The ethanol industry enjoys over 4 billion gallons of annual domestic demand and a vast existing
production, marketing, and transportation network servicing a substantial demand. Conversely, in 2005,
the biodiesel industry supplied only approximately 75 million gallons of fuel for domestic consumption.
The entire diesel fuel market constitutes only about one-third of the gasoline market as a whole. Fifty-six
percent of the diesel market is the trucking industry. Acceptance of biodiesel by consumers has been
slow, and the biodiesel industry has faced opposition from the trucking industry and others in regard to
legislative mandates for its use. In addition, the present marketing and transportation network must
expand significantly before the Company’s biodiesel plant begins production. For example, biodiesel is
often not readily available at pumps in fuel service stations. Therefore, the Company may be unable to
market its biodiesel profitably.
In addition, the Company faces a substantially different market than do ethanol producers for the
supply of raw material. Manufacturers of ethanol often purchase raw grains directly from producers,
which presents an almost unlimited supply from thousands of corn growers. For the first few years of
operations, the Company intends to purchase only raw or partially refined oils from a very limited number
of suppliers and these suppliers may be the Company’s competitors. Accordingly, the Company may be
unable to obtain the necessary supply of raw materials and may be unable to operate at profitable levels.
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The ethanol industry has historically enjoyed substantially more governmental support than the
biodiesel industry on both the federal and state levels. Although the Energy Policy Act of 2005 enacted
or extended certain tax credits for the biodiesel industry, such incentives had been previously available to
the ethanol industry. In addition, various states offer other ethanol production subsidies which may make
ethanol production more profitable. These and other differences between the ethanol industry and the
Company’s industry make risk and investment comparisons between the two industries unreliable.
Biodiesel distribution infrastructure may be inadequate, and infrastructure disruptions could
significantly impair the Company’s ability to market and sell its products.
Growth in the sale and distribution of biodiesel is dependent on the changes to and expansion of
related infrastructure which may not occur on a timely basis, if at all, and the Company’s operations could
be adversely affected by infrastructure disruptions. In addition, if the volume of biodiesel shipments
continues to increase, there may be weaknesses in infrastructure such that the Company’s biodiesel
cannot reach its target markets. Rail and trucking infrastructure may be inadequate to meet the expanding
volume of biodiesel shipments, which could prevent the Company from shipping its biodiesel to its target
markets. If the Company is unable to ship biodiesel, the Company may be forced to slow or halt
production.
Substantial development of infrastructure will be required by persons and entities outside the
Company’s control for its operations, and the biodiesel industry generally, to grow. Areas requiring
expansion include, but are not limited to:
additional rail capacity;
additional storage facilities for biodiesel;
increases in truck fleets capable of transporting biodiesel within localized markets;
expansion in refining and blending facilities to handle biodiesel; and
growth in service stations equipped to handle biodiesel fuels.
Substantial investments required for these infrastructure changes and expansions may not be
made or they may not occur on a timely basis. Any delay or failure in making the changes to, or
expansion of, infrastructure could hurt the demand or prices for the Company’s products, impede the
Company’s delivery of products, impose additional costs on the Company or otherwise have a material
adverse effect on the results of the Company’s operations or financial position. The Company’s business
is dependent on the continuing availability of infrastructure and any infrastructure disruptions could have
a material adverse effect on the Company’s business.
Risks Related to Regulation and Governmental Action
Loss of favorable tax benefits for biodiesel production could hinder the Company’s ability to
operate at a profit.
The biodiesel industry and the Company’s business are assisted by various federal tax incentives,
including those included in the Energy Policy Act of 2005. The provision of the Energy Policy Act of
2005 likely to have the greatest impact on the biodiesel industry is the creation of a 7.5 billion gallon
Renewable Fuels Standard (“RFS”). The RFS will begin at 4 billion gallons in 2006, increasing to 7.5
billion gallons by 2012. The RFS for 2007 is 4.7 billion gallons. The RFS helps support a market for
biodiesel that might disappear without this incentive.
On September 7, 2006, the EPA released a proposed rule for a comprehensive, long-term RFS
program starting in 2007. The new regulation proposes that 3.71 percent (or 4.7 billion gallons) of all the
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fuel sold or dispensed to U.S. motorists in 2007 be renewable fuel. By the end of 2006, there will be
approximately 4.5 billion gallons of renewable fuel consumed as motor vehicle fuel in the United States.
The rule also contains compliance tools and a credit and trading system which allows renewable fuels to
be used where they are most economical, while providing a flexible means for industry to comply with
the standard. Various renewable fuels, including biodiesel and ethanol, can be used to meet the
requirements of the RFS program. This is a proposed rule and there is no guarantee that this rule will be
adopted or that the Company will comply with the requirements.
A change in environmental regulations or violations thereof could hinder the Company’s
ability to operate at a profit.
The Company may be subject to extensive air, water and other environmental regulations and
need to obtain a number of environmental permits to construct and operate the plant. The Company has
utilized Olsson Associates of Omaha, Nebraska, to assist the Company in obtaining the necessary permits
to construct and operate its plant. In addition to the various environmental regulations and permits,
biodiesel producers are required to satisfy the fuel quality standards of the Environmental Protection
Agency. The Company has applied for all applicable permits. The Company does not anticipate a
problem receiving all required environmental permits. However, if for any reason the Company is unable
to obtain any of these permits, construction costs for the plant may increase or the Company may not be
able to construct the plant at all. Additionally, environmental laws and regulations, both at the federal and
state level, are subject to change and changes can be made retroactively. Consequently, even if the
Company has the proper permits at the proper time, the Company may be required to invest or spend
considerable resources to comply with future environmental regulations or new or modified
interpretations of those regulations, which may reduce the Company’s profitability.
Risk of Technological Advances
The development and implementation of new technologies may result in a significant reduction in
the costs of biodiesel production. No prediction can be made about when new technologies may become
available, the rate of acceptance of new technologies by the Company’s competitors or the costs
associated with such new technologies. In addition, advances in the development of alternatives to
biodiesel could significantly reduce demand for or eliminate the need for biodiesel.
Any advances in technology which require significant capital expenditures to remain competitive
or which otherwise reduce demand for biodiesel will adversely affect Project cash flow. Adversely
affecting the Project’s cash flow will have a material adverse effect on the Company’s ability to pay rent
under the Agreement, and consequently, the Authority’s ability to make payments of principal, premium,
if any, and interest on the Series 2007A Bonds.
Risk of Patent Infringement
While the Company has licensed the technology for the Project, third parties may demand license
fees or sue the Company for infringing or misappropriating their patent or other intellectual property
rights. Intellectual property litigation is costly and could result in increased operating expenses for the
Project. If the Company does not prevail in any such litigation, in addition to any damages the Company
might have to pay, the Company could be required to stop the infringing activity or obtain a license
requiring it to make royalty payments. It is possible that a required license will not be available on
commercially acceptable terms, or at all. If the Company fails to obtain a required license or is unable to
design around another company’s patent, the Company may not be able to use some of the affected
technologies, which would have an adverse effect upon the operations of the Project and the Company’s
revenues.
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Risks Related to the Company’s Debt
The proceeds of the Series 2007A Bonds will finance only certain costs associated the Project. In
order to construct and operate the Project, the Company has obtained debt financing in addition to the
Series 2007A Bonds. While the Company has obtained a senior credit facility, there are significant
conditions precedent to the availability of such funds. These conditions include, among others, no
material change in the condition (financial or otherwise), operation or prospects of the Company;
obtaining all consents, approvals and authorizations for the construction and operation of the Project;
there exists no default under the senior credit facility; all representations and warranties of the Company
remain true and correct; and there have been no intervening or conflicting liens filed. There can be no
assurance that these conditions can be met. The Company also cannot assure that its cash flows and
capital resources will be sufficient to repay all of its anticipated debt obligations.
The Company’s debt necessary to implement its business plan will result in substantial debt
service requirements. The Company’s debt service requirements could have important consequences
which could hinder its ability to operate.
In the event that the Company is unable to pay its debt service obligations, the Company’s
creditors could force it to reduce or eliminate needed capital expenditures. It is possible that the
Company could be forced to sell assets, seek to obtain additional equity capital or refinance or restructure
all or a portion of its debt. In the event that the Company would be unable to refinance its indebtedness or
raise funds through asset sales, sales of equity or otherwise, its ability to operate the Project would be
greatly affected and the Company may be forced to liquidate.
Risks Related to Marketability
Because of the lack of credit rating and probable lack of market for the Series 2007A Bonds,
Series 2007A Bondowners may not be able to sell the Series 2007A Bonds.
The Series 2007A Bonds will not bear a rating designation from any credit rating agency. No
party is obligated to repurchase any of the Series 2007A Bonds or to make any market therein.
Accordingly, there can be no assurance that a market for the Series 2007A Bonds will develop. Holders
of the Series 2007A Bonds may be unable to resell the Series 2007A Bonds for an extended period of
time, if at all.
Risks Related to Tax Issues
EACH PROSPECTIVE PURCHASER SHOULD CONSULT HIS OR HER OWN TAX
ADVISOR CONCERNING THE IMPACT OWNERSHIP OF THE SERIES 2007A BONDS MAY
HAVE ON HIS OR HER FEDERAL INCOME TAX LIABILITY AND THE APPLICATION OF
STATE AND LOCAL INCOME AND OTHER TAX LAWS TO HIS OR HER PARTICIPATION
IN THIS OFFERING.
TAX MATTERS
Opinion of Bond Counsel
Federal and Nebraska Tax Exemption. In the opinion of Gilmore & Bell, P.C., Bond Counsel,
under existing law, the interest on the Series 2007A Bonds (including any original issue discount properly
allocable to an owner thereof) is excluded from gross income for federal and Nebraska income tax
-27-
purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed
on individuals and corporations. It should be noted, however, that for the purpose of computing the
alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such
interest is taken into account in determining adjusted current earnings. The opinions set forth in this
paragraph are subject to the condition that the Authority comply with all requirements of the Internal
Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the
Series 2007A Bonds in order that interest thereon be, or continue to be, excluded from gross income for
federal and Nebraska income tax purposes. The Authority has covenanted to comply with each such
requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on
the Series 2007A Bonds in gross income for federal and Nebraska income tax purposes retroactive to the
date of issuance of the Series 2007A Bonds. The Series 2007A Bonds are “qualified tax-exempt
obligations” within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial
institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent
of that portion of such financial institution’s interest expense allocable to interest on the Series 2007A
Bonds.
Original Issue Discount Bonds. In the opinion of Bond Counsel, subject to the conditions set
forth above, the original issue discount in the selling price of each Series 2007A Bond purchased in the
original offering at a price less than the par amount thereof (hereinafter referred to as the “OID Bonds”),
to the extent properly allocable to each owner of such Bond, is excludable from gross income for federal
income tax purposes with respect to such owner. Original issue discount is the excess of the stated
redemption price at maturity of an OID Bond over the initial offering price to the public (excluding
underwriters and intermediaries) at which price a substantial amount of the OID Bonds were sold. Under
Section 1288 of the Code, original issue discount on tax-exempt bonds accrues on a compound basis. For
an owner who acquires an OID Bond in this offering, the amount of original issue discount that accrues
during any accrual period generally equals (i) the issue price of such OID Bond plus the amount of
original issue discount accrued in all prior accrual periods, multiplied by (ii) the yield to maturity on such
OID Bond (determined on the basis of compounding at the close of each accrual period and properly
adjusted for the length of the accrual period), less (iii) any interest payable on such OID Bond during such
accrual period. The amount of original issue discount so accrued in a particular accrual period will be
considered to be received ratably on each day of the accrual period, will be excluded from gross income
for federal income tax purposes, and will increase the owner’s tax basis in such OID Bond. Any gain
realized by an owner from a sale, exchange, payment or redemption of an OID Bond would be treated as
gain from the sale or exchange of such Bond. Owners of OID Bonds should consult with their individual
tax advisors to determine whether the application of the proposed original issue discount federal
regulations will require them to include, for State and local income tax purposes, an amount of interest on
the OID Bonds as income even though no corresponding cash interest payment is actually received during
the tax year.
Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect
to the Series 2007A Bonds.
Other Tax Consequences
Prospective purchasers of the Series 2007A Bonds should be aware that there may be tax
consequences of purchasing the Series 2007A Bonds other than those discussed under the caption
“Opinion of Bond Counsel,” including the following:
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(1)
Section 265 of the Code denies a deduction for interest on indebtedness incurred or
continued to purchase or carry the Series 2007A Bonds, except with respect to certain financial
institutions (within the meaning of Section 265(b)(5) of the Code);
(2)
with respect to insurance companies subject to the tax imposed by Section 831 of the
Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain
items, including interest on the Series 2007A Bonds;
(3)
interest on the Series 2007A Bonds earned by certain foreign corporations doing business
in the United States could be subject to a branch profits tax imposed by Section 884 of the Code;
(4)
passive investment income, including interest on the Series 2007A Bonds, may be subject
to federal income taxation under Section 1375 of the Code for Subchapter S corporations that have
Subchapter C earnings and profits at the close of the taxable year, if greater than 25% of the gross receipts
of such Subchapter S corporation is passive investment income; and
(5)
Section 86 of the Code requires recipients of certain Social Security and certain Railroad
Retirement benefits to take into account, in determining gross income, receipts or accruals of interest on
the Series 2007A Bonds.
Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Series
2007A Bonds should consult their own tax advisors as to the applicability of these tax consequences.
CONTINUING DISCLOSURE
The Authority and the Company will covenant in separate Continuing Disclosure Agreements to
provide certain financial and to provide notices of the occurrence of certain enumerated events, if deemed
to be material. See the caption “Summary of the Continuing Disclosure Agreements” in Appendix D
hereto.
LITIGATION
There is not now pending any litigation restraining or enjoining the issuance or delivery of the
Series 2007A Bonds or questioning or affecting the validity of the Series 2007A Bonds or the
proceedings and authority under which they are to be issued. Neither the creation, organization or
existence of the Authority, nor the title of the members of the Board of Trustees or other officers of the
Authority to their respective offices, is being contested or questioned.
There is no litigation pending which in any manner questions the right of the Authority to pass
the Resolution of the Authority pursuant to which the Series 2007A Bonds are being issued.
LEGAL MATTERS
All legal matters incidental to the authorization, issuance, sale and validity of the Series 2007A
Bonds are subject to the approval of Gilmore & Bell, P.C., Lincoln, Nebraska, Bond Counsel. Certain
legal matters will be passed upon for the Authority and the City by John W. Carlson P.C., Beatrice,
Nebraska, for the Company by its counsel, Dalke Smith & Reis, Beatrice, Nebraska, and for the
-29-
Underwriter by Gilmore & Bell, P.C., Kansas City, Missouri. Such attorneys have not participated in any
independent verification of the information concerning the financial condition or capabilities of the
Authority or the City contained in this Official Statement.
NO RATINGS
The Authority has not applied to Standard & Poor’s, Moody’s Investors Service, Inc. or any other
similar rating service for a rating on the Series 2007A Bonds.
UNDERWRITING
The Series 2007A Bonds are being purchased by Piper Jaffray & Co. (the “Underwriter”). The
Underwriter has agreed to purchase the Series 2007A Bonds pursuant to a Bond Purchase Agreement
entered into by and among the Authority, the Company and the Underwriter. The Bond Purchase
Agreement provides that the Underwriter will purchase the Series 2007A Bonds at a purchase price of
$__________ (which represents an underwriter’s discount of $_________ and a net reoffering
[discount][premium] of $________, plus accrued interest of $_________). In addition, the Bond
Purchase Agreement provides, among other things, that the Underwriter will purchase all of the Series
2007A Bonds if any are purchased. The Underwriter reserves the right to join with dealers and other
underwriters in offering the Series 2007A Bonds to the public. The Authority and Company have agreed
in the Bond Purchase Agreement to indemnify the Underwriter against certain liabilities. The obligations
of the Underwriter to accept delivery of the Series 2007A Bonds are subject to various conditions
contained in the Bond Purchase Agreement.
MISCELLANEOUS
The references herein to the Resolution, the Redevelopment Contract, the Redevelopment Plan
(collectively, the “Transaction Agreements”) and the Redevelopment Law, are brief outlines of certain
provisions of such items and do not purport to be complete. Reference is made to the Redevelopment
Law and the Transaction Agreements for full and complete statements of their provisions. Copies of the
Transaction Agreements are on file at the offices of the Underwriter (see the section herein captioned
“INTRODUCTION - Definitions, Summaries of Documents and Additional Information”) and
following delivery of the Series 2007A Bonds will be on file at the office of the Trustee.
Any statements in this Official Statement involving matters of opinion or forecast, whether or not
expressly so stated, are intended as such and not as representations of fact. This Official Statement is not
to be construed as a contract or agreement between the Company, the Authority, the Underwriter and the
purchasers or owners of the Series 2007A Bonds.
The agreement of the Authority with the owners of the Series 2007A Bonds is fully set forth in
the Resolution, and neither any advertisement or the Series 2007A Bonds nor this Official Statement is to
be construed as constituting any agreement with the purchasers of the Series 2007A Bonds.
It is anticipated that CUSIP identification numbers will be printed on the Series 2007A Bonds,
but neither the failure to print such numbers on any Series 2007A Bonds nor any error in printing of such
numbers will constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and
pay for any Series 2007A Bonds.
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The cover page and the attached Appendices are integral parts of this Official Statement and must
be read together with all of the foregoing statements.
By:
Chair
The Company has supplied and reviewed the information contained herein under the captions
“INTRODUCTION – The Company” and “- the Project” “THE PROJECT” and “RISK
FACTORS” and has approved such information for use within this Official Statement. The execution
and delivery of this Official Statement has been duly authorized by the Company and its members. The
Company will execute a certificate in connection with the issuance of the Series 2007A Bonds to the
effect that the information contained herein under the captions “THE PROJECT” and “RISK
FACTORS” does not contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the circumstances under which
they were made, not misleading.
BEATRICE BIODIESEL, LLC
BY: US CANADIAN BIOFUELS, INC.,
Manager
By:
Title: Chief Executive Officer
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(THIS PAGE LEFT BLANK INTENTIONALLY)
APPENDIX A
THE PROJECT
TABLE OF CONTENTS
Page
General Description of the Project.............................................................................................. A-1
Project Participants...................................................................................................................... A-2
Project Management.................................................................................................................... A-3
Capital Costs and Schedule......................................................................................................... A-5
Permits and Approvals ................................................................................................................ A-5
Licenses ....................................................................................................................................... A-8
Operating Agreement .................................................................................................................. A-8
Plan of Marketing ........................................................................................................................ A-8
THE PROJECT
General Description of the Project
The Project is a nameplate 50 million gallon per
year (“MGY”) biodiesel facility (the “Plant”) located on
a 19-acre site in the northwestern portion of the City of
Beatrice in Gage County, Nebraska. The Plant is adjacent
to a spur that accesses the Burlington Northern Santa Fe
Railroad (“BNSF”). The Plant will use approximately 375
million pounds of soybean oil per year. The biodiesel will
be sold primarily to the local and regional markets.
Approximately 60% of the biodiesel will be delivered by
truck and 40% by rail to nearby major diesel racks in
Aurora, Nebraska, Omaha, Nebraska and Kansas City, Missouri. The Plant will also produce
approximately 50 million pounds of glycerin per year, which will be sold to one or more of the following
industries: animal food additive, chemical, cosmetic, and pharmaceutical.
Beatrice Biodiesel LLC (“BBL”) is a wholly-owned subsidiary of US Canadian Biofuels, Inc
(“USCB”). USCB is a Delaware corporation formed to develop renewable fuels projects in the U.S., and
is a wholly owned subsidiary of Agri Energy Limited, formerly Australian Ethanol Limited (“Agri
Energy”). Agri Energy is based in Melbourne, Australia, and is publicly traded on the Australian Stock
Exchange, under the symbol AAE. Agri Energy has a goal of producing approximately 132 million
gallons (500 million liters) of domestic biodiesel at five separate facilities by 2010. BBL has secured
$32,000,000 in equity financing through an AAE public offering and a private equity raise. To date,
approximately $28,300,000 in equity has been spent toward construction.
The Plant technology will be designed by Axens North America, Inc. (“Axens”), a wholly owned
subsidiary of Axens IFP Group Technologies of Rueil-Malmaison Cedex, France, which, in turn, is a
wholly owned subsidiary of Institut Français du Pétrole (“IFP”). Axens has 14 years experience in
designing biodiesel facilities (see “Project Participants” section for further information).
The biodiesel produced by the Plant will meet all ASTM criteria (ASTM D-6751), which is the
industry standard established by the National Biodiesel Board for pure biodiesel or biodiesel blended with
petroleum-based diesel. The Plant will also be BQ-9000 accredited. The National Biodiesel
Accreditation Commission, which is a cooperative and voluntary program for the accreditation of
producers and marketers of biodiesel fuel, established the BQ-9000 program. The program is a
combination of the ASTM standard for biodiesel, and a quality systems program that includes storage,
sampling, testing, blending, shipping, distribution, and fuel management practices.
The site is designed to accommodate a future soybean crush facility and an ethanol plant; these
potential projects will be evaluated more closely once the operations of the Plant have commenced.
The biodiesel process includes inputting vegetable oils (soybean, rapeseed, mustard, etc.) or
animal fats, and adding methanol to create a catalytic, reversible reaction. Through a series of processes
(see following diagram), biodiesel and a glycerin by-product are created. One hundred pounds of
soybean oil, combined with 10 pounds of methanol produces approximately 100 and 10 pounds of
biodiesel and glycerin, respectively.
A-1
Project Participants
Alberici Constructors Inc. (“ACI”) is a general contractor based in St. Louis Missouri with
annual sales exceeding $1 billion annually. ACI is one of Engineering News Records top-ranked firms
serving the power and chemical industries. ACI has been awarded “General Contractor of the Year” five
times over the last 12 years by the Subcontractor Association of America. ACI functions as the
Construction Manager for USCB biodiesel and ethanol projects. ACI is to receive $1,700,000 market
value in shares of Agri Energy as partial payment of ACI’s construction fee for the Plant
(www.alberici.com)
Burlington Northern Santa Fe (“BNSF”). BNSF serves as the transportation conduit for USCB’s
feedstock supply and product delivery. BNSF has worked closely with USCB to assist in designing the
site rail infrastructure and providing twice weekly service to USCB’s Beatrice Biodiesel facility.
(www.bnsf.com)
Cenex Harvest States (“CHS”). CHS is a diversified Fortune 500 company generating over $9
billion dollars in revenue in 2005. CHS is the nation’s largest cooperative marketer of grain, moving
more than one billion bushels annually to more than 90 countries. CHS ranks as North America’s largest
cooperative refiner and manufacturer of lubricants, third largest propane supplier and, with more than 800
Cenex-identified convenience stores, the nation’s 13th largest convenience store chain moving over 3
billion gallons of refined fuels annually. CHS, through its subsidiaries and affiliates, has contracted to
procure and to supply all of the soy oil for the Beatrice Biodiesel facility, and to market the entire
biodiesel output.
CJ Schneider (“CJS”). CJ Schneider Engineering of Omaha, Nebraska is an experienced ethanol,
biodiesel, and oil seed process engineering company owned by Praj Industries Limited and is the detailed
design engineer for the Project. (www.praj.net) and (www.cjsengineering.com)
A-2
Project Management
USCB is currently the manager and sole member of BBL, a manager managed limited liability
company. Current BBL officers are Peter Anderton, President and Treasurer and Carla Andres, Vice
President and Secretary. The current USCB Advisory Board also acts in an advisory capacity to BBL.
Current USCB Management & Advisory Board
USCB, a Delaware corporation, is a wholly owned subsidiary of Agri Energy Limited f/k/a
Australian Ethanol Limited, an Australian publicly held company listed on the Australian Stock Exchange
(ASX code AEL).
The following are the current executive officers and Advisory Board members of USCB:
Peter Anderton is the Chairman and CEO of Agri Energy Limited and Chairman of the USCB
Board of Directors. Mr. Anderton has over 20 years experience in engineering, construction and
project development principally associated with the mining and industrial sector. Mr. Anderton
has extensive international experience managing projects and companies both private and public.
Previous senior positions held include Managing Director of Cornet Resources Limited,
Managing Director of Minproc Engineers Limited, and Managing Director of Australian Silicon
Limited.
Carla Andres is the Chief Executive Officer of USCB and a member of the Advisory Board.
Ms. Andres previously served as a corporate attorney with Godfrey & Kahn, S.C., advising
clients on financial restructuring, finance, and mergers and acquisitions. While at Godfrey &
Kahn, S.C., she was also at the forefront of their Renewable Fuels Team that is highly regarded in
the U.S. biofuels industry as one of the premier legal organizations. Also during her tenure at
Godfrey & Kahn, S.C., Ms. Andres served as legal advisor to Australian Ethanol Limited. She is
a graduate of Ohio State University and received her J.D. from Villanova University.
David Blythe is the Chief Technical Officer of USCB and a member of the Advisory Board. Mr.
Blythe is a professional engineer with over 20 years experience in the global energy industry in
project management, construction and operations of nuclear power facilities throughout the US.
In recent years, Mr. Blythe has consulted and advised companies in the biofuels and agricultural
industries. He is a graduate of Washington State University, holds an MBA in International
Business from Duke University, and is a certified Project Manager by the Project Management
Institute. Mr. Blythe has managed the Beatrice Biodiesel project and will also manage the
engineering and construction of the ethanol project.
Michael Douglas is the Assistant Dean, Professor of Biochemistry and Molecular Biology and
Director of the Office of Technology Management at University of Arkansas Medical Sciences,
Little Rock, Arkansas. He has held the role of Chief Executive Officer and Chief Scientific
Officer of Novactyl, Inc., a pharmaceutical development company. Dr. Douglas’s previous
experience includes the Executive Vice President and Chief Scientific Officer of Fleming
Pharmaceuticals, Chief Executive Officer and Chairman of the Board of Sigma Diagnostics,
Professor and Chairman of Biochemistry and Biophysics and the Curriculum in Genetics and
Molecular Biology and Biotechnology at the University of North Carolina Medical School,
Chapel Hill, North Carolina. Mr. Douglas is also a Director of Agri Energy Limited.
Michele Graham is a member of the Advisory Board of Directors and is the Agri Energy
Limited, Director of Strategy and Research. Michele is a qualified engineer with a Bachelor of
A-3
Engineering in Civil Engineering with 1st Class Honours and the University Medal. As a senior
consultant with a boutique Australian strategy consultancy and an analyst with Anderson
Consulting, Ms. Graham has advised global clients in industries as diverse as manufacturing,
energy, financial services and information technology. Recently, she has consulted and advised
companies in the biofuels industry in Australia. Ms. Graham also holds an Executive MBA from
the Australian Graduate School of Management and an MPhi from Cambridge University.
Raymond Zipprich (CPA) is the Chief Financial Officer of US Canadian Biofuels, Inc. Mr.
Zipprich’s previous positions include Senior Vice President and Corporate Secretary at Novactyl,
Inc. and Vice President and CFO of Fleming and Company Pharmaceuticals, Inc. Mr. Zipprich
has a breadth of experience in planning and leadership across a range of areas including
operations, finance, accounting, information systems, human resources, debt and equity
financing, investor relations and corporate governance.
Beatrice Biodiesel Plant Management
Brent Frahm is the Plant Manager for Beatrice Biodiesel, LLC. He has a decorated background
as a production engineer with Borden, Inc., a process engineer with Farmland Industries and plant
manager for Koch Industries. While the Beatrice plant is preparing for operation in the final
quarter of 2007, Mr. Frahm is currently staffing the Beatrice Biodiesel team and ensuring BBL
will be a world class production facility
Tammy Wurm is the Office Manager of Beatrice Biodiesel, LLC. Ms. Wurm received her
A.A.S. degree in Accounting in 1994. She came to BBL from Nebraska Heart Hospital, where
she was instrumental in the start-up/opening of the hospital in May 2003 as the Payables
Accountant. She also has extensive accounting experience in the local manufacturing industry.
Ms. Wurm’s is a member of the International Accounts Payable Professionals, the Beatrice
Human Resource Association and the local Opti-Mrs.
Leonard Blair, Operations Superintendent. Mr. Blair joins Beatrice Biodiesel with chemical
processing experience in Fertilizers, Nitric Acid, Soy Bean meal crushing, and Soy Oil extraction.
Mr. Blair has also done Nebraska Department of Environmental Quality and Federal EPA
environmental reporting and has been a working part of Process Safety and Risk Management
since their OSHA inception. His most recent position before joining BBL was Chief Boiler
Inspector and inspection program manager for the State of Nebraska.
Jessi Thiede Colgrove, Plant Chemist. Ms. Colgrove holds an associate’s degree in
Environmental Laboratory Technology from Southeast Community College. She interned at
Pfizer Animal Health in Lincoln as a Laboratory Assistant in the Chemistry Control Laboratory.
Ms. Colgrove has served for five years as a lab technician at the Ag Processing soybean oil
refinery in Hastings, Nebraska where she was instrumental in the start up of both the plant and the
laboratory. Ms. Colgrove was promoted to the position of laboratory supervisor, a title she held
for an additional two years before accepting the Plant chemist position at Beatrice Biodiesel. Ms.
Colgrove will receive her bachelor’s degree in Business Administration from Bellevue University
this June.
Lawrence Keuten, Warehouse Supervisor. Mr. Keuten graduated from Southeast Community
College of Beatrice with a degree in Business Management. Mr. Keuten started his career as a
construction electrician before becoming an instrumentation electrician with Agrium Fertilizers.
While at Agrium, Mr. Keuten progressed from I&E tech to SAP expert user to maintenance
manager. He also served on the corporate tech council and facilitated the implementation of best
A-4
maintenance practices for the various plants in the Agrium system. Upon leaving Agrium, Mr.
Keuten went to KAAPA Ethanol in Minden, Nebraska and learned the ethanol process of an ICM
plant. From KAAPA, he went to Cornhusker Energy to develop a maintenance program for a
plant of Vogelbusch design.
Capital Costs and Schedule
The total estimated cost of the Project is $60 million, which includes equipment and material
costs, installation, and interest during construction, financing costs, and working capital. The cost
estimate is based on the available Project basic engineering information, equipment and materials vendor
quotes, and local labor and fabrication costs. The estimate is itemized by component, with all costs taken
from competitive bids and material lists for the Project. The following shows sources of funds for the
Project and a breakdown by major components of the Project costs:
Sources of Funds:
Owner’s Equity (including Bond proceeds)
Construction Loan*
Total Sources of Funds
$32,000,000
28,000,000
$60,000,000
Uses of Funds:
Plant Construction
Project Development/Engineering
Construction Contingency
Capitalized Interest
Management/Staff/Legal
Equipment
Insurance and Sales Tax
Inventory/Working Capital
Total Uses of Funds
$38,308,000
3,980,000
3,891,000
1,321,000
3,029,000
1,000,000
971,000
7,500,000
$60,000,000
The cost to build the Plant will be approximately $1.05 per gallon, excluding working capital; this
compares favorably to other biodiesel plants with costs of approximately $1.42/gallon (see Sources and
Uses in the Summary of Terms).
Completion of construction is estimated to be August 2007. The plant is scheduled for
commissioning the month of September 2007, with biodiesel production is expected to commence in
September or October 2007, and full production anticipated by November 2007. As of July 25, 2007,
approximately 85% of the construction of the Plant has been completed. A live view of the construction
process can be seen at http://www.beatricebiodieselcam.com/.
Permits and Approvals
Included among the permits required to complete the construction and operations of the Project
that have been or will be obtained by the Company are the following:
*
Term loan and revolving loan only; does not include seasonal letter of credit also available to the Company.
A-5
1.
Permits/Approvals Required Before Construction
Permit/Approval
Status
Air Quality Construction Permit
Complete
NPDES Construction Storm Water Permit Complete
Zoning
Complete
2.
Permits/Approvals Required During Construction/Prior to Operation
Permit/Approval
Timeline
FFA Crane Usage Permit
Prior to using crane
over 100 ft.
Permits are required
before the start of
construction.
Application must be
received at least 10 days
prior to “installation” of
the tank.
Approval required
before erection of
methanol column.
Permit must be issued
prior to the construction
of any wastewater
handling system
Must be obtained by
electrical contractor
prior to starting
construction.
Must be obtained by
electrical contractor
prior to starting
construction.
Must be obtained by
plumbing contractor
prior to starting
construction.
Must be obtained by
plumbing contractor
prior to starting
construction.
Must be obtained by
Boiler Contractor (R.W.
Rice) prior to
commencing operation.
City of Beatrice Building
Permits
Permit to Install
Aboveground Petroleum
Storage Tanks
FFA approval of
methanol column height
Wastewater Facility
Construction Permit
HVAC Permit – State of
Nebraska
Electrical Permit
Plumbing Permit
Plumbing Permit
Boiler Permit
A-6
Required
Date
Complete
Status
Approval received 3/27/07.
Complete
Permit #’s Issued 06-398,399 07003,004, 005, 006.
Complete
Final tank information was received
on 2/7/07, and application was
submitted on 2/14/07.
Complete
Approval received 3/27/07.
Complete
Need for tie-in of the system only.
Waiting on final approval of
drawings from NDEQ.
Complete
Permit #07-003 issued 2/13/07.
Complete
Wiring Permit # 2010425.
Completion Date 5/17/07.
Complete
Permit #07-009 issued 2/23/07 and
#07-025 issued 5/2/07 (both taken
out by HEP for underground
plumbing).
Permit #07-007 issued
1/11/07 (taken out by Lammel
Plumbing for above ground
plumbing)
Tied to Aquila construction tie-in to
Kinder Morgan and projected startup date. Installation of boiler and
auxiliaries commenced in April,
start-up in June.
Complete
8/1/07
Permit/Approval
Timeline
Required
Date
8/1/07
Industrial Track
Agreement
Must be complete prior
to facility start up.
Railroad Easement
Agreement
8/1/07
NPDES Industrial Storm
Water Permit
Notice of Intent (ISWNOI) must be received
by NDEQ at least 30
days prior to facility
start up.
Permit must be issued
prior to discharge of
wastewater to a POTW.
Methanol tank must be
registered with the State
Fire Marshall prior to
operation.
8/1/07
Nebraska Pretreatment
Permit (NPP)
Hazardous Substance
Storage Tanks
Registration – NE State
Fire Marshall
Hazardous Materials
Registration – NDEQ
SPCC Plan Approval –
NDEQ
Complete
Complete
Status
LOI in place with BNSF. Final
agreement will be completed after
approval of final track design.
LOI in place with BNSF. Final
agreement will be completed after
approval of final track design.
Has not been submitted – pending
development of the facility SWPPP
addressing storm water runoff and
exterior housekeeping, which is a
primary condition of this permit.
Draft permit was received from
NDEQ on 3/6/07 for comment and
review.
Methanol tank design submitted to
State Fire Marshal for approval.
8/1/07
To be provided by BBL.
8/1/07
Hazardous Waste
Activity Notification –
NE State DOT
Presence of Hazardous
Substances Notification –
NDEQ
Stormwater Pollution
Prevention Plan
(SWPPP) approval –
NDEQ
Occupancy Certificate
Approval – NE State Fire
Marshall
8/1/07
Submittal Pending development of
facility Spill Prevention, Control, and
Countermeasure Plan by BBL.
8/1/07
8/1/07
8/1/07
IRS Form 637 – Biofuels
Producer Registration
Must be registered with
the IRS to claim a credit
of payment.
Complete
8/1/07
Hazardous Chemical
Inventory – NDEQ
A-7
Permit/Approval
Timeline
State Fire Marshall Plan
Review
Plan approval must be
obtained prior to facility
start up.
OSHA Process Safety
Management (PSM)
EPA Fuel Additive
Registration
EPA Forms 3520-12,
3520-20A, and 352020B1
Product must be
registered with the EPA
prior to introduction
into commerce.
3.
Required
Date
8/1/07
8/1/07
9/1/07
Status
This is pending finalization of fire
protection design by fire protection
contractor (Continental Fire
Sprinkler CO.), who will submit
plans.
To be provided by BBL – requires
biodiesel sample from pant
independently analyzed and
composition results submitted to
EPA for registration.
Permits/Approvals Required During Operation
Permit/Approval
Timeline
Status
Air Quality Operating Permit Must be submitted within 12 months of start up Submittal pending.
Licenses
Axens is a provider of second generation catalyst technology for the production of biodiesel.
Institut Français du Pétrole (IFP) is the parent company. The IFP is an international leader in refining,
petrochemicals and the natural gas market. Axens offers products including processes, catalysts,
adsorbents and equipment, in a number of industries, including biodiesel.
Axens has granted Beatrice Biodiesel, LLC a license to use the Axens proprietary second
generation catalyst technology, through its Technology Transfer Agreement dated March 10, 2006. This
license includes the technical information to design, build, operate and maintain reactor unit using the
Axens process, and has a ten year term. The Technology Transfer Agreement contains a warranty by
Axens regarding quality of the technology, production abilities and output quality. Axens has committed
to provide access to its current facilities for training and technical improvement purposes to Beatrice
Biodiesel, LLC. Finally, an Axens representative will be on site in Beatrice during start up to assist in
any issues that may arise as the plant goes from the construction to operations phase.
Operating Agreement
As the parent company and sole member, it is the business plan of USCB to provide management
services to its subsidiaries, allowing significant economies of scale and profitability, over a relatively
short period of time, as management operations gain specific experience and overcome the inevitable
start-up “bugs”.
Specific resources to be provided by USCB include the development of risk management tools,
through its existing relationship with Moving Parts, LLC, a CHS referral, to reduce profit variability and
avoid financial losses. Risk management services will include the use of forward contracting, hedging,
options, and other techniques for feedstock supply and offtake contracts.
A-8
Plan of Marketing
The Energy Policy Act of 2005, signed into law on August 8, 2005, requires that petroleum
refiners use a minimum amount of renewably-derived ethanol in their refined product pools. The
minimum requirement begins at 4 billion gallons in 2006 and increases by 700 million gallons per year
until 2011. By 2012, refiners will be required to use at least 7.5 billion gallons per year of ethanol, and the
number will escalate automatically each year thereafter based upon a formula (unless Congress modifies
the standard before then).
Provista Renewable Fuels Marketing, LLC (“Provista”), formerly United BioEnergy, LLC, will
market 100% of the biodiesel under a five-year agreement. Provista will also coordinate shipping and
negotiate rail car leases. Provista is a joint venture owned by CHS and US BioEnergy Corporation, LLC
of Brookings, South Dakota (“US BioEnergy”). US BioEnergy is one of the largest producers of
biofuels in the country with three ethanol plants and at least five more ethanol plants under construction.
They are publicly traded on the NASDAQ under the ticker USBE. The Provista joint venture includes
CHS wholesale ethanol and biodiesel marketing, “spot” sales and related storage and rail car
transportation arrangements, and US BioEnergy’s ethanol marketing contracts for over 200 MGY,
wholesale storage and rail transportation contracts, and the marketing of ethanol and biodiesel from all
current and future US BioEnergy plants.
The biodiesel marketing fee will be 2.5% of the selling price. BBL anticipates using forward
contracts to sell approximately 70% of their 6-9 month biodiesel production and selling 30% of their
biodiesel in the spot market.
A-9
APPENDIX B
TECHNICAL REPORT
ON THE PROJECT
Technologies
for the Refining, Petrochemicals & Gas Industries
&Services
Products
Jean Sentenac
President & Chief Executive Officer
A
Jean-Pierre Franck
Chief Operating Officer
xens is an established name in the hydrocarbon industry. Our objective is to be your
technology benchmark company for applications in the refining, petrochemical
and gas processing sectors. This brochure is furnished to give you a better idea of
the overall Axens offer as a technology, catalyst & adsorbent and service provider.
We hope that you will find this information of interest and will visit our Internet site,
at www.axens.net, or contact our business units for additional information.
Although our name is new, we are a company backed by nearly fifty years of commercial success.
The combination of the technology and services group with the catalyst & adsorbents manufacturing and supply business has created an efficient organization that handles your needs as
a single source.
Improving your performance and helping you to be more successful is our only business. We are
a non-aligned, pure technology company. We do not sell motor fuels or chemicals; we do not
operate service stations. There is only one thing that we do – provide technology and the products
and services that are needed to make your hydrocarbon processes operate at their top performance. And our goal is to do this better than anyone else in the world.
Axens is built on an image of reference technology – quality products that are commercially
proven, dependable, reliable and cost effective. We hope that this image is transmitted through
our corporate identity, through our technical and commercial personnel and through our
trademarks. Welcome to Axens, the home of: ACE Technology, Alkyfining, Alphabutol,
Arofining, Benfree, CRS Claus catalysts, Dimersol, EquiFlow, H-Oil, HR series catalysts, Hyvahl,
LD series catalysts, Liquefin, Manufacturing Quick Wins, Multibed, Octanizing, Oparis,
ParamaX, Prime-G+, Prime-D Toolbox, and many, many more.
Jean Sentenac
Jean-Pierre Franck
1
Built
Built on on Rock-Solid
Rock-Solid Foundations
[A Historical Perspective
Axens was created by IFP (Institut Français
for the refining and petrochemical industry
and to have the products required for its
process technology.
du Pétrole) on June 30, 2001 through the
merger of the Procatalyse Catalysts and
IFP’s Industrial Division traces its origins
Adsorbents company with IFP’s Industrial
to its first technology license in 1955.
Division specialized in technology licensing
Almost immediately after its creation,
and services. This provides us with a single
in 1944, IFP began assembling a first
source offering of technology, products and
class graduate school for engineering
services and enables us to more efficiently
in the fields of petroleum and motor
and rapidly respond to customer needs.
sciences and an active program to develop
improved methods and technologies for
Procatalyse was created in 1959 by IFP,
refining crude oil to motor fuels and petro-
to leverage IFP’s knowledge in catalysts
chemicals.
Moscow
Beijing
Princeton
Savannah
Tokyo
Houston
Caracas
France
Offices
Production
Agencies
Tech Service Center
4
2
Rueil-Malmaison
(Headquarters)
Solaize
Salindres
d Foundations
In 1995, the Princeton, NJ, USA based
Hydrocarbon Research Institute (HRI)
was acquired. Created in 1943 with a
long history of heavy oil and coal upgrading
Service and two marketing and technology
technologies, the HRI heritage is now an
groups: Gasoline & Petrochemicals; Hydro-
important part of Axens North America.
processing, Conversion & Claus.
[Operational Organization
Executive Management
Axens North America (Princeton, Houston)
Business Units
Axens Far East (Tokyo)
Marketing, Technology & Services
ervice
Tech S
g
Licensin
Process
ents
Adsorb
&
s
t
s
ly
ta
lyse Ca
Procata
rams
ce Prog
n
a
m
r
o
Perf
Axens North America and Axens Far East
are wholly owned companies serving the
emicals
Petroch
&
e
n
Gasoli
Claus
rsion &
e
v
n
o
C
g,
rocessin
Hydrop
[Our Mission
North American and Far East markets
Axens’ mission is to continually improve
respectively. Our operational organization
our customers’ performance. We will grow
has three business units covering: technol-
by a combination of internal growth and
ogy licensing, catalyst & adsorbent manu-
targeted alliances and acquisitions with the
facturing and supply and operational
continuous objective of providing our cus-
improvement programs. Three technical
tomers with the best overall technologies,
departments serve the business units, Tech
products and services available worldwide.
3
Worldwide Network
www.axens.net
Contact us on the web or anytime, anywhere.
We operate a worldwide network.
Our Customers Span the Globe
Our products and services are present in virtually
every country having hydrocarbon processing industries.
4
Markets Served
Axens is one of the world’s foremost
the purification of monomer-intermediates
suppliers of technologies, products and
and specialty olefins and in the production
services to the refining, petrochemical
and purification of aromatic intermediates:
intermediates and gas processing markets.
benzene, toluene and paraxylene.
Our strong position in petroleum refining
In gas processing, Axens is a long-standing
covers virtually every area from naphtha
leader as a performance catalyst supplier
hydrotreating through vacuum residue
in sulfur removal by the Claus process.
conversion and offers commercially proven
The company is also entering the natural
solutions for clean fuels production.
gas liquefaction field (Liquefin process)
and positioning itself in GTL technology,
We are a world class provider in the petro-
based on Fischer-Tropsch synthesis.
chemical sector, with leading positions in
Technology Licensing
Axens is a premier technology provider.
We deliver to our customers: optimization
and feasibility studies; basic engineering
packages for small revamps through to
major grassroots complexes; hazop studies;
detailed engineering reviews; and much,
much more.
5
The
Motor Fuels
The Motor
Fuels Expert
Gasoline & Diesel Fuel Solutions
Axens’ advantages: our human resources,
our commitment to continuous develop-
[Gasoline
ment and the search for improvement, and
Gasoline production and specification at-
our large array of technologies, products
tainment are areas in which we are market
and services. One of our strongest core
pace setters. Our Octanizing (CCR Reform-
businesses is in motor fuels production,
ing) and R2R (FCC) technologies are
purification and optimization.
cornerstones for gasoline production.
Our Prime-G+ (naphtha desulfurization),
Benfree (benzene reduction), Ipsorb (recycle
isomerization), C 5 /C 6 isomerization
and ethers technologies are key process
blocks for ensuring gasoline specification
attainment. Classed by the number of
awarded licenses, all of these technologies
are either worldwide market leaders or
second in their categories.
6
[Diesel
[Manufacturing Quick Wins
We have been in diesel hydrotreating
Our Performance Programs team provides
longer than in any other refining technol-
studies to optimize production goals
ogy. Our Prime-D Toolbox is a market front-
through many different services, such as:
runner in ensuring high quality, ultra low
hydrogen hunting – to find unexploited
sulfur diesel (ULSD). We provide high
refinery hydrogen; carbon dioxide auditing
activity and high stability HR series
– to reduce fuel and electrical consumption;
catalysts and the most advanced reactor
crude assay studies – to optimize refinery
internals in the industry – EquiFlow. When
margins; and advanced process control
it comes to diesel production, we have
and complete refinery optimization studies.
technologies that are either dedicated
to producing ULSD or to producing diesel
in combination with feeds for other units,
for example: H-Oil, Hyvahl, MHDC
(mild hydrocracking), HyTail (intermediate
fraction hydrocracking) and HDC-HP
(high severity hydrocracking).
7
Refining
Refining
Providing technological solutions for all production goals
Naphtha & Middle Distillates
Benfree, CCR Octanizing, Dualforming, Ipsorb, Hexorb, Prime-D Toolbox
FCC Complex
Alkyfining, Catacol, Dimersol-G, Prime-D Toolbox, Prime-G+, Polynaphtha, Selectopol, R2R
8
Residues & Heavy Fractions
HDC-HP, H-Oil, HyTail, Hyvahl, MHDC, R2R, Solvahl, T-Star
Lube Oils, White Oils, Paraffins
HDC-HP, Revivoil, Selectopropane
9
Petrochemicals
Petrochemicals
A Pacesetter in Olefins & Aromatics Purification
Selective hydrogenation, aromatics production & purification,
and homogeneous catalysis are synonymous with Axens.
Our satisfied customers have made us a leading provider of petrochemical intermediate
production and purification solutions.
[Olefin Processing
Steam crackers are the heart of the world’s
olefins production. Olefin building blocks are
required in ultra high purity to respond to
the quality requirements for polymerization
reactions. Axens has the largest portfolio of
olefin processing technologies and catalysts
in the world and a cumulated operating
C 4, C 5 and pygas cuts. Olefin transfor-
experience that exceeds 30 centuries.
mation reactions are Axens best sellers,
including: Alphabutol, for the production
10
Our LD series catalysts are the clear market
of high purity butene-1 from ethylene;
choice for all liquid phase hydrogenation
Dimersol, for the production of hexenes and
reactions including the purification of C3,
octenes from propylene and butenes.
Olefins - C 2 to C 5
+
Alphabutol, AlphaSelect, Dimersol-X, GHU-1, GHU-2, Iso-5, Isopure, Meta-4
11
Aromatics - The ParamaX Suite
Arofining, CCR Aromizing, Eluxyl, Oparis
[Paraxylene Purification
in PX production and purification technol-
Benzene, toluene and paraxylene (BTX)
ogies with its well known ParamaX Suite
are produced by naphtha steam cracking
of Aromatics Technologies. Our Eluxyl
and by employing CCR reforming
process is at the heart of the ParamaX Suite
technology (Octanizing and Aromizing).
and is known for its excellence in
The xylenes fraction is composed of
operation, high capacity trains, multi-valve
ethylbenzene and three isomers – ortho,
system and high stability molecular sieve
meta and paraxylene. The paraxylene
adsorbent.
(PX) is used as a building block
in polyethylene terephthalate (PET),
employed in plastic bottles and in a vast
12
Axens has distinguished itself as a leader
[Cyclohexane Production
array of fibers. The PX is required in high
Axens is also the world leader in high purity
purity to provide the cleanest, brightest
cyclohexane production through benzene
final products.
hydrogenation with our HC series catalysts.
Gas
Gas
We provide processes that address this rapidly expanding market.
[RAM
is no longer limited by a single cryogenic
heat exchanger. Efficient, low cost, multiple
Downstream processing and environmental
plate-fin exchangers are employed. Heat
needs require removing arsenic and mercury
exchange duty, traditionally assured by two
compounds from natural gas and conden-
very different refrigeration systems, is
sate streams to the parts-per-billion level.
balanced so that identical drivers can be
Axens’ processes recover these contami-
used for the main compressors. Operation is
nants for proper disposal rather than release
simplified and the costs for spares and
them to the local environment.
maintenance are considerably reduced.
[Liquefin
[Gasel
This new, highly competitive natural gas
The development of technology for Fischer-
liquefaction process has many advantages
Tropsch conversion of natural gas to paraf-
affording a capital cost that is substantially
fin liquids is well underway and due to be
lower than conventional schemes. Its
commercially available in several months.
modular construction means that train size
The process is particularly attractive for
“stranded” sources of natural or associated
gas. Diesel cuts produced from this process
have zero sulfur and cetane numbers near
75, making them ideal for diesel blending.
[Multibed
Multibed processing removes contaminants
such as liquid or gaseous water, CO2, H2S
and chlorides from gas or condensate
streams using combinations of specialty
alumina and molecular sieve adsorbents.
The ability of these patented systems to
withstand liquid slugs and higher-thannormal concentrations of water, makes this
process a hit with gas processors.
13
Catalysts,
Adsorbe
Catalysts,
Adsorbents, Products
We are committed to the development,
manufacture and service of catalysts &
adsorbents for the refining, petrochemical
and gas markets.
Two manufacturing locations, Salindres,
France, and Savannah, Georgia, USA,
produce catalysts and alumina gel.
A substantial portion of our revenue
is reinvested into catalyst discovery
We provide a complete service program that
and improvement so we can offer the best
includes start-up assistance, performance
catalysts available today and in the future.
follow-up, analysis of spent material,
regeneration recommendations and performance prediction. We furnish our
customers with all the technical services
needed during the entire life of our
products. The services covered during
the products’ final phase include:
End-of-cycle catalyst analyses
for regeneration decision
Technical expert evaluation
and recommendations on re-use
Unloading supervision
Product disposal assistance
14
nts, Products
[Catapac
Catapac is an ultra high density loading
technique which is used to add more
catalyst to the same reactor volume: up to
25% additional catalyst. With Catapac, you
get more from your initial investment by
using your reactor volume to its maximum
potential.
[Reactor Internals
Our unique line of EquiFlow reactor
internals makes better use of our excellent
catalysts. EquiFlow optimizes flow distribution at the entrance of each catalyst bed
and also homogenizes mixed fluids inside
reactors, thereby ensuring the longest cycle
lengths of operation. This reduces the
number of change outs, improves on-stream
factor and reduces overall catalyst costs.
Texicap offers substantially higher performance from fixed bed radial reactors,
where low pressure drop is critical, such as
in reforming units. Application of Texicap
reactor internals can provide a combined
addition of up to 15% additional throughput, higher activity or longer cycle length
to your operations.
[Toll manufacturing
If you have a particular catalyst or adsorbent
need that is not directly available from our
catalogue, contact us and we will discuss
with you the possibility of making a special
product for your needs.
15
Hydrotreating
With the programmed improvement in fuel
of-the-art manufacturing facilities, brings you
product specifications and increased demand
the best catalysts through the ACT, HR, HT,
for middle distillates, hydrotreating catalyst
HTH, HTS, HYC, HMC and HOC series.
technology has become crucial to the refining
This line of products is strongly supported
industry. Axens offers a complete product
by commercial experience and a complete
range of hydrotreating and hydroconversion
offer of services and proprietary reactor
catalysts for naphtha and gas oil to residue
internals technology: EquiFlow. For more
applications. Axens’ investments in catalyst
information, ask about our ACE Technology,
discovery & development and in our state-
dual-activity hydrotreating catalysts.
Hydrogenation
Hydrogenation is a key purification process
for both the refining and petrochemical
industries. Its growing importance is driven
by the need to optimize plant operations in
order to comply with increasing stringent
specifications. Our broad experience and
our catalyst technology bring you the best
in performance, reliability and technical
support. In addition to workhorse catalysts
such as the LD series, we offer a wide range
of products that can be adapted to virtually
any hydrogenation scenario.
Reforming & Isomerization
Axens is a leader in naphtha reforming.
for over four decades, providing a complete
We have been very active in this market
range of reforming catalysts for semiregenerative,
cyclic
and
continuous
regeneration processes suitable for all
unit designs. Our portfolio also includes
aromatics production and isomerization
catalysts. Our AR, CR, RG, ATIS, IS series
products come with a complete range of
expertise and services and proprietary
techniques such as Texicap and Catapac.
16
Sulfur Recovery
Environmental regulations concerning fuels
and industrial wastes present a serious challenge to refiners who must treat increasing
amounts of acid gases while simultaneously
improving sulfur recovery. For years, we
have brought to the market-place attractive
solutions for sulfur recovery as well as a
complete portfolio of solutions for sulfur
reductions in fuels. Our AM, CR, CRS, TG
and TGS series products fit your needs.
Axens is the world’s leading supplier for topof-the-line Claus sulfur recovery catalysts.
Guard Beds
As a pioneer in the field of noble metal
poisons such as sulfur, arsenic and mercury,
catalyst utilization and protection of these
and for particle contaminants such as
catalysts from premature deactivation,
polymeric materials, rust, sand and sludge.
Axens offers a full range of guard bed
Ask us about our ACG, CMG and MEP
materials to trap catalyst contaminants and
series products.
Adsorbents
Adsorption is a well-known technique that
is employed to purify many different gas and
liquid streams. Axens, with its unique range
of specialty aluminas and molecular sieves,
squeezes the best performance from your
units. With decades of experience in
adsorption technology, we not only supply
products (AA, SAS and MS series) but also
a global expertise and services. Our
commercially-proven Multibed technology
provides an optimized combination of our
adsorbents for improved operations.
17
w
In
serving
you
better
In serving you better
we fulfill our mission
Customer Service is our business
[Start-up Assistance
As part of a process licensing or catalyst purchase agreement, Axens provides start-up
assistance, inspection, pre-commissioning,
commissioning, catalyst loading and all startup and operational know-how to ensure that
your unit performs to expectations.
[Training
Axens has a wide selection of training programs – from on-site and classroom type
operator training for Axens’ units to training
programs for operators and foremen
through IFP’s Continuing Education
Center. Additionally, the IFP School offers
a master’s degree program for Chemical
Engineering. Axens also provides specific
and generic operator training simulators
for most process applications.
[Follow-up Assistance
Monitoring and assistance continues once
your unit is up and running. We offer optimization studies, evaluation and enhancement, performance monitoring, consulting,
analyses, troubleshooting, regeneration
consulting, catalyst and adsorbent loading,
catalyst recovery to ensure optimal performance of your units, refineries, gas plants
and petrochemical complexes.
18
e fulfill our mission
Advanced Services
Axens is well-equipped with advanced
services to further improve customer
profitability. We bring together the power
and resources backed by five decades of
discovery, development, reaction kinetics,
modeling, process know-how and design,
control and optimization, commercial startups & operations, with safety and environmental considerations ever present.
The advanced services offered through
the Performance Programs Business Unit
are organized along three lines:
[Process Simulation
Operator Training Simulators and Process
Operations Simulators, based on customized
reactor kinetic models, provide accurate
Advanced Process Control – Process
simulations that are well fitted to your
expertise supported by proprietary infer-
units.
ential models provides the definition of
[Refining Expertise Services
the best Advanced Process Control (APC)
strategies. Associated with a powerful multivariable predictive controller, these strategies
These services cover refinery studies as
provide cost effective APC implementa-
well as hydrogen and CO2 management.
tions. Economic optimization is consider-
The main objectives are to package a large
ably improved by use of rigorous kinetic
range of expertise to supply optimized
models.
refinery operations taking into consideration market constraints and site issues.
[Profit Optimization
Manufacturing Quick Wins – Axens’ extensive operations know-how and technology
background are applied to develop plans for
production enhancement. This results in
rapid implementation solutions to generate
a fast return.
19
Integrating
Core Competencies
Integrating Core
Competencies
Strong R&E Support
The unending demand for lower investment costs, lower operating costs, lower
emissions, higher yields, easier operations,
shorter down times, has led to many
improvements which require multiple steps
of verification before commercial implementation. Pilot plant verification is a key
to commercial success. Axens’ research
and engineering (R&E) programs focus on
developing and approving new processes
and products and improving existing ones
to better meet your needs.
[
of catalysts and adsor[Scale-up
bents
from laboratory to commercial
Research & development activities
production is performed in pilot plant
are principally carried out at two sites in
facilities at the catalyst and adsorbent
France: Salindres (near Marseille) and at
manufacturing site in Salindres.
the IFP Development Center in Solaize (see
photo below).
[
[Engineering and Design
for new
process designs and improvements and for
Pilot plant test facilities for testing
grassroots and revamping projects are carried
new catalysts and developing new processes
out in the Rueil-Malmaison, France and
and process know-how are principally
Princeton, New Jersey offices.
located at IFP in Solaize.
IFP Development Center
20
01 47 30 12 72
www.axens.net
02/2004 - Photos : Axens, IFP, Scopimag, Photodisc, X -
Axens
89, boulevard Franklin Roosevelt - BP 50802
92508 Rueil-Malmaison Cedex - France
Tel.: +33 1 47 14 21 00
Fax: +33 1 47 14 25 00
for
sustainable development
in the field of energy
Innovating
products.
of petroleum
and the use
i c a l s, e n g i n e s
refining, petrochem-
exploration, production,
of oil, gas and their substitutes:
Its activities cover the whole sector
information in the field of energy.
research & development, training and
an independent center for industrial
IFP (Institut Français du Pétrole) is
IFP
I
n transport applications, there will be no significant alternatives to hydrocarbons, in particular oil and gas, for many
decades to come. In this context, IFP's vocation is to innovate,
develop and transfer the technologies that will enable the oil,
gas and automobile industries and the wider community to
achieve sustainable development while preserving the environment.
Founded in 1944, today IFP is an acknowledged player on the French, European
and world oil and energy scene. It is more determined than ever to efficiently take
up the new challenges posed by sustainable development in the energy field,
by providing authorities and industry with the manpower, knowledge and
technologies they need to answer the questions raised by future energy supplies
and protection of the environment, at a cost acceptable to our societies.
A MAJOR PLAYER ON THE
INTERNATI ONAL ENERGY SCENE
To be effective, this R&D work must be backed up by a substantial training
and information drive, in order to maintain IFP’s scientific and technical skills
y Dissemination of scientific, technical and economic knowledge to help
institutional players and the oil and gas industry, with, on the one hand,
an active policy of publishing articles and conference papers and writing books,
and, on the other, a comprehensive range of information, study and technical
and economic consultancy services.
engine industries, extended by the continuing education programs of IFP Training.
level, either alone or with partners from the scientific and industrial communities,
the world offers a very broad range of programs in the professions of the oil, gas and
y Training provided by the IFP School and open to college graduates from around
political decision-makers and the general public.
data available to the greatest possible number of people — industrialists,
and transfer them to coming generations. It must also make reliable, objective
both French and international. The result of this work is a continuous stream of innovations, enriching a scientific and technological heritage based on a portfolio of
more than 12,500 "living" patents.
consumption and drastically reducing emissions of pollutants, including greenhouse
gases. Its work is based on fundamental and exploratory research at the highest
IFP's Research and Development (R&D), which has a marked industrial focus, is
aimed at expanding and diversifying access to oil and gas resources, controlling
Organized around the four fundamental areas of the oil and gas industry (explorationreservoir engineering, drilling-production, refining-petrochemicals, engines-energy),
Finally, IFP pursues an active policy of cooperation with SMEs, thereby helping
to strengthen these companies technologically, and thus contributing to job
creation, by providing them the benefit of its skills and know-how.
represents an important intermediary for the industrial development of IFP’s
technological innovations.
covering the entire petroleum service and supply sector, from consultancy to
engineering and the supply of products, equipment and services. This group
Through its direct subsidiaries and its interests in petroleum service and supply
companies, IFP heads a group of international dimensions with activities
IFP's strategy and of its internal policy.
and social equity — are at the core of
growth, protection of the environment
development — economic
sions of sustainable
The many dimen-
atives and substitutes). The response to this quantitative challenge of reserves
has now been relatively well defined, but there is still a need for considerable
technological progress, especially in:
• improving the success rate in exploration;
• significantly increasing the percentage of oil recovered;
y renew, extend and diversify world hydrocarbon resources (oil, gas, deriv-
IFP's research topics are accordingly organized around two strategic themes:
In this context, R&D, IFP's core business, must innovate and conceive technologies to ensure that the world's energy supply is adequate, sustainable and
geographically diversified.
Insofar as there is currently no form of energy capable of replacing oil on a large
scale and for an acceptable cost, especially in transport applications, hydrocarbons
(oil and gas) will continue to cover the bulk of world energy needs for the next
40 years.
and gas. For the oil and gas industry, this poses the major challenge
of renewing reserves while protecting the environment on both a local and
a global scale.
W
orld energy needs are expected to double by 2050, and, for many
decades to come, nearly two thirds of these needs will be met by oil
IFP
• extract as much energy as possible from each barrel produced;
• control consumption, limit discharges, etc.;
• design processes (refining, petrochemicals and gas processing) and products
(catalysts and adsorbents) that comply with environmental standards;
• minimize the impact of transport on the environment (improve fuel quality,
reduce both consumption and pollutant emissions);
• develop renewable forms of energy, such as biomass (and in particular biofuels);
• develop technologies that significantly reduce greenhouse gas emissions,
in particular technologies for the trapping and sequestration of CO2;
house effect, through the production and consumption of oil and gas. Here, a vast
R&D drive will be needed to:
y reduce the impact of the oil and gas industry on the environment
For the oil industry, the stakes are high, because the challenge is to break the
chain that leads to the rise in CO2 content in the atmosphere and to the green-
• exploiting unconventional forms of petroleum — extra-heavy crudes from
the Orinoco belt, Athabasca tar sands, etc.;
• cutting the costs of liquefying natural gas and of transporting LNG;
• converting natural gas and other resources (heavy products, coal, etc.) into
high-quality liquid fuels;
• exploiting offshore reservoirs in very deep or ultra-deep water (depths of
2,000 to 3,000 meters);
etc. — so that decision-makers are in possession of all
the scientific, technical and economic data they need
on which to base the choices that must be made
in the field of energy, choices that will involve
future generations. This is the whole purpose
of IFP's determined efforts to disseminate
its knowledge.
In this work in favor of sustainable development, IFP's R&D benefits from close,
day-to-day synergies with IFP's training and information services. Through
the training dispensed at its school, IFP aims to train professionals for the oil
industry of tomorrow and make them aware of all the issues. But it is also determined to provide totally transparent information to the greatest number
of people — industrialists, the authorities, the general public,
of hydrogen from fossil resources and from biomass.
• conceive technologies that will allow the clean and economical production
A PLAYER
IN SUSTAINABLE DEVELOPMENT
in its industrial development activity.
in the dissemination of its knowledge or
whether in research and development,
day-to-day work of its staff,
activities and guides the
the heart of IFP's
Innovation lies at
• in the fields of reservoir exploration and exploitation, Fraca software, marketed
since mid-2002 by Beicip-Franlab, developed by IFP to give the industry a
powerful modeling tool specially designed for fractured reservoirs. In particular,
the industry uses this software to model the geometry of fractured carbonate
reservoirs, which account for a large proportion of world reserves. This modeling, an essential preliminary to a pertinent simulation of flows in reservoirs,
is thus of strategic importance in optimizing their exploitation.
A lot of products, equipment, processes and software programs, all genuine
technological innovations derived from IFP's R&D, are today in widespread use
by the oil, petroleum service and supply, gas and automobile industries, at all
stages from exploration to end use. Examples include:
Major industrial successes
To innovate and conduct its research programs, IFP anticipates market needs,
transfers the results of its work to industry, and thereby contributes to the development and the technological competitiveness of the oil, petroleum service
and supply, gas and automobile industries. To do this, IFP has highly specialized
engineers and technicians whose scientific and technical skills encompass all
the professions in the oil and gas industry. IFP possesses cutting-edge equipment
and technologies and holds leadership roles in many professional organizations.
Industry-oriented research and development
IFP
and lower fuel consumption than the indirect-injection engine it replaces.
Yet another example of technological innovation that helps cut consumption
• in the field of engines, IFP has contributed extensively to the design and development of the first gasoline direct injection engine marketed by a European
manufacturer. This engine, mass-produced by Renault, features higher torque
gasolines, for a total production of 1,900,000 barrels a day of "green" gasoline.
• in the fields of refining and petrochemicals,
the processes developed by IFP to reduce the sulfur
content of fuels represent some of its major successes in
recent years. Marketed by Axens, an IFP subsidiary, they make
IFP a world leader in these markets. For example, 70 licenses have been granted
for the Prime-G+ process for the deep desulfurization of catalytic cracking
technology for drilling in deep water that
uses an original connection principle,
marketed under the name of Clip Riser. Both
fast and effective, these connectors are just
what operators need. Made under license
by the Kvaerner company, more than 600 of
them have been sold, making the Clip Riser
technology the current leader in its market.
• in the fields of drilling and production, the work
done has led to the development of a riser
• a portfolio of 12,500 industrial “living” patents and more than 1,000 new patent
applications filed every year;
• 500 articles a year published;
• a catalogue of nearly 950 scientific and technical works.
A dynamic policy of accumulating and building
on knowledge
• 135 doctoral researchers (20% of them
foreign researchers);
• 50 post-docs;
• an active policy of institutional mentoring,
with degree programs for engineers organized
abroad with local partner universities (in Angola,
Iran, Russia, etc.).
An active policy of training
in and by research
of fossil energy and so enhances protection of
the environment.
AND INNOVATION: FROM RESEARCH
TO INDUSTRY
these sectors.
center to cover all
European R&D
independent
lFP is the first integrated and
chemicals, engines and energy),
and production, refining and petro-
ration and reservoir engineering, drilling
areas of the oil and gas industry (explo-
organized around the four fundamental
With research and development activities
IFP is host every year to nearly 150 post-docs, who contribute to its cognitive
and exploratory research work.
engineers and technicians; their combined work
embodies scientific and technical skills in:
• Geology and geochemistry;
• Geophysics;
• Reservoir engineering;
• Applied mechanics;
• Physics and analysis;
• Catalysis and separation;
• Chemistry and applied physico-chemistry;
• Process engineering;
• Process development;
• Engines and energy;
• Technology, computer science and applied mathematics;
• Economics.
y More than 80% of the total staff of 1,860 people are
and on powerful modern equipment.
To maintain the high scientific level of its work, IFP relies both on highly qualified
personnel, often internationally recognized experts in their respective fields,
Research focusing on scientific and technical excellence
y IFP AT THE CUTTING
injection benches, optical diagnostic benches, aerodynamic benches and
dynamic engine test benches;
• about thirty models for hydrodynamic studies;
• training simulators used to understand, define and reproduce the systems
employed for the monitoring and regulation of refining processes and associated equipment;
• advanced computing resources, etc.
• an X-ray scanner for the analysis and viewing of heterogeneities, cracks,
porosity and saturation of the parts or objects studied;
• a test loop for the study of paraffin deposits and the formation of hydrates
in pipes carrying crude;
• more than 160 pilot units for the design and industrial development of refining,
petrochemical and gas treatment processes;
• about thirty engine test benches and several chassis dynamometers, diesel
installations for the transition from experiment to industrial implementation.
Examples include:
y To carry out their work, IFP's researchers have cutting-edge scientific
and computing equipment, laboratories in the various fields of expertise and pilot
In addition to many joint projects with leading French and foreign research organizations and laboratories, one of the main features of IFP's R&D is its backing
by major sectors of international industry: hydrocarbons (oil and natural gas)
and the automobile industry. In this way, IFP maintains close ties with many
industrialists around the world — about thirty oil and gas companies, about forty
petroleum service and supply companies, about twenty car manufacturers and
automotive equipment suppliers — and its research has a strong lever effect
in industry. In addition, IFP has for several decades pursued a policy of business
creation and industrial development in order to provide industrial outlets for
its research work and contribute to the growth of high-added-value companies.
scientific assets and, by promoting innovation, assuring its long-term future.
80% of the research done at IFP has a definite industrial purpose. Fundamental
research, which accounts for 20% of the R&D budget, is the key to renewing IFP's
Research with an industrial purpose
EDGE OF RESEARCH
RESEARCH AND
DEVELOPMENT
conducted at IFP.
the research and development
between its training programs and
strength from the natural synergy
gral part of IFP, the IFP School draws
international companies. As an inte-
with the expectations of French and
continuing education is in perfect line
This continuum of initial training /
form of continuing education by IFP Training.
at the IFP School, which is extended in the
and training, offering professional training
In the field of continuing education, the work of
the IFP School is extended by IFP Training. Active
both in France (through six regional training
centers) and internationally, IFP Training meets
the technical, scientific and economic training
needs of personnel from the oil, gas, petroleum
service and supply and chemical industries, from
the engineering and engines industries and from
related industries. In addition, degree programs
are now offered in major oil-producing countries,
in the context of institutional mentoring operations, in partnership with local institutions.
(industrial partnerships, degree programs abroad, a wide range of services for
students and graduates, network of partners in France and abroad, etc.), it has
acquired a very sound reputation around the globe. Over the last decade, the
number of students has doubled, from 200 to 400
students per class, with 50% foreign students.
in the oil, gas, petrochemical and engine industries. Distinguished
by its international dimension and its special ties with industry and research
O
pen to college graduates from all over the world, the IFP School offers
a complete range of training, in French and English, for all professions
TRANSFER OF
IFP is deeply committed to education
y THE
y
• 5 areas of study:
Exploration, Development and exploitation of reservoirs, Refining-petrochemicals-gas, Engines and the utilization of hydrocarbons, Economics and
management;
• 5 specialization programs for engineers in French and 5 programs in English
leading to an engineering or Master of Science degree;
• 2 specialized Masters programs;
• 4 doctoral programs;
• 35 permanent teaching staff and 500 professors
and lecturers from industry and research;
• work-study programs with the status
THE SCHOOL IN A FEW FIGURES
of salaried employee;
• more than 11,000 graduates of 113 nationalities
• programs in partnership with internasince it was founded in 1924;
tionally known universities and schools:
• nearly 2,400 applications in 2003;
Colorado School of Mines (USA),
• 400 students admitted for 2003 and 135 theses
University of Oklahoma (USA), Texas
in progress in 2003;
A&M (USA), Imperial College (UK),
• 60% of students financed directly by industry;
McGill University (Canada), Gubkin
• 45% foreign students from 40 countries;
University of Oil and Gas (Russia), etc.;
• 99% hired upon graduation;
• about fifty companies sponsored students;
• 80 companies from 50 countries regularly recruit
graduates;
• sessions in IFP's research divisions.
• more than 600 trainees every year.
The School offers recent college
and engineering school graduates:
A world-class player, the IFP School trains true professionals who are immediately operational in the oil
and gas and automobile industries. As an integral
part of IFP, the school benefits from an outstanding
scientific and technical environment and provides
an international setting for its students.
The IFP School
KNOWLEDGE
Every year, IFP Training provides nearly a thousand training sessions for more
than 10,500 participants, 2,000 of them foreign. 800 companies from 70 different countries call on the services of IFP Training.
• 6 training centers in France: Lillebonne, Martigues (near Marseille), Pau,
Rouen, Rueil-Malmaison (near Paris), Solaize (near Lyon);
• specific training matched to demand in companies in France and abroad;
• powerful modern educational resources (dynamic process and drilling
simulators, video libraries, machine and instrumentation shops, demonstration
equipment, etc.);
• a staff of 85, including 55 full-time teaching staff;
• 500 outside lecturers;
• a policy of diversifying the services provided.
IFP Training
TRANSFER
OF KNOWLEDGE
2002.
of knowledge in
dissemination
dedicated to the
organization specially
etc. —, IFP set up a new
leaders, the media, the general public,
government, scientific and industrial
on it and transmitting it to different publics —
of knowledge, of accumulating it, building
Well aware of the strategic importance
ts work in the field of oil and natural gas, their derivatives and substitutes,
and their use is hinged around two main missions:
learned societies.
IFP also disseminates its knowledge through an active policy of publishing articles
and presenting conference papers, publishing an internationally-acclaimed
scientific journal, writing reference works, organizing many international seminars and being actively represented by its researchers in leading international
In this context, using all of its scientific, technical and economic skills and
an Information and Expertise Center, that is the only one of its kind in Europe,
IFP proposes a comprehensive range of information services — documentary
services, technical and economic studies, expert appraisals and consultancy —
covering all energy sectors (except nuclear power).
y To supply government agencies, industry, technicians and researchers with
information concerning scientific knowledge and industrial techniques.
its various scientific, technical and economic areas of expertise;
y To enhance IFP's reputation and the value derived from its know-how in
I
y ACCUMULATING AND
• institutional conferences, annual gatherings of the whole (non-nuclear) energy
sector: Panorama, IFP-OAPEC Seminar, Oil Summit, Gas Summit, etc.;
• scientific symposia — “les Rencontres scientifiques de l’IFP”;
• industrial discussions — “IFP Sessions”.
Leadership roles in professional communities:
symposia, conferences and seminars
• dissemination of IFP's research results at major national and international
conferences;
• publication of articles in specialized journals, both French and foreign;
• publication of a peer-reviewed, bilingual and interdisciplinary journal — Oil &
Gas Science and Technology (OGST) - Revue de l'Institut Français du Pétrole —
open to the work of researchers with IFP and other French and foreign organizations;
• publication of reference works that are authoritative at world level;
• distribution, through Éditions Technip, of a catalogue of nearly 950 titles
(including 400 books by IFP authors) covering all fields of the oil and gas
industry and related disciplines.
Accumulating and disseminating knowledge:
publications, articles and papers
Present to various degrees at every stage of the information process, IFP continuously adapts its various
means of disseminating knowledge to a context strongly marked by rapidly evolving information and communication technologies and constantly develops new
products and/or services.
Information
• custom documentary services;
• intelligence services (standard or customized) combining several criteria
(countries, players, markets, technologies, products, regulations, etc.);
• single-client studies with a strong methodological content;
• multi-client studies;
• consulting and expert appraisal services.
High-added-value technical
and economic information products
• specialized document collection that is unique
in Europe, covering the entire oil and gas sector,
consisting of 80,000 books and 1,100 collections of
scientific journals, with access to the main scientific,
technical and economic servers and databases;
• close ties with the Bibliothèque Nationale de France (BNF), of which it is
an extension service, and with the documentation departments of large
industrial groups.
A European scientific, technical and
economic information and expertise
center
DISSEMINATING KNOWLEDGE
ACCUMULATING
AND DISSEMINATING
KNOWLEDGE
of high-value-added businesses.
contributing to the emergence and growth
outlet for the product of that research while
applied research, and to ensure an industrial
market needs, to provide direction to its
to maintain a high degree of awareness of
trial companies, with a triple objective:
policy of creating and investing in indus-
constitute a network of highly-skilled partners and offer top-of-the-range
services on the international oil, gas and derivatives markets.
These companies cover the entire oil service and supply sector, from consulting
to engineering, including the supply of products, equipment and services. They
Services, established in 2000, which has already become a recognized drilling
tool manufacturer.
• Beicip-Franlab, created in 1992 by the merger of Beicip and Franlab; Prosernat,
established in 1998; Vinci Technologies, created in 1992; and Diamant Drilling
• NovaSep, created with the involvement of IFP, was sold to its founders in 2002
and is today a supplier of equipment and services to all of the major pharmaceutical groups;
• Axens, created in 2001, from the merger of Procatalyse (established by IFP
in 1959) with an activity spun off by IFP. Axens is a world’s leading technology
and service provider and catalyst and adsorbent manufacturer in the downstream oil, gas and petrochemical sectors;
This policy has produced some notable commercial successes:
• Technip, founded in 1958, and Coflexip, created in 1971, were merged in 2001
to give birth to one of the leading companies in the oil and gas service and
supply sector for the engineering and construction of industrial complexes;
Since its inception, IFP has maintained the strategic goal of contributing to the
growth of industrial value through the creation and development of businesses.
IFP, business creator
IFP GROUP
For several decades, IFP has pursued a
y THE
Beicip-Franlab
7%
Technip
Géomath
Axens Group
12%
CGG
100%
100%
100%
100%
100%
51%
100%
IFP Canada
IFP Training
RSI
Éditions Technip 100%
Cofip
founded in 2003.
19%
100%
15%
34%
10%
50%
30%
10%
Vinci Technologies 100%
Transvalor
Thide Environnement 27%
Spinnove
Prosernat
Imagine
Geoservices
Eurecat US
Eurecat
D2T
DDS
Isis BV
IFP Investments
100%
29%
100%
25%
25%
Principia
20%
27%
18%
20%
34%
Lacaze
Entema
Dactem
CTI
Artesys
Airmeex
Isis développement 100%
3 E seed fund
fund (Emertec - Énergie - Environnement),
Banques Populaires Group, in the 3 E seed
9%
• in companies in the seed phase: IFP participates,
as a sponsor, along with the French Atomic
Energy Commission, CDC-PME and Natexis
Portfolio of IFP's main industrial
shareholdings as of 31st December, 2003
a venture capital company, to acquire minority holdings in companies in which,
in addition to putting up capital, it creates value by contributing its technological
expertise and its knowledge of the sectors in which they operate;
• in start-ups and developing companies: IFP has founded Isis développement,
innovations play an important role in value creation;
IFP also pursues an active policy of industrial investments:
• in companies (in which it may have a majority interest) in which technological
IFP, a capital investor
IFP
GROUP
fabric and to job creation.
to the strength of the nation's economic
and making a significant contribution
financial help of accredited organizations.
y work done in collaboration with other specialized agencies and with the
• processes (in particular for environmental protection and waste recycling),
• industrial equipment,
• measuring and monitoring instruments,
• chemical materials and products,
• software,
• economic intelligence;
y technological development support targeting IFP's areas of expertise, such as:
• a regional office network covering the whole country,
• the supply of original and versatile assistance and consulting resources to
support SMEs' innovative projects in the context of balanced partnerships;
y research into partnerships with SMEs that are the best performers in their
fields, through:
to the transfer of skills and know-how
to SMEs, thereby encouraging innovation
This work is reflected in:
PARTNERSHIPS
IFP devotes considerable time and effort
y SME
Every year, IFP receives approximately 200 requests for consultations, examines
70 files, signs more than 25 cooperation contracts and files about ten joint
patent applications.
IFP contributes:
• its scientific and technical skills,
• its experience in the industrial development of technological innovations,
• its resources (laboratories, pilot units, patent services and Information
and Expertise Center),
• its seal of quality and its international reputation,
• attentive contacts, with a single point of entry,
• its help in developing relations with other parties (financing organizations,
institutional partners, resource centers, etc.).
sectors, or on inventions from other research centers.
based on innovations conceived by the SMEs, or on technologies developed
by IFP in its own sectors of activity (oil, gas, energy) that are applicable to other
IFP helps SMEs to manage their projects, from the research phase to market
launch, in accordance with their own objectives. These projects are typically
SME
PARTNERSHIPS
IFP-Lyon
BP 3 • 69390 Vernaison • France
Tel.: +33 4 78 02 20 20 • Fax: +33 4 78 02 20 15
IFP (Head Office)
1 et 4, avenue de Bois-Préau • 92852 Rueil-Malmaison Cedex • France
Tel.: +33 1 47 52 60 00 • Fax: +33 1 47 52 70 00
www.ifp.fr
01 47 30 12 72
Photos : Axens, Corbis, Digitalvision, Geoservices, Graphix-images / L. Zylberman, J.J. Humphrey, IFP, Photo France / P. Chevrolat, Scopimag, X - 200402 -
>
A
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>
2004
>
Annual report
2004
>>
3
Message from the Chairman
and CEO
4
IFP at a glance
5
Facts and figures
6
Highlights
9
Executive Committee
10
Boards
12
IFP, an international player
CO
N
T
E
N
TS
IFP
>>
IFP, from research to industry
16
Research strategy for sustainable development
18
Exploration-Production
24
Refining-Petrochemicals
30
Powertrain Engineering
>>
IFP and the propagation of knowledge
38
Education and Training: IFP School
42
Information
>>
>
The IFP Group
48
IFP's subsidiaries and shareholdings
50
Portfolio of IFP's main industrial shareholdings
59
Partnership with SMEs
1
>
>
+
MESSAGE FROM
THE CHAIRMAN AND CEO
>> Olivier Appert
Chairman and CEO
>> Édouard Freund
Executive Vice-President
>
>> Georges Picard
>> Gérard Friès
2>
>>
F
ollowing 3 turbulent years, 2004 brought no peace or respite –far from it. In a market that has
become highly volatile, the American WTI price reached an all-time high of $55.7/bbl in October.
This extreme nervousness, sometimes fuelled by nothing more than rumors or wintry weather forecasts, was a result of a combination of several factors: operators’ worries concerning the international
geopolitical situation and the designation of Iraqi oil infrastructures as prime targets, the consequences of
devastating storms in the Gulf of Mexico, reserves deemed to be inadequate for the unpredictability of the
times and, perhaps most significantly, the expectation of sustained growth in the United States and strong
growth in China. However, although the market was tense, there was no shortage or oil crisis. This tension
in the oil market was accompanied by a parallel price escalation in all energy markets (gas, coal).
In contrast with past experience, global demand showed no signs of price elasticity, sustained, in particular,
by the needs of the world's biggest 2 importers: the United States and China. Realizing their vulnerability,
they even continued to build up their strategic reserves. Crude prices were also little affected by the
production increases decided upon by OPEC and non-OPEC producers to satisfy solvent demand. The inadequacy of available spare capacity undoubtedly contributed to the price explosion.
Tension in the oil market has led experts to question how long resources can last, and even to suggest the
existence of an unavoidable production ceiling in the more or less short term. A very large international
group sharply cut its estimates of its reserves, triggering deep concern and a drop in its share value. A
number of international companies failed to renew their reserves, starkly revealing the inadequacy
of investments.
Although the outstanding financial results of oil companies allow them to invest in order to ensure future
supplies, they are nonetheless having difficulty gaining access to the most promising oil exploration fields
in producing countries. Indeed, the bulk of reserves (80%) are owned by the national companies of these
countries, hence exposed to pressures from political authorities anxious to avoid a surplus that would cause
prices to collapse and also facing other, more urgent needs. The result is too little investment not only in
the upstream sector but also, curiously, in the downstream sector, presaging lasting tension in the markets.
Now having to face the fact that oil supplies have become –and are likely to remain– expensive, consumer
countries and international oil companies have been forced to re-examine their energy and environmental
policies, ratifying the Kyoto protocol (except for the United States and Australia), diversifying their sources
of supply (with the United States, for example, turning to Africa, Libya and the Gulf of Guinea), promoting
alternative energies (non-fossil fuels, development of liquefied gas or gas-to-liquid [GTL] fuel), reviving
nuclear programs, and developing renewable energies (wind, micro-hydro). All of these actions are also
part of an approach aimed as sustainable growth, in other words growth that uses fossil resources sparingly and does not harm the world in which we live.
Reinforced in this analysis, which underpins its strategic choices, IFP has continued its work to develop
–and make economical– the new technologies that will guarantee the industrial competitiveness, growth,
and well-being of tomorrow. IFP and its group have maintained an active policy of partnerships in the fields
of training, services, and consulting.
IFP is also at the center of the current debate in connection with preparations for the guideline law on
energy, and of discussions relative to research resources and organization in France. Straddling the worlds
of fundamental research and industrial innovation, IFP will, through its excellence, help to meet the
challenges of the future in the fields of energy, transport, and the environment.
Olivier Appert
Chairman and CEO
3
>
+
IFP AT A GLANCE
>>
I
FP is a scientific research and industrial development,
training, and information services center active in the
fields of oil & natural gas, their use, in particular by vehicles,
and new energy and environmental technologies (production of fuels from biomass, biofuels, hydrogen, the capture
and storage of CO2, etc.).
In an international energy context marked by a number of
major challenges –the need to respond to a relentless growth
in energy demand, and thus, notably to renew oil reserves,
expand the energy mix and combat climate change– IFP
innovates, developing and transferring the technologies
needed to produce, transform, and use energy to meet the
growing needs of the transport and petrochemicals sectors
in a way that can be sustained for the rest of the 21st century.
For IFP, these challenges lead to five
by generating growth and jobs. A
the School offers a very broad range of
priorities for the coming decades:
portfolio that now includes more than
training in the professions of the petro-
12,000 patents is testimony to IFP's
leum, gas, and engines sectors, ex-
capacity to innovate.
tended, in the field of continuing educa-
■ renewing and increasing world oil &
gas reserves,
tion, by IFP Training, a subsidiary of IFP.
■ designing refining and petrochemical
Drawing on a large information center
processes that are clean and highly
and on all of the knowledge developed
efficient,
at IFP, the accumulation and dissemination of scientific, technical, and eco-
■ diversifying energy sources for the
nomic knowledge is a profession in its
production of fuels and hydrogen,
own right, one that serves both institutional players and industry.
■ reducing vehicle fuel consumption
Finally, IFP has instigated the creation
and emissions,
of numerous companies, in businesses
■ mastering CO2 capture and storage.
covering the whole oil service and supply sector, from consulting to engineering via the supply of products, equip-
IFP's research and development work,
which is structured in line with these
Taking advantage of the synergies
ment, and services. These companies
5 strategic priorities, regularly leads to
between research and training, IFP plays
today constitute an international group.
new
being
a major role in the transfer of knowledge
They are an important outlet for the
found, serving to reinforce the economic
through the IFP School. Open to univer-
industrial development of IFP's techno-
competitiveness of our industries, there-
sity graduates from all over the world,
logical innovations.
4
>
technological
solutions
+
FACTS AND FIGURES
H uman Resources
Average consolidated workforce: 1,729
(as of December 31st, 2004)
B udget
Expenses of the Technology Business Units and
Business Units: 253 millions euros
859
870
(as of December 31st, 2004)
31.3% > Refining-
36.4% > Exploration-
Petrochemicals
Engineers
and Managers
Production
Workers
and Technicians
E ducation and Training
2.9% > Exploratory
48 post-doctoral researchers
Research
16.5% > Powertrain
3.6% > Industrial Development
Engineering
191 doctoral
researchers
5.9% > Education and Training
438 students
admitted to all
programs of the IFP
School at the RueilMalmaison site
(entering class of
2004, 47% of them
from abroad)
3.4% > Information
I nformation
222
1,030 continuing
education courses
P atents filed
228
385
951 in 2004
7
8
d
he
blis
pu
oks
Bo
124
116
68
60
60
atio
ern
Int
ar
min
se
nal
ific
ent
Sci
s
a
les
rtic
ed
ers
lish
pap
pub
nce
e
r
e
f
Con
55
48
35
tes om any
nds Italy Japan anada world
nce
Fra ed Sta Kingd Germ therla
C
the
t ted
e
i
n
N
t of
U Uni
The
Res
5
>
+
HIGHLIGHTS
> January
Biofuels:
> May
> February
signing of an
Panorama 2004
Renewal
Corporate
conferences
of ISO 9001:
memory:
(Paris and Lyon)
2000 certification
internal
agreement
Capture and
between IFP,
storage of CO2:
for the activities
deployment
ADEME, and INRA
start of the
of the Process
of a tool for
for the joint
European Castor
Development
the accumulation
Development
development
project, led by IFP.
and Engineering
of R&D knowledge
of a high-pressure
of a tool for the
It includes
Division.
and results.
riser for drilling
multi-criterion
30 partners
evaluation
(industry and
> April
Engine
of biofuels.
research centers)
> June
in ultra-deep
water.
technologies:
Software
improvement of
Tech'advantage, a
Creation of IFP
Community
on the theme
development:
the performance
computer services
Training,
member countries.
“Fossil fuels:
marketing
of IFP's
company for the
a commercial
technical,
agreement with
downsizing
energy sector:
company 51%
economic,
the Paradigm
concept in terms
IFP now holds
owned by IFP,
and political issues
Geophysical
of fuel
100% of the
charged with
on the horizon
company for an
consumption and
Geomath
complementing
2030-2050”.
elastic inversion
specific torque
company –which
software program
and extension
becomes
developed by IFP.
of the concept
Tech'advantage–
to conventional
through its IFP
from 11 European
the actions of
> March
the IFP School by
proposing a global
training offer on
Cooperation
Scientific seminar
turbocharging
Investissements
subsidiary.
the international
Schlumberger
with Total
organized
and injection
market.
announces
Petrochemicals
by IFP on the theme
technologies.
the marketing
Basic Chemicals:
“Trace analysis in
Renewal
of the CougarTM
signing
the petroleum
Prospective
first graduating
of ISO 17 025
software
of a multi-year
industry” at
thinking sessions
classes of the
accreditation
developed by IFP.
framework
IFP-Lyon.
with IFP's scientific
satellite
for the
It is used to
agreement
board on hybrid
degree-programs
“standardized
estimate
for future
vehicles,
in Angola and
engine tests”
the uncertainties
cooperation in
hydrogen, process
in Russia.
activity of the
associated with oil
R&D on targeted
intensification,
Energy
& gas reservoir
subjects in the
heavy crudes, etc.
Applications
production
field of basic
of ISO 9001:
Techniques
forecasts.
petrochemistry.
2000 certification
Division.
6
>
IFP School:
Renewal
for the activities
Engine and
Publication
of the Physics and
vehicle system
of 2 books
Analysis Division.
simulation:
by IFP staff mem-
commercial
bers “Le pétrole.
release via
Au-delà du mythe“
IMAGINE, an IFP
(“Oil: beyond the
Group company,
myth”) and
of the IFP-Drive
”Insights into
library for vehicle
Petroleum
modeling.
Geochemistry”.
> December
DarcylogTM:
IFP and
the Research
Institute of
> November
> July
> September
Record class
> October
at the IFP School:
Petroleum Industry
(RIPI) of Iran sign
Construction
an exclusive
Software
Scientific
324 students,
Biofuels:
of the Sprex®
agreement for
development:
seminars:
173 of them
Diester Industrie
pilot for
the use of this tool
start of
French and
chooses IFP's
the treatment of
in Iran.
development of
151 foreign,
new biodiesel
highly acidic gases.
the First reservoir
recruited in more
production process,
It was built and
simulation and
than 40 different
marketed by its
commissioned
Fraca++ fracture
countries, in the
Axens subsidiary,
at the Lacq site,
network modeling
programs
for its Sète unit
in the context of
industrial software
for engineers.
(France).
joint research
programs by IFP
conducted
and its Beicip-
organization
by Total, Prosernat
Franlab subsidiary.
by IFP of an
(an IFP Group
international
company), and IFP.
Monitoring of the
conference
Girassol field:
entitled “Which
IFP sells some of
Acquisition of
in the context of
fuels for low CO2
its Technip shares:
a shareholding
close cooperation
engines?”.
transfer of 2.7%
by RSI in China:
of the capital,
RSI, a subsidiary of
bringing the total
IFP Investissements,
between Total
and IFP, the
Launch of phase II
cutting-edge
of the WAOE JIP:
NGV demonstrator
The School's
proportion
has taken a 25%
technologies
its goal is to
vehicle:
50th birthday
of Technip shares
holding in
developed at IFP
develop
success of
attended by nearly
sold by IFP in
the Chinese
will be applied
formulations
the demonstrator
200 senior
the course of
computer services
with a view to
of cements for
dedicated to
academics and
the year to 3.5%.
company HKD.
optimizing output.
the abandonment
natural gas
industry managers.
of production
developed
IFP School:
Launch of the
wells.
on a Smart vehicle
Launch
in the context
Acacia JIP:
Conference on
base, in partnership
of phase II of
of the policy
this project
Catalysis
with ADEME
the Cold Start JIP
of dissemination,
is looking at
organized jointly
and Gaz de France.
It is studying
20 students of
the resistance of
by IFP and
the restarting
the first class of
cements in wells
the CNRS.
of high-wax oil
the Petroleum
in the presence of
fields.
Engineering
gases having a very
Sale of Éditions
program in Nigeria
high H2S and CO2
Technip by IFP
graduated.
content.
13th International
and signing
of a long-term
cooperation
agreement.
7
>
>>
School celebrates
50 birthday
T’ heits IFP
th
Supérieure
du
Pétrole
et
des
Combustibles Liquides, founded in 1924,
and the École Nationale des Moteurs à
The IFP School celebrated its half-century
Combustion et Explosion, founded in
at a special event held on October 15,
1936. Since that time, nearly 12,000 stu-
2004 at Rueil-Malmaison (France), at-
dents from more than 110 different coun-
tended by distinguished guests from the
tries have graduated from the school, and
worlds
engines.
the great majority of them now put their
Introduced by Olivier Appert and Patrick
skills to good use, working all over
Ollier, Deputy and Chairman of the
the world.
of
petroleum
and
Economic Affairs Commission of the French
>> Day of exchanges organized for
the School's 50th anniversary.
national assembly, and Mayor of Rueil-
Fifty years ago, the School's priority was
Malmaison, the event gathered together
to play an active part in a major national
nearly 200 leading academics and industry
ambition: the creation of a French oil
faces serious technological and societal
professionals with links to the School,
industry and a French petroleum service
challenges. The world will continue to
including Claude Mandil, Executive Director
and supply industry. It helped to achieve
need oil and gas for a long time to come.
of the International Energy Agency, Charles
this by training the men and women who
It is therefore essential to continue discov-
Mattenet, Senior Vice-President, Director
have played a major role in today’s suc-
ering new resources, to ensure their opti-
Strategy and Business Development at
cess, enabling a country with almost no
mum development, to use these products
Total Exploration-Production, Robert
oil and gas resources and French indus-
as rationally as possible, and, of course, to
Peugeot, Director Innovation and Quality at
trial companies to now rank among the
respond to major environmental chal-
PSA Peugeot Citroën, Jean-Baptiste Renard,
world's leading oil and gas players.
lenges, by tackling urban pollution and
reducing the greenhouse gas emissions
Vice-President for Refining-Marketing at
BP Group and Jean Dercourt, Permanent
Since then, a great many things have
responsible for global warming, for exam-
Secretary of the French Academy of Sciences.
changed on the national and interna-
ple. At the same time, it is just as essential
tional scene, but the same major challenge
to develop products, substitutes and
The IFP School was created in 1954
remains: that of attracting and training
alternative technologies to drive off
by the merger of the École Nationale
talented personnel for an industry that
the specter of an energy shortage in the
long term.
The demographic data in terms of jobs is
well known and the Society of Petroleum
Engineers believes that petroleum service
and supply and oil companies will have to
replace half of their workforce in the next
10 years. The IFP School is ready to take
up this challenge. In the last 20 years, it
has not only tripled its intake, from 149 in
1985 to more than 500 new students this
year, but has also paved the way towards
joining the world leaders in its field.
>> The IFP School admits more than 400 students every year.
Creation
of the École
Nationale
Supérieure
du Pétrole
et des Moteurs
following a merger
8
>
Creation
of the student
welcome office
First post-graduate
diploma in Oil
sciences
Creation of first
English-language
program
(Oil economics)
Launch
of apprenticeship
program
20
02
20
04
523
STUDENTS
19
95
19
96
304
STUDENTS
19
89
149
STUDENTS
19
75
19
78
19
65
19
68
154
STUDENTS
19
85
148
STUDENTS
19
55
19
54
117
STUDENTS
Launch of satellite
degree-programs
>
+
EXECUTIVE
COMMITTEE
>>
General Management
> Olivier Appert
Chairman and CEO
> Édouard Freund
> Gérard Friès
> Georges Picard
>> Directors of the Technology Business Units and Business Units
> Gérard Friès
> Raymond Szymanski
> Philippe Pinchon
> Jean-Luc Karnik
Education and Training
> Jean-Jacques Lacour
Information
> Pierre-Étienne Brau
Industrial Development
>> Other directors of the Executive Committee
> Yves Boscher
Human Resources Division
> Jacqueline Lecourtier
Scientific Management
> Henri Marion
Finance Division
> Roland Huin
IFP-Lyon R&D Center
as of December 31, 2004
9>
+
BOARDS
B oard of Directors(1)
Olivier Appert
Peter Mellbye
Chairman
Executive Vice-President, International Exploration
and Production, Statoil
Michel Benezit
Senior Vice-President, Northern Europe,
Robert Peugeot
Total Exploration-Production
Director Innovation and Quality,
PSA Peugeot Citroën
Christian Carreras
Representative of Force Ouvrière (trade union)
Daniel Valot
Chairman and CEO, Technip
Pascal Colombani
Associate Director, A.T. Kearney
Jean-Paul Vettier
Executive Vice-President, Refining and Marketing,
Alfonso Cortina
Total
Chairman of the Repsol YPF Foundation
With the attendance of:
Jean-Paul Cressy
Jacques Deyirmendjian
Jean-François Bard
Michel Castagné
Thierry Le Fur
Éric Sanchez
General Delegate, Gaz de France Group,
Representing IFP personnel
Representative of the Confédération Française
Démocratique du Travail (trade union)
Chairman of Gaz de France International
Sophie Galey-Leruste
Georges Douin
Director, Energy and Mineral Resources,
Executive Vice-President, Strategic and
Government Commissioner
Products-Planning, International Operations,
Renault SA
Anne-Dominique Fauvet
Head of the Economic and Financial Mission
Michel de Fabiani
for Petroleum, Chemicals and Geological Research
Director of Companies
Jean-Pierre Jaugin
Philippe Gillet
State Auditor, Economic and Financial Mission
Director of the École Normale Supérieure
for Petroleum, Chemicals and Geological Research
de Lyon
Jean-Pierre Cordier
Jean-Pierre Lamoure
Auditor (Grant Thornton)
Chairman and CEO, Solétanche-Bachy
Dominique Maillard
General Directorate for Energy and Raw Materials
Charles Mattenet
Senior Vice-President, Director Strategy and Business
Development, Total Exploration-Production
10
>
(1) as of March 1st, 2005
S cientific Board(1)
Olivier Faugeras
Michel Che
Bernard Leduc
Chairman, Member of the French
Professor at the university Pierre et Marie
Director of the Service de Mécanique
Academy of Sciences, Research Director
Curie (Paris VI)
Appliquée and Professor at the Université
at the Institut National de Recherche
Libre of Brussels (Belgium)
en Informatique et en Automatique
Michel Combarnous
(INRIA)
Corresponding Member of the French
Norbert Peters
Academy of Sciences, Professor at the
Professor, Director of the Institut
university of Bordeaux I
für Technische Mechanik, RWTH,
Jean-François Agassant
Aachen (Germany)
Professor at the École des Mines de Paris,
Deputy Director of the Centre de Mise
Jean Dercourt
en Forme des Matériaux
Permanent Secretary of the French
Michel Poix
Academy of Sciences, Professor at
Vice-President of the university of Paris
the university Pierre et Marie Curie (Paris VI)
Dauphine, Director of the Institut pour
Pierre Albrecht
le Management de la Recherche
Professor at the university Louis Pasteur,
Strasbourg
Roy H. Gabrielsen
et de l'Innovation (IMRI)
Professor at the university of Bergen
Pierre Berest
(Norway)
Professor at the École Polytechnique,
Bernard Tissot
Member of the French Academy of
Director of the Laboratoire de Mécanique
Roland Glowinski
Sciences, Chairman of the Commission
des Solides
Professor at the university of Houston
Nationale d'Évaluation des Recherches
(United States)
sur la Gestion des Déchets Radioactifs
Jean-Claude Charpentier
Director of the École Supérieure
Geffrey F. Hewitt
de Chimie, Physique, Électronique,
Professor at the Imperial College
Lyon
of London (United Kingdom)
A dvisory Board of the IFP School(1)
Representing industry:
Jean-Claude Careil
Vice-President for Operations,
Exploration-Production, Shell
Odile de Damas-Nottin
Jean-Dominique Percevault
Chairman and CEO, Oil Services,
Schlumberger
Christian Deleplace
Joseph Castrec
BP Group
Head of the Design, System, Transmission
entity of PSA Peugeot Citroën
Representing higher education
and research:
Jean-Claude Company
Refining Director, Total
Élizabeth Crépon
External Relations Manager,
Alain Robert
École Polytechnique
Sales Director, Chevron Chemical, and
President of the Alumni Association
Powertrain Design and Technology
Manager, Renault
CEO of Siemens Automotive Hydraulics
Vice-President for Refining-Marketing,
Human Resources and
Communications Director, Technip
Philippe Bauer
Jean-Baptiste Renard
Recruitment Director, Total
Anne Decressac
Representing alumni:
Carlo Giavarini
of the IFP School
Professor at La Sapienza university, Rome
Philippe Marcus
(Italy)
Assistant Director, Exploration-Production,
Gaz de France
Bernard Leduc
Director of the Service de Mécanique
Pedro Miro Roig
Appliquée and Professor, Université Libre
Technology Director, CEPSA
of Brussels (Belgium)
Jean-Yves Ortola
Alain Storck
Head of Training Department,
Director of the Institut National
Total
des Sciences Appliquées (INSA) of Lyon
11 >
+
IFP, AN INTERNATIONAL
PLAYER
>>
I
FP is active in over 100 countries. It is the world's
second largest process licensor in refining and petro-
chemicals through its Axens subsidiary, an internationally
recognized center of excellence in the fields of exploration
and production, a major player in technologies for the automobile industry.
Through its activities, which include training personnel,
providing scientific, technical and economic information to
communities, entering into partnerships with the biggest
international research centers and industrial companies
every year, and through the worldwide presence of IFP
Group companies, IFP has established a character and a
prestige unique in Europe and in the world.
>> The IFP Group
A group on an international scale
In the context of its statutory technology transfer mission, IFP has created an
industrial group on an international scale. This gives its R&D work effective
market access and its success demonstrates IFP's ability to create and develop
jobs and profitable industrial activities founded on technological innovation.
The IFP Group includes companies in which IFP is the majority shareholder.
They operate in fields that are of strategic importance for IFP's research, and
their vocation is to provide access to a significant share of their respective
sectors. In addition, IFP has minority holdings in companies with which it also
has technological partnerships; this helps it turn its research into industrial
results more rapidly.
12
>
>> IFP and training
The IFP School, an integral part of IFP, has
>> IFP and information
recruited nearly 3,400 foreign students from
Aware of the strategic importance of knowledge –and managing and sharing this knowledge– IFP is strongly committed
to disseminating its knowledge to institutional players, to the
more than 110 countries since it was created.
Today, foreign students account for around
50% of each year’s intake.
scientific and technical communities (national, European and
In addition, in the context of its policy of dis-
international) and to industry. It ensures this through the
semination, the School organizes 5 satellite
presence and sustained action of IFP's researchers in the most
degree-programs abroad (in Algeria, Angola,
significant learned societies and by an active policy of confer-
Iran, Nigeria and Russia), operated by IFP
ence papers and article publication. It also publishes an inter-
Training, a subsidiary of IFP.
nationally acclaimed scientific journal, Oil & Gas Science and
Technology, writes reference books and organizes numerous
international seminars. In addition, drawing on all of its scientific, technical, and economic expertise, IFP is today in a position to offer a comprehensive range of economic intelligence
services and products (information, studies, surveys, intelligence, etc.) in all of its fields of activity.
>> 1st graduating class of the satellite
degree-program in Angola.
>> IFP and Europe
>> IFP organizes about
10 international seminars
a year.
IFP is determined to play a leading role in the emergence of a European
research community, especially in its own specific sectors of activity: energy,
transport and environment.
It is determined to continue to develop and consolidate new partnerships on a
European scale, through bilateral cooperation, both scientific and institutional,
with research organizations and with networks of excellence. This cooperation must be sustained over the long term and must serve to develop, in the
>> IFP and innovation
IFP has a portfolio of 12,000 in force patents
and each year files more than 950 patent
applications in France and abroad. According
to the latest INPI statistics, this made IFP the
10th most prolific French applicant of patents
in France in 2002 and, according to figures
taken from the Patent Intelligence &
Technology Report, the fifth largest French
patent-holder in the United States in 2003.
industries concerned, the technologies needed for the transport sector of
tomorrow.
IFP's commitment to Europe is also reflected by sustained participation in the
European Commission's Framework Program for Research and Technical
Development (FP). IFP has been very active in this program for a number
of years, especially in its strategic areas. It is currently actively involved in
32 projects, covering all of its sectors of activity, working with international
institutions and industrial companies.
In 2004, 12 new project proposals were submitted and 8 have been accepted.
These proposals concern such themes as the capture and storage of CO2, the
production of hydrogen, engines, the production of biofuels and information
technologies.
IFP is also a significant player in the future FP7 (2007-2014), through its
involvement in the European technological platforms that are destined to
play a major role in structuring research. Finally, the international character
of IFP's activity is reflected in its commitment to strategic international
forums such as the CSLF (Carbon Sequestration Leadership Forum) and the
IPHE (International Partnership for the Hydrogen Economy).
>> Axens, supplier of technologies, catalysts,
and adsorbents for the refining
and petrochemicals industry.
13
>
IFP,
from research
to industry
>>
14
>
>>
Research strategy for sustainable development
>>
>>
>>
>>
I
FP's research and development activity is aimed at
developing and transferring the technologies needed
to produce, transform and use energy to satisfy the
growing demand of the transport and petrochemicals
sectors, using fossil energy sources (oil, gas, coal) and their
substitutes (in particular biomass) in a context of sustainable development.
It is also aimed at strengthening research. IFP, which spans
the worlds of fundamental research and industry, takes a
special interest in organizing and leading French research
by creating and leading poles of scientific excellence in its
areas of expertise, encouraging the cross-fertilization of
scientific and professional expertise in the context of poles
of competitiveness or of technological platforms, and by
organizing the network of research players in the energy
sector.
This research and development activity is steered and led
by 3 Technology Business Units: Exploration-Production,
Refining-Petrochemicals, and Powertrain Engineering.
These Units are responsible for defining and monitoring
research programs and for the industrial use of the results.
In addition, major transverse projects, concerning for example CO2 capture and storage, hydrogen and the production
of biofuels, are monitored by the Sustainable Development
Division. The R&D programs are conducted in the form
of multidisciplinary projects via a matrix organization that
involves 10 research divisions covering a broad range of
scientific and technical skills.
Close ties are developed with various types of partner in
France, Europe and further afield: universities and research
organizations, companies in the oil, petroleum service and
supply, and automobile industries (automobile manufacturers and equipment suppliers).
The industrialization of results is achieved in ways specific
to each field, notably through the acquisition of shareholdings in companies via the Industrial Development
Business Unit. In addition, transfers of technology and
know-how to SMEs are actively encouraged.
15
>
+
RESEARCH
STRATEGY
for sustainable
development
>>
I
n the short and medium terms, it will be difficult to
find substitutes for oil and gas in transport and
petrochemical applications. They can therefore be
R enew and increase oil
and gas reserves
Renewing and increasing oil and gas
expected to account for about two thirds of world energy
reserves is still the first challenge in meet-
demand, which is expected to increase substantially
ing steadily rising world demand for
between now and 2030.
In this context, pushing back the current limits of reserves,
designing refining and petrochemical processes that are
clean and highly efficient, diversifying the energy sources
petrochemicals and transport. This latter
sector is currently 98% dependent on oil.
Alternative energies exist, but currently
account for –and will continue to do so
in the short and medium terms– only a
relatively small fraction of total consumption, for reasons of both cost and avail-
used to produce motor fuels and hydrogen, reducing the
ability. In the transport sector, a massive
fuel consumption of vehicles and the pollutant and green-
change to some other source of energy
house gas emissions resulting from their use, are funda-
will
remain
impossible
for
several
decades.
mental technological challenges that must be met to
ensure the sustainable development of our societies. We
must also start now to prepare for the transition to
replacement energies that are clean and environmentally
friendly.
These are common themes underpinning all the R&D work
carried out at IFP, aimed at developing the technologies
required to satisfy the growing needs of the transport and
>> Renewing reserves using IFP's
technologies for drilling in ultra-deep water.
petrochemicals sectors in the decades to come. From this
The renewal of reserves depends on the
work emerge innovative technological solutions that
development of technologies. Improving
enhance the economic competitiveness of our industries,
sources of growth and jobs.
the success ratio in exploration and the
oil recovery ratio, and developing nonconventional petroleums, could multiply
oil reserves by at least 3, the equivalent
of a century of production at the current
rate of consumption. This century we
will need to develop viable alternative
solutions for the transport sector and
16
>
of hydrogen, given the extensive research
already conducted or still underway on its
thereby ensure a smooth energy transition
production, storage and use, both in the
without any major economic and societal
refining industry and in the transport sec-
crisis.
tor. For this reason, IFP is well placed to
evaluate the potential of hydrogen technology and to define the main lines of its
D esign clean and highly
efficient refining and
petrochemical processes
in order to optimize the use
of resources
development, while helping to eliminate
the various scientific, technological, and
economic obstacles. For example, before
economical means of producing hydrogen
without emitting CO2 become available,
IFP can help develop a method using fossil
The relentless growth in energy demand,
fuels with CO2 storage, to launch the
the development of non-conventional
transition to hydrogen energy.
petroleums to renew reserves, and increas-
>> IFP's clean and highly efficient refining
and petrochemical processes.
ingly severe environmental constraints are
creating a number of technological chal-
Furthermore, when combined with the
lenges for the refining industry. IFP's R&D
use of ultra-clean fuels, these tech-
accordingly strives to derive the maxi-
nologies lead to near-zero pollutant
mum amount of fuel and petro-
emissions. The use of gaseous
chemical bases from each barrel of
crude produced, to develop con-
fuels with a high hydrogen con-
version technologies to upgrade
tent, such as natural gas, is
heavy oils and, finally, to make
another avenue of research
ever cleaner fuels available and
aimed at reducing greenhouse
reduce the greenhouse gas
gas emissions.
emissions produced by refining
units.
D iversify energy
sources for the production of fuels and hydrogen
M aster the capture
and storage of
CO2 to limit climate
change
>> IFP, a major technological player
in biofuels.
of new energy solutions for the transport
sector, in order to free it from its almost
total dependence on oil.
While it is hard to see how capture of the
CO2 emitted by vehicles in the transport
IFP is actively involved in the development
R educe vehicle emissions
and fuel consumption
by innovating in the field
of engines and fuels
sector could be made feasible, CO2 capture and storage technologies must be
developed wherever possible, in particular
in the generation of electricity and in
industry. Capture, transport, and storage
IFP's work concerns in particular the production of synfuels from various energy
Developing technologies to reduce fuel
technologies fall within the scope of the
sources, such as gas, coal, and biomass. In
consumption and minimize pollutant
key skills of IFP, which is determined to
this latter field, IFP is pursuing an ambi-
emissions in the transport sector is one of
play a leading role in the development
tious action program. It is working to
IFP's priorities.
of this option. Significant work has been
undertaken in close cooperation with
improve production processes in conventional sectors while also searching for new
For this purpose, IFP works to improve
industrial operators. This has led to the
technologies with which to diversify
internal combustion engines by applying
creation of new programs, in particular at
sources of energy and to lower costs.
innovative technologies. A particular prior-
a European level, aimed at both cutting
ity is controlling energy by extracting the
costs and ensuring the safety and perma-
Moreover, IFP is one of the research cen-
maximum from each calorie consumed and
nence of the storage facilities by control-
ters with the widest experience in the field
developing such options as hybridization.
ling all risks.
17
>
+
EXPLORATION
PRODUCTION
>>
T
he Exploration-Production Technology Business Unit
was created by the merger in October 2004 of the
Exploration-Reservoir Engineering and Drilling-Production
Technology Business Units. Its goal is to develop new
methods that will enable oil and gas companies to renew
E xploration and
evaluation of petroleum
systems
> Evaluation of world
reserves
their reserves, correctly manage and increase the output
2004 was marked by large reductions in
of their reservoirs, located in increasingly difficult environ-
the oil reserves of several major compa-
ments, whilst making due allowance for environmental
issues.
nies due, in particular, to the difficulty
of estimating these reserves. IFP is determined to develop reliable expertise on this
question, using its own evaluation meth-
The program of the Exploration-Production Technology
ods. For example, extensive work has
Business Unit is hinged around 5 strategic axes and about
been carried out to collate existing publi-
fifteen associated themes:
■ exploration and evaluation of petroleum systems,
cations. It shows that only 15% of world
reserves are worked by companies having
an obligation to their shareholders to
report on their reserves. Data from na-
■ reservoir engineering and monitoring,
tional companies, which are free of this
■ drilling and well architecture,
constraint, is less reliable.
■ development and production of fields,
> Seismic imaging in complex
zones
■ protection of the environment.
An original methodology combining the
approaches of structural geologists and
geophysicists has been developed to
tackle the difficult problems of seismic
imaging in complex zones, in particular in
foothills. This methodology will be tested
in 2005 on real long-term seismic data
recently acquired in the Arabian-Persian
Gulf. The coherence of the ultimate interpretation yielded by this process is ensured
by “unfolding” the structures identified.
This delicate operation is performed at IFP
>> Development by IFP of a seismic imaging method
for complex zones.
18
>
using methods based on a geomechanical
analysis.
>>
A
In 2004, IFP launched the First platform industrialization project,
a new-generation reservoir simulation environment, with the goal of
winning significant market share in the strategic reservoir simulation
sector.
> Basin modeling
Work in basin modeling has been aimed
at making better allowance for salt tectonics and at improving performance and
accuracy by allowing local refining of the
mesh in regions that look promising.
The line of “basin” products from IFP now
includes
several
MBITIOUS OBJECTIVES FOR THE FIRST PLATFORM
software
This software development is a significant step for the IFP Group:
it concentrates more than twenty people in teams from the Technology,
Computer Science and Applied Mathematics and Reservoir Engineering
research divisions and from the Tech'advantage subsidiary of IFP
Investissements.The market release of First by Beicip-Franlab, an IFP subsidiary, is planned for 2006. First will include the new First RS
reservoir simulator and Condor™ technology for updating geological models using production data by the patented gradual deformations technique.
programs
belonging to the Temis family, marketed
by Beicip-Franlab, a wholly owned sub-
A new version of the RMLTM (Reservoir
Cydarex, a company that emerged from
sidiary of IFP. In 2004, several new ver-
Modeling Line) geomodeling tool devel-
an IFP satellite degree-program in 2004.
sions were released, enabling Beicip-
oped by IFP has been launched by Beicip-
Franlab to strengthen its position as leader
Franlab.
in basin modeling software.
Finally, a cooperation agreement was
entered into with the Norwegian company Reslab in the field of specialized
> Ultra-deep reservoirs
analyses of cores in reservoir condition.
The trend towards very deep reservoirs in
> Reservoir simulation
the field of oil and gas exploration heightens
compositional
In reservoir simulation, IFP decided to
approach, based in particular on the prin-
the
utility
of
a
launch 2 major projects with Beicip-
ciples of molecular modeling, to predict
Franlab:
changes in the composition of the hydro■ First, a software to simulate the behav-
carbons formed during the primary and
secondary cracking steps. In 2004, work
to validate this new methodology included
ior of the reservoir during production,
>> DarcylogTM equipment.
laboratory experiments on pure substances and binary mixtures.
R eservoir engineering
and monitoring
Improving the characterization of reser-
and also to modify the geological model
for improved production history retrieval.
An agreement between IFP and the RIPI
The “gradual deformations” method
(the National Iranian Oil Corporation's
used is going to be extended to fractured
research center) has been signed for the
reservoirs in the Calfrac JIP started up in
use in Iran of the DarcylogTM tool for per-
2004;
meability measurements on drill cuttings,
with interpretation of the measurements
■ In 2006, Fraca++, a new-generation
by the Cydar software program sold by
software program for the characterization
voirs, simulating and monitoring them
during the production period are major
issues for oil companies. IFP has been
carrying out cutting-edge work in these
key areas for a number of years.
> Static characterization
In static characterization, IFP continued its
work on the Presti JIP and has entered
into a marketing agreement with the
Paradigm Geophysical company for the
development of a tool for the stratigraphic
inversion of prestack seismic data.
>> Demonstration of First software on an IFP Group booth.
19
>
and modeling of fracture fields, will super-
reinjection schemes of production water
■ the durability of syntactic foams,
sede Fraca®, already marketed by Beicip-
into reservoirs.
in the context of a Joint Industry
Program led by Ifremer (Tideep JIP).
Franlab.
In the field of management of the uncertainties associated with oil and gas reser-
D evelopment
and production of fields
voir production forecasts, CougarTM soft-
> Flow modeling
In this field, the Tina software program,
ware, developed by IFP, has been marketed
This major theme includes several sub-
developed with Total, is intended to model
by Schlumberger since February 2004.
themes: the management of flow assur-
steady-state and transient multiphase
ance, in particular in deep offshore fields,
flows encompassing the whole chain from
flow modeling, seabed to surface links,
the reservoir, the production well, the col-
difficult crudes
lection networks and the transport pipes
(heavy and extra-
up to the fluid separation valves.
D rilling
and well
architecture
heavy crudes, waxy
To optimize the
crudes), the treat-
and asphaltenic
> Seabed-surface links
production and
ment and transport
The work on seabed-surface links is part
recovery of the
of gas.
of the ongoing development in the field
hydrocarbons
of deep to ultra-deep offshore reservoirs.
> Management
of flow
assurance
present in reservoirs, innovative
specific technologies are being
developed in
>> Fraca++
software.
flexible lines and also at designing risers
and tendons made of carbon-fiber composite materials in order to make struc-
Work to improve flow
order to im-
tures in very deep water lighter.
assurance management
prove well positioning and productivity.
It is aimed at adapting and optimizing
is aimed at optimizing
Thus, in 2004 IFP continued its work in
flows of hydrocarbons in production net-
close cooperation with Technip on flexible
works while protecting the environment
structures and reeled rigid tubes.
In the field of drilling additives, projects
and making the operations safer. The
are focusing on foaming systems for
projects make use of specific experi-
Development of DeepLines® and DeepFlow
underbalanced drilling and on products
mental resources available at the Rueil
software continued with the incorporation
designed to minimize damage to the
and Lyon sites, in particular for charac-
of hydroelastic phenomena and estimation
reservoir and facilitate production.
terization of the life of materials under
of the fatigue of these offshore pipes.
difficult conditions. The work concerns, in
particular:
> Heavy and extra-heavy crudes
to quantify the durability of cements in the
■ the stopping/restarting process in the
Heavy and extra-heavy crudes represent
very long term after the abandonment of
presence of hydrates or of wax plugs,
significant hydrocarbon reserves, but they
producing wells.
using the Lyre loop (stage 2 of the Cold
are still exploited to a limited degree only
Start JIP);
because their very high viscosity leads to
In addition, the second stage of a joint
industry program (WAOE JIP) was launched
A project was also launched, in partner-
low recovery rates. Current research is
ship with Deutsch, to develop an optical
■ the thermal insulation of pipes and
aimed at a better understanding of the
connector that can be plugged in in drilling
the development of high-temperature
mechanisms governing this viscosity.
muds in order to transmit information
phase-change gels (liquid-solid insula-
Emphasis is on researching the factors and
from the well bottom.
tion);
processes that could improve transport
conditions by the use of additives to
Finally, for the purpose of improving oil
reversibly emulsify the oil in water, by
and gas recovery, work was begun on the
transport in slurry form, or even by means
prevention of water inflows, with the
of lubricated flows.
development of microgels based on differ-
> Treatment and transport of gas
ent techniques. Much of this work is
being carried out in partnership with
Seppic.
In gas treatment, current research includes
the joint development of several processes
For this same purpose, the Prowide JIP,
launched this year, is aimed at optimizing
20
>
with Total, in liaison with Prosernat, an IFP
>> Cold Start JIP.
subsidiary.
They include the Sprex® process, in which
fundamental research in this field, in par-
acid deacidification effluents (H2S and
ticular research on fluid-rock interactions,
CO2) can be reinjected into the reservoir,
reservoir monitoring, and the develop-
and a mercaptans adsorption process.
ment of new solvents.
One important theme in gas transport is
> Management of acid fluids
reducing feed losses in gas pipelines:
in 2004, the research studied special coat-
The reinjection of acid gases requires
ings and the effectiveness of structured
study of the thermodynamics of fluids rich
surfaces in the context of the Icare JIP.
in CO2 and H2S, the conditions of their
injectivity in reservoirs, and their interactions with reservoir rocks.
P rotection
of the environment
In addition, specific materials for wells, in
particular cements able to withstand these
> Tackling climate change
extremely aggressive compounds, are
being researched.
Capturing and storing CO2 is one way
> Tackling subsoil pollution
of limiting the increase in greenhouse gas
emissions in coming years.
Compliance with environmental standards
IFP, the leader of the Castor project
(begun in February 2004), has strengthened its action in this field. This project
is leading the industry to implement
>> Sprex® pilot unit built by Total at its Lacq
site, using the process developed jointly
by IFP/Total/Prosernat.
brings together more than 30 European
processes aimed at remedying possible
pollution of the subsoil, in particular of
aquifers. Several of the studies conducted
partners (industrialists and research cen-
developed to capture the CO2 in the flue
in 2004 were performed using tools
ters) from 11 countries of the European
gases of large industrial installations
developed by IFP, such as PolluSIMTM
Community. Its objective is to make geo-
(primarily conventional power stations).
software and the Pollut-EvalTM analysis
logical storage more secure and to reduce
equipment
the cost of CO2 capture. In relation to this
This four-year project is being accompa-
last point, new technologies are being
nied by a strengthening of the specific
marketed
by
its
Vinci
Technologies subsidiary.
>>
S TRATEGY
Renew oil and gas reserves while protecting
the environment
Interview with Gérard Friès, Director of the
Exploration-Production Technology Business Unit
The creation of the Exploration-Production Technology
Business Unit by merging the Exploration-Reservoir
Engineering and Drilling-Production Technology Business
Units marked IFP's determination to significantly develop
its programs and skills in these fields in coherence with
IFP's strategic objectives and as part of a long-term vision
of our planet's energy needs.
It is in this context that reflection was begun in 2004 and will
Developing the technologies,
equipment, products, software, and methods required to
push back the limits of oil and gas
reserves while protecting the environment and in particular combating climate change: such
is our commitment! To renew reserves, we are now initiating or reinforcing projects relating to producing ultradeep reservoirs and to bringing reservoirs of heavy and
extra-heavy crudes into production. These reserves are
potentially significant. Similarly, in the field of the capture
and storage of CO2, we are generating innovative ideas
that will be tested, patented, and developed.
continue in 2005. It involves all players in innovation in both
the Technology Business Unit and the research divisions.
21
>
S
+
>>
cientific advances
in Exploration-Production
2004 was marked by several significant scientific
advances in Exploration-Production, in particular the development of an original “gradual
deformation” concept, the development of
metallic ultra-trace analysis, and early experimental results in the field of underground
storage of CO2.
>> Development of an original “gradual deformation” concept honored
by the French Academy of Sciences
A team of IFP researchers has invented and developed a “gradual deformation” concept that can be used to history-match
oil reservoirs models by gradual modification of images of geological facies distribution or petrophysical properties. This
advance received the Michel Gouilloud Schlumberger prize from the French Academy of Sciences, awarded for “a significant
discovery in the field of geology or geophysics”. Especially remarkable for the originality of the basic ideas, this concept and
its implementation constitute a very important advance, making it possible to improve the exploitation of reservoirs put into
production. They are in line with one of IFP's strategic priorities –the renewal of oil reserves.
Traditionally, the initial model of the reservoir is established on the basis of static geological and seismic data. It is then gradually
modified so that is can provide dynamic production data, such as fluid flow rates and pressures, which are also measured in the
wells. Until now, this modification of the initial model was obtained by successive tests. Today, the gradual deformation method
provides a rigorous and more efficient response: it makes it possible to take all available information into account –in spite of its
extremely varied types and different scales– coherently and with a smaller number of numerical simulations.
This technique has been successfully applied to
several case studies. It is of direct interest to
many oil companies for tracking the production
of their reservoirs and is the basis for several
international joint industry projects.
>> The gradual deformation method relies on very advanced mathematical and
physical developments, despite the fact that the researchers who came up with
the concept say that it is based on a very simple fundamental mathematical
theorem: “All linear combinations of Gaussian random numbers actually always
follow a Gaussian law”.
22
>
>> Development of analysis of metallic ultra-traces
in crudes
The development of the analysis of metallic ultra-traces in crudes, and of certain isotopic ratios,
by ICP-MS (inductively coupled plasma mass spectrometry) is a technological leap forward
made thanks to joint work by IFP and the Laboratory of Bioorganic Analytical Chemistry and
Environment of the University of Pau et des Pays de l’Adour. This advance opens the door to
a whole field of potential knowledge in geochemistry, a field so far left unexplored due to the
lack of a tool to analyze these elements and observe the phenomena involved. With this
method, detection thresholds are actually lowered by a factor of 100 to 1000, depending on
the species, in comparison with conventional analysis techniques.
This advance will generate new solutions in terms of the genesis and evolution of petroleums
and condensates, metal concentrations being genetic indicators providing information on paleoenvironments and the properties of mother rocks, as well as indicators of biodegradation and
migration of hydrocarbons. These solutions will help to better identify zones liable to contain
oil, thereby helping to renew reserves.
Another application concerns pollution problems, whether this involves cleaning up soils
polluted by hydrocarbons or oil slicks.
>> The development of ICP-MS
for the analysis of metallic ultra-traces
in crudes opens the door to a whole new
field of knowledge in geochemistry.
Finally, this advance will also have important applications in refining, in particular enabling
the development of feed pretreatment processes to prevent poisoning of catalysts located
downstream.
>> Underground storage of CO2:
early experimental results in reservoir
conditions
IFP is one of the first research centers to publish experimental results
concerning the injection of carbon dioxide (CO2) into calcareous rocks in
reservoir conditions. Supercritical CO2, at 100 bar and 90°C, was
injected into cores extracted from reservoirs to permit close study of the
interactions between the rock and the circulating fluids. Cutting-edge
technologies associated with methodologies initially developed for oil
>> The X-ray scanner is a viewing tool. In the case
described, it was used to analyze interactions between
the injected CO2 and the rocks of the underground
formations.
applications were used: analysis by X-ray scanner and NMR thus made it
possible to view and quantify the changes in the properties of the rocks
following this injection.
These results are especially important because they are necessary for validation of the numerical modeling tools developed with a view to the
storage of CO2 in depleted reservoirs or in aquifers. These tools will
make it possible to predict the behavior of the sites selected for storage,
so that their long-term integrity may be guaranteed. This line of research
takes its place in a body of work aimed at developing technologies to
tackle the greenhouse effect.
>> 3D reconstruction, based on a scanner
analysis, of a calcareous rock in which CO2
was injected at high temperature and
pressure. This identifies the preferred
routes induced by the injection.
23
>
+
REFINING
PETROCHEMICALS
>>
R
efiners and petrochemists are having to produce at
lower and lower costs whilst complying with increas-
ingly stringent health, safety, and environmental regula-
V acuum conversion
of residues and distillates
Growing needs for light distillates, gas oils
tions. Taxes on CO2 emissions and the escalating price
and gasolines as opposed to fuel oils, are
of crude add an extra dimension to the problem.
driving the development of conversion
processes. In addition, the high price of
In this context, the purpose of the program established by
crudes is making the treatment of heavy
the Refining-Petrochemicals Technology Business Unit is to
more attractive.
crudes, even of coal liquefaction products,
develop more economical, cleaner, and safer new processes
for the production of fuels and petrochemical building
IFP has opted for hydroconversion solutions
for the treatment of heavy fractions. Here,
blocks from all accessible sources of carbon: not only oil
the aim is to significantly increase conver-
and gas, but also coal and biomass. In the case of trans-
sions of residues and heavy crudes while
port fuels, which are the most difficult products to
replace, the goal is not only to contribute innovative solutions for the medium term –sulfur-free fuels that are
desulfurizing as thoroughly as possible.
Research has accordingly been directed
towards new catalysts and innovations in
the technologies best suited to meet these
challenges (boiling bed and slurry).
richer in hydrogen and include a significant proportion of
components of non-fossil origin– but also to prepare the
transition to the use of hydrogen.
Catalytic cracking is still an important
conversion tool for refiners, even if the
products that result are not always well
matched to market needs. Pretreatment in
the form of hydrocracking is one response
to this problem, serving to balance the
production of gas oils with respect to gasolines. The development of new hydrocracking catalysts, oriented towards the production of medium distillates, accounted for
the bulk of the year's work.
P roduction of gas oil
and gasoline
The vehicle fuels market is characterized
>> Catalytic cracking micropilot.
24
>
by a demand that favors diesel, by a faster
than planned evolution towards 10 ppm
sulfur, and by the manifest intention of
the authorities to make the use of fuels
derived from biomass mandatory.
In the field of desulfurization, both for gas
oils and for gasolines, the work consisted
on the one hand of searching for new
hydrotreating catalysts that are both more
active and allow a reduction of hydrogen
consumption and, on the other hand, of
developing approaches like adsorption
that require no addition of hydrogen.
A new series of tests was run on the
>> Esterfip-H biodiesel pilot production unit.
Fischer-Tropsch pilot, incorporating the
improvements developed in 2003. The
has motivated a search for some new,
biomass can make a significant contribu-
conversion of waxes to gas oil was also
more suitable solids.
tion. The European objective of having
carried through to completion.
biofuels provide 5.75% of the energy
Finally, in catalytic reforming, the search
used for land transport by 2010 is proba-
For the treatment of catalytic cracking
for catalysts that can further improve the
bly optimistic, but indicates a strong politi-
gasolines, a new solid catalyst for the alkyl-
production of hydrogen has continued.
cal will.
ation of thiophene was developed and a
specific application was created.
In the field of biodiesel, 2004 saw the
B iomass
selection of the Esterfip heterogeneous
The C5/C6 cuts making up isomerization
process for the Diester Industrie plant in
feeds are changing significantly. In particu-
Although as a renewable source of carbon
Sète (France). The use of oils other than
lar, the increased presence of naphthenes
it will never be able to cover all fuel needs,
rapeseed oil and even of alcohols other
>>
I
FP, A LEADER IN FUELS FROM BIOMASS
The incorporation in fuels of products derived from
biomass is scheduled to become mandatory by 20102011. IFP has been working in this field for nearly
twenty years. It has developed ETBE and vegetable oil
methyl ester (or biodiesel) production processes using
homogeneous and heterogeneous catalysis; these
biofuels are already in use worldwide.
IFP intends to maintain its lead in these 2 fields by
continuing its development work on ethers obtained
from various olefins, and in particular by expanding
the application of its heterogeneous esterification
process, the market leader, to oils of all origins and to
the use of ethanol, to obtain a 100% organic product.
This program, already under way, will be extended further.The clear objective is to cover all possible sources
of production and to cut production costs as far as
possible. The activity of the catalyst and modification
of separation schemes and equipment are the themes
on which the efforts have been focused.
In addition, in the context of the national biofuels program, IFP is expanding its work on the use of lignocellulose biomass:
■ by fermentation to produce ethanol (its conversion
to hydrogen has also been studied),
■ by gasification to produce synthetic gas, which
can be used to produce gas oil by a Fischer-Tropsch
process that IFP has mastered, or even, in the longer
term, to produce hydrogen.
25
>
P etrochemicals
than methanol was studied. A few interesting solutions for the use of glycerin
were identified.
The production and purification of
olefins (monomers) and aromatics
Otherwise, while the use of
(BTX and linear alkylbenzenes or
ethanol as a gasoline addi-
LAB) accounted for the bulk of
tive is known, its incorpo-
the work. For the purification
ration in gas oil is uncer-
of light olefins, work on
tain. The work done in
hydrogenation catalysts has
this field has not yet
continued and alternative
yielded
techniques such as adsorp-
economically
viable solutions. In addi-
tion (membrane separation
tion, a new program
module) were explored. For
relating to the production
propylene, various approaches
of bioethanol by fermen-
(metathesis and catalytic crack-
tation of lignocellulose bio-
ing among them) were reana-
mass was proposed to the
lyzed with potential partners. In
European Commission.
the field of aromatics, the metaxylene separation process was finalized:
Finally, IFP participated with the
promising results were obtained on new
other French players in the field in defin-
molecular sieves in joint work carried out
ing the national biofuels program, which
with CECA. Finally, substantial progress
is expected to be set up next year. At the
was made on the production of LAB in
same time, work with the CEA on gasifi-
>> Membrane test bench (gas permeation).
cation has continued.
the course of this year, in particular with
respect to the definition of a new dehydrogenation catalyst.
reformer incorporating CO2 capture.
H ydrogen
For decentralized production, thinking led
to a change of focus to work on the partial
P ollution abatement
The production and purification of hydro-
oxidation of liquid fuels (ethanol and gas
gen were the object of feasibility studies
oil). In the context of a partnership,
Research concerned the desulfurization
designed to better define our future
a partial oxidation pilot was built and
of exhaust gases from Claus units, the
actions. In the field of centralized produc-
launched. Similarly, studies and prelimi-
biodegradation
tion, preparations were made for a
nary tests performed in 2004 led to redi-
the pyrolysis of old tires. The project on
European project: IFP's contribution
recting work in purification towards
the desulfurization of exhaust gases was
consisted in defining a specific steam
membrane and catalytic technologies.
completed by studies on the precipitation
of
fuel
ethers,
and
and reduction of salts, and the effectiveness of new contactors. It will end at
the beginning of 2005. The file on the
biodegradation of MTBE has been completed; contacts for a large-scale pilot test
are making progress. For the pyrolysis
of tires project, the pilot has been
upgraded to meet current quality, safety,
and environmental standards. The tests
are planned in 2005.
F undamental research
Fundamental research, which accounted
for more than 20% of the Technology
Business Unit's budget, is aimed at maintaining and developing, in-house, the skills
>> Gaseous discharge desulfurization laboratory (Clauspol process allowing recovery of more
than 99.9% of the sulfur in refinery stack gases).
26
>
that are the keys to future developments,
increasing its efforts through a worldwide
■ better mastery of the preparation of
installation of experimental model confir-
supports –modified aluminas– as well
mation facilities continued.
as active phases through control of the
solutions and of the activation phases
(sulfurization),
T ools of the trade
■ continued development of skills in new
The installation of a tool to connect all of
areas of research (hydrogen and biomass).
our databases has continued, and is
expected to be complete in 2005.
In analysis, the year's principal achievements were the improved knowledge of
A high-flow experiment, suited to the par-
nitrogenated compounds in distillates and
ticular needs of the Technology Business
a solid understanding of the phenomena
Unit, is being set up. Specific facilities for
of stability of fuels after conversion.
each type of catalysis have also been
defined.
In separation, understanding of the rela>> Model used to study gas flows in
fluidized beds and model for extrapolation
of the sizes of bubble columns.
tions between the fine structure of solids
(locations of cations in zeolites) and their
adsorption properties advanced signifi-
network of partnerships, and generating
cantly. Furthermore, a much better
new ideas. This research is organized
understanding of membrane potentials
around 4 major themes: catalysis, analy-
as well as of the technical obstacles still
sis, separation and process development.
to be overcome was obtained.
In catalysis, work has focused on:
In process development, the focus was on
obstacles to modeling fuel oil conversion
■ the synthesis of new ligands for the
processes and on the extrapolation
retention of metals in a liquid ionic
aspects of the least well controlled
medium,
structures, such as bubble columns. The
>> Six-reactor autoclave system
for the synthesis of zeolite.
>>
S TRATEGY
New skills to meet future needs in refining and
petrochemicals
Interview with Raymond Szymanski, Director of
the Refining-Petrochemicals Technology Business
Unit
To ensure we are prepared
for these changes, we have
already focused on acquiring
new skills. More generally, highflow experiments are being set up
for research and development on new
Developing more economical, cleaner, and safer new pro-
catalysts and adsorbents. Work on the characterization of
cesses for the production of vehicle and other fuels and
heavy products is also in progress. There will be continued
petrochemical building blocks from all accessible sources
focus on the acquisition of new skills for the conversion of
of carbon: these are our objectives in the fields of refining
lignocellulose biomass and for hydrogen production.
and petrochemicals.
These skills concern the fields of catalysis (enzymatic and
In the medium term, the strongest trends in the refining
heterogeneous), the equilibrium thermodynamics of polar
industry will concern the conversion of residues and
compounds, specific analyses, reactors for biomass gasifi-
heavy crudes and the introduction of biofuels. In the
cation or for the purification of mixtures of synthesis gas
longer term, hydrogen will play an increasingly signifi-
or hydrogen, as well as suitable separation processes.
cant role.
27
>
S
+
>>
cientific advances
in Refining-Petrochemicals
advances in Refining-Petrochemicals, in particular the development of a two-dimensional
chromatography prototype, innovative work in
ionic liquids and the development of a new
range of hydrotreating catalysts.
>> Two-dimensional chromatography: IFP, a pioneer in Europe
A major innovation, a two-dimensional gas chromatography (GC2D) prototype, has just been developed and put into operation at
IFP. It leads to a significant gain in the molecular analysis of petroleum cuts, which are by nature extremely complex. This concept
can extract up to a hundred classes of compounds, organized in retention planes according to their boiling points and their
polarities, whereas conventional analysis techniques give access to only around twenty pseudo-constituents.
Although the GC2D concept is a little more than 10 years old, the extreme complexity of its implementation means that its development on an international scale is rare. Only a few teams in the United States and Australia have mastered this technology, and IFP is
one of the pioneers in Europe. A powerful GC2D system requires the development of both equipment and software that are
perfectly integrated and at the cutting edge of current possibilities. This development illustrates the multidisciplinary character and
excellence of IFP's teams, especially in the fields of analytical methods and signal and image processing.
The additional benefits brought by this new analysis tool are many. In refining and petrochemicals, access to new 2D distributions
of the constituents of feeds and effluents makes it possible to develop effective processes based on information that is increasingly
at the molecular level. This technology can also make a major contribution to solving environmental problems, for example the
search for the source of marine pollution: the extended molecular characterization obtained can identify the origins of certain types
of pollution.
>> In GC2D, the sample to be analyzed undergoes 2 chromatographic separations, termed “orthogonal”
because they are independent, one depending on the volatility and the other depending on the polarity
of the compounds. The 2 columns are connected via a cryogenic modulator using a double stream of CO2
that traps, concentrates and continuously injects the effluent from the first column into the second.
The Polychrom data processing program uses the raw data for the 2D/3D display of the chromatograms and
for their integration.
28
>
>> Numerous applications for IFP's pioneering work in the field
of ionic liquids
The expertise that IFP has being building up in the field of ionic liquids for nearly 15 years has led to its very strong international
reputation in this area today and to a number of applications in the refining and petrochemicals sector. It was back in the early
1990s that IFP's pioneering teams first proposed using these solvents –described as “green” as a result of their low volatility– in
catalysis and chemistry. They then developed the Difasol* process for the biphasic dimerization of butenes into octenes, the petrochemical precursors of certain plasticizing agents. When combined with Dimersol*, a dimerization process operating in homogeneous conditions, it can reduce waste while at the same time improving the yield of desired products.
Today, IFP is working on the use of these molten salts to direct the
selectivity of certain chemical reactions and to provide a solution to the
problem of the recycling of homogeneous catalysts. New applications
in separation (desulfurization and purification of oil feeds) have also
been identified and patented. A way of recycling CO2 using these ionic
media is also currently being researched.
More fundamental research is being conducted in parallel in order to
find out more about these media (correlation between structure and
physico-chemical properties and reactivity), with a view to gaining a
better understanding of their influence on chemical mechanisms.
>> Ionic liquids, made up of cations and anions, are used
in catalysis and chemistry.
* marketed by Axens, an IFP subsidiary.
>> Innovation in hydrotreating catalysis
rewarded
In 2004, IFP’s work on the development of the new HR 500* line
of hydrotreating catalysts led to it being awarded the Montgolfier
prize by the Société d'Encouragement de l'Industrie Nationale (SPI).
This prize reflects the innovative quality of the series and its major
commercial success since it was launched at the end of 2003.
The development of these new catalysts, which are highly active in both
hydrodesulfurization and hydrodenitrogenation and suitable for various types
of distillates (naphtha, gas oil, vacuum distillates), is the fruit of advanced
multidisciplinary research drawing on the expertise of IFP's teams in a whole
range of fields, including catalysis, analytical techniques, molecular modeling
and development engineering.
The HR 500 series is marked by significant scientific advances in control
of the physico-chemical properties of catalytic supports composed
of nanoparticles of oxides. Indeed, mastery of the genesis of the structural
and textural characteristics of the supports led to the invention of an innovative method for synthesizing alumina gels using soft chemistry, a more environmentally-friendly method than those used previously. The remarkable
properties of the new alumina support obtained are further enhanced by
the progress made in the preparation of metallic oxide solutions.
>> The development of new catalysts draws on expertise in
a range of fields: catalysis, analytical techniques, molecular
modeling and development engineering.
* HR 500 series marketed by Axens, an IFP subsidiary.
29 >
+
POWERTRAIN
ENGINEERING
>>
T
he transport sector has become a fundamental
component of all modern economies. A high level of
mobility of goods and people is not only a characteristic
C ombustion and
fundamental research
Control of combustion is a basic theme of
of developed countries, but, far more, a prerequisite for
IFP's research, which covers combustion in
their development. The number of vehicles on the roads
gasoline and diesel engines and catalytic
combustion for gas turbines.
has significantly increased in the last few decades and the
automobile industry now faces a number of challenges,
one of the most important being to control the impact
Development in the field of combustion
processes based on the controlled autoignition of the air-fuel mixture continued
of vehicles on the environment, particularly with respect
in 2004. Processes such as CAI (Controlled
to greenhouse gas emissions.
Auto-Ignition) in spark ignition and HCCI
(Homogeneous
A number of challenges must be overcome to ensure road
transport is compatible with sustainable development.
Innovations and technological advances will be among the
most important of these, especially where powertrain
Charge
Compression
Ignition) in diesel are of great value in
terms of improving efficiency or reducing
engine-out emissions. Since its creation
in
2003,
the
ECO-Engines
(Energy
COnversion in Engines) European network
of excellence, coordinated by IFP, has been
systems are concerned.
contributing to this development.
The industrial thermal installation and gas turbine sectors
The Groupement Scientifique Moteurs
face problems similar to those of the transport sector,
(GSM) also provides IFP with a framework
in particular in terms of controlling the emissions of
polluting effluents and limiting the emissions of CO2 by
reduction or capture.
To meet these various technological challenges, IFP relies
favorable to the implementation of a significant share of its research work, in
collaboration with PSA Peugeot Citroën
and Renault.
Regarding gasoline engines, the different
topics approached by the GSM are direct
on its dual expertise in engines and fuels, and offers
injection (GDI), CAI combustion, and
the industry concrete responses. Its approach is based
downsizing. The use of a piezoelectric
both on high-level skills and on powerful modeling and
experimental technical resources.
injector in the multi-ignition mode in GDI
leads to a significant increase in the
robustness of stratified combustion operation and in increased exhaust gas recycle
tolerance, with very low emissions of
nitrogen oxides (NOx). The effects of fuel
30
>
>>
D
injection on the internal aerodynamics and
combustion are analyzed in detail using
optical diagnostic techniques such as particle image velocimetry (PIV) and planar
laser induced fluorescence (LIF), which
yield field images of the OH radical. LIF is
also used to study CAI combustion, in particular in order to determine the appearance of auto-ignition precursors. In the
field of downsizing, numerous studies aim
to improve our understanding of knock
resistance using three-dimensional modeling. The potential of this process is being
examined concurrently by experiments on
a single cylinder engine.
EVELOPMENT OF THE ENGINE AND VEHICLE CALIBRATION
ACTIVITY
The growing complexity of powertrains and of vehicles subsequently
requires design, optimization, and control methodologies that are much
more effective. In particular, the electronic calibration of a vehicle, which
requires the determination of several tens of thousands of adjustment
parameters, is a key element. As part of its development work, and to validate its concepts, IFP is therefore going to acquire a capacity to carry
out complete calibration projects. This field corresponds, moreover, to a
growing market, since auto manufacturers are being led to subcontract
a large share of their needs, as a combined result of the diversification of
their product offer and the introduction of new antipollution standards.
IFP's skills in engine and vehicle calibration have already been acquired
in particular through the development of demonstrators in partnership
with car manufacturers. To move on to the industrial stage, IFP has
decided to give priority to developing effective methodologies and
resources: automated test benches, design of experiments, modeling, etc.
In diesel, the optimization of conventional
combustion has been pursued with a per-
of jet/wall interaction was carried out by
In three-dimensional modeling, significant
formance target of 80 kW/l. A new experi-
visualization to characterize the optimal
improvements have been made on post-
mental engine capable of operating at
operating conditions in the HCCI mode in the
oxidation and soot models. A new model
200 bars of cylinder pressure has been
case of IFP's NADI TM (Narrow Angle Direct
of spray/liquid film interaction has been
built for this purpose. The cold starting
Injection) process. In addition, the principal
successfully evaluated on gasoline and
phase has also been examined, in order to
sources of unburnt hydrocarbons (HC) and
diesel applications. A first step in the vali-
identify the impact of reducing the com-
of carbon monoxide (CO) have been identi-
dation of calculated auto-ignition delays
pression ratio, and encouraging results
fied and were found to correlate in particu-
proved to be decisive. Furthermore, a
have been obtained at a temperature
lar with local mixture inhomogeneity and
significant step forward was taken in
of –25°C. Finally, a detailed analysis
with low maximum cycle temperatures.
LES (Large Eddy Simulation) modeling,
with first engine intake-compression calculations performed using a moving mesh.
T echnological
developments
IFP works to develop and optimize innovative technologies mainly oriented at reducing consumption and pollutant emissions.
The main developments in diesel are
aimed at controlling combustion with very
high levels of exhaust gas recycle (EGR) to
achieve a significant engine-out emissions
reduction in NOx and particulates. This
approach relies on the use of emerging
injection and turbocharging technologies.
A special effort is also being made in the
field of control, which contributes directly
to the optimization of the whole engine
>> High-performance single-cylinder diesel engine built in the context of the GSM.
system.
NADITM,
IFP's
homogeneous
31
>
combustion concept, fully exploits these
The process of air injection into the
performance criteria, given the constraints
developments. Its evaluation continues, in
exhaust is being examined in order to
on local pollution, the impact on the green-
collaboration with a growing number of
optimize its potential. A number of proj-
house effect, and the diversification of
automobile manufacturers. The issue of
ects have also been initiated in the field
energy sources.
engine cold-starting is also being exam-
of selective catalytic reduction (SCR) for
ined through technology, control strate-
applications on automobiles and trucks.
IFP accordingly evaluates possible future
approaches compatible with the notion of
gies and calibration.
sustainable development, approaches using
The downsizing of gasoline engines
both conventional and alternative fuels.
appears today to be the most promising
Research is carried out with a view to char-
option, on an industrial level, for reduc-
acterizing the potential of such fuels as
ing CO2 emissions in the short term.
ethanol and vegetable-oil derivatives. In
IFP's approach, which is based on
particular, IFP has built a demonstrator vehicle dedicated to ethanol,
“scavenging combustion” and results
in better knock resistance under high
based on a Smart gasoline
load conditions, is starting to be used
engine, in order to evaluate
This
the potential of this fuel,
approach combines turbocharging
which is among the leading
and gasoline direct injection. The lat-
alternative fuels in terms of
on
production
vehicles.
quantity produced world-
est developments are aimed at
wide. The results lead to a
optimizing the performance
15% performance improve-
and cost of this concept.
It can now be effectively
ment in both torque and power, combined
adapted
with a marked reduction in CO and NOx
tional
to
conven-
emissions.
turbocharging
technologies
(single-
flow turbo) and to port
fuel injection (PFI). IFP's
GDI demonstrator, which
>> NGV demonstration
vehicle built by IFP
with the ADEME and
Gaz de France.
The impact of fuel characteristics on the specific performance and emissions of the new
HCCI and CAI combustion processes is being
has a displacement of 1.8 liter
analyzed within the framework of interna-
and uses a conventional turbo-
tional consortiums. The objective is to identify the best formulation to extend the range
charger, delivers a torque of 190 Nm/l
from 1,500 rpm and a power of 83 kW/l,
all with a reduction in consumption of
O ptimization of coupling
engine and fuel
of application of these processes. Started in
2003, the HCCI consortium has grown and
now includes 12 partners, among them the
more than 20% compared with the
Any analysis of energy systems dedicated
ADEME, 7 automobile manufacturers, and
to transport applications must necessarily
3 oil companies. The CAI consortium, which
In this field, IFP is also developing a
consider the engine-fuel couple. Joint
started in 2004 with 8 partners, is also
demonstration vehicle for PSA Peugeot
optimization is fundamental to satisfy
attracting growing interest.
conventional engine.
Citroën. This demonstrator, on a Citroën
C2 base, has a turbocharged two-cylinder
engine using “Stop & Start” technology.
The aim is very low CO2 emissions.
For this project, the engine torque control
structure developed by IFP's engine control specialists is applied.
Because future regulations will be even
more stringent, control of pollutant emissions remains an important research
theme for IFP. With respect to gasoline
engines, the cold-starting is being given
special attention because it significantly
contributes to emissions. The comparative
performance of the GDI and PFI concepts
is analyzed in terms of HC emissions.
32
>
>> Calculation, using the IFP-C3D code, of the scavenging of the burnt gases of a turbocharged
direct injection engine.
A dvanced engine control
the
European
Cathlean project
Aware of the fundamental importance of
coordinated by
control in current and future powertrains
Alstom.
(hybridization), IFP is actively deploying its
skills and resources in this field. The work
The
concerns the development of combustion
of
and after-treatment control strategies,
sions in indus-
and engine and vehicle calibration.
trial combustion
is
reduction
CO2
emis-
approached
Rapid control prototyping is being used
from the “fuel”
in particular for engine and vehicle appli-
and “capture
cations in downsizing, the natural gas
vehicle, and the homogeneous combustion diesel engine. This work is being
of CO2” stand>> Demonstrator vehicle equipped with a PSA Peugeot Citroën
prototype turbocharged two-cylinder gasoline engine, a “Stop & Start”
system, and the prototype engine control system developed by IFP.
conducted with the help of the ACEBox
points via the
combustion
process. The
system developed by IFP, a toolbox
launched at the beginning of 2005,
combustion in gas turbines of fuels
which could soon become available on
in parallel with the three-dimensional IFP-
derived from biomass (vegetable oils,
the market.
C3D code for the calculation of combus-
ethanol, and biogas) is being studied in
tion in engines. Finally, the IFP-Exhaust
the context of the European Aftur proj-
Control strategy development relies on
(after-treatment simulation) library is also
ect. IFP is also working on new thermody-
the development of real-time simulation
the focus of major development efforts.
namic energy production cycles allowing
models, created by combining numerical
the capture of CO2 at low cost. IFP is also
control models with system simulators.
heavily involved in the European Encap
These simulators are developed by IFP,
in cooperation with its partner, IMAGINE,
I ndustrial thermal
engineering
in the form of specific libraries on the
project for developing different capture
techniques dedicated to power stations
burning natural gas or coal. Finally, there
AMESim software platform. The IFP-Drive
IFP conducts work in the field of low-NOx
is a particular emphasis on the transfer
(vehicle simulation) library has been on
combustion for gas turbines. Work on
of oxygen by metallic oxides (chemical
the market since March 2004. The IFP-
catalytic combustion applied to high-
looping combustion) applied to circulating
Engine (engine simulation) library will be
power turbines is being conducted within
fluidized beds and to gas turbines.
>>
S TRATEGY
Innovate in the field of powertrains for road
vehicles
Interview with Philippe Pinchon, Director of the
Powertrain Engineering Technology Business Unit
The Powertrain Engineering Technology Business Unit intends to meet future challenges in the field of powertrains
for road vehicles. Its strategic objectives for the short and
medium terms are established in anticipation of the needs
arising from changes to antipollution standards and from
the various commitments made to reducing CO2 emissions.
Guidelines for the longer term are based on the results of
numerous prospective studies, such as “lifecycle analyses”,
on the guidelines and directives published by the national
and European authorities, and on an examination of the
potential of technologies being considered for the future.
In the short and medium terms, the development of innovative technologies that can help reduce the pollutant
emissions and fuel consumption of internal combustion
engines will continue to be a
priority. Hybrid powertrains,
a very promising solution for the
reduction of CO2 emissions, will be examined in the near future with an optimization approach
based on system modeling and the development of original control strategies. This approach may also be adopted
in the longer term when the various options for the integration of fuel cells in the energy system of a vehicle are
considered.
Finally, alternative fuels such as natural gas and biomass
derivatives will start to play a much larger role in the
future. An exhaustive evaluation of the performance and
potential of these new fuels will therefore be conducted
to prepare for their sustainable development.
33
>
S
+
>>
cientific advances
in Powertrain Engineering
advances in Powertrain Engineering, with in particular the modeling of auto-ignition processes for
the implementation clean diesel combustion
modes and the development of an engine control
system for a demonstration vehicle running on
natural gas.
>> Modeling of auto-ignition processes for the implementation of clean diesel
combustion modes
IFP has created an original concept called NADITM, which can be used to implement a new homogeneous diesel combustion mode
(HCCI). It has just been evaluated by 3 new automobile manufacturers and the results are remarkable: clean combustion becomes
possible, with practically no nitrogen oxide emissions (reduced by a factor ranging from 20 to 100) and no soot particles (reduced
by a factor ranging from 5 to 10), without penalizing the fuel economy and therefore CO2 emissions that are the great strengths
of diesel engines.
The invention of this concept was made possible in particular by the development of a new auto-ignition model enabling calculation of this type of combustion in engines and capable of reproducing the phenomena observed when a very high burned gas
recirculation rate is used. This original model led to a better understanding of the physico-chemical and aerodynamic phenomena
involved and thereby made it possible to dimension the combustion system, which consisted of, in particular, a very closed injection
cone and a suitable piston bowl geometry. A detailed analysis of the effects of injection on mixture formation and combustion was
performed using techniques available at IFP, notably planar laser-induced fluorescence (LIF) optical diagnostics on the fuel and on
the combustion radicals.
>> Planar laser-induced fluorescence makes it possible to track the evolution of fuel distribution in the combustion chamber in time
and space.
34
>
>> Development of an engine control system for a demonstration
vehicle running on natural gas (NGV)
IFP has just successfully finalized an engine control system suitable for a demonstration vehicle running on natural gas, on
a Smart vehicle base, in partnership with the ADEME and Gaz de France. This prototype, reaching very low CO2 emissions
–less than 100 g/km in a standard EU driving cycle– satisfies the Euro IV antipollution standards in force from 2005.
>> IFP develops system simulators in the form of specific libraries introduced on the AMESim software platform marketed
by IMAGINE, an IFP Group company. These simulators are used in developing control strategies.
This success illustrates the expertise IFP has built up in engine and vehicle control. This field is becoming even more important today as increasingly severe standards governing emissions of pollutants and of CO2 make engines and vehicles
more and more complex, requiring ever more sophisticated optimization of the many operating parameters. This is achieved in vehicle on-board electronic control units; their design requires the development of new methodological approaches
and software infrastructure. Consequently, engine control involves numerous skills, in such varied fields as mathematics,
automation, signal processing and real-time computing, but also in physical modeling and engine technologies. Therein
lies the strength of IFP, which represents one of Europe’s leading centers of integrated expertise in this field.
Today, this expertise is also being used to develop hybrid vehicles, through the optimization of the combined operation
of internal combustion engines and electric motors. The development of these vehicles, which will lead to lower pollutant
emissions and greater fuel economy, is in line with the strategic priorities defined by IFP.
35
>
IFP
and the propagation
of knowledge
>>
36
>
>>
Education
Education and
and Training:
Traning:
IFP
IFP School
School
>>
Information
Information
>>
I
FP's knowledge is transferred through a dual activity
of education and training and information activities:
■ the IFP School, open to university graduates, offers a
complete range of French and English-language graduate/
masters/degree programs in all the professions of oil, gas,
petrochemicals, and engines industries. Benefiting from
close ties with the world of research and industry, the School
has acquired a very strong international reputation, testified
by the presence of nearly 50% foreign students from around
fifty different countries in its programs;
■ information activities is oriented towards institutional
players –to serve and support public policy–, the scientific
and technical communities –through an active policy of
publishing articles, presenting conference papers, writing
books and organizing international seminars– and towards
industry, in the form of a comprehensive range of economic
intelligence services and products (information, studies,
surveys, etc.). This activity is supported by the full range of
scientific, technical and economic skills developed at IFP.
37
>
+
EDUCATION
EDUCATIO
AND TRAINING:
IFP SCHOOL
>>
T
he IFP School manages IFP's training mission in:
G raduate education
for engineers
■ the graduate education of engineers,
■ training in and through research (theses).
With the benefit of its genuine international dimension and
its privileged ties with industry and research, the School
offers a full range of graduate programs, in French and in
English, in all professions relevant to petroleum, gas, petro-
Since
the
founding
of
the
School,
8,344 French and 3,384 foreign students
representing more than 110 nationalities
have been awarded the IFP School's
degree. In the same period, more than
500 non credit students representing
70 nationalities have also studied at the
School.
chemicals and engines.
The School currently offers 10 specialized
The IFP Group, through IFP Training, also performs a continuing education mission. In the context of a sphere of activity
and advanced masters programs for engineers, in French or in English, lasting from
11 to 22 months:
that is both national and international, IFP Training meets
the technical, scientific, and economic training needs of per-
■ Petroleum Geosciences, Geology major,
sonnel in the oil, chemical, and automobile industries.
■ Petroleum Geosciences, Geophysics major,
■ Reservoir Geoscience and Engineering
with Texas A&M University (College
Station, USA) and Gubkin University
(Moscow, Russia),
■ Petroleum Engineering and Project
Development (program taught in French),
■ Refining, Engineering and Construction,
Gas (program taught in French),
■ Advanced Technology in Petrochemicals,
Polymers and Plastics with McGill University (Montréal, Canada) and La Sapienza
>> The School offers
10 specialized
or complementary
training programs.
38
>
University (Rome, Italy),
■ IC Engines (program taught in French),
>>
■ Petroleum Products and IC Engines
T
HE POLICY OF DISSEMINATION TO MEET THE GROWING
TRAINING NEEDS OF PRODUCING COUNTRIES
(program taught in French),
■ Economics and Corporate Management
(program taught in French),
■ Petroleum Economics and Management
with the Colorado School of Mines
(Golden, USA), Texas A&M University
(College Station, USA), the University of
Oklahoma (Norman, USA), and Gubkin
University (Moscow, Russia).
In order to meet the growing training needs of producing countries,
the IFP School has instituted a policy of dissemination, in other words
of “exporting its degrees”. This consists of offering and setting up
place degree programs abroad, organized with a local partner university and one or more industrial partners. These satellite degreeprograms are conducted in close collaboration with IFP Training, a
subsidiary of IFP, which runs these programs and manages their contractual and commercial aspects. The School designs the program,
selects the students, oversees the instruction and delivers at least half
of the teaching.
2004 saw the launch of a new operation in Algeria (Petroleum
Economics, 21 students) in addition to the 4 already launched successively in Angola, Russia, Nigeria and Iran. The coming years are
expected to witness further ventures of this kind, beginning with the
Middle East being a likely area initially.
>> Jean-Martin Folz, President
of the Directorate of PSA Peugeot Citroën
and sponsor of the class of 2004,
Olivier Appert and Jean-Luc Karnik.
and 3 elsewhere in Europe. In 2004, 23 stu-
upstream integration and the develop-
dents in their penultimate year of engi-
ment of industrial partnerships for those
neering school were admitted under this
students benefiting from corporate spon-
program to work concurrently towards the
sorships (17 of the 23 students had
IFP School's engineering degree.
apprenticeship contracts in 2004).
The principal benefits include the assurance of a high quality of recruitment from
These courses, taken in 2004-2005 by
target schools, the strengthening of ties
324 engineers and students, 151 of them
with partner schools, enabling genuine
A pprenticeship
at the School
foreign nationals, lead to the IFP School's
As an extension of the work of previous
engineering degree or to its national mas-
years, the apprenticeship formula has
ters degree.
been consolidated. It involves studying
for an engineering degree under a
The School also offers 4 training
programs with options, intend-
work contract and alternating
periods of classroom studies
ed primarily for professionals
with periods of work place-
and adapted to a com-
ment. This system, which is
pany's specific objectives
based on the assumption
and needs.
of recruitment upon completion of training, is
a winning relationship
"B ac + 4"
agreements
with engineering
schools
for all 3 parties: student, company, School.
Apprentices are recruited by the School and
companies in parallel.
The training programs last
The School has entered
from 16 to 22 months, with
into agreements with 30 engineering schools in France
>> 40 nationalities are represented among the students.
alternating study/placement
39
>
>>
T
HE IFP SCHOOL
> 4 study centers:
- Exploration-Production;
- Refining, Petrochemicals,
Gas;
- Engines and Utilization
of Hydrocarbons;
- Economics and
Management.
> 18 training programs,
6 of them in English.
> Key figures for 2004:
>> The School's 9th annual jobs fair.
periods based on modules lasting a few
university laboratories, is an important
months.
part of the training of doctors for industry
and research.
In spite of a less favorable business
- Nearly 3,000 applicants;
climate, the September 2004 class had
In all of the fields in which IFP is active,
- 438 students admitted to
all programs at the RueilMalmaison campus;
126 apprentices, the largest number since
161 theses are ongoing, including 44 by
the program was started. There are
foreign researchers: 77 on themes in
apprentices in 8 of the School's programs,
Exploration-Production, 59 in Refining-
- 67% of the students
in the master’s programs
are sponsored by industry
(this includes both
professionals seconded
by their companies and
apprentices);
and they are sponsored by 37 companies.
Petrochemicals, and 14 in Powertrain
Since 1996, when this form of instruction
Engineering. In addition to these scientific
was introduced, 683 apprentice engi-
theses, there are 11 in Economics.
neers have been recruited by nearly
Altogether, 40 doctoral theses were
60 companies.
defended in 2004, bringing the total
- 35 full-time professors
and 350 professors and
lecturers from industry
and research;
E ducational reform
- 161 theses in progress
at IFP.
more interactive training programs pro-
since the School's founding to 1,207.
The IFP School has also developed partnerships to deliver teaching corresponding to
The educational reform in effect since
September 2003 is aimed at offering
moting exchange between students,
open to all dimensions of the engineer-
> International dimension:
ing profession, and building on the
- 47% foreign students
(in the master’s
programs);
students' personal experience and
- nearly 50 international
companies or national
companies of producing
countries regularly second
professionals or sponsor
the School's young
graduates. Among them:
BP, CEPSA, Delphi,
ExxonMobil, NIOC,
PetroVietnam,
Schlumberger, Shell,
Siemens, Sincor,Technip,
Total, etc.
common to the students of
contributions. In this context,
an interdisciplinary module
different programs was run
for the first time in January
2004. It included group
projects, business games,
case studies in a realistic setting and practice in written
and oral expression as well as
lectures.
T raining through research
Work on doctoral dissertations, carried
out either in IFP's research divisions or in
40
>
>> 20th “Professions and careers
in petroleum and engines” day.
the research masters or to the DEA
(French research graduate diploma) in
>>
T
4 fields:
RAINEES AT IFP: 589 IN 2004
■ Master of sciences and technologies of
497 > Research and
development
the University of Paris VI, with majors in:
• Sciences of the universe, environment,
19 > IFP School
ecology, geosciences-geomaterials specialization;
18 > Information
• Fundamental and applied chemistry,
chemical engineering specialization;
55 > Other divisions
• Engineering sciences, mechanics and
energy specialization;
■ DEA in Energy economics, jointly with
191 > Doctoral
researchers
the University of Paris II and the University
of Burgundy.
48 > Post-docs
The School admitted 89 students to these
courses in 2004-2005, 36 of them foreign
23 > Trainees from
foreign organizations
nationals.
327 > Trainees from
French organizations
>>
S TRATEGY
Attract and train talents for industry
Interview with Jean-Luc Karnik, Dean of the IFP
School
The IFP School celebrated its 50th anniversary at the start of
the 2004-2005 school year. Since it was founded, it has
trained nearly 12,000 engineers, who have helped to
come– more and more highly
qualified engineers.
To satisfy this demand, the
School has evolved significantly
in the last few years. The size of its
classes has tripled, industrial sponsorships
have multiplied, the international audience is much larger,
develop a French oil industry and petroleum service and
and various new training approaches, such as satellite
supply industry that is among the world's leading players.
degree-programs, have made their appearance. In the next
While the national and international environment has
few years, the School is going to continue its development,
considerably changed since the school was founded, one
in particular by welcoming as many students as possible to
major challenge remains the same: that of attracting and
the Rueil campus (insofar as space allows), by developing
training talents for oil and engine industries that are faced
the policy of dissemination in strategic countries, and by
with serious technological and societal challenges.
expanding and strengthening IFP Training continuing
Demand on the part of these international industries has
education programs.
been growing steadily for about fifteen years. These needs
These developments will be achieved through continued
are expected to be even more marked in the next decade,
emphasis on the quality of both recruitment and the
driven by demographics that will impose a large-scale
training offered (constant adaptation of training content
renewal of the workforce. In addition, to meet the ex-
to the needs of industry, improvement of documentation,
pected technological and societal challenges, these compa-
development of new case studies, plans for an e-campus,
nies now need –and will continue to need in the years to
etc.).
41
>
+
INFORMATION
>>
A
ware of the strategic importance of knowledge and its
transmission to various publics, IFP has set up an
organization specifically dedicated to the dissemination of
A European center
of information and expertise
> At the heart of networks
knowledge; its vocation lies in the field of energy, transport
and environmental technologies, and is organized around
In the context of its mission to inform, IFP
has built up a first-rate information center in
2 principal missions:
■ provide the authorities, industry, technicians, and
researchers with documentation on scientific knowledge
and industrial techniques;
■ raise the profile of IFP's expertise in its various scientific,
the field of oil & gas, energy, and the environment. An associate pole of the Bibliothèque Nationale de France (BNF), this center
has documentary resources that are growing
all the time (80,000 books and 1,100 journals), covering all aspects of oil and gas. In
addition, IFP's active participation in leading
professional associations and international
technical, and economic fields of activity and ensure that
working groups guarantees the incorpora-
this expertise yields maximum benefits.
tion of the most recent information technologies in the services proposed by IFP.
Information is directed mainly at institutional users (to serve
and support public policy), at the scientific and technical
communities, and at industry, with a comprehensive range
of economic intelligence services and products (information,
> A diversified offer
of economic intelligence
services and products
IFP's expertise is available through intelli-
studies and appraisals) backed up by all of the scientific,
gence services and studies performed to
technical, and economic skills developed at IFP.
meet institutional and industrial needs.
These services may be one-off and/or
recurrent, “tailor made” or predefined,
and take the form of:
■ states of the art (scientific, technical and
industrial);
■ in-depth macroeconomic analyses and
>> Serge Lepeltier, Minister
for Ecology and Sustainable
Development,
and Jean-Jack Queyranne,
Deputy of the Rhône department
and President of the Rhône-Alpes
Regional Council,
visiting the IFP stand at Pollutec.
42
>
syntheses (geographical and sectorial);
■ prospective analyses of technological
evolutions and studies of their impact on
markets;
>>
E
■ life-cycle analyses of energy systems and
benchmarking;
■ consulting in support of the creation of
documentation, information, and intelligence facilities.
These services are intended not only for all
players in the fields of oil and gas, the
automobile industry and the environment,
but also for allied industries and services
concerned by new energy and environmental issues.
CONOMIC INTELLIGENCE IN THE FIELD OF THE CAPTURE AND
STORAGE OF CO2
One of IFP's major concerns is making its knowledge available rapidly in
order to guide the choices of decision-makers, both public and private,
in the field of energy and the environment. This mission assumes its full
importance in the impending period of energy transition, when the decisions taken today in such emerging sectors as the production of alternative fuels, the hydrogen economy, and mastery of the capture and
storage of CO2 will determine the energy and environmental future of
the planet.
IFP has renowned expertise in all aspects of the capture and storage of
CO2. The scope of the work conducted on an international level, the
complexity of the problems studied and the profusion of information on
this sector of activity should in future be the object of permanent critical analysis in order to enlighten the main players in their decisionmaking processes. Through the independent character of its expertise,
and with the benefits derived from the cross-fertilization of its documentary, scientific, technical and economic skills, IFP will inevitably play
a leading role in the dissemination of knowledge in this field.
In addition, IFP has its own scientific
48% > IFP
journal, Oil & Gas Science and Technology
+ France
25% > IFP
+ International
(OGST) - Revue de l’Institut Français du
Pétrole,
which
provides
a
regular
look at all of the research activities of
IFP and its partners. Since 2003, OGST
has
had
a
website
of
its
own
(http://ogst.ifp.fr/), with many search
functions –by author, subject or theme–,
specific access to special issues, and an
alert service. Moreover, since 2004,
the full texts of all articles published
>> IFP's international seminar,
“Which fuels for low CO2 engines?”.
in the IFP journal since 1997 –nearly
450 articles– have been available free of
charge via IFP's website: more than
50,000 downloads of these articles are
27% > IFP alone
P apers and publications
registered every month.
With 228 papers presented in 2004 at the
Among the various issues published by the
principal national and international semi-
OGST journal in 2004, mention should be
nars, IFP both promotes the dissemination
made of the publication of 5 special
of its results and maintains close ties with
issues, on solid/liquid dispersions in drilling
all academic and industrial players in the
and production, the upscaling of fluid
profession. In addition, IFP researchers, in
flow in oil reservoirs, interactive drilling,
association with their industrial and
the pipeline transportation of heavy oils,
One of IFP's missions is to bring together
academic colleagues, published 222 arti-
and fuels for low CO2 engines.
and link the various scientific, economic,
cles in 2004 in a number of different
>> 73% of IFP's scientific publications
were with partners.
E vents organized
by IFP
and industrial communities in its main
French and foreign-language specialized
Also, 8 books by IFP staff members were
fields of activity, through events that allow
journals.
published in 2004.
numerous exchanges; these are especially
43
>
conducive to innovation and the emer-
conversion in natural-gas engines, the use
of wastes: examples of cooperation
gence of new cooperative ventures.
of hydrogen in internal combustion
between IFP and SMEs”. This event
engines, etc.;
brought together nearly 100 top SME
The seminars organized by IFP in 2004
notably included the following:
managers and was an opportunity to
■ a seminar intended specifically for
consolidate ongoing collaborative projects
SMEs on the “Treatment and upgrading
and establish promising contacts for the
■ as one of IFP's Rencontres scientifiques,
future;
a seminar on “Trace analysis in the petro■ the Paris and Lyon Panorama
leum industry” reviewed the latest
advances in research on the detec-
seminars, now IFP's annual
tion of traces in extremely varied
sectors
of
upstream
appointments with the whole
and
profession. Intended to in-
downstream oil industry, in
aqueous
and
form decision-makers in
organic
the worlds of politics,
media as well as in
industry, the economy
solids;
and finance, these
2 seminars combined
■ in the same context,
drew nearly 300 par-
an international semi-
ticipants in 2004 to
nar on the question,
consider the theme
“Which fuels for low
“Fossil fuels: technical,
CO2 engines?”. This event,
economic, and political
issues on the horizon
attended by more than
2030-2050”;
160 participants from more
than 15 countries, drew up a
■ jointly with the Centre de
complete inventory of the latest
Géopolitique de l'Énergie et des
developments in combustion pro-
Matières Premières (CGEMP) of the
cesses in engines and examined the
University of Paris-Dauphine, a seminar
future of the engine-fuel couple: the
future of liquid fuels, fuels for the HCCI
and CAI combustion modes, energy
>> Presentation at the Pollutec show
of IFP's research in the field of transport and
sustainable development.
on the theme of “Oil reserves: between
geologists and financiers”.
>>
S TRATEGY
Medium- and long-term development
books, the organization of
Interview with Jean-Jacques Lacour, Director of the
Information Business Unit
seminars, etc.) is part of a res-
IFP possesses a unique capital of knowledge built up over
several decades of scientific research and industrial successes. The dissemination of its knowledge, which is one of
IFP's general interest missions, reflects its determination to
share its know-how and transform this knowledge into
of the growth of the e-economy,
which is profoundly challenging traditional
models of publishing, information and communication
today.
The creation of a center for information and independent
a competitive advantage for all private players requesting
expertise in the field of energy and the environment will
economic intelligence services in the fields of energy and
also enable IFP to offer, both to the authorities and to in-
of the environment.
dustry, a whole range of decision-making support products
and industrial communities (participation in learned
societies, conference papers, publications, the writing of
>
must adapt to the consequences
genuine assets to serve and support public policy and into
The sharing of knowledge with the scientific, technical,
44
olutely European approach and
and services, one-off and/or recurrent, “tailored” or predefined, using all of the skills developed at IFP.
>>
P
UBLICATION OF 8 IFP BOOKS IN 2004
> Oil and Gas
Exploration
and Production:
Reserves, Cost, Contract
> Which Fuels for
Low CO2 Engines?
> Insights into
Petroleum Geochemistry
Authors:
Author:
Pierre Duret
Bernard Colletta
Author:
and Xavier Montagne
Organic geochemistry applied
> Traitement du signal
pour géologues
et géophysiciens.
(Tome 3 : techniques
avancées)
The IFP School
Based on the proceedings
to oil exploration is one of IFP's
Authors:
After a historical review and a
of the international seminar
areas of excellence. This book
Jérôme Mars,
presentation of the markets, this
organized by IFP on this subject
looks at the history of the IFP
Jean-Louis Lacoume,
book examines the various technical
in 2004, this work is divided into
approach initiated by
Jean-Luc Mari
stages in oil and gas exploration
5 themes: the future of liquid
Bernard Tissot, a quantitative
and François Glangeaud
and production, the evaluation
fuels, engine-fuel relations
approach that paved the way
Seismic prospecting and
of reserves, the estimation of
in HCCI and CAI combustion,
for basin modeling, now
seismology make extensive use
investments and costs, decision-
energy conversion in natural-gas
an essential tool in modern
of elastic or acoustic waves
making and control processes, as
engines, the use of hydrogen
exploration.
recorded by a network of sensors.
well as the accounting, legal, and
in internal combustion engines,
This work is devoted to wave
contractual environment of these
and fuels for low-CO2-emissions
separation methods, illustrated
activities. A concluding section
engines.
by a number of simulated and
touches on the role of safety and
actual examples (2D, 3D,
environmental and ethical
4 components), to deconvolution
questions.
techniques, to the presentation
of time-frequency and time-scale
methods, and to their applications
in geophysics.
> Avaries en
lubrification.
Application aux paliers
> Le pétrole.
Au-delà du mythe
> Chemical Reactors.
From Design to Operation
> Mechanics
of Fluid-Saturated Rocks
Author:
Authors:
Authors:
Author:
Xavier Boy de la Tour
Jean-Paul Euzen
Yves Guéguen
Jean-Louis Ligier
This work examines the
and Pierre Trambouze
and Maurice Bouteca
This work describes the various
extraordinary adventure of the oil
A revision of the work published
Based on the 3 Euroconferences
possible modes of failure of
industry from its earliest days,
in 1984, “Les réacteurs
of 1998, 1999 and 2000 on rock
lubricated systems and reviews their
putting the new challenges
chimiques : conception,
mechanics and physics in
specific mechanisms of failure,
–technical, economic, geopolitical,
calcul, mise en œuvre”, this book
geology, this work describes
presents the commonest situations,
and environmental– it faces today
sums up current knowledge
recent advances in the field of
and examines potential solutions.
in perspective.
in process engineering.
fluid-saturated rock mechanics.
45
>
the
IFP Group
>>
46
>
>>
IFP’s subsidiaries and shareholdings
>>
Portfolio of IFP’s main industrial shareholdings
>>
Partnership with SMEs
>>
I
FP has been actively committed to technology
transfer to industry since it was founded, supporting
the creation of companies designed to market the
fruits of its research. From Technip (1958), via Procatalyse
(1959), Beicip (1960), Franlab (1967), Coflexip (1971) and
Axens (2001), the IFP Group's constant policy of creating
subsidiaries is of major strategic importance, giving it
industrial outlets along with access to world markets in
fields relevant to oil and gas and an ability to anticipate
their needs. This active industrial policy, now managed by
the Industrial Development Business Unit, has led to the
expansion of major players in the oil service and supply
sector, such as Technip, today ranked fifth in the world in
its sector.
These examples illustrate IFP's ability to create jobs and
profitable industrial activities founded on technological
innovation.
47
>
+
THE
IFP GROUP
>>
W
ithin the framework of its statutory development
IFP is at the head of an industrial group
mission, IFP has pursued a policy of creating and
made up of subsidiaries and participations, held directly or through its holding
assisting industrial companies. IFP today heads an industrial
company, IFP Investissements.
group that includes strategic subsidiaries and holdings in
companies with which there are technological partnerships.
Being able to call on such a group is of fundamental
importance to IFP's R&D work, because the companies that
make it up provide industrial outlets for the results, giving it
effective access to markets and to financial returns. The success of IFP Group companies also demonstrates IFP's ability
T echnip
to turn technological innovations into jobs and profitable
Technip attained its growth, sales, and
industrial activities.
profit targets, thereby demonstrating
the Group's ability to withstand such un-
The development of its strategic subsidiaries and the
favorable market factors as the weakness
accession of some of them to the rank of world leader are
of the dollar and higher prices for raw
materials. The value of orders in 2004
major goals for IFP and constitute the main thrust of its
amounted to 5,092 million euros.
industrial development policy. In a complementary manner,
the portfolio of minority holdings evolves regularly, aimed,
in particular, at helping IFP translate its research into indus-
Éditions Technip
Publisher of books
on oil
Transferred in 2004
48
>
Technip
Engineering
and construction
of industrial
installations
Procatalyse
Développement,
production,
and sale
of catalysts
and adsorbents
Merged with
IFP’s Industrial
Division in 2001,
creating Axens
Beicip
Industrial engineering design
and cooperation
office
Merged with
Franlab in 1992
Géomécanique
Marketing
of cables
and flexible pipes
Became Vinci
Technologies
in 1992
Franlab
Reservoir
engineering
and oil
data-processing
Merged with
Beicip in 1992
Coflexip
Offshore products
and services
Merged with
Technip in 2001
19
75
19
71
19
67
19
63
19
60
19
59
19
58
19
56
19
44
trial results more rapidly.
Isis
Financial holding
company for
the development
of oil assets
Technip's strategy of positioning itself in
markets featuring high growth and high
added value was validated by the winning
of major deep offshore contracts: the
development of the Greater Plutonio field
off Angola, the engineering and construction of the P-51 semi-submersible production platform in Brazil, and the engineering and construction of a Spar production
platform intended for the Constitution
field in the Gulf of Mexico.
>> The CGG seismic vessel Alizé.
In Onshore-Downstream activities, Technip
confirmed its leading positions in liquefied
natural gas (LNG) production units with
with the second part of the year marked by
the engineering, supplying of equipment,
the initial signs of a recovery in investments
and construction of a sixth liquefaction
in exploration and production geophysics.
train in Nigeria and the construction in
This trend was reflected in the fourth quar-
Qatar of the biggest 2 LNG trains in the
ter by a significant increase in orders.
world.
Sercel, the CGG subsidiary specializing in
Technip's competitive strengths –geo-
geophysical equipment, strengthened its
graphical and sectorial positioning, mas-
leading position in its market, thanks to
tery of technologies and the management
strong sales of 408 UL systems and to
C GG
of very large projects, and the skills of its
continuing external growth. Sercel plays
teams– give the Group complete confi-
an increasingly important role in the busi-
dence in its capacity to generate profitable
In 2004, the CGG Group operated in a
ness of the CGG Group, accounting for
growth in the years to come.
seismic market that was globally stable,
more than 40% of its sales.
Horwell
Horizontal
well
engineering
Transferred by
Isis in 1997
Beicip-Franlab
Consulting
and studies
in the oil domain
Merger of Beicip
and Franlab
Saf Isis
Transformation
of the biomass
Part of Isis
développement
from 1996 to 1999
Isis
développement
Capital
investment
Prosernat
Processing and
separation units
Merger
of Proser
(Framatome)
and Nat (IFP)
Diamant Drilling
Services
Drilling tools
Transferred by
IFP Investissements
in 2004
Axens
Process licensor,
supplier
of catalysts
and adsorbents
and associated
services for refining
and petrochemicals
Merger
of Procatalyse
and IFP’s
Industrial Division
20
03
20
01
20
00
19
98
19
96
NovaSep
Preparative
chromatography
Transferred by
Isis développement
in 2002
3 E seed money
fund
Financing
of innovative
companies
in the energy
and environmental
sectors
20
04
IFP
Investissements
CPX Holding
is renamed
IFP Investissements
CPX Holding
Holding company
that has taken
over the holdings
of Isis
19
95
19
92
19
84
Vinci
Technologies
Field and laboratory
measuring
equipment
>
IFP Training
Continuing
education
for the oil,
chemical,
and automobile
industries
49
>
>>
P ORTFOLIO OF IFP’S MAIN INDUSTRIAL SHAREHOLDINGS
>>
38%
>>
Axens
100%
>>
50%
>>
100%
>>
Beicip-Franlab
34%
>>
>>
Cofip
>>
100%
Eurecat US
Geoservices
>>
>>
100%
>>
Artesys
IMAGINE
Prosernat
>>
18%
51%
Airmeex
20%
15%
100%
>>
34%
>>
100%
Eurecat
Axens
North America
10%
>>
D2T
CTI
RSI
IFP Training
>>
>>
19%
Spinnove
>>
Dactem
27%
>>
100%
IFP Technologies
(Canada) Inc.
>>
100%
>>
31%
IFP
100% Investissements
Tech'advantage
Thide
Environnement
>>
>>
10%
>>
>>
12%
100%
3%
Technip
>>
100%
>>
6%
50
>
Vinci
Technologies
>>
25%
>>
Lacaze
Transvalor
CGG
100%
>>
>>
25%
Principia
Isis
développement
Isis BV
3 E seed
money fund
>>
20%
DDS
As of 28 February 2005
>> The 64,000 ton/year Axens cyclohexane unit (Holborn Refinery, Germany).
Geophysical services, refocused on the
units. Demand was especially strong in the
offshore sector, are well placed to benefit
field of gasolines and gas oil, but was also
from the gradual improvement in the
sustained by a significant recovery in
“marine” market. This recovery is illus-
petrochemicals and in conversion projects.
trated in particular by the securing of a
All parts of the world contributed to this
contract worth more than 100 million dol-
good level of business, most notably Asia
lars that will mobilize 4 CGG ships in India
and the Middle East.
for the first half of 2005. More generally,
the excess capacity of the world seismic
A xens
fleet as a whole will have been totally
The Prime-G+ process, a cutting-edge
technology in FCC gasoline desulfuriza-
absorbed this winter. This situation,
Axens is an international player in tech-
tion, continued to prevail in the market. It
already in evidence at the time of the
nologies, catalysts and services for the oil
should also be pointed out that the
merger discussions with PGS, prevented
and gas industry. In its fourth year of exis-
Esterfip-H process developed by IFP, the
its completion on acceptable financial
tence, Axens consolidated its position as
only biodiesel production process using
terms.
a major player in refining by offering even
heterogeneous catalysis, was chosen by
better processes and catalysts for the pro-
Diester Industrie.
The onshore business, restructured at the
duction of fuels complying with the new
beginning of the year, relied on new local
environmental standards.
> Catalysts
remained difficult, but in which some
The company had a very good year in
The new HR 500 series of hydrotreating
improvement is expected in 2005.
terms of both sales and profitability, in
catalysts for the production of low-sulfur
spite of an unfavorable euro/dollar
gas oil was a great success and confirms
exchange rate.
Axens' position as the benchmark player
partnerships to operate in a market that
Finally, in data processing, CGG continued
working to improve its performance,
increased its computing power to more
in this market.
> Technologies
than 45 teraflops, and continued to de-
In addition, Axens North America entered
velop new technologies aimed at providing
Axens granted 57 licenses, produced more
into an agreement with Degussa to pro-
customer oil companies with better seis-
than 80 process books, and successfully
duce Axens' hydrotreating catalysts at the
mic images in shorter lead times.
commissioned a very large number of
Calvert City industrial site in the United
51
>
States. This agreement will make it easier
all of the company's fields of activity. The
the demand for increasingly sophisticated
for the company to serve the North
research workload was very heavy in the
tools and increasingly specialized skills.
American market.
upstream oil sector. Sales of software
continued their strong growth in a very
The growth in software sales continued,
Finally, the high-performance Claus cata-
competitive international economic envi-
and framework agreements were signed
lysts posted record sales, confirming
ronment. The economic results, however,
with several national and international
Axens' position as leader in this sector.
were hit by the decline of the dollar.
companies. In basin modeling, sales of
> Advanced services
> Exploration-Production
Many proposals were submitted and met
The consulting and studies business
the modeling of fractured reservoirs, sales
with growing success, notably in the areas
in Exploration-Production was up very
of Fraca software (modeling of fractured
of consulting and of advanced control,
significantly from 2003. It was especially
reservoirs) and RML software maintained
where several contracts were won, in par-
buoyant in Algeria, Kuwait, Mexico, and
their growth.
ticular in Africa, Asia and the Middle East.
Venezuela. The major contracts for inte-
2004 also provided an opportunity to con-
grated studies of giant mature reservoirs
In reservoir simulation, mention must be
solidate the product offer and improve the
begun in 2003 continued successfully and
made of the significant performance
tools.
new contracts were signed, notably
increase of the Athos simulator on mas-
in China.
sively parallel computers, making possible
Temis 3D continued to grow, and this program continues to be market leader, recognized by the world industry. Similarly, in
simulations on several million mesh
Specialized services based on techniques
elements.
developed within the IFP Group (modeling
of petroleum systems, modeling of frac-
> Industrial projects
tured reservoirs, lithoseismic studies of
B eicip-Franlab
reservoirs) progressed significantly, espe-
Business in this field stabilized in 2004, in
cially in lithoseismic (reservoir seismic) and
a market that was on the whole not very
fracturation studies. The market confirms
active, especially in the first half. The reorganization of this sector begun in 2003
Beicip-Franlab offers a broad range of
continued. Beicip-Franlab executed a large
expert and engineering-consulting services
contract in Ecuador, to study the upgrad-
in the upstream and downstream sectors
ing diagrams of the production of
of the oil and gas industry. Beicip-Franlab
2 large reservoirs, and, at the end of the
also publishes software derived from IFP's
year, signed 2 large contracts,
research work and intended for the
one a refining study and
the other concerning
Exploration-Production sector.
gas, in Western
Africa and in
2004 was a year of recovery
the Middle
for Beicip-Franlab: busi-
East.
ness was sustained in
>> Construction of a geological model of a fractured giant field in Iran using
RML-Fraca software.
52
>
I FP Training
IFP Training exists to meet the technical,
scientific, and economic training needs
of the oil, chemical and automobile
industries.
IFP Training is a joint stock company in
which IFP has possessed a majority
holding since 1st January 2004, when the
company took over the lucrative training
activities of the ENSPM Formation Industrie
association, created in 1975. Its staff of
more than 100 people includes 65 full-time
instructors, assisted by nearly 500 outside
lecturers who are regular contributors.
IFP Training operates 6 training centers in
France –at Lillebonne, Martigues, Pau,
Rouen, Rueil-Malmaison (near Paris) and
Solaize (near Lyon). These centers have
effective modern educational resources.
Training is also provided, in response to a
variety of specific needs, at industrial sites
in France and abroad. In 2004, 1,030 training sessions were held for 11,988 participants, 3,655 of them foreign nationals.
Some of these training operations led to a
recognized qualification such as “Blowout
>> IFP Training organized 1,030 training operations in 2004.
Prevention” certification (276 certificates)
or the official title of ”Refining and petrochemicals operator” (177 titles, 82 of
Business was also up in the Economics-
collaboration
them through an apprenticeship at
Management and Engines-Lubricants sec-
Several programs are ongoing in Algeria,
with
local
universities.
Lillebonne or Martigues).
tors. The bulk of IFP Training's operations
Angola, Iran and Nigeria.
abroad were in Algeria, Angola, Iran,
In 2004, the total growth of the business,
Kuwait, Morocco, Nigeria, Russia, the
In addition, in 2004, IFP Training continued
in terms of participant-days, was 10.9%.
Sudan, Tunisia and Venezuela.
to diversify the range of services it offers:
consulting in training, pedagogical engi-
This growth was especially strong in the
upstream sector, thanks to the success of
Satellite degree-programs of the IFP
neering, administration of the safety
the new training programs proposed and
School's programs continued to grow
qualification systems of participating
the growth in satellite degree-programs
strongly in 2004. These long degree
contractors (MASE) in the Étang de Berre,
of the IFP School's programs abroad.
training programs are designed and over-
Normandy,
In the downstream sector, there was a
seen by the School and are now offered
administration of safety accreditation for
marked increase in international business.
by IFP Training in several countries, in
the GIES Étang de Berre.
and
Rhône-Alpes
areas,
53
>
I FP Technologies
(Canada) Inc.
IFP Technologies (Canada) Inc., IFP's field
office and Beicip-Franlab's representative
in Calgary, works to promote the application in Canada of the IFP Group's technologies in the upstream and environmental sectors and, more generally, to
promote Franco-Canadian technological
cooperation. Its work takes the form of
studies that may be performed on site or
entrusted to IFP or to Beicip-Franlab.
In 2004, IFP Technologies (Canada) Inc.
generated sales of approximately 0.7 million Canadian dollars with, in particular, a
study of polymer injection on the Pelican
Lake field and geological-geophysical
studies on the exploration of the Larne
basin in Northern Ireland for Canadian
companies.
IFP Technologies (Canada) Inc. also carried
out in-house the first study using Heresim
3D on a regional scale and provided
assistance to the operators of the Trutch
>> Controlling engine test benches equipped with Morphée software.
gas field.
I FP Investissements
engine tests, studies, the supply of equip-
ware (Morphée) and rapid engine control
ment and management software for test
prototyping software (ACEbox).
benches and the turnkey construction of
test benches.
2004 witnessed the growth of D2T's international business in the United States,
South Korea and Sweden and the opening
of an office in China. Another fastgrowing business, especially in France, is
the building of turnkey test benches, with
several sites completed in 2004 or still
under construction. In terms of engine
tests, D2T oriented its services towards
> Eurecat
more technical tests with higher margins.
The Eurecat Group offers catalyst regener-
> D2T
D2T's R&D focused on key topics in the
ation, packaging, and recycling services,
improvement of engine test benches, such
together with specialized expertise on
D2T is a powertrain design and testing
as simulation. It also continued its joint
reactors in refineries and petrochemical
company founded in 1989. It has gradually
technical work with IFP to expand its
plants, during shutdowns of catalytic
extended its range of services to include
product offer in test bench operating soft-
units.
54
>
Profits in 2004 were up compared with
increase in the drilling of difficult wells
2003, and a probable new growth cycle
and in the number of “ultra-deep reser-
was begun thanks to the positive effect of
voir” projects, both of which require high-
new environmental legislation introduced
end mud logging.
in Europe and in the United States relative
to the quality of gasolines and gas oils.
> IMAGINE
2004 was also a year of technological
innovation, with the signing of new cata-
IMAGINE is a software publisher. The
lyst packaging contracts, made possible by
company's AMESim software makes it a
the start-up of a production unit in the
leader in supplying Collaborative System
Gela plant in Italy and by the moderniza-
Simulation solutions.
tion of the existing installations in the
United States.
The AMESim platform enables participants in industrial product design
projects (aviation, automobiles, capital
and consumer goods, etc.) to capitalize
on and share system simulation models
and the associated data, and to organize
design and simulation processes, in all
stages of product design: preliminary
design, detail design, and validation.
The AMESim platform helps companies
> Geoservices
>> Eurecat, a specialist of catalyst
regeneration and recycling.
Geoservices' business grew in 2004, by
In well intervention, Geoservices continues
design, integration, performance opti-
more than 20% in dollar terms, partially
to grow thanks to the significant contracts
mization of manufactured products and
offsetting the effects of the decline of the
won in 2004 and to the good perform-
risk management.
dollar against the euro. The company's
ance of the Indonesian Welltekindo com-
profitability improved slightly from 2003
pany, taken over by Geoservices in mid-
IMAGINE posted sales of 6.85 million
thanks to the implementation of a cost-
2003. Finally, the company worked to
euros in 2004, up 30% from 2003, with
cutting plan and to the development of
improve the procurement chain of the
operating profits of 6% of sales. In 2005
services having a higher added value. This
sites while reducing the level of invento-
the company continues its policy of
is the case in mud logging, for example,
ries and purchases. This new organization
expanding and investing in order to
where new products such as geoNEXT
relies, in particular, on a worldwide
strengthen its market position. It works in
and Flair are starting to have a significant
telecommunications network that has
most major sectors of industry throughout
impact. Additionally, there has been an
been entrusted to a single supplier.
the world. Companies like Bosch, Dassault,
improve their competitiveness, reduce the
cycles and costs associated with the
55
>
standards and position Prosernat as one of
the top suppliers of acid gas treatment
chain technologies.
Finally, the conventional engineering
business faced an extremely competitive
environment characterized by the irregular
pace of new business.
> RSI
RSI, an IFP subsidiary since 1998, has been
>> Natural gas dehydration unit at Chemery (France), delivered by Prosernat to Gaz de France.
held since 2004 by IFP Investissements. It
provides dynamic simulation solutions and
services to the oil industry market. To
Delphi, Ford, General Motors, Nissan, PSA
portfolio of sulfur recovery technologies
achieve this, the company can count on its
Peugeot Citroën, Renault, Snecma and
(Claus, Clauspol®, SulfreenTM, SultimateTM
highly qualified personnel and its technol-
Aquisulf TM ).
AdvAmine TM
Toyota are amongst IMAGINE's major
and
and
ogy, including its 2 flagship products:
industrial references.
AdvAsulfTM provide oil and gas operators
Indiss, a simulation platform used to
with solutions in response to the ever
develop applications covering the lifecycle
more stringent requirements of discharge
of processes, and MVAC, advanced control
> Prosernat
In 2004, Prosernat successfully started up
the installations delivered in Algeria (In
Salah project), Iran (Aromatic 3), at Port
Said in Egypt, and at Chemery in France
for Gaz de France.
Prosernat also added to its commercial
and technical product offer in the gas
treatment sector, with, in particular, in a
logical follow-up to AdvAmineTM (scrubbing with amines), the introduction of the
AdvAsulfTM line, thus completing the
56
>
>> RSI delivers the simulator of the 4th aromatic complex (Assalouyeh, Iran).
software developed with IFP and used
by Thide Environnement, was commis-
commercially by Axens.
sioned in June 2004. Its environmental
impact is in line with predictions: emis-
To increase its penetration in Asia and
sions are much lower than regulations
ensure its competitiveness, RSI has
require. Improvement work continues on
acquired a 25% holding in the Chinese
some parts of the installation, to bring the
company Beijing Huakangda Computer
operation of the unit in line with the loads
Application Technology Company (HKD).
actually being received and with the speci-
HKD is a computer services company and
fications imposed by the recycled by-
the local leader in operator training simu-
products markets.
lators for refining, petrochemicals and
coal liquefaction.
IFP's SME seminar in September 2004
gave many environmental professionals an
opportunity to visit the plant and appreciate this technical achievement.
> Tech’advantage
Since April 2004, Tech'advantage, formerly Geomath International and a subsidiary of Beicip-Franlab, has been wholly
owned by IFP Investissements. On the
strength of its experience in the industrial
>> Automatic oil rock permeability
and porosity measurement bench
(Vinci Technologies).
development of the IFP Group's software,
> Vinci Technologies
Tech'advantage is positioned as a computer
2004 was characterized by exceptional
service company that can deliver high-
spending to restructure the company
added-value and high-tech business com-
which had a significant impact on
In 2004, Vinci Technologies’ 3 businesses
puting solutions for industrial companies.
earnings. However, business in 2004 was
were all highly successful, generating
up slightly from 2003 and the share of
record sales for the company, up nearly
contracts outside the IFP Group also rose.
40% from 2003.
scientific and technical knowledge,
Furthermore, in April 2004, Tech'advantage
In the pilot unit design and construction
software engineering and information
was granted ISO 9001 certification,
business, the technical and commercial
systems
version 2000, by the AFAQ.
investments of recent years have resulted
Using expertise that encompasses display
and simulation, the accumulation of
architecture,
Tech'advantage
offers its customers services in the field of
in an increase in orders taken, as well as a
information systems consulting, comput-
shift in the company's mix. For the first
ing solutions development and integra-
time, orders from the petrochemical and
tion, along with third-party applications
hydrogen production industry exceeded
maintenance of scientific and technical
orders in refining, until now the tradi-
software.
tional area of expertise.
In 2004, the new line of laboratory equipment for petroleum exploration and production, introduced last year, consolidated
the success that started to take shape in
2003, strengthening the position of Vinci
Technologies as one of the world leaders
> Thide Environnement
in this field.
Arthelyse, the thermolysis waste treat-
The market for seismic sensors, in particular
ment plant for the Arras urban area, built
hydrophones used for seismic recording,
57
>
negotiations with financial and industrial
investors, to launch, in the development
capital sector, an operation comparable
to the one set up in seed money through
the 3 E fund, led to the signing of an
agreement protocol with a major institutional investor. The agreement calls for
the creation of a 100 million euro development capital fund (venture capital
mutual fund) in the energy and ecoindustries sectors. It is expected that the
operation will be finalized during the first
half of 2005 and lead to the sale of some
of Isis développement's shares to this new
structure, of which IFP Investissements
would be cosponsor.
> 3 E seed money fund
The 3 E seed money fund (Emertec–
>> Analysis of a surface BOP (Blowout Preventer) drilling concept in a moonpool - Principia.
Energy–Environment) was created in July
2003 with 11.5 million euros; its spon-
recovered in 2004. The level of Vinci
The organic growth of sales of the devel-
sors, in addition to IFP Investissements,
Technologies's orders for hydrophones
opment capital participations was steady,
are CDC PME, Natexis Private Equity, and
was satisfactory this year, and the upward
averaging 13%, while that of the eco-
CEA Valorisation.
trend looks promising for 2005.
industry sector was 27%. This development in some cases required financial
This venture capital mutual fund, the
support and advances from shareholders.
management of which has been entrusted to Emertec Management, a manage-
Furthermore, in accordance with the
ment company approved by the AMF,
objectives set by its board of directors,
has just closed at 15.5 million euros, with
among others the contributions of Cogac
(a subsidiary of Gaz de France), Séché
Environnement, and the Caisse d'Épargne
des Alpes. It will finance innovative hightech companies in the energy and
environmental sectors in the seed
or start-up stage, and it is
planned that it will ultimately
> Isis développement
acquire a dozen minority
shareholdings.
In 2004, the companies in
Isis développement's port-
3 E made 2 investments
folio benefitted from a
in France in 2004: one in
stronger economic envi-
the Thermya company,
ronment than the pre-
which
markets
the
also
Chartherm process for
harvested the early fruits of
upgrading wood wastes;
vious
year.
They
strategic refocusing mea-
and the other in Alcali,
sures, operations optimiza-
which produces and markets a self-contained thermo-
tion, and technical and/or commercial investments in buoyant
sectors, undertaken in 2003 following productive and regular exchanges
between the managements of these
holdings and Isis développement.
58
>
chemical process for cooling
without producing greenhouse
gases.
>>
P ARTNERSHIP WITH SMEs
For more than 15 years IFP has
pursued a policy of supporting
industrial innovation in SMEs,
using the skills it has developed
in the context of its own work.
The innovations, derived from
IFP's research or proposed by
industry, are developed in
partnership. Whenever possible, industrial property is
protected by the joint filing of
patents. The risks and successes
are shared and IFP's financial
return takes the form of royalties
on new sales by the partner. Contacts
are established mainly through IFP's
regional offices, which participate in
local industrial life by working with public and private organizations active in
the field of economic development.
In depollution, demand is strong and
the techniques are varied: physicochemical treatment and catalysis for
the Smelox pig manure treatment
process using fixed or mobile units
(APV Compost and Armor Industrie
companies), treatment of oily water
(Maisonneuve), photocatalysis for the
destruction of odors (Photosil),
membrane bioreactors for sewage
treatment (Polymem), capture by
adsorption of volatile organic compounds incorporated in chemical installations (Artec), etc.
Innovations continue in the field of
thermal waste treatment. Three boilers
using the fat fuel burner process developed jointly with Lacaze SA have been
started up in a tannery that burns its
fatty waste in them.
In the field of equipment and instrumentation, IFP's participation has
>> Industrial fatty wastes upgrading unit
(IFP-Lacaze process).
contributed to advances in innovative
sensors, instruments for complex measurements, and molecular separation
devices (centrifugal partition chromatography with Armen). Several other
products, currently in the prototype
stage, will be marketed soon, such as a
liquid/solid contactor and an original
particle size measuring instrument
developed by IFP.
More generally, IFP plays an active
role in organizations that encourage
the development of SMEs (Creati,
CRITT Chimie-Environnement, RDT
Ile-de-France, etc.) and takes part in
trade fairs such as Pollutec and in
regional forums. This year again, several partners were award-winners at
such fairs and in national competitions
to support the creation of innovative
technology companies.
59
>
+
CONTACTS
CONTACTS
H ead Office
Rueil-Malmaison
1 et 4, avenue de Bois-Préau
92852 Rueil-Malmaison Cedex
France
Tel.: +33 1 47 52 60 00 - Fax: +33 1 47 52 70 00
R egional Establishments
IFP-Lyon
BP 3
69390 Vernaison
France
Tel.: +33 4 78 02 20 20 - Fax : +33 4 78 02 20 15
> Director: Roland Huin
IFP-Pau
Hélioparc Pau-Pyrénées
2, avenue du Président Pierre Angot
64000 Pau
France
Tel.: +33 5 59 84 43 00 - Fax: +33 5 59 84 59 70
> Director: Jacques Jacobs
60 >
Design & Layout
Esquif Communication
[email protected]
Printing
GraphiDoc - Tel.: +33 1 47 52 57 00
Photos
©Author’s image, Axens, Beicip-Franlab,
CGG/D. Lecuivre, Corbis, D2T, Dynamic Graphics,
Éditions Technip, Getty images,
Graphix Images/P. Mestre and L. Zylberman,
J.J. Humphrey, IFP, Lacaze,
Photo France/P. Chevrolat, Principia,
Prosernat, Scopimag, Trilogic/T. Duvivier,
RSI, Vinci Technologies, X.
>
w w w. i f p . f r
www.ifp.fr
IFP (Head Office)
1 et 4 avenue de Bois-Préau
92852 Rueil-Malmaison Cedex - France
Tel.: +33 1 47 52 60 00 - Fax: +33 1 47 52 70 00
IFP-Lyon
BP 3 - 69390 Vernaison - France
Tel.: +33 4 78 02 20 20 - Fax: +33 4 78 02 20 15
Axens Introduction : Mar 2006
1
Performance Programs
Processes
Catalysts
Axens: A New Company
With >50 Years of Experience!
2
Offices
Manufacturing Sites
Agencies
Tech Service
Caracas
Calvert City
Princeton
Savannah
Houston
Salindres
Lyons, Solaize
Rueil-Malmaison
(Headquarters)
Moscow
Beijing
Tokyo
3
Global Network
• > 170 pilot units,
mock-ups and bench
units
Axens
Introduction : Mar 2006
• 50% of IFP’s R&D
• 630 people (81% R&D)
Axens’ European R&D Center
4
Oligomerization
Skeletal Isomerization
Etherification
Selective Hydrogenation
Prime-G+
•
•
•
•
FCC Complex
• Hydrotreating- Prime-D
• Catalytic Reforming
• Isomerization
• Sweetening LPG, naphtha
and kero
• Octane Improvement
Light Ends
• Hydrofinishing and
Hydrocracking
• Solvent Extraction and
Dewaxing
• Propane Deasphalting
• Spent oil re-refining
Lube Oils
• Solvent Deasphalting
• Visbreaking
• Hyvahl
• H-Oil
• FCC/RFCC – R2R
• HDT and HDC of VGO
• Residue Hydroprocessing
Heavy Ends
6
Axens Process Licensing BU:
Refining Market Segments
• Catalytic Reforming
• Aromatics Extraction
• Hydrogenation of Benzene
to Cyclohexane
• Hydrodealkylation of
Toluene and higher
aromatics
• Xylenes and Paraxylene
production & purification
• Aromatics – Paramax Suite
• Selective Hydrogenation
• Oligomerization
• Skeletal Isomerization
Petrochemicals
• Olefins
• Liquids recovery
• Mercury and arsenic
removal
Natural Gas Liquids
7
• Esterfip/Esterfip-H Biodiesel
Renewable Fuels
• Mercury removal
• Sulfur recovery catalysts:
Claus and CTGT
• Fischer-Tropsch Synthesis
• Liquefaction Process
Natural Gas Processing
Axens Petrochemical & Gas
Processing Market Segments
toluene selective disproportionation
C7 - C10 aromatics transalkylation
C8 aromatics isomerization
Xylenes isomerization with EB dealkylation
toluene disproportionation ( 2 T Æ B + X )
Extractive distillation
World’s largest, highest purity, single-train
paraxylene purification technology
Diene removal for low clay consumption
High severity CCR reforming
4 ParamaX Complexes Licensed in 2005
Crystallization, HDA, Sulfolane (B,T,X) extraction
Morphylane
MTDP-3
XyMax
Oparis
TransPlus
PxMax
Aromizing
Arofining
Eluxyl
The ParamaX Suite
9
Petrochemicals: Aromatics Complex
Naphtha & Middle Distillates
FCC Complex
Residues & Heavy Fractions
Lube Oils, White Oils, Paraffins
•
•
•
•
Refining, 62%
•
•
Gas, 13%
Olefins – C2 to C5
Aromatics
Natural Gas Processing
Claus Catalysts
•
•
12
Petrochemicals, 25%
Our Markets
Middle East
9%
Asia Pacific
37%
Latin America
8%
Africa
3%
Western
Europe
23%
North
America
14%
Russia &
Eastern
Europe
6%
1706 references (end 2005)
13
Licenses
by Geographical Zone
AXENS
Corporate: Profile
Axens
Introduction
Mar 2006
17
17
The Prime-G+ Blockbuster
Basic Engineering
Catalyst Supply
Simulator Assisted Training
Assistance for Start-up
Follow-up of the unit
Advanced Control
All Axens guarantees met
•
•
•
•
•
•
Full Set of Axens services
• Less than 2 years between BEDP and Oil In
>120 Licensed Units (Jan 06)
>60 Prime-G+ units in operation ( >30 in N.A.)
Technology Selection after Pilot Testing
Fast Track Projects
•
•
•
•
•
•
19
Prime-G+ FCC Gasoline HDT
Industrial Success
As of April 2005
11.9%
33.0%
Middle East Africa
3
Europe - Russia
World Total: 109 Licenses
Central & South America
13
North America
36
34
2.8%
21.1%
31.2%
Asia - Pacific
23
21
Prime-G+ Licensing
Geographical Breakdown (Licenses)
2004 to November 2005
25
• 14 new units licensed from Jan
• Lowest Cost
• Access for maintenance
• No size constraints
• State-of-the-art CCR
technology, > 70 licenses
• Unique regeneration system:
long catalyst life, low attrition
• CR401/AR501: new generation
catalysts for gasoline/aromatics
• Side-by-side arrangement-
CCR Reforming: Naphtha to
Gasoline & Aromatics
ACE technology engineered
materials: HR 500 Series
EquiFlow internals: “near
perfection” fluid distribution
through the entire catalyst bed
Catapac: dense loading to
maximize activity per volume
•
•
•
EquiFlow
E E
ACEACACACE
HDT Unit
Know-how
Prime-D Toolbox: Complete Set of
Benchmark Sulfur-Removal Technologies
Axens Know-how: 40 years
experience in HDT unit design
•
u
Eq
E E
ACEACACACE
HD
T
Un
Kn it
ow
how -
w
iFlo
28
Prime-D Toolbox
S=4.4%
40000 bpd
S=2.6%
VDU
40000 bpd
65000 bpd
Diesel
4000 bpd
S < 0.05%
S=0.08%
Hyvahl 33000 bpd
VRDS
S=0.5%
MHDC
RFCC
R2RTM
HP
HDC
Flue Gas Scrubber
S=0.3%
65000 bpd
Diesel
8000 bpd
S < 0.05%
32000 bpd
‘Complete’ Fuel Oil Destruction
Gasoline
42000 bpd
S = 50 ppm
Diesel+Jet
53000 bpd
S = 5ppm
38
Clean Fuels Complex: VRDS,
Hydrocracker, RFCC with Scrubber
41
Reforming
Isomerization
Hydrogenation
Hydrotreating
Claus
Catalysts
Adsorbents
Guard Beds
Procatalyse Product Lines
42
Worldwide Capacity:
12 000 ton in 2005
Expansion to 17 000 ton/y planned
Alumina Manufacturing Facilities
Savannah, USA
A series of products for diesel
and VGO HDT
Easy handling, activation and
regeneration
No chemical treatment
•
•
•
•
Outstanding stability for high
on-stream factors
New, Advanced Catalytic
Engineered materials
•
43
HR 500 Series - ACE Technology
Theoretical and operational
classroom training,
process simulation, on-site
visits
Customer-tailored training
courses (Axens, IFP
School)
Training programs at an
Axens’ customer site or
specified refinery
•
•
•
45
Tech Service
Operating Staff Training
Inspection
Pre-commissioning
Commissioning
Catalyst loading
Start-up
Test-run
46
Start-up and operational know-how to ensure
optimum unit performance
•
•
•
•
•
•
Technical specialists at your service for:
•
•
Tech Service
Unit Start-Up
• Manufacturing Quick Wins
• Advanced Process Control
Profit Optimization
• Operator Training Simulator
• Process Operations Simulator
Process Simulation
• Feasibility Studies - Master Plan
• Hydrogen & Octane Management
Consulting Services
49
Performance Programs Services
Refinery
Studies
Precious Metal
Management
Catalyst
End of Life
Manufacturing
Quick Wins
Hydrogen & CO2
Management
Advanced
Process Control
Performance Programs
Catalysts & Adsorbents
Operator
Training
Simulators
Process Operation
Simulators
Follow-Up
Assistance
Start-Up
Process Licensing
Training
51
An Intersecting Universe of
Products & Services
For more info:
www.Axens.net
Innovative designs and continuous improvement
Dedication to our customers - long term support
Commitment to environmentally sound solutions
Results oriented project teams to solve today’s
problems & tomorrow’s challenges
•
•
•
•
World Class R&D and Support
• Increasing array of products and services
• Alliances to offer the best available products and
technologies
• Worldwide sales network
International Presence & Focus
52
Service - Experience - Quality - Innovation
A Virtual Visit of the
Diester Industrie Plant in
Sète
Esterfip-H First Unit
1
•
•
•
•
Owner: Diester Industrie
Started-up in March 2006
Capacity: 160,000 tons/yr
Location: Sète, France
Sète
2
Esterfip-H - 1st Commercial Reference
3
January 2005
4
September 2005
5
January 2006
6
March 2006
Methanol
Column
Resins
Reactors
7
Main Equipment
8
Reverse view
9
Feed Tanks
Methanol
Glycerine
Biodiesel
10
Tank Farm
Cooling Towers
Steam production
11
Utilities
12
Flare
Donald W. Meyer, P.E.
Principal, Chemical Engineer
Education:
B.S. in Chemical Engineering,
Purdue University, 1970.
M.S. in Chemical Engineering,
Purdue University, 1971.
M.B.A. University of
Missouri-Kansas City, 1974.
Registration:
Professional Engineer - California,
Missouri, Kentucky
As a senior member of Burns & McDonnell’s process engineering group, Mr. Meyer is
involved in all aspects of the company's process engineering. This includes direction of
the process design staff, participation in process design engineering and support of
marketing efforts. Process engineering is responsible for conceptual process design,
process simulation, heat and material balances, developing equipment specifications and
producing the process and engineering flow diagrams.
Mr. Meyer is also involved in technology licensing and transfer at Burns & McDonnell.
This includes development of a novel process to reduce the water content in a dewaxing
process that is now used in several refineries. Burns & McDonnell has been involved in
licensing a melt crystallization technology since the mid 1970’s. During this time, Mr.
Meyer designed and operated three pilot plants at our facility in Kansas City, set up a
pilot facility at BASF’s plant in Ludwigshafen, Germany, and managed two pilot tests
for Monsanto in Japan. The data obtained in these tests were used to design commercial
units and to produce materials for customer evaluation. Since melt crystallization is
involved with handling materials that at their melting temperature, he is familiar with all
of the problems associated with tracing and isolation of hot systems from their
surroundings.
Mr. Meyer has lead several projects where the pilot data was obtained in the client’s
laboratory. Burns & McDonnell’s role was to evaluate this data and develop it into a
design for a commercial plant. Once the equipment could be sized, estimates could be
made for capital and operating costs. In the case of Union Carbide, these process
designs were used to direct additional test work. Once a process was finally established,
a demonstration unit was build. Similar technology development projects have been
done for Koch, Goodyear, Simplot and UCAR Carbon.
Mr. Meyer served as lead process engineer for a number of Burns & McDonnell
projects. These include a facility for the manufacture of a household product for The
Clorox Company; a process wastewater improvement project for a major chemical
company; a new paradichlorobenzene plant for Monsanto; starch modification projects
for Cargill, Staley, and Midwest Grain that included the unloading, storage, and use of
highly flammable, reactive chemicals including both ethylene and propylene oxide; and
a new continuous starch conversion unit at CPC International's North Kansas City plant
(now owned by National Starch & Chemical Corporation). He supervised the
installation of a triple-effect evaporator at Pekin Energy in Pekin, Illinois and the
modernization of the dextrose crystallization facility for CPC International at Argo,
Illinois.
He has many years of experience in the design of distillation and crystallization units.
In distillation, his experience ranges from the design of crude and vacuum columns for
refineries, to the recovery of isoprene for use in synthetic rubber for Goodyear to the
recovery of fatty acids from tall oil for Westvaco. Mr. Meyer has designed several
crystallization units for p-xylene, naphthalene, durene and xylenol as well as a waste
water evaporator and crystallizer that were part of a Zero Water Discharge facility.
MEYER, DON
Donald W. Meyer, P.E.
(continued)
He has participated in the process design of many plants including units for visbreaking
heavy oils, alkylating light hydrocarbons, hydrotreating gasoline and distillate material,
and plants for producing greases, toluene diisocyanate, polyol, and isoprene
purification. He has developed computer programs for process design and flow sheet
simulation and is familiar with the use of Aspen, Hysim, Pro II and Chemcad process
simulation packages.
Mr. Meyer currently serves on the Board of Directors for Heat Transfer Research, Inc.
Edward Darlington III – Burns & McDonnell
Current Role
Mr. Darlington is lead Investigator for evaluating potential technologies related to Biomass to fuel
conversion. Burns and McDonnell is pursuing solutions to both petroleum based and non
petroleum based fuel requirements for the future generations. He has worked on both process
designs and FEL (front end loading) projects for the conversion of cellulose to intermediate
chemical compounds, animal waste to liquid fuels, animal waste to methane gas and
cogeneration of electrical power, animal waste to power and fertilizer production. Also part of a
team to develop startup and commissioning systems for new processes and plants.
Previous Roles
Prior to going to Burns & McDonnell , Mr. Darlington worked for Danisco Ingredients manager of
plant operations for the production of Mono-glycerides. Prior to that he spent 20+ years in
numerous roles for Procter & Gamble in both operations and engineering. He had a major role in
the development of new products primarily in bar soap and industrial fats, oils, FFA, methyl
esters, and tallow alcohol.
2004-28-028
Biodiesel through Transesterification of Vegetables Oils
- A New Solid Catalyst Based Process
B. Delfort, G. Hillion, G. Martino
Institut Français du Pétrole, France
J. A. Chodorge
Axens, France
Copyright © 2004 Society of Automotive Engineers Inc.
ABSTRACT
Biodiesel production has received great interest mainly in
Europe during the last decade. They are many benefits of
biodiesel. It is made from renewable materials, so it is
beneficial for reduction of green house effect compared
to fossil fuel. It is non-toxic. It contains no sulfur, no
aromatics. It provides fuel lubricity and it's cetane number
is in the same range than cetane index of diesel fuel.
Biodiesel can be used as pure fuel or blended with
conventional diesel fuel.
Biodiesel is obtained throw a transesterification reaction
of a vegetable oil by methanol. Methanolysis is a process
which could be applied to a lot of vegetable oils such as
those extracted from rapeseed, soya, sunflower, palm,
cotton, and coprah. A sharp increase in the production of
this kind of biofuel is expected in the near future.
European capacities of biodiesel production is now about
2 MT/year.
This paper covers first the conventional industrial
processes,
where
the
catalytic
methanol
transesterification of vegetable oils is achieved using a
homogeneous liquid catalytic system operated in batch
mode or in continuous way, then an IFP completely new
continuous biodiesel production process where the
transesterification
reaction
is
promoted
by
a
heterogeneous
catalyst.
this
process
employs
methanolysis of vegetable oils by passing the reactants
through two consecutive fixed-bed reactors followed by
methanol and glycerine separation stages.
This process requires neither catalyst recovery nor
aqueous treatment steps. It exhibits very high yields of
methyl esters, close to the theoretical values. Glycerine is
directly produced at purity levels of at least 98% and is
exempt from any salt contaminants. With all its features,
the process can be considered as a green process.
This article provides a general description of the process
including characteristics of biodiesel fuel and glycerine.
KEYWORDS: Biodiesel, vegetable oils, solid catalysts,
transesterification.
INTRODUCTION
The reactions for direct transformation of vegetable oils
into methyl esters and glycerol have been known for
more than a century. The reactions of interest today,
mainly those producing methyl esters from rapeseed,
soybean and sunflower oils, have been studied and
optimized in order to manufacture the high quality diesel
fuel known as biodiesel.
With over ten years of development and commercial use
in Europe, biodiesel has now proved its value as a fuel
for diesel engines [1-3]. The product is non-toxic, free of
sulfur and aromatics, and, as it is obtained from
renewable sources, it leads to a carbon dioxide
emissions reduction of almost 60% compared to
conventional diesel fuel (table 1).
Moreover, recent European regulations have restricted
sulfur content in diesel fuel to no more than 50 ppm in
year 2005. Sulfur is known to provide diesel fuels with a
lubricity that will disappear as the regulations take effect.
Biodiesel addition at levels of one to two per cent in
diesel blends has the beneficial impact of restoring
lubricity through an antiwear action on engine injection
systems [4-5]. Recently, the European commission
proposed a directive concerning the introduction of
biofuels in motor fuels. It can be fatty methyl esters from
vegetable oils in Diesel fuel, pure ethanol or ETBE in
gasoline. The amount proposed is up to two percent of
biofuels in motor fuels by 2005 adding 0.75 percent per
year to reach a level of up to 5.75 percent by 2010.
Because of this directive, a large biodiesel development
is in progress. Table 2 summarizes the estimated
biodiesel production in Europe for year 2003. In EU
biodiesel quality is now standardized according to the
EN 14214 standard of which some properties are
presented in table 3 as well as typical esters
compositions.
Several commercial processes to produce fatty acid
methyl esters from vegetable oils have been developed
and are available today. They mainly concern methyl
esters from rapeseed, soybean and sunflower oils used
as fuel oil or diesel. These processes use basic catalysts
such as caustic soda or sodium methylate which lead to
waste products after neutralization with mineral acids.
This paper provides a general description of a new
industrial process where the transesterification reaction
is promoted by a heterogeneous catalyst. The quality of
the methyl ester meets all the biodiesel specifications
and the glycerol, by-product is nearly pure and highly
valuable .
BIODIESEL PRODUCTION PROCESSES
The transesterification of triglycerides to methyl esters
with methanol is a balanced and catalyzed reaction as
illustrated in figure 1. An excess of methanol is required
to obtain a high degree of conversion.
Rapeseed and soybean oils are among the main
vegetable oil candidates for biodiesel uses but palm oil
and sunflower oil can also be used. Their compositions
are summarized in table 4.
The
conventional
catalysts
in
natural
oil
transesterification processes are selected among bases
such as alkaline or alkaline earth hydroxides or
alkoxides [6]. However, transesterification could also be
performed using acid catalysts, such as hydrochloric-,
sulfuric- and sulfonic acid, or using metallic base
catalysts such as titanium alcoholates or oxides of tin,
magnesium, or zinc. All these catalysts act as
homogeneous catalysts and need to be removed from
the products after the methanolysis step.
CONVENTIONAL HOMOGENEOUS CATALYZED
PROCESSES
In conventional industrial biodiesel processes, the
methanol transesterification of vegetable oils is achieved
using a homogeneous catalyst system operated in either
batch or continuous mode.
In most cases the catalyst is sodium hydroxide or
sodium methylate. It is recovered after the
transesterification reaction as sodium glycerate in the
glycerol phase. An acidic neutralization step with, for
example, aqueous hydrochloric acid is required to
convert sodium glycerate to glycerol. In that case
glycerol is obtained as an aqueous solution containing
sodium chloride. Depending on the process, the final
glycerol purity is about 80% to 95%.
When sodium hydroxide is used as catalyst, side
reactions forming sodium soaps generally occur. This
type of reaction is also observed when sodium methylate
is employed and traces of water are present. The
sodium soaps are soluble in the glycerol phase and must
be isolated after neutralization by decantation as fatty
acids. The loss of esters converted to fatty acids can
reach as high as 1% of the biodiesel production.
These operations are illustrated in figure 2.
In most of the conventional homogeneous catalyzed
continuous processes, the methanolysis reaction is
carried out at 60-80°C using two successive reactors.
The removal of glycerol is necessary before the second
stage of reaction.
The purification of methyl esters required water washing
operations following by drying before storage. In some
processes methyl esters purification is performed by
reduced pressure distillation.
HETEROGENEOUS CATALYZED PROCESS
To avoid catalyst removal operations and soap
formation, much effort has been expended on the search
for solid acid or basic catalysts that could be used in a
heterogeneous catalyzed process [7-10]. Some solid
metal oxides such as those of tin, magnesium, and zinc
are known catalysts but they actually act according to a
homogeneous mechanism and end up as metal soaps or
metal glycerates. In this paper a new continuous process
is described, where the transesterification reaction is
promoted by a completely heterogeneous catalyst.
This catalyst consists of a mixed oxide of zinc and
aluminum which promotes the transesterification
reaction without catalyst loss. The reaction is performed
at a higher temperature than homogeneous catalysis
processes, with an excess of methanol. This excess is
removed by vaporization and recycled to the process
with fresh methanol. The desired chemical conversion is
reached with two successive stages of reaction and
glycerol separation to displace the equilibrium reaction.
The flow sheet for this process appears in figure 3. The
catalyst section includes two fixed bed reactors that are
fed by oil and methanol at a given ratio. The
methanolysis reaction is carried out at 200°C. Excess
methanol is removed after each of the two reactors by a
partial flash. Esters and glycerol are then separated in a
settler. Glycerol phases are joined and the last traces of
methanol are removed by vaporization. Biodiesel is
recovered after final recovery of methanol by
vaporization under vacuum and then purified to remove
the last traces of glycerol. Typical characteristics of
biodiesel obtained from rapeseed oil and soybean oil in
pilot plant operations are reported in table 3.
COMPARISON OF BOTH TYPE OF PROCESSES
In both homogeneous and heterogeneous catalyzed
continuous processes, the chemical conversion is
reached with two successive stages of reaction.
Homogeneous catalyzed processes required mild
operation conditions while heterogeneous one required
higher temperatures of reaction and higher ratio
methanol to oil.
In the heterogeneous process, the catalyst is very stable
with no metal leaching. There is no formation of either
glycerate salts or metal soaps which affords the
following advantages: no neutralization step is required,
there is no introduction of water, and there is no salt
formation; this accounts for an exceptional glycerol
purity. In addition, there is no waste production of lowvalue fatty acids. With this process the purity of methyl
esters exceeds 98.5% with yields close to 100% of the
theoretical. Glycerol treatment is much easier than in
homogeneous catalyzed processes. A simple elimination
of methanol by vaporization suffices and no chemicals
are required. The glycerol produced is neutral, clear and
exempt from any salt, with purities above 98%. This
valuable product could be used in many chemical
applications without further treatment. If required,
pharmaceutical grade can easily be reached.
In the heterogeneous process, the feeds are limited to
vegetable oils and methanol and the only products are
biodiesel and a high-purity glycerol that is free of water
and salt. With all its features, the process can be
considered as a green process.
CONCLUSION
Increasing biodiesel consumption requires optimized
production processes that are compatible with high
production capacities and that feature simplified
operations, high yields, and the absence of special
chemical requirements and waste streams. The high
quality of the glycerol by-product obtained is also a very
important economic parameter. A heterogeneous
catalyzed continuous process allows all these objectives
to be attained.
REFERENCES
[1] E. K. Wilson, Chemical & Engineering News, May 27,
2002
[2] Biodiesel - A success story, Report of the
International Enegy Agency, February 2002.
[3] G. Wermeersch, Oléagineux. Corps gras. Lipides Vol
8, n°1, 2001, p.33.
[4] X. Montagne, 2nd European Motor Biofuels Forum,
Graz, september 1996.
[5] G. Hillion, X. Montagne, P. Marchand, Oléagineux.
Corps gras. Lipides. Vol 6, n°5, 1999, p.435.
[6] U. Kreutzer, J. Amer.Oil.Chem.Soc. 61 , 1984, p.343.
[7] R. Stern, G. Hillion, J.J. Rouxel, S. Leporq,
5,908,946, US Patent 5,908,946 (1999)
[8] R. Stern, G. Hillion, J.J. Rouxel, US Patent 6,147,196
(2000)
[9] R.F. Vogel, R.J. Rennard, J.A. Tabacek, US patent
4,490,479 (1984)
[10] G. Gelbard, O. Brès, F. Vielfaure-Joly and Coll., J.
Amer.Oil.Chem.Soc. 72 , 1995, p.123
Table 1 - Well to Wheel CO2 production
Fuels
CNG
Diesel
Gasoline
FT Diesel
FAME (Biodiesel)
kg CO2/km
0.148
0.166
0.216
0.203
0.108
relative to diesel
0.89
1.0
1.30
1.22
0.60
Table 2 - European Union biodiesel production and capacity estimated in 2003
Estimated production
Estimated capacity
(x1000 ton)
2003 *
(x1000 ton)
beginning 2003
715
357
273
32
41
9
6
1
1434
1020
500
420
50
40
10
10
5
2055
Country
Germany
France
Italy
Austria
Denmark
UK
Spain
Sweden
TOTAL
* Source : European Biodiesel Board
Table 3 - Biodiesel Quality
Characteristics
of Biodiesel
Methyl esters
Monoglycerides
Diglycerides
Triglycerides
Free glycerol
Total glycerol
Acid number
Water content
Metal content
Phosphorus
Units
wt -%
wt -%
wt -%
wt -%
wt -%
wt -%
mg KOH/g
mg/kg
mg/kg
mg/kg
from
Rapeseed Oil
from
Soybean Oil
Required
European
Specifications
>98.5
0.4
0.1
0.01
<0.02
0.15
0.3
200
<3
<10
>98.5
0.4
0.1
0.01
<0.02
0.15
0.3
200
<3
<10
96.5 min
0.8
0.2
0.2
0.02
0.25
0.5 max
500 max
5
<10
Table 4 - Fatty acids compositions for rapeseed, soybean, sunflower and palm oils (Wt - %)
Fatty acid chain
Palmitic
C16:0
Palmitoleic
C16:1
Stearic
C18:0
Oleic
C18:1
Linoleic
C18:2
Linolenic
C18:3
Others
≥ C20
Rapessed oil Soybean oil Sunflower oil Palm oil
5
10
6
44
0.5
2
4
5
6
59
23
18
38
21
53
69
10
9
8
0.5
4,5
≤2
≤ 1.5
≤1
Figure 1 - Overall reactions for vegetable oil methanolysis
R1
COO
CH2
R2
COO
CH
R3
COO
CH2
triglyceride
catalyst
+
3
CH3OH
R1
COOCH3
R2
COOCH3
R3
COOCH3
+
methyl esters
methanol
HO
CH2
HO
CH
HO
CH2
glycerol
with R1, R2, R3 = hydrocarbon chain from 15 to 21 carbon atoms
Figure 2 - Global scheme for a typical continuous homogeneous catalyzed process
Methanol
Mineral
Acid
Partially
Refined
Vegetable
Oil
Water
Biodiesel
(Diester)
Reactor
Settler
Neutralization
Washing
Evaporation
Catalyst
Glycerin
Mineral
Acid
Glycerin
Purification
+ water
+ salts
Fatty Acids
Figure 3 - Global scheme for a typical continuous heterogeneous catalyzed process
Methanol
Partially
Refined
Vegetable
Oil
Biodiesel
Reaction
Settler
Evaporation
Purification
Glycerin 98%
Evaporation
APPENDIX C
THE CITY OF BEATRICE, NEBRASKA
TABLE OF CONTENTS
Page
GENERAL AND DEMOGRAPHIC INFORMATION
City Location and Size ......................................................................................................................
Government and Organization ..........................................................................................................
Educational Institutions and Facilities ..............................................................................................
History of Enrollment........................................................................................................................
Employment.......................................................................................................................................
Medical and Health Facilities............................................................................................................
Recreational and Cultural Facilities ..................................................................................................
Municipal Services and Utilities .......................................................................................................
Transportation and Communication Facilities..................................................................................
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ECONOMIC INFORMATION CONCERNING THE CITY
Commerce and Industry ....................................................................................................................
Housing Structures ............................................................................................................................
Building Construction .......................................................................................................................
Income Statistics................................................................................................................................
Nonagricultural Wage and Salary Employment Statistics ...............................................................
Beatrice Utility Customer Statistics ..................................................................................................
Property Tax Levied and Collected Statistics...................................................................................
Largest Taxpayer Statistics................................................................................................................
Total Property Tax Levy Statistics....................................................................................................
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PART I
GENERAL AND DEMOGRAPHIC INFORMATION
City Location and Size
The City of Beatrice, the county seat of
Gage County, is located in the southeastern corner
of Nebraska. The City has an approximate land
area of 8 square miles. Beatrice is 39 miles south
of Lincoln, 99 miles southwest of Omaha, and 179
miles northwest of Kansas City. The estimated
population of the City is 12,496. The City
employs approximately 135 full-time employees.
Additional information regarding the City may be obtained from Gwen Grabouski, City Clerk, 400 Ella
Street, Beatrice, NE 68310, (402) 228-5200.
Government and Organization
The City utilizes a Mayor-Council form of government. The Mayor and eight council members are
elected on a non-partisan ballot. The Mayor oversees meetings and has additional duties. The Mayor and the
City Council are charged with the formation of public policy to meet the community’s needs. They provide
leadership in the development of priorities for the City and in planning economic growth and stability for the
community. The City’s fiscal year ends on September 30.
The following individuals currently serve as Mayor and members of the City Council:
Name
Dennis Schuster
Phil Cook
Susan Witulski
Allen Fetty
Ted Fairbanks
Richard D. Kerr
Dwight Parde
David "Pede" Catlin
Gary Lytle
Office
Mayor
Council Member, 1st Ward
Council Member, 1st Ward
Council Member, 2nd Ward
Council Member, 2nd Ward
Council Member, 3rd Ward
Council Member, 3rd Ward
Council Member, 4th Ward
Council Member, 4th Ward
Term Expires
2008
2010
2008
2010
2008
2010
2008
2010
Educational Institutions and Facilities
The Beatrice Public School District currently has four elementary schools and one middle school and
one high school with a current total enrollment of approximately 2,241 students. Two parochial schools, St.
Joseph’s Catholic and St. Paul’s Lutheran Schools, are both located in the City. There are various other public
and private schools in the area.
The University of Nebraska at Lincoln is 39 miles from Beatrice. Southeast Community College is also
located in Beatrice, with two additional locations in Lincoln and Milford.
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History of Enrollment
The following table shows student enrollment in the Beatrice School District for each of the last five
years, as well as the current school year.
Total
2001-02
2,264
2002-03
2,281
2003-04
2,326
2004-05
2,266
2005-06
2,221
______________
Source: City of Beatrice
Employment
The following table sets forth unemployment figures for the last five years for the City, Gage County
and the State of Nebraska.
Gage County
Total Labor Force
Unemployed
Unemployment Rate
2002
13,053
484
3.7
2003
13,075
550
4.2
2004
13,009
579
4.5
2005
12,896
578
4.5
2006
12,802
466
3.6%
State of Nebraska
Total Labor Force
Unemployed
Unemployment Rate
_____________
959,363
35,743
3.7%
975,639
38,903
4.0%
985,772
38,426
3.9%
986,296
37,226
3.8%
974,476
29,206
3.0%
Source: Nebraska Department of Labor / www.dol.state.ne.us
Medical and Health Facilities
The Beatrice Community Hospital is a critical access hospital providing a variety of services. There are
25 acute beds; 71 long term care beds (at Parkview Center); ambulatory care services in surgery, diagnostic, and
rehabilitation areas; an occupational health program; and many home health services. The hospital has 14 local
physicians on the active medical staff and 74 consulting physicians. In addition there are 4 full-time emergency
department physicians available 24 hours a day, seven days a week.
Recreational and Cultural Facilities
Fourteen parks in Beatrice include Veteran’s Memorial Park and the Skate Park. There are 11 ball
diamonds in which six are lighted. Recreational facilities include bowling, roller skating, and a full-service
YMCA facility. Softball, baseball and midget football programs are available under the direction of Beatrice
Youth Recreation. Annual celebrations include the Gage County Fair in July and a Homestead Days Celebration
with a parade the last weekend in June. Other recreational activities include golfing, a hike and bike trail, movie
theaters and a gun club.
Municipal Services and Utilities
The City provides its citizens with typical services, such as gas, electric, water, sewer, street
maintenance, police protection, fire and rescue protection and parks and recreation.
The Nebraska Public Power District provides wholesale electric service to the City. The City is provided
with two alternate 34,500 volt feeder lines from a 115,000 volt substation located on the northwest edge of the
City. Two additional 34,500 volt alternate feeder lines are provided from a new 115,000 volt substation southeast
of the city. Total transmission system capacity is approximately 112 MVA. The Nebraska Public Power
District’s 115,000 volt substations are an integral part of a 115,000 volt statewide system. This 115,000 volt
system is also supported with interconnections with Mid-Continent Area Power Pool (MAPP). A portion of the
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distribution system is 12.5kV with the remainder at 4.16kV. The distribution system has a total transformer
capacity of approximately 62.5 MVA.
Aquila, a full-service natural gas distribution company, is the retail supplier of natural gas in Beatrice.
NGPL is the pipeline presently serving Beatrice with an 8-inch line at 285 pounds pressure. Northern Natural
also enters Beatrice with a 6-inch line at 70 pounds pressure. Natural gas, with a value of BTU is available for
residential, commercial, and industrial customers for base and peak use on a firm basis. Interruptible service is
available for customers with alternate fuel capability. Aquila’s system is open and allows for transportation by
certified marketers.
The municipal water system in Beatrice is supplied by 12 ground wells that range in depth from 95 to
225 feet. The system, serving 100 percent of the city’s population, has a combined pumping capacity of 7,000
gallons per minute. Two elevated storage tanks have capacity for 1.5 million gallons of water and two
underground store reservoirs have a capacity of 8 million gallons for a total of 9.5 million gallons. The average
daily water demand for the city is 2.4 million gallons, the historic peak demand is 6.7 million gallons, and the
maximum daily capacity is 19.5 million gallons. The static pressure averages 60 pounds and the residual pressure
averages 50 pounds per square inch.
The City has a municipal sanitary sewerage system consisting of a combination RBC and trickling
filter system. The treatment plant, built in 1983, has a daily capacity of 5.0 million gallons. The average daily
flow is 2.4 million gallons and the historic peak daily discharge is 4.4 million gallons. An Ultraviolet
Disinfection System was added to the plant in 1997 to help ensure safe discharge water.
Windstream Communications serves the Beatrice area with a digital central office fed by a selfhealing fiber ring. DMS 100, fiber optic, T-carrier, ISDN, and DSL are provided as well as dial up and
wireless 1+data. Dual feed from two switching offices is available. Fiber redundant diverse routing is
available. A full-service retail and customer service center is located in Beatrice, providing customers personal
access to serve representatives. Installation and maintenance personnel are also headquartered in Beatrice.
Extended local calling area service to all communities in Gage County is available.
The City employs 24 full-time fire department personnel, 10 volunteer fire department personnel and
employs 29 full-time police department personnel.
Transportation and Communication Facilities
U.S. Highways 77 (north-south) and 136 (east-west) intersect in Beatrice. East-west Nebraska Highway
4 also passes through the community. There are no local road restrictions. Interstate 80 is 39 miles from
Beatrice. U.S. Highway 77 has been resurfaced and widened to a four-lane expressway to Interstate 80 and
Lincoln. U.S. Highway 136 connects to Interstate 29, 62 miles east. There are more than 8,000 licensed motor
freight carriers with global connections in Nebraska. These carriers can serve businesses throughout the United
States, Canada and Mexico.
The residents of the City have access to US Highway 77 and Nebraska State Highways 92 and 66. The
City is served by motor freight carriers, including several interstate carriers and one intrastate carrier. The Union
Pacific Railroad services the City of Beatrice. The City is serviced by public-use airports in Omaha, Lincoln and
Wahoo. Eppley Airfield in Omaha is approximately 99 miles from Beatrice and has eight major and four
commuter airline carriers. Four major carriers service Lincoln Municipal Airport, which is approximately 35
miles from Beatrice.
Beatrice is served by a branch line of the Burlington Northern Santa Fe, with one freight train daily.
Amtrak provides Lincoln, 39 miles north of Beatrice, with rail passenger service east to Chicago and west to
Denver and San Francisco/Oakland. The Superliner features coach and first-class accommodations and dining
car service. Travel time is 10 ½ hours to Chicago and 39 hours to the West Coast. Amtrak has one train each
way daily.
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The City is served by television and radio stations and a cable system in the area. Local news coverage
is provided by daily and weekly newspapers.
Population and Other Statistics
The following tables set forth certain population information.
City of Beatrice
Gage County
State of Nebraska
_____________
1980
12,891
24,456
1,569,825
1990
12,395
22,794
1,578,417
2000
12,496
22,993
1,711,265
2005
12,890
23,273
1,758,787
Source: U.S. Bureau of the Census
ECONOMIC INDICATORS CONCERNING THE CITY
Commerce and Industry
Some major employers in the area in 2006 include:
Employer
Beatrice State Developmental Center
Exmark Manufacturing
Beatrice Community Hospital
Mosaic
Husqvarna Turf Care
Beatrice Public Schools
Store Kraft Manufacturing
City of Beatrice*
Good Samaritan Center
NEAPCO
*includes part time and seasonal
Type of Business
Employees
Rank
Home for mentally handicapped
Manufacturing
Medical
Home for mentally handicapped
Manufacturing
Education
Manufacturing
Government
Nursing Home
Manufacturing
888
704
441
352
350
280
226
210
180
164
1
2
3
4
5
6
7
8
9
10
% of
County
Employment
8.56%
6.79%
4.25%
3.39%
3.37%
2.70%
2.18%
2.02%
1.73%
1.58%
Housing Structures
The median value of owner occupied housing units in the area of the City and related areas was,
according to the 2000 census, as follows:
Median Value
City of Beatrice
$70,200
Gage County
$68,600
State of Nebraska
$88,000
_____________
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Building Construction
The following table indicates the number of building permits and total estimated valuation of these
permits issued within the City over a five-year period. These numbers reflect permits issued either for new
construction or for major renovation. Get breakdown from clerk re: comm.
Year
2006
2005
2004
2003
2002
2001
Number of
Permits
253
208
267
264
232
234
Commercial
Construction
47
27
72
43
49
38
Residential
Construction
206
181
195
221
183
196
______________
Source: City of Beatrice
Income Statistics
The following table sets forth income figures from the 2000 census.
City of Beatrice
Gage County
State of Nebraska
Per Capita
$17,816
$17,190
$19,613
Median Family
$33,735
$43,072
$41,984
______________
BEATRICE UTILITY CUSTOMERS
LAST FIVE YEARS
Year
2006
2005
2004
2003
2002
______________
Source:
1
2
Water Customers 1
5,668
5,654
5,637
5,593
5,574
Gas Customers 2
4,800
--4,824
5,099 (2000))
Electricity Customers 1
7,338
7,313
7,316
7,257
7,236
City of Beatrice
Aquila – Beatrice, NE
CITY OF BEATRICE
PROPERTY TAX LEVIED AND COLLECTED
GENERAL FUND TAX COLLECTIONS
TAXABLE ASSESSED VALUATION
Date
9/30/06
9/30/05
9/30/04
Total Tax
Levied
1,360,231
1,250,949
1,197,846
Total Tax
Collected
1,302,036
1,248,880
1,201,283
% Total Tax
Collected
95.7
99.8
100.3
C-5
General Fund
Collected
1,565,317
1,760,438
1,881,328
Total
Valuation
463,420,813
453,422,564
437,194,620
Total Tax
Date
Levied
9/30/03
1,138,409
9/30/02
1,105,767
9/30/01
1,107,296
_____________
Total Tax
Collected
1,136,772
1,097,394
1,091,817
% Total Tax
Collected
99.9
99.2
98.6
General Fund
Collected
1,560,220
1,976,408
2,013,851
Total
Valuation
415,500,759
403,585,978
366,646,731
Source: Gage County Assessor
The Gage County Assessor’s office has certified the total valuation for property within the City for
2006 as $463,420,813. Real property taxes based on such valuation will become due and payable during the
City’s fiscal year ended September 30, 2007.
TEN LARGEST TAXPAYERS
Taxpayers
KH Beatrice LLC
Wal-Mart Stores
Beatrice Retirement, Inc.
Cornhusker Hospitality II, LLC
Farmers Co-op Elevator
Sea Breeze Land Development
Stanley T. & Judy E. Meyer
LTC Properties
Homestead Village
Equinox Consulting LLC
Total
2006
Assessed Valuations
11,400,000
6,269,140
3,451,635
2,821,370
2,568,325
2,484,380
2,325,415
2,170,000
2,072,110
1,877,520
37,439,895
Total Percentage
2006 Assessed Valuation
2.46%
1.35%
0.74%
0.61%
0.55%
0.54%
0.50%
0.47%
0.45%
0.41%
8.08%
TOTAL PROPERTY TAX LEVIES
WITHIN REDEVELOPMENT AREA
LAST SIX YEARS*
Entity
City of Beatrice
School District #15
Gage County
Special Tax Dist.
Airport
Total Tax Rate
2006
0.293520
1.161633
0.369699
0.127308
0.041655
1.993815
2005
0.275890
1.688050
0.387777
0.125965
0.042787
2.001224
2004
0.273984
1.168804
0.401505
0.123692
0.046065
2.014050
2003
0.273985
1.670710
0.391282
0.125460
0.040610
1.998408
2002
0.273986
1.167993
0.364278
0.124815
0.041043
1.972115
2001
0.302007
1.298063
0.353581
0.091067
0.043048
2.087766
*The assessment rate is 100% of market and the levy is expressed as the tax per $100 of estimated market value.
The above levies are for taxes payable in the following year. The real property included in the
Redevelopment Area was not part of the City for the above mentioned years. In 2006, the City annexed
the real property in the Redevelopment Area. Thus City taxes were levied on such property in 2006 for
taxes payable in 2007. The levies shown above are the levies that would have been applicable had the
Redevelopment Area been located within the City during the years indicated.
C-6
APPENDIX D
SUMMARIES OF RESOLUTION
AND
SUMMARY OF RESOLUTION
The following is a brief summary of certain provisions contained in the Resolution adopted with
respect to the Bonds and should not be considered as a full statement thereof. This summary is qualified
by reference to and is subject to the Resolution, copies of which may be obtained at the office of Authority
Secretary.
Definitions
“Act” means Article VIII, Section 12 of the Nebraska Constitution, and Chapter 18, Article 21,
Reissue Revised Statutes of Nebraska, 1997, as amended, and acts amendatory thereof and supplemental
thereto.
“Authority” means the Community Redevelopment Authority of the City of Beatrice, Nebraska.
“Bonds” means the Series 2007A Bonds and the Series 2007B Bonds.
“City” means the City of Beatrice, Nebraska.
“Company” means Beatrice Biodiesel, LLC, a Nebraska limited liability company, its successors
and assigns, including any surviving, resulting or transferee corporation or entity.
“Debt Service Fund” means the fund by that name created pursuant to the Resolution.
“Debt Service Reserve Fund” means fund by that name created pursuant to the Resolution.
“Debt Service Reserve Fund Requirement” means(a) the amount to be held in the Bond Proceeds
Account of the Debt Service Reserve Fund for the Series 2007A Bonds, which will not exceed the least of
(1) 10% of the stated principal amount of the Series 2007A Bonds, (2) the maximum annual principal and
interest requirements on the Series 2007A Bonds (determined as of the Issue Date, or (3) 125% of the
average annual principal and interest requirements on the Series 2007A Bonds (determined as of the Issue
Date), plus (b) an amount as determined in accordance with the Resolution in the Business Interruption
Reserve Account to be funded over time pursuant to the Resolution. (If the aggregate initial offering
price of the Series 2007A Bonds to the public is less than 98% or more than 102% of par, such offering
price must be used in clause (1) in lieu of the stated principal amount.)
“Holder” means the registered owner of a Bond.
“Paying Agent” means the paying agent with respect to the Bonds appointed pursuant to the
Resolution.
“Project” means the improvements to the Redevelopment Area, as further described in the
Redevelopment Contact.
“Project Costs” means only costs or expenses incurred by Company to acquire the Project and to
construct necessary improvements thereon as defined in the Redevelopment Contract.
“Project Fund” means the Fund by that name created pursuant to the Resolution.
D-1
“Redevelopment Area” means that certain real properly situated in the City of Beatrice, Gage
County, Nebraska, which has been declared blighted and substandard by the City pursuant to the Act, and
which is more particularly described in the Redevelopment Contract.
“Redevelopment Contract” means the redevelopment contract between Authority and Company,
as amended with respect to the Project.
“Redevelopment Plan” means the Redevelopment Plan of the City adopted in accordance with the
Act, as amended from time to time.
“Resolution” means the Resolution of the Authority adopted on July 24, 2007, approving the
Redevelopment Contract and authorizing the issuance and sale of the Bonds, as the same may be
amended, modified or supplemented by any amendments or modifications thereof.
“Series 2007A Bonds” means the Authority’s Tax Increment Revenue Bonds (Beatrice Biodiesel,
LLC Project), Series 2007A.
“Series 2007B Bonds” means the Authority’s Tax Increment Revenue Bonds (Beatrice Biodiesel,
LLC Project), Taxable Series 2007B.
“Tax Increment Revenues” means ad valorem property taxes pledged to payment of the Bonds in
accordance with sections 18-2147 and 18-2150 of the Act.
“Trustee” means the Trustee appointed pursuant to the Resolution.
Creation of Funds
The Authority has created and established three special trust funds to be held by the Trustee called,
respectively, (a) the “Community Redevelopment Authority of the City of Beatrice, Nebraska Tax
Increment Revenue Bonds (Beatrice Biodiesel Project), Series 2007, Project Fund” (the “Project Fund”), in
which there shall be established a Series 2007A Project Account and a Series 2007B Project Account, (b)
the “Community Redevelopment Authority of the City of Beatrice, Nebraska Tax Increment Revenue
Bonds (Beatrice Biodiesel Project), Series 2007 Debt Service Fund” (the “Debt Service Fund”), in which
there shall be established a Series 2007A Debt Service Account, a Series 2007A Capitalized Interest
Account, a Series 2007A Redemption Account and a Series 2007B Debt Service Account, and (c) the
“Community Redevelopment Authority of the City of Beatrice, Nebraska Tax Increment Revenue Bonds
(Beatrice Biodiesel Project), Series 2007 Debt Service Reserve Fund” (the “Reserve Fund”), in which there
shall be established a Series 2007A Bond Proceeds Account and a Business Interruption Reserve Account.
Project Fund
Money in the Project Fund shall be disbursed to pay or reimburse Project Costs and to pay costs of
issuance for the Bonds, by the Trustee upon disbursement requisitions issued by the Company which have
been approved by the Authority pursuant to the Redevelopment Contract, or as otherwise provided in the
Redevelopment Contract. The Trustee is authorized and directed to issue its checks for each disbursement
from the Project Fund upon receipt of the disbursement requisitions signed by the Authority.
If any balance remains in the Series 2007A Project Account in the Project Fund after the full
accomplishment of the Project and such other purposes for which the Series 2007A Bonds were issued, such
balance shall be transferred to the Series 2007A Debt Service Account in the Debt Service Fund and applied
D-2
as is other money in that account. Money in the Project Fund shall be invested in investments described in
the Resolution.
Debt Service Fund
The Authority shall make the following deposits into the appropriate accounts in the Debt Service
Fund:
(a)
Accrued interest, if any, received upon sale of the Bonds;
(b)
Proceeds of the Series 2007A Bonds in the amount of $259,401.44* as necessary to pay a
portion of interest on the Series 2007A Bonds from the date of issuance to December 1, 2008 in the Series
2007A Capitalized Interest Account in the Debt Service Fund;
(c)
All Tax Increment Revenues received by the Authority with respect to the Project shall
be deposited into the Series 2007A Debt Service Account in the Debt Service Fund until none of the
Series 2007A Bonds are outstanding under the Resolution, and then all Tax Increment Revenues shall be
deposited into the Series 2007B Debt Service Account in the Debt Service Fund;
(d)
Interest earnings on all amounts in the Debt Service Fund shall be deposited into the
Series 2007A Debt Service Account in the Debt Service Fund until none of the Series 2007A Bonds are
outstanding under his Resolution, and then all such interest earnings shall be deposited into the Series
2007B Debt Service Account in the Debt Service Fund;
(e)
All other money received by the Authority or the Company when accompanied by
directions that such money is to be paid into the Debt Service Fund or used for purposes for which monies
in the Debt Service Fund may be used; and
(f)
All other monies required to be deposited in the Debt Service Fund pursuant to any
provision of the Redevelopment Contract or the Resolution including without limitation interest earnings
on transfers from the Debt Service Reserve Fund, if applicable, and the Debt Service Reserve Fund as
required by the Resolution.
All amounts paid and credited to the Debt Service Fund shall be expended and used by the
Authority for the sole purpose of (1) first, paying the principal or redemption price of and interest on the
Bonds as and when the same become due, (2) next, to make up deficiencies first in the Series 2007A
Bond Proceeds Account and then in the Business Interruption Reserve Account in the Debt Service
Reserve Fund and (3) to redeem Bonds prior to the date of maturity thereof to the extent of available
funds in the Series 2007A Redemption Account pursuant to the Resolution.
Debt Service Reserve Fund
The Authority will make the following deposits into the Debt Service Reserve Fund:
(a)
an initial deposit in an amount of $231,500* from proceeds of the Series 2007A Bonds
shall be deposited into the Series 2007A Bond Proceeds Account.
(b)
such additional amounts from the Debt Service Fund as may be required by the
Resolution (includes excess Tax Increment Revenues in such the amounts necessary to make up
D-3
deficiencies first in the Series 2007A Bond Proceeds Account and then in the Business Interruption
Reserve Account to be funded over time pursuant to the Resolution in an amount equal to $231,500*).
(c)
any other money paid to the Trustee when accompanied by directions that such money is
to be paid into the Debt Service Reserve Fund.
If on any interest payment date or redemption date for the Series 2007A Bonds, the amount in the
Debt Service Fund shall be less than the amount of interest then due and payable on the Bonds, after giving
effect to all payments received by the Trustee in immediately available funds by 10:00 a.m. (Lincoln,
Nebraska time) on such date, the Trustee forthwith shall transfer moneys from the Debt Service Reserve
Fund, first, from the Business Interruption Reserve Account until fully expended, then from the Bond
Proceeds Account to Debt Service Fund to the extent necessary to make good any such deficiency.
In the case of the Debt Service Reserve Fund, a “surplus” means the amount by which the amount
on deposit therein is in excess of the Debt Service Reserve Fund Requirement with respect to the Bonds.
Semiannually and upon any withdrawal from the Debt Service Reserve Fund, the Trustee shall determine
the amount on deposit in the Debt Service Reserve Fund. If on any such date a deficiency exists, the
Trustee shall notify the Authority of such deficiency and that such deficiency must be replenished from
Tax Increment Revenues as provided in the Resolution. If a surplus exists, the Trustee shall notify the
Authority and the Company thereof and shall transfer such amount to the Series 2007A Redemption
Account of the Debt Service Fund to redeem Bonds pursuant to the Resolution.
For purposes of determining a “surplus” or “deficiency” amount, the Debt Service Reserve Fund
shall be valued at the cost thereof or the fair market value, whichever is less.
At such time as the money in the Debt Service Reserve Fund is sufficient to fully pay the Series
2007A Bonds, the Company shall use the money in the Debt Service Reserve Fund to pay the final
principal and interest payment on the Series 2007A Bonds.
Funds Held in Trust or Secured
All amounts on deposit in the Debt Service Fund and the Debt Service Reserve Fund under the
provisions of the Resolution or the Redevelopment Contract shall be held in trust or fully secured by
pledged assets and applied only in accordance with the provisions of the Resolution and the
Redevelopment Contract and shall not be subject to a lien or attachment by any creditor of the Authority
or the Company.
Application of Funds
If at any time the monies and investments in the Debt Service Fund shall not be sufficient to pay
in full the principal, premium, if any, and interest on the Bonds as the same shall become due and payable
(either by their terms or by acceleration of maturities under the provisions of the Resolution), such funds,
together with any monies then available or thereafter becoming available for such purpose, whether
through the exercise of the remedies provided for herein or otherwise, shall, in accordance with the
Resolution, be applied ratably first to outstanding interest and, second, to principal then due and payable
with respect to the Series 2007A Bonds and only after payment in full of the Series 2007A Bonds, third,
to the outstanding interest and, fourth, to principal then due and payable with respect to the Series 2007B
Bonds.
D-4
Pledge of Tax Increment Revenues as Security
In accordance with section 18-2147 of the Act, the Authority hereby amends the Redevelopment
Plan of the Authority by approving the Project and by providing that any ad valorem tax on real property
in the Redevelopment Project for the benefit of any public body be divided for a period of fifteen years
after the effective date of this provision as provided in section 18-2147 of the Act as follows.
(i)
That portion of the ad valorem tax which is produced by levy at the rate fixed
each year by or for each public body upon each redevelopment project valuation (as defined in
the Act) shall be paid into the funds of each such public body in the same proportion as all other
taxes collected by or for the bodies; and
(ii)
That portion of the ad valorem tax on real property in the Project in excess of
such amount, if any, shall be allocated to, is pledged to, and, when collected, paid into the Debt
Service Fund of the Authority to pay the principal of, the interest on, and any premiums due in
connection with the Bonds, loans, notes or advances of money to, or indebtedness incurred by,
whether funded, refunded, assumed, or otherwise, such Authority for financing or refinancing, in
whole or in part, the Project and in carrying out the purposes of the Act. When such Bonds,
loans, notes, advances of money, or indebtedness, including interest and premium due have been
paid, the Authority shall so notify the County Assessor and County Treasurer, Gage County, State
of Nebraska, and all ad valorem taxes upon real property in the Project shall be paid into the
funds of the respective public bodies.
In accordance with section 18-2150 of the Act, the Tax Increment Revenues are pledged by the
Resolution for payment of principal, premium, if any and interest on the Bonds.
The pledge of Tax Increment Revenues as security for payment of principal, premium, if any and
interest on the Series 2007A Bonds shall be superior in priority to the pledge as security for payment of
principal, premium, if any and interest on the Series 2007B Bonds. Notwithstanding any provision in the
Resolution to the contrary, in the event of a default in any payment on the Series 2007A Bonds, such
default shall be cured before application of any Tax Increment Revenues toward payment of principal,
interest or premium on any Series 2007B Bonds.
First Lien
The lien on Tax Increment Revenues created by the Resolution is a first and prior lien and the
Authority will take no actions which would subject the Tax Increment Revenues pledged hereunder or the
rights, privileges and appurtenances thereto to any lien claim of any kind whether superior, equal or
inferior to such lien of the Resolution.
Events of Default
The following shall be “Events of Default” under the Resolution and the term “Event of Default”
shall mean, whenever used in the Resolution, any one or more of the following events:
(a)
If the Authority fails to pay any installment of principal and interest, if any, on
any Bonds when the same shall become due and payable (whether at maturity, on acceleration or
otherwise) and such failure shall continue for a period of seven (7) business days after written
notice thereof shall have been given to the Authority by the Trustee; or
(b)
Default by Company occurs under the Redevelopment Contract; or
D-5
(c)
If any representation or warranty made by the Authority in the Resolution is or
was, at the time it is made, false or misleading in any material respect; or
(d)
If the Authority fails to maintain a covenant, and such failure continues to exist
30 days from the date the Authority receives written notice of such failure.
Remedies
Subject to the pledge of Tax Increment Revenues as security for payment of principal, premium,
if any and interest on the Series 2007A Bonds being superior in priority to the pledge as security for
payment of principal, premium, if any and interest on the Series 2007B Bonds:
(a)
Upon the occurrence of an Event of Default, the Trustee may, and shall upon
request of the Holders of a majority of outstanding principal amount of any series of the Bonds,
declare the entire unpaid principal of and accrued interest on such series of Bonds, and including
all sums advanced hereunder to be forthwith due and payable. Upon such declaration, all
outstanding Bonds of all Series, including principal and all interest thereof, shall be and become
immediately due and payable without presentment, demand or further notice of any kind;
(b)
Upon the occurrence and continuation of an Event of Default, or in ease the
principal of the Bonds shall have become due and payable, whether by lapse of time or by
acceleration, then and in every such case the Trustee may and shall upon the request of Holders of
a majority of outstanding principal amount of any series of Bonds proceed to protect and enforce
their rights by a suit or suits in equity or at law, either for the specific performance of any
covenant or agreement contained herein, in the Redevelopment Contract or in the Bonds, or in aid
of the execution of any power herein or therein granted, or exercise of the power of sale with
respect thereto, or for the enforcement of any other appropriate legal or equitable remedy; or
(c)
Notwithstanding any provision in the Resolution or under the Redevelopment
Contract to the contrary, all monies paid or collected with respect to the Authority’s or
Company’s obligations under the Resolution or the Redevelopment Contract shall, after payment
of expenses as provided in the Resolution, be deposited in the Debt Service Fund and shall be
paid and applied as provided in the Resolution.
Waiver of Event of Default; Forbearance
The Trustee may, and shall upon the request of Holders of a majority of outstanding principal
amount of any series of Bonds outstanding, waive any Event of Default under the Resolution and its
consequences and rescind any declaration of acceleration of principal. No forbearance by the Trustee in
the exercise of any right or remedy hereunder shall affect the ability of the Trustee to thereafter exercise
any such right or remedy.
Defeasance
The Authority’s obligations under the Resolution shall be fully discharged and satisfied as to any
Bond authorized and issued thereunder, and said Bond shall no longer be deemed outstanding under the
Resolution when payment of the principal thereof plus interest thereon to the date of maturity or
redemption thereof (a) shall have been made or caused to have been made in accordance with the terms
thereof, or (b) shall have been provided for by depositing with the Trustee, or in escrow with a national or
state bank having trust powers in trust solely for such payment (1) sufficient money to make such
D-6
payment or (2) direct general obligations of, or obligations the principal and interest of which are
unconditionally guaranteed by, the United States of America (herein referred to as “Government
Obligations”), in such amount and with such maturities as to principal and interest as will insure the
availability of sufficient money to make such payment, and thereupon such Bond shall cease to draw
interest from the date of its redemption or maturity and, except for the purposes of such payments, shall
no longer be entitled to the benefits of the Resolution; provided that, with respect to any Bond called or to
be called for redemption prior to the stated maturity thereof, notice of redemption shall have been duly
given or provided for. If money shall have been deposited in accordance with the terms hereof with the
Trustee or escrow agent in trust for that purpose sufficient to pay the principal of such Bond and all
interest due thereon to the due date thereof or to the date fixed for the redemption thereof, all liability of
the Authority for such payment shall forthwith cease, determine and be completely discharged, and the
Bond shall no longer be considered outstanding under the Resolution.
Limitation of Rights
With the exception of any rights expressly conferred in the Resolution, nothing expressed or
mentioned in or to be implied from the Resolution or in the Bonds is intended or shall be construed to
give to any person other than the Authority, the City, the Company and the Holders any legal or equitable
right, remedy or claim under or with respect to the Resolution or any covenants, conditions and
provisions contained therein; the Resolution and all of the covenants, conditions and provisions thereof
being intended to be and being for the sole and exclusive benefit of the Authority, the City, the Company
and the Holders as therein provided.
SUMMARY OF
Definitions. In addition to the definitions set forth in the Resolution, which apply to any
capitalized term used in the Disclosure Agreements unless otherwise defined in this Section, the
following capitalized terms shall have the following meanings:
“Central Post Office” means DisclosureUSA, any successor thereto, or any other conduit entity
recognized, authorized or approved by the Securities and Exchange Commission for the submission of
Annual Reports and Material Events notices to the Repositories. The Central Post Office currently
approved by the Securities and Exchange Commission is set forth on Exhibit A.
“Dissemination Agent” means Wells Fargo Bank, National Association, acting in its capacity as
Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the
Authority.
“Material Events” means any of the events listed in the Continuing Disclosure Agreement.
“National Repository” means any nationally recognized municipal securities information
repository for purposes of the Rule.
“Participating Underwriter” means Piper Jaffray & Co., the original underwriter of the Bonds,
required to comply with the Rule in connection with offering of the Bonds.
“Repository” means each National Repository and each State Repository, if any.
D-7
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as the same may be amended from time to time.
“State Repository” means any public or private repository or entity designated by the State of
Missouri as a state repository for the purpose of the Rule and recognized as such by the Securities and
Exchange Commission. As of the date of this Agreement, there is no State Repository.
Authority’s Continuing Disclosure Agreement
The following is a summary of certain provisions contained in the Continuing Disclosure
Agreement of the Authority. The following is not a comprehensive description; however, and is qualified
in its entirety by reference to the Continuing Disclosure Agreement for a complete recital of the terms
thereof.
Provision of Annual Reports
The Authority shall, or shall cause the Dissemination Agent (utilizing counterparts of information
and data provided to the Dissemination Agent by the Authority) to provide to each Repository the
following financial information and operating data (the “Annual Report”):
(1)
Not later than 30 days after receipt thereof, each notice of the latest assessed
value of the real property comprising the Project.
(2)
Not later than 180 days after the end of the Authority’s fiscal year commencing
with the fiscal year ending September 30, 2007:
(A)
updates as of the end of each fiscal year of (i) the information appearing
in the table “PROJECTED TAX INCREMENT AND DEBT SERVICE
COVERAGE” except that amounts for the current and previous fiscal years shall be
actual amounts (rather than estimates) and (ii) the information appearing in the table
Total Property Tax Levies Within Redevelopment Area under “ECONOMIC
INFORMATION CONCERNING THE CITY” in Appendix A; and
(B)
a copy of the Company’s property tax bill for such fiscal year showing
the assessed valuation of the real property comprising the Project and the amount billed
to the Company constituting Tax Increment Revenues with respect to the Project.
Any of the items listed above may be included by specific reference to other documents, including official
statements of debt issues with respect to which the Authority or the City is an “obligated person” (as
defined by the Rule), which have been filed with each of the Repositories or the Securities and Exchange
Commission. If the document included by reference is a final official statement, it must be available from
the Municipal Securities Rulemaking Board. The Authority shall clearly identify each such other
document so included by reference. In each case, the Annual Report may be submitted as a single
document or as separate documents comprising a package, and may cross-reference other information as
provided in this Section. If the Authority’s fiscal year changes, the Authority will give notice of the
change in the same manner as for a Material Event.
D-8
Reporting of Material Events
(a)
Pursuant to the provisions of this Section, the Authority shall give, or cause to be given,
within five Business Days after the Authority obtains knowledge thereof, notice of the occurrence of any
of the following events with respect to the Bonds, if material (“Material Events”):
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
principal and interest payment delinquencies;
non-payment related defaults;
modifications to rights of bondowners;
optional, contingent or unscheduled bond calls;
defeasances;
rating changes;
adverse tax opinions or events affecting the tax-exempt status of the Bonds;
unscheduled draws on debt service reserves reflecting financial difficulties;
unscheduled draws on credit enhancements reflecting financial difficulties;
substitution of credit or liquidity providers, or their failure to perform;
release, substitution or sale of property securing repayment of the Bonds; or
damage to or destruction of any of the Project or improvements within the
Redevelopment Area.
failure by the Company or any affiliate thereof to pay any ad valorem taxes or
payments in lieu of taxes with respect to property in the Redevelopment Area
owned by the Company or any affiliate thereof.
(b)
The Dissemination Agent shall, promptly after obtaining actual knowledge of the
occurrence of any event that it believes may constitute a Material Event, contact the City Clerk or his or
her designee, or such other person as the Authority shall designate in writing to the Dissemination Agent
from time to time, inform such person of the event, and request that the Authority promptly notify the
Dissemination Agent in writing whether or not to report the event pursuant to subsection (d). If in
response to a request under this subsection (b), the Authority determines that such event would not be
material under applicable federal securities laws, the Authority shall so notify the Dissemination Agent in
writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (d).
(c)
Whenever the Authority obtains knowledge of the occurrence of a Material Event,
because of a notice from the Dissemination Agent pursuant to subsection (b) or otherwise, the Authority
shall promptly notify and instruct the Dissemination Agent in writing to report the occurrence pursuant to
subsection (d).
(d)
If the Dissemination Agent has been instructed by the Authority to report the occurrence
of a Material Event, the Dissemination Agent shall promptly file a notice of such occurrence with each
National Repository or the Municipal Securities Rulemaking Board and the State Repository, if any, with
a copy to the Authority. Notwithstanding the foregoing, notice of Material Events described in
subsections (a)(4) and (5) need not be given under this subsection any earlier than the notice (if any) of
the underlying event is given to the owners of affected Bonds pursuant to the Resolution.
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Company’s Continuing Disclosure Agreement
The following is a summary of certain provisions contained in the Continuing Disclosure
Agreement of the Company. The following is not a comprehensive description; however, and is qualified
in its entirety by reference to the Continuing Disclosure Agreement for a complete recital of the terms
thereof.
Provision of Reports
The Company shall, within 30 days of the end of each calendar quarter (ending March 31, June
30, September 30 and December 31) following the closing of the Series 2007A Bonds, provide to the
Dissemination Agent and the Authority the following information (the “Company Report”):
(i)
status of completion of the Project and the projected completion date;
(ii)
a statement as to the existence of any material legislative, administrative or
judicial challenge to the knowledge of the Company to the construction or operation of the
Project;
(iii)
an update to Appendix A of the Official Statement reflecting any material
changes in the Project as described therein, including a report on the amount of biodiesel
produced at the Project (A) during such quarter, updated on a quarterly basis only during the first
calendar year of production, and (B) during the previous calendar year, updated on an annual
basis beginning with the second calendar year of production and thereafter;
(iv)
the receipt by the Company of formal written notice of default under the
Redevelopment Agreement;
(v)
a statement as to material changes, if any, in the form, organization or ownership
of the Company; and
(vi)
a description of any material modification (as determined by the Company) of the
Redevelopment Agreement as it pertains to Project.
(vii)
(vii)
(A) the audited financial statements for the Company’s prior fiscal year
if released during such quarter, and (B) a financial and operations report for the preceding fiscal
quarter of the Company consisting of unaudited quarterly consolidated financial statements of the
Company, in each case prepared in accordance with GAAP consistently applied (except for the
omissions of footnotes and for the effect of normal year-end audit adjustments) and in a format
that demonstrates any accounting or formatting change that maybe required by various
jurisdictions in which the business of the Company is conducted (to the extent not consistent with
GAAP), and also including a section containing management discussion and analysis, all
prepared on substantially the same basis as the most recently prepared audited financial
statements of the Company. Each of such quarterly financial statements shall be (i) prepared in
reasonable detailed and in comparative form, including a comparison of actual performance to the
budget for such quarter and year-to-date, and (ii) include a balance sheet, a statement of income
for such quarter and for the period year-to-date, and such other quarterly statements as requested
which shall included any and all supplements. Such quarterly statements shall be certified by an
authorized officer of the Company.
After completion and opening of the Project, the Company shall, within 30 days of the end of
each calendar quarter (ending March 31, June 30, September 30 and December 31), provide to the
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Dissemination Agent and the Authority while the Series 2007A Bonds are outstanding, the Company
Report containing the information or events set forth in (ii) through (vi) above, inclusive, if any of such
information described above has changed or such events described above have occurred during such
quarter.
Reporting of Other Events
The Company shall give or cause to be given to the Dissemination Agent notice of the latest
assessed value of the real property comprising the Project within 30 days of receipt of notice as to such
assessed valuation from the Assessor’s office.
Whenever the Company obtains actual knowledge of the occurrence of one or more of the
following events (a “Significant Event”), the Company shall within five Business Days give or cause to
be given to the Dissemination Agent notice of any of the following events:
(i)
material damage to or destruction of any of the Project or improvements within
the Redevelopment Area;
(ii)
material default by the Company or any affiliate thereof on any loan with respect
to the construction or permanent financing of the Project;
(iii)
the filing of any lawsuit with a claim for damages in excess of $100,000 against
the Company which may adversely affect the completion of the Project or litigation in excess of
$100,000 which would materially adversely affect the financial condition of the Company;
(iv)
the failure by the Company or any affiliate thereof to pay any ad valorem taxes or
payments in lieu of taxes with respect to property in the Redevelopment Area owned by the
Company or any affiliate thereof;
(v)
the filing by the Company or any affiliate thereof of any appeal of assessed
valuation with respect to property in the Redevelopment Area that is owned by the Company or
any affiliate thereof which appeal, if successful, would cause the tax liability owed on such
property to decrease by more than 5%;
(vi)
payment default by the Company or any affiliate thereof on any loan to such
party with respect to the construction and permanent financing of all or any portion of the Project
(whether or not such loan is secured by an interest in property in the Redevelopment Area); or
(vii)
any bankruptcy, reorganization, debt arrangement, moratorium or any proceeding
under bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is instituted by
or against the Company; or
(viii) any work stoppage or cessation of biodiesel production at the plant for a period
of at least a week (excluding normal closing periods for weekends and holidays).
The Dissemination Agent shall, promptly after obtaining actual knowledge of the occurrence of
any event that it believes may constitute a Significant Event, contact the Company and request that the
Company promptly notify the Dissemination Agent in writing whether or not to report the event pursuant
to this subsection. The Dissemination Agent shall also provide notice to the Participating Underwriter
that the Dissemination Agent has obtained actual knowledge of the occurrence of any event that it
believes may constitute a Significant Event. If in response to a request under this subsection, the
Company determines that such event would not be material under applicable federal securities laws, the
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Company shall so notify the Dissemination Agent and the Participating Underwriter in writing and
instruct the Dissemination Agent not to report the occurrence; provided, however, if (i) the Company fails
to respond to the Dissemination Agent’s request for a determination whether an event constitutes a
Significant Event within five Business Days of such request or (ii) the Participating Underwriter directs
the Dissemination Agent in writing to provide notice of such event as a Significant Event notwithstanding
the Company’s determination, the Dissemination Agent shall promptly file a notice of such occurrence
with each National Repository or the Municipal Securities Rulemaking Board and the State Repository, if
any, with a copy to the Company and the Authority.
Provisions Applicable to Both Continuing Disclosure Agreements
Central Post Office
The Authority authorizes and directs the Dissemination Agent to use the Central Post Office for
the submission of Annual Reports and Material Events notices for so long as there is any Central Post
Office recognized, authorized or approved by the Securities and Exchange Commission. Submission of
an Annual Report or a Material Events notice by the Authority or the Dissemination Agent to the Central
Post Office shall be deemed to satisfy the Authority’s and the Dissemination Agent’s obligations under
the Continuing Disclosure Agreement with respect to that Annual Report or Material Events Notice
unless the Authority has actual notice that the Central Post Office has failed to deliver the Annual Report
or Material Event Notice to the Repositories.
The Company authorizes and directs the Dissemination Agent to use the Central Post Office for
the submission of Company Reports and Other Events notices for so long as there is any Central Post
Office recognized, authorized or approved by the Securities and Exchange Commission. Submission of a
Company Report or an Other Events notice by the Company or the Dissemination Agent to the Central
Post Office shall be deemed to satisfy the Company’s and the Dissemination Agent’s obligations under
this Continuing Disclosure Agreement with respect to that Company Report or an Other Events Notice
unless the Company has actual notice that the Central Post Office has failed to deliver the Company
Report or an Other Event Notice to the Repositories.
Termination of Reporting Obligation
The Authority’s obligations under its Continuing Disclosure Agreement and the Company’s
obligations under its Continuing Disclosure Agreement will terminate upon the legal defeasance, prior
redemption or payment in full of all of the Bonds. If a termination occurs prior to the final maturity of the
Bonds, the Authority shall give notice of the termination in the same manner as for a Material Event.
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APPENDIX E
THE REDEVELOPMENT CONTRACT
FIRST AMENDED AND RESTATED
REDEVELOPMENT CONTRACT
By
THE COMMUNITY REDEVELOPMENT AUTHORITY
and
JULY 24, 2007
TABLE OF CONTENTS
Page
PARTIES ...................................................................................................................................................... 1
RECITALS ................................................................................................................................................... 1
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01 Terms Defined in this First Amended and Restated Redevelopment Contract.......... 1
Section 1.02 Construction and Interpretation ................................................................................. 3
ARTICLE II
REPRESENTATIONS
Section 2.01 Representations by Authority..................................................................................... 4
Section 2.02 Representations of Redeveloper................................................................................. 6
ARTICLE III
OBLIGATIONS OF THE CITY
Section 3.01
Section 3.02
Section 3.03
Section 3.04
Section 3.05
Division of Taxes....................................................................................................... 7
Issuance of TIF Indebtedness..................................................................................... 7
Pledge of TIF Revenues............................................................................................. 8
Grant of Proceeds of TIF Indebtedness...................................................................... 8
Creation of Fund ........................................................................................................ 9
ARTICLE IV
OBLIGATIONS OF REDEVELOPER
Section 4.01 Construction of Project .............................................................................................. 9
Section 4.02 Cost Certification ....................................................................................................... 9
Section 4.03 Authority Costs ......................................................................................................... 10
Section 4.04 No Discrimination.................................................................................................... 10
Section 4.05 Pay Real Estate Taxes .............................................................................................. 10
Section 4.06 No Assignment or Conveyance................................................................................ 10
Section 4.07 Insurance .................................................................................................................. 11
Section 4.08 Obligation to Restore ............................................................................................... 15
ARTICLE V
FINANCING REDEVELOPMENT PROJECT; ENCUMBRANCES
Section 5.01 Financing.................................................................................................................. 17
(i)
ARTICLE VI
DEFAULT, REMEDIES; INDEMNIFICATION
Section 6.01 General Remedies of Authority and Redeveloper ................................................... 17
Section 6.02 Forced Delay Beyond Party’s Control ..................................................................... 18
Section 6.03 Limitation of Liability; Indemnification .................................................................. 18
ARTICLE VII
MISCELLANEOUS
Section 7.01 Notice Recording ..................................................................................................... 19
Section 7.02 Governing Law ........................................................................................................ 19
Section 7.03 Binding Effect; Amendment .................................................................................... 19
Execution by the Authority ......................................................................................................................... 20
Execution by the Redeveloper .................................................................................................................... 20
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
- Description of Redevelopment Area
- Description of Project
- TIF Indebtedness
- Project Costs
- Qualified Project Costs
- Certificate of Completion
- Certificate of Reimbursable Project Costs
(ii)
FIRST AMENDED AND RESTATED
REDEVELOPMENT CONTRACT
This Redevelopment Contract is made and entered into as of the 24th day of July, 2007, by and
between the Community Redevelopment Authority of the City of Beatrice, Nebraska (“Authority”), and
Beatrice Biodiesel, LLC, a Nebraska limited liability company (the “Redeveloper”).
W I T N E S S E T H:
WHEREAS, the City of Beatrice, Nebraska (the “City”), in furtherance of the purposes and
pursuant to the provisions of Section 2 of Article VIII of the Nebraska Constitution and Sections 18-2101
to 18-2154, Reissue Revised Statutes of Nebraska, 1997, as amended (collectively the “Act”), and
pursuant to Resolution No. 4203 of the City dated September 8, 1997, has designated an area within the
corporate limits of the City as blighted and substandard; and
WHEREAS, pursuant to Section 18-2119 of the Act, the Authority has solicited proposals for
redevelopment of the blighted and substandard area and Redeveloper has submitted a redevelopment
contract proposal; and
WHEREAS, Authority and Redeveloper desire to enter into this Redevelopment Contract for
acquisition and redevelopment of a parcel in the blighted and substandard area;
NOW, THEREFORE, in consideration of the Redevelopment Area and the mutual covenants
and agreements herein set forth, Authority and Redeveloper do hereby covenant, agree and bind
themselves as follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATION
Section 1.01 Terms Defined in this Redevelopment Contract.
Unless the context otherwise requires, the following terms shall have the following meanings for
all purposes of this Redevelopment Contract, such definitions to be equally applicable to both the singular
and plural forms and masculine, feminine and neuter gender of any of the terms defined:
“Act” means Section 2 of Article VIII of the Nebraska Constitution, Sections 18-2101 through
18-2154, Reissue Revised Statutes of Nebraska, 1997, as amended, and acts amendatory thereof and
supplemental thereto.
“Authority” means the Community Redevelopment Authority of the City of Beatrice, Nebraska.
“Bond Resolution” means the Authority’s resolution authorizing the issuance of TIF
Indebtedness contemplated under this Redevelopment Contract.
“Bond Trustee” means any paying agent, registrar and trustee appointed pursuant to the
Authority’s Bond Resolution authorizing the issuance of TIF Indebtedness contemplated under this
Redevelopment Contract.
“Certificate of Completion” means a certificate in substantial compliance with the form of
certificate attached as Exhibit F, executed by a Manager or other duly authorized officer or representative
of Redeveloper, representing and warranting that the Project is substantially complete.
“City” means the City of Beatrice, Nebraska.
“Governing Body” means the Mayor and City Council of the City.
“Holder” means the holders of TIF Indebtedness issued by the Authority from time to time
outstanding.
“Insurance Consultant” means any insurance agent reputable and experienced in the
Beatrice, Nebraska area and who is reasonably acceptable to the Authority.
“Project” means the improvements to the Redevelopment Area, as further described in Exhibit
B attached hereto and incorporated herein by reference and, as used herein, shall include the
Redevelopment Area real estate.
“Project Cost Certification” means a statement in substantial compliance with the form of
certificate attached as Exhibit G prepared and signed by a Manager or other duly authorized officer or
representative of Redeveloper verifying the payment of Project Costs identified on Exhibit D.
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“Project Costs” means only costs or expenses incurred by Redeveloper to acquire, construct and
equip the Project pursuant to the Act as identified on Exhibit D.
“Redeveloper” means Beatrice Biodiesel, LLC, a Nebraska limited liability company.
“Redevelopment Area” means that certain real property within the corporate limits of the City,
and which has been declared blighted and substandard by the City pursuant to the Act, and which is more
particularly described on Exhibit A attached hereto and incorporated herein by this reference.
“Redevelopment Contract” means this redevelopment contract between the City and
Redeveloper with respect to the Project.
“Redevelopment Plan” means the Redevelopment Plan for the Redevelopment Area as set forth
in the Redevelopment Contract, prepared by the Authority and approved by the City pursuant to the Act,
as amended from time to time.
“Resolution” means the Resolution of the Authority, as supplemented from time to time,
approving this Redevelopment Contract.
“TIF Indebtedness” means any bonds, notes, loans, and advances of money or other
indebtedness, including interest and premiums, if any, thereon, incurred by the Authority pursuant to
Article III hereof and secured in whole or in part only by TIF Revenues.
“TIF Revenues” means incremental ad valorem taxes generated by the Project which are
allocated to and paid to the Authority pursuant to the Act.
Section 1.02 Construction and Interpretation.
The provisions of this Redevelopment Contract shall be construed and interpreted in accordance
with the following provisions:
(a)
Wherever in this Redevelopment Contract it is provided that any person may do or
perform any act or thing, the word “may” shall be deemed permissive and not mandatory and it shall be
construed that such person shall have the right, but shall not be obligated, to do and perform any such act
or thing.
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(b)
The phrase “at any time” shall be construed as meaning “at any time or from time to
(c)
The word “including” shall be construed as meaning “including, but not limited to.”
(d)
The words “will” and “shall” shall each be construed as mandatory.
(e)
The words “herein,” “hereof,” “hereunder,” “hereinafter” and words of similar import
time.”
shall refer to the Redevelopment Contract as a whole rather than to any particular paragraph, section or
subsection, unless the context specifically refers thereto.
(f)
Forms of words in the singular, plural, masculine, feminine or neuter shall be construed
to include the other forms as the context may require.
(g)
The captions to the sections of this Redevelopment Contract are for convenience only and
shall not be deemed part of the text of the respective sections and shall not vary by implication or
otherwise any of the provisions hereof.
(h)
This Redevelopment Contract shall be construed and interpreted in accordance with and
governed by the laws of the State of Nebraska, including the Act.
ARTICLE II.
REPRESENTATIONS
Section 2.01 Representations by Authority.
The Authority makes the following representations and findings:
(a)
The Authority is a duly organized and validly existing community redevelopment
authority under the Act.
(b)
The Redevelopment Plan has been duly approved and adopted by the City pursuant to
Section 18-2109 through 18-2117 of the Act.
(c)
The Authority has requested proposals for redevelopment of the Redevelopment Area
pursuant to section 18-2119 of the Act, and deems it to be in the public interest and in furtherance of the
purposes of the Act to accept the proposal submitted by Redeveloper as specified herein.
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(d)
The Redevelopment Project will achieve the public purposes of the Act by, among other
things, increasing employment, improving public infrastructure, increasing the tax base, and lessening
conditions of blight and substandard in the Redevelopment Area.
(e)
(1) The Redevelopment Plan is feasible and in conformity with the general plan for the
development of the City as a whole and the plan is in conformity with the legislative declarations and
determinations set forth in the Act, and
(2)
(i)
the Project would not be economically feasible without the use of tax-
increment financing,
(ii) the Project would not occur in the Redevelopment Area without the use of
tax-increment financing, and
(iii) the costs and benefits of the Project, including costs and benefits to other
affected political subdivisions, the economy of the community, and the demand for public and private
services have been analyzed by the Authority and have been found to be in the long-term best interest of
the community impacted by the Project.
(f)
The Authority has determined that the proposed land uses and building requirements in
the Redevelopment Area are designed with the general purpose of accomplishing, in conformance with
the general plan, a coordinated, adjusted, and harmonious development of the City and its environs which
will, in accordance with present and future needs, promote health, safety, morals, order, convenience,
prosperity, and the general welfare, as well as efficiency and economy in the process of development;
including, among other things, adequate provision for traffic, vehicular parking, the promotion of safety
from fire, panic, and other dangers, adequate provision for light and air, the promotion of the healthful
and convenient distribution of population, the provision of adequate transportation, water, sewerage, and
other public utilities, schools, parks, recreational and community facilities, and other public requirements,
the promotion of sound design and arrangement, the wise and efficient expenditure of public funds, and
the prevention of the recurrence of insanitary or unsafe dwelling accommodations, or conditions of blight.
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Section 2.02 Representations of Redeveloper.
The Redeveloper makes the following representations:
(a)
The Redeveloper is a Nebraska limited liability company, having the power to enter into
this Redevelopment Contract and perform all obligations contained herein and by proper action has been
duly authorized to execute and deliver this Redevelopment Contract.
(b)
The execution and delivery of the Redevelopment Contract and the consummation of the
transactions therein contemplated will not conflict with or constitute a breach of or default under any
bond, debenture, note or other evidence of indebtedness or any contract, loan agreement or lease to which
Redeveloper is a party or by which it is bound, or result in the creation or imposition of any lien, charge
or encumbrance of any nature upon any of the property or assets of the Redeveloper contrary to the terms
of any instrument or agreement.
(c)
There is no litigation pending or to the best of its knowledge threatened against
Redeveloper affecting its ability to carry out the acquisition, construction, equipping and furnishing of the
Project or the carrying into effect of this Redevelopment Contract or, except as disclosed in writing to the
Authority, as to any other matter materially affecting the ability of Redeveloper to perform its obligations
hereunder.
(d)
Any financial statements of the Redeveloper or its Members delivered to the Authority
prior to the date hereof are true and correct in all respects and fairly present the financial condition of the
Redeveloper and the Project as of the dates thereof; no materially adverse change has occurred in the
financial condition reflected therein since the respective dates thereof; and no additional borrowings have
been made by the Redeveloper since the date thereof except in the ordinary course of business, other than
the borrowing contemplated hereby or borrowings disclosed to or approved by the Authority.
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ARTICLE III.
OBLIGATIONS OF THE CITY
Section 3.01 Division of Taxes.
In accordance with Section 18-2147 of the Act, the Authority hereby provides that any ad
valorem tax on real property in the Project for the benefit of any public body be divided for a period of
fifteen years after the effective date of this provision as set forth in this section. The effective date of this
provision shall be January 1, 2007.
(a)
That a portion of the ad valorem tax which is produced by levy at the rate fixed each year
by or for each public body upon the Redevelopment Project Valuation (as defined in the Act) shall be
paid into the funds of each such public body in the same proportion as all other taxes collected by or for
the bodies; and
(b)
That a portion of the ad valorem tax on real property in the Redevelopment Area in
excess of such amount, if any, shall be allocated to, is pledged to, and, when collected, paid into a special
fund of the Authority to pay the principal of, the interest on, and any premiums due in connection with the
bonds, loans, notes or advances of money to, or indebtedness incurred by, whether funded, refunded,
assumed, or otherwise, such Authority for financing or refinancing, in whole or in part, such Project.
When such bonds, loans, notes, advances of money, or indebtedness, including interest and premium due
have been paid, the Authority shall so notify the County Assessor and County Treasurer and all ad
valorem taxes upon real property in such Project shall be paid into the funds of the respective public
bodies.
Section 3.02 Issuance of TIF Indebtedness.
Authority shall incur TIF Indebtedness in the form and principal amount and bearing interest and
being subject to such terms and conditions as are specified on the attached Exhibit C or on such terms as
may be mutually acceptable to the Authority, Redeveloper and the purchaser(s), underwriter or placement
agent of any TIF Indebtedness as evidenced by a written contract to purchase or place such TIF
Indebtedness. In the event no contract to purchase or place the TIF Indebtedness is entered into with any
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purchaser(s), underwriter or placement agent, the terms and conditions as are specified on the attached
Exhibit C shall apply. The Authority shall have no obligation to find a lender or investor to acquire the
TIF Indebtedness, but rather shall issue the TIF Indebtedness to or to the order of Redeveloper or an
underwriter reasonably acceptable to the Authority upon payment of the principal amount thereof. The
Authority may (but is not obligated to), from time to time and subject to the provisions of the Act, issue
additional TIF Indebtedness secured by the TIF Revenues for the purpose of funding additional Project
Costs, if projected TIF Revenues are projected to be sufficient to pay principal and interest on such
additional TIF Indebtedness.
Section 3.03 Pledge of TIF Revenues.
The Authority hereby pledges the TIF Revenues as security for the TIF Indebtedness.
Section 3.04 Grant of Proceeds of TIF Indebtedness.
The Authority will grant to Redeveloper the proceeds of the TIF Indebtedness incurred as
described on Exhibit C. An amount equal to interest payable on such TIF Indebtedness prior to projected
receipt of TIF Revenues shall be retained by the Authority and applied for such purpose. A portion of the
TIF Indebtedness may be granted for the costs of issuance associated with such TIF Indebtedness. If
requested by a placement agent or underwriter, the Authority shall allow for any reserve funds requested
by such placement agent or underwriter.
Notwithstanding the foregoing, the amount of the grant shall not exceed the amount of Project
Costs certified pursuant to Section 4.02.
The Authority acknowledges the expenditure by the
Redeveloper of the Project Costs listed on Exhibit E which shall be paid to the Redeveloper from the
proceeds of the sale of the TIF Indebtedness upon the closing of such sale, or if no such sales takes place,
as soon as possible from TIF Revenues. As for any other Project Costs, the grant shall be paid to the
Redeveloper upon receipt of requisitions for Project Costs which include supporting documentation
requested by Authority and shall, if requested by Authority, be made in one or more advances.
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Section 3.05 Creation of Fund.
The Authority will create a special fund to collect and hold the TIF Revenues. Such special fund
shall be used for no purpose other than to pay TIF Indebtedness issued pursuant to Sections 3.02 and 3.03
above and to establish such additional reserves and pay such administrative costs as deemed necessary by
the Authority and the placement agent or underwriter of the TIF Indebtedness.
ARTICLE IV.
OBLIGATIONS OF REDEVELOPER
Section 4.01 Construction of Project.
Redeveloper will complete the Project and install all improvements, buildings, fixtures,
equipment and furnishings necessary to operate the Project and will begin operation of the Project for the
production of soy biodiesel for at least one (1) day. Redeveloper shall be solely responsible for obtaining
all permits and approvals necessary to acquire, construct and equip the Project. Until construction of the
Project has been completed, Redeveloper shall make reports in such detail and at such times as may be
reasonably requested by the City as to the actual progress of Redeveloper with respect to construction of
the Project. Promptly after completion by the Redeveloper of the Project, the Redeveloper shall furnish to
the City a Certificate of Completion.
The certification by the Redeveloper shall be a conclusive
determination of satisfaction of the agreements and covenants in this Redevelopment Contract with
respect to the obligations of Redeveloper and its successors and assigns to construct the Project. As used
herein, the term “completion” shall mean substantial completion of the Project.
Section 4.02 Cost Certification.
Redeveloper shall submit to Authority a Project Cost Certification, on or before the date of the
issuance of TIF Indebtedness which shall contain detail and documentation acceptable to the Authority
showing the payment of Project Costs specified on the attached Exhibit D in an amount at least equal to
the grant to Redeveloper pursuant to Section 3.04.
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Section 4.03 Authority Costs.
Redeveloper shall reimburse the Authority, on the date of execution of this Redevelopment
Contract for legal fees and costs then due, and again upon the issuance of TIF Indebtedness, for legal fees
and costs incurred by the Authority in connection with this Redevelopment Contract.
Section 4.04 No Discrimination.
Redeveloper agrees and covenants for itself, its successors and assigns that as long as any TIF
Indebtedness is outstanding, it will not discriminate against any person or group of persons on account of
race, sex, color, religion, national origin, ancestry, disability, marital status or receipt of public assistance
in connection with the Project. Redeveloper, for itself and its successors and assigns, agrees that during
the construction of the Project, Redeveloper will not discriminate against any employee or applicant for
employment because of race, religion, sex, color, national origin, ancestry, disability, marital status or
receipt of public assistance. Redeveloper will comply with all applicable federal, state and local laws
related to the Project.
Section 4.05 Real Estate Taxes.
Redeveloper intends to create a taxable real property valuation of the Redevelopment Area and
Project of approximately Fifteen Million Dollars ($15,000,000) no later than as of January 1, 2008.
During the period that any TIF Indebtedness is outstanding, Redeveloper will not convey the
Redevelopment Area or structures thereon to any entity which would be exempt from the payment of real
estate taxes. Redeveloper recognizes that real estate taxes and assessments levied on the Redevelopment
Area and Project that are not paid prior to the time such become delinquent shall constitute a lien against
the Redevelopment Area and Project.
Section 4.06 No Assignment or Conveyance.
Redeveloper shall not assign its rights or obligations under this Redevelopment Contract without
the prior written consent of the Authority, which the Authority shall grant or deny within fifteen (15) days
of receipt of written request from Redeveloper, which consent shall not be unreasonably withheld,
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delayed or conditioned, except for the following conveyances, which shall be permitted without consent
of Authority:
(a)
any assignment as security for indebtedness incurred by Redeveloper for Project Costs or
any subsequent physical improvements to the Redevelopment Area, provided that any such assignment
shall be subject to the obligations of the Redeveloper pursuant to this Redevelopment Contract; or
(b)
any assignment to any person or entity which owns more than 50% of the voting equity
interests of Redeveloper (if Redeveloper is a corporation, partnership, limited liability company or other
entity) or with respect to which Redeveloper or any of its shareholders owns directly or indirectly more
than 50% of the voting equity interests, or with respect to which one or more of the owners of equity
interests in the Redeveloper own, in the aggregate, more than 50% of the voting equity interests provided
that any such assignee agrees to assume all obligations of the Redeveloper and be bound by all terms and
conditions of this Redevelopment Contract; or
(c)
if Redeveloper is a corporation, partnership or limited liability company, any merger,
consolidation, split off, split-up, spin off or other reorganization of Redeveloper which does not result in a
substantial change of control or management of the Redeveloper, provided that any such successor entity
agrees to assume all obligations of the Redeveloper and be bound by all terms and conditions of this
Section 4.07 Insurance.
(a)
The Redeveloper shall keep the Project continuously insured against such risks and in
such amounts, with such deductible provisions as are customary in connection with the operation of
facilities of the type and size comparable to the Project. The Redeveloper, at the Redeveloper’s sole
expense, shall (or shall cause each sublessee or Tenant to) to carry and maintain, or cause to be carried
and maintained, and pay or cause to be paid in a timely manner the premiums for at least the following
insurance with respect to the Project (unless the requirement therefor shall be waived by the Authority’s
Bond Trustee and the Authority in writing):
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(1)
Builder’s completed value risk insurance and, on and after the completion date of
each structure, property insurance, in each case (a) providing coverage during the construction of the
Project for financial losses of the Redeveloper relating to continuing expenses, caused by property
damage during the construction of the Project, (b) providing coverage (including increased costs from
changes in building laws, demolition costs and replacement cost coverage) for those risks which is equal
or broader than that currently covered by an all–risk policy covering all improvements, fixtures and
equipment comprising the Project, (c) containing an agreed amount endorsement with a waiver of all coinsurance provisions; (d) providing for no deductible in excess of $500,000 (as increased each year by the
increase in the CPI for the preceding calendar year, if any) for all such insurance coverage, and (e)
covering, without limitation, loss, including, but not limited to, the following:
a.
fire,
b.
extended coverage perils,
c.
vandalism and malicious mischief,
d.
water damage,
e.
debris removal,
f.
collapse, and
g.
comprehensive boiler and machinery insurance,
in each case on a replacement cost basis in an amount equal to “full insurable value” of the Project. “Full
insurable value” means an amount sufficient to prevent the application of any co-insurance contribution on
any loss but in no event less than one hundred percent (100%) of the actual replacement cost of the Project,
including additional administrative or managerial costs that may be incurred to effect the repairs or
reconstruction but excluding costs of excavation, foundation and footings. “Full insurable value” shall be
determined at least every year after the completion date of the Minimum Project by an appraisal, a report
from an Insurance Consultant (who will be reputable and experienced in the subject geographic area and
who is reasonably acceptable to the Parties), or if the policy is on a blanket form, such other means as is
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reasonably acceptable to the Insurance Consultant. If an appraisal or report is conducted, a copy of such
appraisal or report shall be furnished to the Bond Trustee and the Authority;
(2)
Commercial general liability insurance providing coverage for those liabilities
which is equal or broader than that currently covered by a CGL policy (a standard ISO CGL form),
including at least the following hazards: (1) premises and operations; (2) products and completed
operations; (3) independent contractors; and (4) blanket contractual liability for all legal contracts; such
insurance (a) to be on an “occurrence” form with a combined limit of not less than $4,000,000 in the
aggregate and $2,000,000 per occurrence, and (b) with excess coverage of not less than $25,000,000;
(3)
Flood insurance, if the Project is located in an area identified as being in the 100-
year flood plain, initially in an amount that is acceptable to a lender, or if there is no lender then in an
amount acceptable to the Authority; provided, however, the maximum limits of the policy may be
reduced upon the written recommendation of the Insurance Consultant delivered to the Bond Trustee,
provided, further, however in no event shall the maximum policy limits be less than (i) the probable
maximum loss, (ii) the maximum amount of insurance available through the National Flood Insurance
Program, or (iii) limits which, in the opinion of the Insurance Consultant, are adequate and appropriate
and consistent with insurance industry practice for facilities such as the Project, in each case as identified
to the Bond Trustee by the Insurance Consultant, provided, further, however, a separate policy of flood
insurance shall not be required if, in the opinion of the Insurance Consultant, such risks are adequately
covered in the property insurance policy described in clause (i) above;
(4)
Earthquake insurance, initially in an amount that is acceptable to a lender, or if
there is no lender then in an amount acceptable to the Authority; provided, however, the limits of the
policy may be reduced upon the written recommendation of the Insurance Consultant delivered to the
Bond Trustee but in no event shall the maximum policy limits be less than (i) the probable maximum loss,
or (ii) limits which are adequate and appropriate and consistent with insurance industry practice for
facilities such as the Project; provided, however a separate policy of earthquake insurance shall not be
-13-
required if in the opinion of the Insurance Consultant, such risks are adequately covered in the property
insurance policy described in clause (i) above;
(5)
Business interruption insurance (including coverage prior to the commencement of
operations) providing coverage in an amount equal to the lesser of (i) the projected TIF Revenues contained
in the projections the Redeveloper delivered to the Authority, or (ii) the maximum amount of business
interruption insurance commercially available from a qualified insurer as determined by the Insurance
Consultant. Such insurance shall provide for a period of indemnification acceptable to the Insurance
Consultant of not less than two years and shall only terminate upon recommencement of normal operations
at the Project (with a deductible of not more than 60 days or if a flat deductible is used, not more than
$500,000 (as increased each year by the increase in the CPI for the preceding calendar year, if any);
provided, further, however, a separate policy of business interruption insurance shall not be required if, in
the opinion of the Insurance Consultant, such risks are adequately covered in the property insurance
policy described in clause (i) above; and
(6)
(b)
Fidelity bond coverage with respect to the personnel and agents of the Redeveloper.
Neither the Authority’s Bond Trustee nor the Authority represents in any way that the
insurance specified herein, whether in scope, overall coverage or limits of coverage, is sufficient to protect
the business or interests of the Redeveloper.
(c)
Each insurance policy obtained in satisfaction of the foregoing requirements:
(1)
shall be by such insurer or insurers as shall be financially responsible, and shall
have a rating equal to or higher than A+/ FSC IX (if such insurance relates to property damage) or A- (if
such insurance relates to anything other than property) or better by Best Insurance Guide and Key Ratings
or shall be acceptable to the Insurance Consultant as evidenced by a written certificate delivered to the
Authority and the Bond Trustee, and
(2)
shall be in such form and with such provisions as are generally considered
standard provisions for the type of insurance involved as evidenced by a written report of the Insurance
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Consultant delivered to the Authority and the Bond Trustee on or prior to the Bond Closing Date and at
the time of delivery of any replacement policies.
(d)
All such policies, or a certificate or certificates of the insurers that such insurance is in full
force and effect, shall be provided to the Authority and the Bond Trustee and, prior to expiration of any such
policy, the Redeveloper shall furnish the Authority and the Bond Trustee with satisfactory evidence that
such policy has been renewed or replaced or is no longer required by this Redevelopment Contract;
provided, however, the insurance so required may be provided by blanket policies now or hereafter
maintained by the Redeveloper if the Redeveloper provides the Authority and the Bond Trustee with a
certificate from an Insurance Consultant to the effect that such coverage is substantially the same as that
provided by individual policies. All policies evidencing such insurance required to be obtained under the
terms of this Redevelopment Contract shall provide for thirty (30) days’ prior written notice to the
Redeveloper, the Bond Trustee and the Authority of any cancellation (other than for nonpayment of
premium), reduction in amount or material change in coverage.
(e)
In the event the Redeveloper shall fail to maintain, or cause to be maintained, the full
insurance coverage required by this Redevelopment Contract, the City’s Bond Trustee shall promptly
notify the Authority of such event and the Authority or the Authority’s Bond Trustee may (but shall be
under no obligation to) contract for the required policies of insurance and pay the premiums on the same;
and the Redeveloper agrees to reimburse the Authority or the Authority’s Bond Trustee to the extent of
the amounts so advanced, with interest thereon at the Default Rate. Notwithstanding the foregoing, if the
Authority shall advance to the Authority’s Bond Trustee the amounts necessary to contract for such
insurance the Bond Trustee shall promptly cause such insurance to be maintained or restored.
(f)
All policies of insurance required by this Section shall be utilized as required by this
Section 4.08 Obligation to Restore.
The Redeveloper hereby agrees that if any portion of the Project owned by it shall be damaged or
destroyed, in whole or in part, by fire or other casualty, or by any taking in condemnation proceedings or
-15-
the exercise of any right of eminent domain, the Redeveloper, to the extent of the net proceeds of
insurance (including any deductible) or condemnation award received by or made available to the
Redeveloper but subject to the rights of any lender of the Redeveloper (“Lender”), shall promptly
restore, replace or rebuild the same (or shall promptly cause the same to be restored, replaced or rebuilt)
to as nearly as possible the value, quality and condition it was in immediately prior to such fire or other
casualty or taking, with such alterations or changes as may be approved in writing by the Authority,
which approval shall not be unreasonably withheld. The Redeveloper shall give prompt written notice to
the Authority of any damage or destruction to the Project by fire or other casualty, irrespective of the
amount of such damage or destruction, but in such circumstances the Redeveloper shall make the property
safe and in compliance with all applicable laws as provided herein. If Lender consent is required for the
application of the insurance proceeds or condemnation award to the restoration, replacement or rebuilding
of the Project under any loan documents to which the Redeveloper or the Project is subject, the
Redeveloper shall request such Lender consent in accordance with the terms of such loan documents.
To the extent the net proceeds of insurance are deposited into the Project Fund under the Bond
Resolution pursuant to subparagraph (a), the Redeveloper may use such moneys in the restoration,
replacement and rebuilding of the Project.
The Redeveloper further agrees that the provisions of Sections 4.07 and 4.08 of this
Redevelopment Contract shall be covenants running with the Redevelopment Area and shall be binding
upon any other owner, lessee or sublessee of all or any part of the Project. Notice of such Sections shall
be included in any contract, lease or sublease relating to the development, ownership or use of any portion
of the Project by any other owner, lessee or sublessee. Any such other owner, lessee or sublessee shall be
required to procure and maintain the insurance required under Section 4.07 as it relates to that part of the
Project owned, leased or subleased by it, to the extent such insurance is not carried by the Redeveloper,
and to restore any portion of the Project, owned, leased, or subleased by it in accordance and subject to
the terms of this Section 4.08, unless such restoration obligation is retained by or delegated to the
-16-
Redeveloper in any contract, lease or sublease between the Redeveloper and any such other owner, lessee
or sublessee.
These restrictions are for the benefit of the Authority and may be enforced by the Authority by a
suit for specific performance or for damages, or both.
ARTICLE V.
FINANCING REDEVELOPMENT PROJECT; ENCUMBRANCES
Section 5.01 Financing.
Redeveloper shall pay all Project Costs and any and all other costs related to the Redevelopment
Area and the Project which are in excess of the amounts paid from the proceeds of the TIF Indebtedness
granted to Redeveloper.
Prior to the issuance of the TIF Indebtedness, Redeveloper shall provide
Authority with evidence satisfactory to the Authority that private funds have been committed to the
Project in amounts sufficient to complete the Project. Redeveloper shall timely pay all costs, expenses,
fees, charges and other amounts associated with the Project.
ARTICLE VI.
DEFAULT, REMEDIES; INDEMNIFICATION
Section 6.01 General Remedies of Authority and Redeveloper
Subject to the further provisions of this Article VI, in the event of any failure to perform or
breach of this Redevelopment Contract or any of its terms or conditions, by any party hereto or any
successor to such party, such party, or successor, shall, upon written notice from the other, proceed
immediately to commence such actions as may be reasonably designed to cure or remedy such failure to
perform or breach which cure or remedy shall be accomplished within a reasonable time by the diligent
pursuit of corrective action. In case such action is not taken, or diligently pursued, or the failure to
perform or breach shall not be cured or remedied within a reasonable time, this Redevelopment Contract
shall be in default and the aggrieved party may institute such proceedings as may be necessary or
desirable to enforce its rights under this Redevelopment Contract, including, but not limited to,
proceedings to compel specific performance by the party failing to perform or in breach of its obligations
-17-
or exercise any other remedies that may be provided in this Redevelopment Contract or by applicable law;
provided, however, that the default shall not give rise to a right of recision or termination of this
Section 6.02 Forced Delay Beyond Party’s Control.
For the purposes of any of the provisions of this Redevelopment Contract, neither the Authority
nor the Redeveloper, as the case may be, nor any successor in interest, shall be considered in breach of or
default in its obligations with respect to the conveyance or preparation of the Redevelopment Area for
redevelopment, or the beginning and completion of construction of the Project, or progress in respect
thereto, in the event of forced delay in the performance of such obligations due to unforeseeable causes
beyond its control and without its fault or negligence, including, but not restricted to, acts of God, or of
the public enemy, acts of the Government, acts of the other party, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, and unusually severe weather or delays in subcontractors due to
such causes; it being the purpose and intent of this provision that in the event of the occurrence of any
such forced delay, the time or times for performance of the obligations of the Authority or of the
Redeveloper with respect to construction of the Project, as the case may be, shall be extended for the
period of the forced delay: Provided, that the party seeking the benefit of the provisions of this section
shall, within thirty (30) days after the beginning of any such forced delay, have first notified the other
party thereof in writing, and of the cause or causes thereof and requested an extension for the period of
the forced delay.
Section 6.03 Limitation of Liability; Indemnification.
Notwithstanding anything in this Article VI or this Redevelopment Contract to the contrary,
neither the City or the Authority, nor their officers, directors, employees, agents or their governing bodies
shall have any pecuniary obligation or monetary liability under this Redevelopment Contract. The sole
obligation of the Authority under this Redevelopment Contract shall be the issuance of the TIF
Indebtedness and granting of a portion of the proceeds thereof to Redeveloper, as specifically set forth in
Sections 3.02 and 3.04. The obligation of the Authority on any TIF Indebtedness shall be limited solely
-18-
to the TIF Revenues pledged as security for such TIF Indebtedness. Specifically, but without limitation,
neither the City or the Authority shall be liable for any costs, liabilities, actions, demands, or damages for
failure of any representations, warranties or obligations hereunder.
The Redeveloper will indemnify and hold each of the City and the Authority and their directors,
officers, agents, employees and members of their Governing Bodies free and harmless from any loss,
claim, damage, demand, tax, penalty, liability, disbursement, expense, including litigation expenses,
attorneys’ fees and expenses, or court costs arising out of any damage or injury, actual or claimed, of
whatsoever kind or character, to property (including loss of use thereof) or persons, occurring or allegedly
occurring in, on or about the Project during the term of this Redevelopment Contract or arising out of any
action or inaction of Redeveloper in connection with its activities conducted pursuant to this
Redevelopment Contract (whether or not in any way related to the enforcement of this Redevelopment
Contract) and/or in connection with the ownership, use or occupancy and development or redevelopment
of the Redevelopment Area (whether or not in any way related to the Project).
ARTICLE VII.
MISCELLANEOUS
Section 7.01 Notice Recording.
This Redevelopment Contract or a notice memorandum of this Redevelopment Contract shall be
recorded with the County Register of Deeds in which the Redevelopment Area is located.
Section 7.02 Governing Law.
This Redevelopment Contract shall be governed by the laws of the State of Nebraska, including
but not limited to the Act.
Section 7.03 Binding Effect; Amendment.
This Redevelopment Contract shall be binding on the parties hereto and their respective
successors and assigns. This Redevelopment Contract shall run with the Redevelopment Area. This
Redevelopment Contract shall not be amended except by a writing signed by the parties bound hereto.
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IN WITNESS WHEREOF, Authority and Redeveloper have signed this Redevelopment
Contract as of the date and year first above written.
COMMUNITY REDEVELOPMENT
AUTHORITY OF THE CITY OF
BEATRICE, NEBRASKA
ATTEST:
___________________________________
__________________, Secretary
STATE OF NEBRASKA
COUNTY OF GAGE
By: ___________________________________
_____________, Chair
)
) ss.
)
The foregoing instrument was acknowledged before me this _____ day of ____________, 2007,
by ______________________ and _______________________, Chair and Secretary, respectively, of the
Community Redevelopment Authority of the City of Beatrice, Nebraska, on behalf of the City.
(S E A L)
_______________________________________
Notary Public
By: ___________________________________
U.S. CANADIAN BIOFUELS, INC.
Its: Manager
U.S. CANADIAN BIOFUELS, INC.
By: ___________________________________
Its: President
STATE OF NEBRASKA
COUNTY OF GAGE
)
) ss.
)
The foregoing instrument was acknowledged before me this _____ day of _______________,
2007, by _____________________, President of U.S. Canadian Biofuels, Inc., the Manager of Beatrice
Biodiesel, LLC, on behalf of the limited liability company.
(S E A L)
_______________________________________
Notary Public
-20-
EXHIBIT A
DESCRIPTION OF REDEVELOPMENT AREA
Lots Twenty-nine (29), Thirty (30), Thirty-one (31), Thirty-two (32), Thirty-three (33),
Thirty-four (34), Thirty-five (35), Thirty-six (36), and Thirty-seven (37), Gage County
Industrial Park First Subdivision, City of Beatrice, Gage County, Nebraska; and that part
of Kinney Avenue (now vacated) located West of Centennial Drive, between Lots Thirtyfour (34) and Thirty-five (35), Gage County Industrial Park First Subdivision, City of
Beatrice, Gage County, Nebraska.
A-1
EXHIBIT B
DESCRIPTION OF PROJECT
A biodiesel production facility, including all necessary receiving, storage, processing, pollution
control, waste handling, and shipping buildings, equipment and furnishings and ancillary facilities
sufficient to produce, from vegetable oil, approximately 50,000,000 gallons of soy biodiesel annually.
B-1
EXHIBIT C
TIF INDEBTEDNESS
1.
Principal Amount:
Series A: The maximum amount, which, together with interest accruing
thereon, can be fully amortized by December 31, 2021, solely from
projected TIF Revenues based on the current aggregate ad valorem tax
rate (together with the City’s ad valorem tax rate) applicable to the
Redevelopment Area times an assumed project valuation of $15,000,000
and a debt service coverage ratio of ____.
Series B: The remaining amount which can be fully amortized based on
the assumptions with respect to the Series A Indebtedness but without
assuming a debt service coverage ratio.
2.
Payments:
Semi-annually or more frequent, with interest only until 2009, in
substantially equal amounts sufficient to fully pay the TIF Indebtedness
in full on or before December 31, 2021
3.
Interest Rate:
To be determined by Redeveloper, not to exceed Ten percent (10%).
4.
Maturity Date:
On or before December 31, 2021.
C-1
EXHIBIT D
PROJECT COSTS
All Project Costs payable from the proceeds of TIF Indebtedness pursuant to the Act including:
1.
Redevelopment Area Acquisition cost
2.
Site work and site preparation
3.
Utility extensions, installation of gas, water, sewer and electrical lines and equipment
4.
Construction of roadways and rail service lines
5.
Pollution control equipment
6.
Such other costs and expenses as may be allowed under the Act.
D-1
EXHIBIT E
QUALIFIED PROJECT COSTS
1.
2.
3.
4.
5.
6.
7.
Land acquisition
City Water Line
Sewer/Lift Stations
Paving of Kinney Drive
Site Paving
Civil/Undergrounds
Rail Work
$ 35,000
$ 60,000
$ 149,187
$ 125,000
$ 257,780
$1,118,035
$1,400,000
[OTHER?]
E-1
EXHIBIT F
CERTIFICATE OF COMPLETION
OF
The undersigned, BEATRICE BIODIESEL, LLC (the “Redeveloper”), pursuant to that certain
Redevelopment Contract dated as of _____, 2007, between the Community Redevelopment Authority of
the City of Beatrice (the “Authority”) and the Redeveloper (the “Agreement”), hereby certifies to the
Authority as follows:
1.
That as of ____________, 20 , the construction, renovation, repairing, equipping and
constructing of the Project (as such term is defined in the Agreement) has been substantially completed in
accordance with the Agreement.
2.
The Project has been completed in a workmanlike manner and in accordance with the
Construction Plans (as those terms are defined in the Agreement).
3.
Lien waivers for applicable portions of the Project have been obtained.
4.
This Certificate of Completion is accompanied by the project architect’s Certificate of
Completion on AIA Form G-704 (or the substantial equivalent thereof), a copy of which is attached
hereto as Appendix A and by this reference incorporated herein), certifying that the Project has been
substantially completed in accordance with the Agreement.
5.
This Certificate of Completion is being issued by the Redeveloper to the Authority in
accordance with the Agreement to evidence the Redeveloper’s satisfaction of all obligations and
covenants with respect to the Project.
6.
The Authority’s acceptance (below) or the Authority’s failure to object in writing to this
Certificate within 30 days of the date of delivery of this Certificate to the Authority (which written
objection, if any, must be delivered to the Redeveloper prior to the end of such 30-day period), and the
recordation of this Certificate with the Gage County Registrar of Deeds, shall evidence the satisfaction of
the Redeveloper’s agreements and covenants to construct the Project. The Authority’s acceptance of the
Certificate of Completion shall release the Redeveloper from any further obligation or liability for
construction of the Project under the terms of the Agreement in regard to the portion of the
Redevelopment Area for which the Certificate of Completion is furnished.
This Certificate is given without prejudice to any rights against third parties which exist as of the
date hereof or which may subsequently come into being.
F-1
Terms not otherwise defined herein shall have the meaning ascribed to such terms in the
Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand this _____ day of
____________, 200__.
By: ___________________________________
Printed Name: __________________________
Title: _________________________________
ACCEPTED:
AUTHORITY OF THE CITY OF BEATRICE
By: ___________________________________
Printed Name: __________________________
Title: _________________________________
(Insert Notary Form(s))
F-2
EXHIBIT G
CERTIFICATE OF REIMBURSABLE PROJECT COSTS
TO:
Community Redevelopment Authority of the City of Beatrice, Nebraska
Re:
Beatrice Biodiesel, LLC
Terms not otherwise defined herein shall have the meaning ascribed to such terms in the
Redevelopment Contract dated as of ____, 2007 (the “Agreement”) between the Authority and the
Redeveloper. In connection with said Agreement, the undersigned hereby states and certifies that:
1.
Each item listed on Schedule 1 attached hereto is a Reimbursable Project Cost and was
incurred in connection with the construction of the Project.
2.
These Reimbursable Project Costs have been paid or incurred by the Redeveloper and are
reimbursable under the Agreement.
3.
Each item listed on Schedule 1 has not previously been paid or reimbursed from money
derived from any money derived from any project fund established pursuant to a Resolution authorizing
TIF Indebtedness, and no part thereof has been included in any other certificate previously filed with the
Authority.
4.
There has not been filed with or served upon the Redeveloper any notice of any lien, right
of lien or attachment upon or claim affecting the right of any person, firm or corporation to receive
payment of the amounts stated in this request, except to the extent any such lien is being contested in
good faith.
5.
To the best of Redeveloper’s knowledge and belief all necessary permits and approvals
required for the Work for which this certificate relates have been issued and are in full force and effect.
6.
All Work for which payment or reimbursement is requested has been performed in a
good and workmanlike manner and in accordance with the Agreement.
7.
If any cost item to be reimbursed under this Certificate is deemed not to constitute a
“redevelopment project cost” within the meaning of the Act and the Agreement, the Redeveloper shall
have the right either to seek to convince the Authority that any such cost constitutes a “redevelopment
project cost” or to identify and substitute eligible Project Costs as Project Costs for payment hereunder.
If the Redeveloper elects to seek to convince the Authority that any such cost constitutes a
“redevelopment project cost” and the Authority still refuses to accept such cost as a “redevelopment
project cost”, the Redeveloper may then seek to identify and substitute other Redevelopment Project
Costs as Project Costs for payment hereunder as provided in the preceding sentence.
8.
To the best of Redeveloper’s knowledge and belief the Redeveloper is not in default or
breach of any term or condition of the Agreement, and no event has occurred and no condition exists
which constitutes a Redeveloper event of default under the Agreement.
G-1
9.
All of the Redeveloper’s representations set forth in the Agreement remain true and
correct as of the date hereof.
10.
Construction of the Project is in compliance with the covenants set forth in the
Agreement related to completion.
Dated this _____ day of ______________, 20____.
By:
Printed Name:
Title:
Approved for Payment this ____ day of ___________, 20_____:
AUTHORITY OF THE CITY OF BEATRICE,
NEBRASKA
By:____________________________________
Printed Name: ___________________________
Title: __________________________________
G-2
SCHEDULE 1 TO CERTIFICATE OF REIMBURSABLE PROJECT COSTS
ITEMIZATION OF REIMBURSABLE EXPENSES
_____________________________________________________________________________
G-3
APPENDIX F
FORM OF OPINION OF BOND COUNSEL
Community Redevelopment Authority
of the City of Beatrice, Nebraska
Beatrice, Nebraska
Piper Jaffray & Co.
Leawood, Kansas
Re:
$2,315,000 Community Redevelopment Authority of the City of Beatrice, Nebraska Tax
Increment Revenue Bonds (Beatrice Biodiesel, LLC), Series 2007A
Ladies and Gentlemen:
We have acted as bond counsel in connection with the issuance by the Community
Redevelopment Authority of the City of Beatrice, Nebraska (the “Authority”) of the above-captioned
bonds (the “Bonds”) pursuant to a resolution adopted by the Authority on July 23, 2007 (the “Bond
Resolution”). Capitalized terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Bond Resolution.
We have examined the law and such certified proceedings and other documents as we deem
necessary to render this opinion. As to questions of fact material to our opinion we have relied upon the
certified proceedings and other certifications of public officials furnished to us without undertaking to
verify the same by independent investigation.
Based upon the foregoing, we are of the opinion that, under existing law:
1.
The Bonds are valid and binding special, limited obligations of the Authority, payable
solely from the sources provided therefor in the Bond Resolution. Under no circumstances shall the
Bonds constitute or give rise to a pecuniary liability of the Authority or the City of Beatrice, Nebraska
(the “City”) or a charge against the general credit or taxing powers of either the Authority or the City.
The principal of and interest on the Bonds are payable solely from revenues to be produced and received
from limited real property levies.
2.
The Bond Resolution creates a valid pledge of the funds pledged thereby for the security
of the Bonds under the Bond Resolution.
3.
The interest on the Bonds (including any original issue discount properly allocable to an
owner thereof) is excluded from gross income for federal income tax purposes and is not an item of tax
preference for purposes of the federal alternative minimum tax imposed on individuals and corporations.
It should be noted however, that for the purpose of computing the alternative minimum tax imposed on
F-1
corporations (as defined for federal income tax purposes), such interest is taken into account in
determining adjusted current earnings. The opinions set forth in this paragraph are subject to the
condition that the Authority comply with all requirements of the Internal Revenue Code of 1986, as
amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds in order that interest
thereon be, or continue to be, excluded from gross income for federal income tax purposes. The
Authority has covenanted to comply with each such requirement. Failure to comply with certain of such
requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax
purposes retroactive to the date of issuance of the Bonds. The Bonds are “qualified tax-exempt
obligations” within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial
institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for 80 percent
of that portion of such financial institutions’ interest expense allocable to interest on the Bonds. We
express no opinion regarding other federal tax consequences arising with respect to the Bonds.
4.
The interest on the Bonds is exempt from income taxation by the State of Nebraska.
The rights of the registered owners of the Bonds under the Bond Resolution and the
enforceability thereof may be subject to the valid exercise of the sovereign police powers of the State of
Nebraska and of the constitutional powers of the United States of America, valid bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors’ rights heretofore or hereafter enacted and
their enforcement may also be subject to the exercise of judicial discretion in appropriate cases.
Very truly yours,
GILMORE & BELL, P.C.
F-2

E - fpr.net

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