BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 56 July 2004 

# Bio-Oil

Commercialization Plan

Prepared for the NH Office of Energy and Planning

by



### Cole Hill Associates 32 Dyke Road

PO Box 523 Sugar Hill, NH 03585-5000 (603) 823-5109

July 2004

This material was prepared with financial support from the New Hampshire Governor’s Office of Energy and Community Services (E CS) and the New Hampshire Department of Resources and Economic Development (DRED). However, any opinions, findings, conclusions, or recommendations expressed are those of Cole Hill Associates and do not necessarily reflect the views of ECS (now the NH Office of Energy and Planning) or

DRED and do not constitute an endorsement of products or services mentioned.

Since this Plan was produced, Cole Hill Associates has relocated:

Gerald W. Stewart
Cole Hill Associates
4 St. Andrews Lane Bluffton, SC 29909

Telephone/Fax (843) 705-5924 Cell Phone (843) 368-5661BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 56 July 2004 

### Introduction

I. Commercialization Plan Summary †

A. There is a need for an expanded use of low-grade wood chips in the North Country of New Hampshire. 1a,1b,2

B. One alternative is the conversion of w ood chips into bio-oil, an environmentally friendly, renewable energy source.

C. The objective of this study is to eva luate the economic viability of locating a bio-oil facility in New Hampshire as an alte rnative use of wood chips, and to inform interested parties as to the current st ate of bio-oil technology. Contractual requirements for developing this commercialization plan specifically forbid the selection of and /or bias towards any one producer or process. Therefore, a specific process, management structure, ownership scenario, plant location, etc. could not be identified; thus specific detailed cost analysis as normally found in a commercialization plan was not possible. Rather, average representative costs consistent with published industry data we re used. The next step in locating a commercial bio-oil facility in New Hampshire would be to select a vendor of choice and work with that organization to pr oduce a detailed busine ss plan identifying management, ownership structure, pro cess parameters, products and market analysis sufficient for attrac ting adequate financing. It is assumed in this initial modeling that the resulting entity woul d be a public/private partnership with financing from the partners, local investors, commercia l institutions and local
government.

D. Bio-oil technology is in the early st age of development; however, one company has commercial plants in operation 3 and two other companies are seeking funding to build commercial facilities. 4,5

E. A 100-ton per day (tpd) plant operati ng at 90% efficiency using dried wood chips containing 8% moisture content by weight would consume approximately 46,000 tons of green wood chips per year hav ing a 38% average moisture content by weight. Such a plant would genera te approximately 4.8 million gallons of biooil having the heat equivalent (BTU) of 2.64 million gallons of #2 fuel oil.

F. The heat content of bio-oil (75,500 BTU per gallon) is only 55% that of #2 fuel
oil. ‡ Therefore one must burn 1.82 gallons of bio-oil to obtain the same amount of heat as released when burning one gallon of #2 fuel oil. At the current price of #2 fuel oil, $0.86 per gallon in tank car quantities, the equiva lent cost of bio-oil would be $0.47 per gallon. For bio-oil to be cost competitive with #2 fuel oil on an equal

† In this document all units of weight are reported in English Units (eg.1 ton equals 2000 lbs) and all currencies are reported in US $’s unless specifically stated otherwise.

‡ For this study it was assumed that the market for bio-oil would be small to medium sized industrial boilers burning #2 fuel oil, not residential customers. However, during the course of this study it became apparent that an alternative market would be larger industrial boilers burning #6 fuel oil. For comparison, bio-oil has a 49% lower heat content or an equivalent price of $0.39 as compared to a market price of $0.80 per gallon for #6 oil in truckload quantities at Portsmouth, NH in late June 2004.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 57 July 2004 energy basis the selling price of bio-oil must be less than or equal to $0.47 per gallon. This compares to a break-even production cost for bio-oil of $0.71 per gallon or a net loss of approximately $0.24 pe r gallon for a stand-al one facility. In smaller quantities th e price of #2 fuel oil ranges from $1.10 to $1.29 per gallon or an equivalent cost for bio-oil of $0.60 to $0.71 per gallon.

G. An alternative scenario for reducing th e production cost of bio-oil would be to co-locate a bio-oil facility with an existi ng wood fired power plant. Utilization of waste heat along with cost sharing of facilities and labor would reduce the production price per gallon of bio-oil to approximately $0.55 per gallon. Thus by selling to a mix of customers a co mpetitive price might be achieved.

H. A second alternative and profitable scenario would be to operate a bio-refinery where higher value added products would be extracted and sold in addition to selling the residual bio-oil. This approac h is similar to that used in existing commercial plants. 3

I. The most attractive option for New Ha mpshire would be the co-location of a bio-refinery with an existing facility such as a wood fired power plant. This configuration would provide the maximum profit and return on investment (ROI) for investors. Selling bio-oil at $0.55 a gallon, char at $47 per ton and refined chemicals at an average price of $0.97pe r pound would provide a profit with 20%

return on investment.

J. Therefore, it can be concluded that there are certain operating scenarios in which a bio-oil facility located in New Ha mpshire, using low-grade wood chips as a feedstock, might be economically viable.



### II. Risk Factors

A. Assumptions: Assumptions used in th is report are based on the best currently available knowledge of bio-oil technology and business conditions as they currently exist in Northern New Hampshire. It is understood that assumptions may change based on differences relevant to propri etary technology and conditions unique to specific business groups and/or locations.

B. Critical Factors: Critical factors used in the economic analysis such as feedstock moisture content, bio-oil yi eld, capital cost, re turn on investment,
overhead rates and etc. are consistent with those currently being used in northern New Hampshire at the time of writing. These parameters may change with time, location and/or readers may wish to use param eters more to their liking. If so, the accompanying spreadsheet may be used to change these parameters to assess their impact on the overall economic analysis.

C. Emerging Technology: The production of bi o-oil from the fast pyrolysis of wood chips is in the early stages of developm ent. There is no assurance that this technology will emerge as a significant s ource of alternative fuels and/or become an expanded source for value-added chemicals.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 58 July 2004 D. Feedstock Availability: There is no assurance that existing markets for wood chips will not grow and/or that alternative uses of wood chips will not be found. A competitive market for wood chips could resu lt in a price increase, thus making the production of bio-oil econom ically impractical.

E. Limited Access to Technology: To date there are only three companies in North America capable of supplying the requir ed technology. Only one of these companies has demonstrated the ability to establ ish a commercial plant. There is no assurance that any of these companies ar e interested in building a plant in New Hampshire. There is no assurance that a viable business agreement can be reached with any of the potential suppliers.

F. Limited Source of Informa tion: Much of the informati on necessary to establish a commercial plant is retained as proprie tary information. There is no public information available to validate and/or c ontradict many of the assumptions made in this study. There are no existing stand-alone commercial plants. Existing commercial plants are an integrated part of other commercial processes and most, if not all, products generate d by the plant are consum ed onsite. Operating and financial information is reta ined as proprietary inform ation. Much of the information provided in this report wa s obtained from private conversations and presentations made by the potential s uppliers, “knowledgeable third party sources” and/or from academic studies.

G. Limited Market: To date sufficient quantities of bio-oil have not been available
to establish a market. There is no assuran ce that a viable market will emerge. To use bio-oil as an alternative fuel, customers will need to invest time and money into converting boilers to burn bio-oil. New value-added chemicals will need to compete with existing sources. Barriers to market entry are unknown and could be significant. It is uncertain how current market suppliers will react, e.g., reduce prices in an effort to eliminate competition.

H. Permits / Licensing: There has been no attempt to acquire the required local, state and federal permits and licenses necessary to operate a bio-oil plant and/or to utilize the products generated. A plant si te has not been identified. This report relies on the fact that commercial plants exist in other U.S. States and in Canada. These plants have received the necessary pe rmits without issue. There are also technical papers reporting the physical prope rties of bio-oil, as well as plant

emissions.

I. Energy Credits: Various State and Federal Agencies have enacted and/or proposed legislation to provid e energy credits for specific applications. It is not
certain that these credits will be enacted and/or if they are, will be applicable to a bio-oil facility using currently available te chnology. For purposes of this report no benefits related to energy credits are assumed.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 59 July 2004 

### III. Capitalization

A. Capital requirements fo r a stand-alone bio- oil facility or a bio-refinery would be approximately $7.8MM and $10.55MM respectiv ely. The use of capital would be as follows:

Table I. Capital Utilization

B. Sources of capital would be as follows:

Table II. Source of Funds Utilization Stand Alone Bio-Refinery

Capital Equipment $ 2,500,000 $ 3,500,000 Construction / Installation Cost $ 3,100,000 $ 4,100,000 Commissioning @ 6 mths $ 1,500,000 $ 2,100,000 Working Capital $ 700,000 $ 850,000

Total Capital Needs $ 7,800,000 $ 10,550,000

Source of Funds Stand-Alone Bio-Refinery

1. Equity Investment a. Investors Equity $ 1,100,000 $ 1,500,000 b. CDBG Grant for 16 employees $ 320,000 $ 320,000 @ $20K per employee 2. Sale of Product generated $ 280,000 $ 380,000 during commissioning

3. Bank Financing a. Capital Equipment Loan $ 2,500,000 $ 3,500,000 b. Construction Loan $ 3,100,000 $ 4,100,000 c. Draw on Line of Credit @ 80% $ 500,000 $ 750,000 Receivables, 20% Inventory

Total Funds Available $ 7,800,000 $ 10,550,000BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 60 July 2004 

### Commercialization Plan

I. Importance of Markets for Low-Grade Wood 6

A. The timber industry is important to NH since the state is one of the most heavily forested in the nation.

B. NH forests are primarily privately owne d and owners rely on income from the harvesting of these woodlots.

C. NH Division of Forest and Lands s how that between 37% and 44% of all standing timber in state is considered low-grade.

D. Low-grade means it does not meet the specification for saw logs used for
lumber or veneer. 20-80% of the volume of wood harvested during a logging job is considered low-grade. From April 1, 2001 to March 31, 2002 sixty percent of volume of wood harvested in NH was low-grad e. Percentage varied by county with a low of 41% in Cheshire County and a high of 69% in Grafton County. In 2001 NH generated 892,000 tons of wood chips a nd a total of more than 2,000,000 tons of low-grade wood total.

E. Low-grade markets are pulpwood (prima rily used in paper manufacture), whole-tree chips used to generate electr icity and fuel wood primarily for home heating.

F. Forests also provide wildlife habita t and open space for camping, hiking, etc.

G. State Forester Philip Bryce in te stimony before the NH legislature in 2003 stated “Markets for low-grade wood are es sential to the practice of sustainable forestry...Without adequate markets fo r low-grade wood, there will be limited opportunity to maintain and improve the quality of timber upon which our forest products industry depends.” 7

H. Sawmills also rely on low-grade wood markets as an outlet for mill residue. It is estimated that in 2000 NH sawmills pr oduced over 300,000 tons of mill residue annually.

I. Whole tree chips represented 25% of wood harvested in NH in 2001 and used in wood-fired power plants. In 2002 power plants provided a market for 1.14 million tons of whole tree chips. BioEnergy closed in 2002 (140,000 tons annually) and Whitefield Power & Light was scheduled to close in 2003 (180,000 tons annually). † By 2009 the rate orders for all wood fired plants will terminate and it is possible that all wood fired power plants could close unless there is a significant change in the competitive nature of the market for electricity.

J. Another major market is pulpwood for the paper industry. NH has two significant in-state mills. Because of cu tbacks and closing of mills the pulpwood

† The owners of Whitefield Power & Light have entered in to preliminary agr eements with a buyer to purchase the power plant with the understanding that the plant will remain in operation. The final sale of the plant and thus the continued operation of the plant remain uncertain.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 61 July 2004 market has decreased from 1,375,000 tons in 1997 to less than 1,000,000 tons in
2001.

K. Conclusion: To sustain an active forest industry in NH an alternative market for low-grade wood is needed.



### II. What is Bio-oil?

Physical properties of bio-oil produced from wood have been presented in numerous publications and are summarized as follows: 8-15

A. Bio-oil is an organic liq uid fuel produced from the fast pyrolysis of low-grade wood. In addition to bio-oil, a high qu ality char and a combustible gas are produced at approximately 70% , 17% and 13% respectively.

B. The bio-oil production process is described as closed l oop (i.e. self contained).

C. Bio-oil is not a petroleum-based produc t and is insoluble in petroleum-based materials such as #2 fuel oil or gasoline.

D. Bio-oil contains approximately 30% water and has a lower hydrocarbon content than petroleum based fuels, thus having a lower heat content approximately 55% that of light fuel oil or diesel and approximately 90% of ethanol.

E. Bio-oil is a transportable liquid similar in properties to petroleum-based fuels. Its viscosity is between that of #2 and #6 fu el oil. Similar to diesel, it has a limited shelf life. This can be extended by stor ing at room temperature, in a closed container with periodic s tirring and/or agitation.

F. It is slightly more acidic (pH of 2.5 – 3) than petroleum based products and should be stored and handled using stainl ess steel and or polyethylene containers.

G. Limited studies to date indicate that bio-oil is no more hazardous than similar petroleum-based materials and should be handled using similar precautions. 16

H. Bio-oil is produced from biomass, a renewable resource, and as such can be
marketed as a Green Product.

I. Combustion of bio-oil is CO 2 neutral.

J. Extensive burner studies that have b een performed with bi o-oil generated from wood feedstock show the following: 17-22

1. To maintain an energy release rate equivalent to that for petroleumbased fuels requires a greater flow ra te approximately 1.6 times that for
#2 fuel oil.

2. Typical combustion parameters include an air atomizing burner and a fuel handling system similar to th at used for emulsified bitumen.
Biofuel † is stored in a tank with the temperature maintained at about

† Certain published documents refer to bio-oil as “biofu el”. For this report when a reference is made to
biofuel it should be considered to mean bio-oil. It is understood that the term biofuel has a much broader meaning than bio-oil.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 62 July 2004 36 o C and a blade impeller mixer to keep the fuel homogenized. Fuel is transported to the burner using a positi ve displacement pump and an inline steam heat exchanger is used to obtain increased uniform fuel temperatures at the burner. Nomi nally preheated atomizing air (114 o to
132 o C) is used and flue gas oxygen is maintained at about 5 to 5.5% (15 to 20% excess air).

3. Although the bio-oil flow rate is increased, the airflow required to maintain effective combustion is similar to that for the petroleum-based
fuels.

4. The exhaust gases from bio-oil ha ve a higher content of water vapor resulting in a slightly higher dew point for the stack gases, but values are well below normal boiler exhaust temperatures.

5. Composition of the flue gas shows higher CO 2 levels from the bio-oil
with CO and NO levels between those for #2 and #6 fuel oils. TSP
emissions are close to those for #2 fuel oil and lower than those for burning #6 fuel oil. The bio-oil SO 2 levels are dramatically lower than those for petroleum-based fuels. At lower bio-oil flow rates, i.e. lower heat transfer rates, and lower fl ame temperatures, NO emissions are substantially reduced. At comparable flow rates for bio-oil and #2 fuel
oil the NO emission is redu ced by approximately 50%.

6. Emissions are influenced by the quality of the bio-oil, in particular the char/ash content and by the bio-oil contaminants, which are dictated by the composition of the biomass feedstock from which the bio-oil was produced.

7. A significant destruction of dioxins /furans occurs during combustion (up to 99%).

8. It is reasonable to expect that co mbustion systems for fuel oils can be converted to use a reasonable qua lity of bio-oil without producing emission levels that would prevent permitting in normal situations.

K. The quality of char produced is dependent on the feedstock. Whole tree chips
of either hard or soft wood and/or a mixt ure results in a high quality char product. The char is typically used in the process as a fuel for drying the feedstock. If drier
feedstocks are available a nd/or alternative fuels are available to operate the pyrolysis process, the char can be sold as a high quality fuel (i.e. charcoal briquettes) and/or converted into activated carbon.

L. The gas produced by pyrolysis is used in the process as a fuel and as the carrier gas. The LHV for the gas is approximately 7.7MJ/kg. The use of pyrolysis gases as a synthesis gas to produce higher value products would require extensive reforming. Due to the unfavorable econom y of scale, it probably will not be feasible to use pyrolysis gas as a synthesis gas.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 63 July 2004 

### III. How is Bio-oil Produ ced: Pyrolysis Process

A. All fast pyrolysis applications in No rth America use some form of a fluidized
bed reactor. 8,12,15 Pyrolysis typically occurs at 500 0 C or less in an oxygen-free atmosphere resulting in essentially the dest ructive distillation of chemicals from the wood. The process is kept at low temp eratures to minimize decomposition

Figure I. Conceptual fluid bed fast pyrolysis process 12

(i.e. increase the amount of oil product) and therefore minimize the production of
hazardous chemicals such as dioxins and furans. 13

B. Essential features of the fast pyrolysis process are:

1. Very high heating and heat transfer rates which require the moisture content
of the feedstock to be 5-8% and feedst ock to be finely ground to a particle size of approximately 2mm.

2. Carefully controlled pyrolysis reac tion temperatures of approximately
500 0 C in the vapor phase with short vapor residence times of typically less
than 2 seconds.

3. Rapid cooling of the pyrolysis vapo rs to recover the bio-oil product.



### IV. Companies Utilizing Fast Pyrolysis

There are three companies in North Ameri ca utilizing fast pyrolysis to produce biooil and other related products. These are Ensyn Technologies, Inc. (Ensyn), DynaMotive Energy Systems Corporati on (DynaMotive) and Renewable Oil International (ROI).BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 64 July 2004 A. Ensyn Technologies, Inc. 3,23

1. Is the oldest of the three compan ies having been in existence since 1984.

2. Is based in Ottawa, Ontario, Cana da with its parent company Ensyn Group, Inc. located in Boston, MA.

3. Utilizes Rapid Thermal Processing (RTP TM ) 24 technology or transported
bed in which a continuous stream of hot sand supplies th e heat required to rapidly vaporize the wood feedstock.

4. Is the only company with an existing commercial process, which has been in operation since 1989.

5. Currently have six (6) commercial pl ants the largest of which processes 45 tons per day of dry wood for pr oduction of food flavorings and byproduct energy. Residual bio-oil and ch ar are being used for process and facility heat as well as for producing electricity

6. Business philosophy is to control thei r business by main taining patented and proprietary technology. Ensyn w ill manage and operate facilities owned by the Ensyn Group or as a part ner in joint ventures with other business partners and/ or investor groups.

7. Is promoting a bio-refinery approa ch analogous to a petroleum refinerywhere raw bio-oil and solid carbon products are produced from lowgrade wood. The bio-oil and carbon ar e then refined to produce a broad spectrum of value-added fuel, chemical and carbon products. The products include resins, polymers, emulsifiers, food flavorings and
activated carbon as well as heat a nd power produced from the residual bio-oil from the refinery process.

8. As discussed above, the products ar e renewable, greenhouse gas-neutral,extremely low in sulfur content and replace products from nonrenewable petroleum resources.

9. Is the only rapid pyrolysis co mpany to maintain its own R&D laboratory, which explores a wide variety of new applications and products from a diverse range of rene wable feedstocks. This facility
houses two RTP TM pilot units.

10. Examples of commercial products include

i. NR, a natural resin ingredient used as a substitute for phenol and formaldehyde in wood panels

ii. V-Additive, a binder-emulsifier used in the non-wood construction industry

iii. Food additives and products including flavorings, browning agents and activated car bons for de-colorization

iv. Bio-fuels such as soli d charcoal and liquid fuels

v. Green power, with electricity generated using the bio-oil productsBIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 65 July 2004 10. Ensyn is constructing a new 50,000 sq.f t. facility in Renfrew, Ontario, Canada to house a new bio-refinery, which will be capable of processing 60 tons of dry feedstock per day. This will be the first RTP TM facility to integrate the production of multiple co mmercial products with electricity generation.

B. DynaMotive Technologies Corp. 4,25

1. DynaMotive was incorporated in 199 1 and is located in Vancouver, British Columbia, Canada.

2. DynaMotive is using a patented BioTherm TM process 26 , which was acquired from Resource Transforms International (RTI) in February 2000. The BioTherm process utilizes a deep bubbling sand fluidized bed technology combined with a no vel bio-oil recovery system. Depending on feedstock the process pr oduces 60-75% liquid bio-oil, 10- 20% solid char and 10-20% non-condensable gas. The char is used as a fuel for drying the feedstock and th e non-condensed gas is recycled and
used to heat the fluid bed and as the fluidizing gas.

3. Bio-oil composition is 20-25% wate r, 25-30% water insoluble pyrolytic lignin, 5-12% organic acids, 5- 10% non-polar hydrocarbons, 5-10% anhydrosugars and 10-25% other oxygenated compounds.

4. DynaMotive built a 0.5-tpd prototype in 1997, which was upgraded in 1998 to a 2-tpd pilot facility, which was operated for over 3,000 hours. In 2001 a 10-tpd pilot plant was commissioned which has a production capacity of 6,000 liters of bio-oil per day.

5. DynaMotive expects to commission it s first two commercial plants in 2004. The first will be a 2.5 MW cogeneration plant to be located at the Erie Flooring and Wood Products fa cility in West Lorne, Ontario. Magellan Aerospace Corporation – Orenda Division will provide the direct-fired gas turbine. A second pr oject with a processing capacity of up to 200 green tons per day has been announced, however, the plant
location has not been released. Th is project is supported by Technology Partnerships Canada.

6. The company’s business strategy is to be an energy solutions / energy service provider. Revenues will be generated from project opportunities through technology license fees, design/engineering fees, bio-oil /char royalties and/or project equity pa rticipation. To achieve these goals DynaMotive has entered into an agreement with RTI to acquire exclusive worldwide patent rights to the BioTherm technology; is working with Orenda Aerospace, a subsidiary of the Magellan Aerospace Corporation to develop a bio-oil fueled commercial micro turbine package to produce electricit y by the direct firing of bio-oil 15,27 ; and has formed a strategic allian ce with TECNA S.A. which allows DynaMotive to access Tecna’s global design engineering expertise for plant design and construction.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 66 July 2004 7. To date DynaMotive has conducted se veral combustion tests of its biooil product, however, no commercial pr ojects have been announced.
The Canadian Government and other investors have provided financial
support.

C. Renewable Oil International 5,28

1. ROI is a small two-pe rson start-up operation located in Florence, AL USA and Ottawa, Ontario, Canada.

2. ROI’s patent pending process uses a specially designed, indirectly heated auger. Proposed advantages are that the proce ss does not require an inert gas stream to fluidize a be d or transport hot sand. Elimination of the recycle blower and the associated heat load is reported to greatly reduce the capital and operating costs for the ROI process.

3. ROI’s business approach is to deve lop a low cost, transportable reactor
to be located in areas where there are limited feedstocks and/or integrated into operations with limited waste biomass for feedstock but sufficient to produce enough bio-oil for process heat and electrical generation.

4. To date emphasis has been on agricu ltural waste as a feedstock. A demo facility has been constructed using ch icken liter as a f eedstock. It has been reported that ROI is curren tly negotiating with a wood flooring company in Massachusetts to install a plant utilizing sa wdust residue to produce process heat and onsite electricity.



### V. Economic Variables

A. Variables affecting operating cost of a bio-oil facility include:

1. Plant Size: The largest commercial plant currently in operation is 45 tpd (plant size is based on dry tons). Ensyn has a 60-tpd facility under construction while Dynamotive has co mpleted engineering plans for a 100-tpd plant. Consensus is that any plant over 100 tpd would be modular in design (i.e. multiples of smaller pyrolysis units operating in parallel). For this study a 100-t pd plant will be considered.

2. Plant Availability: It is assumed th at the plant will operate 330 days per year thus representing 90% availability.

3. Facility Cost: Dynamotive has es timated facility costs of $2.6MM, $5.6MM, $8.2MM and $12.6MM for 25, 100, 200 and 400 tpd plants respectfully. 25 Ensyn has estimated capital costs for a 45 tpd plant to be approximately $2.5MM. Assuming reas onable cost for site preparation, construction cost, etc., it is estimate d that the overall cost for an Ensyn facility would be approximately the same as that for Dynamotive. ROI has estimated the cost of capital for a 100-tpd facility to be $375,000 per year. Assuming terms of 15 years at 7% with a 20% equity investment,BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 67 July 2004 this would represent a facility cost of approximately $4.2MM. The reduced facility cost for an ROI inst allation reflects the difference in technology, i.e. use of indirec tly heated auger design.

For this study the more conventiona l fluidized bed design utilized by Dynamotive and Ensyn with an esti mated facility cost of $ 5.6MM will be used. Assuming 20% equity investment and borrowing of $4.48MM over a period of 15 years at an aver age interest rate of 7%, the annual debt payment (principal and interest) will be approximately $500,000. For a 100-tpd plant, capital cost would account for approximately 15% of the annual operating co st of the facility.

4. Feedstock: Composition and moisture content of the feedstock affects both operating cost and product distri bution, thus directly affecting profitability.

a) Composition of the feedstock can vary from whole tree (white wood) chips to a blend of white wood and bark (nominally 60% white wood and 40% bark). Product distribution will vary from 66% oil, 21% char and 13% gas for a blend of white wood and bark, to 72% oil, 15% char and 13% gas fo r whole tree chips. Although whole tree chips increase oil production by approximately 10%, this must be offset by an increased cost for whole tree chips of approximately 25%.

b) Moisture content for a 60/40 blend of chips is approximately 44% as compared to 38% for whole green tree chips ‡ . Thus a 60/40 blend would require an additional 8,000-ton per year of chips plus
the increased cost to remove an additional 6% of moisture.

c) Cost: Currently Whitefield Power & Light is paying $23 per ton for whole green tree ch ips on the open market. 29 It is assumed that a long-term contract could be negotiated for $18 per green ton. For this study it is assumed that whol e tree chips at a cost of $18 per green ton will be used. At $18/t feed stock would be the greatest cost factor representing 25% annually.

5. Electricity Consumed: Based on a pl ant layout as presented above, it is estimated that a bio-oil plant will consume approximately 7.75M kWh of electricity per year. At a cost of 7.2 cents per kWh the cost of electricity would represent approximately 17% of the annual operating cost. Electricity costs are based on the current Public Service of New Hampshire (PSNH) rate structur e as presented in Table III. 30

6. Labor Cost: It is assumed that the plant will operate 24 hours a day, seven days a week with 8-hour shifts. This will require 16 full time

‡ Moisture content will vary based on various factors in cluding type of wood, location, harvest season, length of storage, etc. For this report it is assumed that the average moisture content for wh ole wood chips at time of consumption is 38%. The chips will be dried to 8% mo isture content, thus removing approximately 80% of the moisture. The moisture content will vary based on local conditions.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 68 July 2004 Total Use Monthly Annual 645,833 7,750,000 Monthly Charges Energy $ 30,160.42 Customer Charge $ 319.43 Systems Benefit $ 1,937.50 Electricity Consumption Tax $ 35.52 Off-peak $ 7,544.63 On-peak - first 150 kWh $ 5.63 On-peak - all other $ 6,400.36

Total $ 46,403.49 $ 556,842

Cost per kWh $ 0.072

Table III. Electric use for a bio-oil facility using PSNH rate structure.

hourly employees at an average annual salary of $31,200 for plant operations. In addition, G&A will require one salaried manager, $62,500 annually, and 1.5 full-time e quivalent hourly staff at $31,200 annually. A labor overhead rate of 20% is assumed. Labor cost will represent 22% of the annual operating expense.

7. Royalty / License Fee: A royalty / li cense fee of 3% of total revenue is
assumed.

8. Other assumptions and conversion fa ctors are given in Table IV.



### VI. Pro Forma Income Statement for a stand alone bio-oil facility

A. Factors affecting income include the following:

1. Heat Content: The heat content of bio-oil is approximately 55% that of #2 fuel oil. To obtain the same energy release as that of oil it would take
1.82 times more bio-oil.

2. Price Per Gallon: The consumer tank car price for #2 fuel oil on October 29, 2003 at port of Ne w York was $0.86 per gallon. 31 The biooil cost equivalent would be $0.47 per gallon. Assuming operating cost as stated above, a bio-oil facility would generate a lo ss of approximately $970,000 annually (Table V). The br eakeven price would be $0.71.

3. To attract a serious investor and ba nk financing, it is assumed that a biooil plant would need to generate a minimum 20% return on investment (ROI). A 20% ROI would require a bio-oil sale price of $0.76 per gallon. See Table VI.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 69 July 2004 Item Amount

Plant Size 100 tpd Plant Availability 90%, 330 days/yr Raw Feedstock Consumed 45,540 green t/yr Feedstock Cost $ 18/green ton Feedstock Composition Whole Wood Chips
Moisture Content 38%
Bio-oil Yield 72% Bio-oil Production 4,752,000 gal/yr Bio-oil Yield per ton 200 gal/t bio-oil Bio-oil Heat Content 75,500 btu/gal Cost of #2 Fuel Oil $ 0.86 Density Bio-oil 1.2 kg/l - 10.04 lbs/gal
Char Yield 15% Char Production 4,950 t/yr Plant Capital Cost $ 5.6MM Equity 20% Debt Financed $4.48MM Return on Investment (ROI) 20% Debt Amortization 15yr
Finance Rate 7% Electricity Consumed 7,750,000 kWh Cost of Electricity $0.072/kWh Labor Rate (Hourly) $31,200/yr Labor Rate (Salaried) $62,500/yr
Production Staff 16 G&A Staff 1 (Salaried) 1.5 fte (hourly)
Overhead Rate 20% Process Heat Bio-gas a nd Bio-oil for pyrolysis heat Char for dryer heat
Bio-Oil Consumed 6%
Char Consumed 31% Maintenance Cost (%Capital) 5% Consumables (%Sales) 5% Royalty / License Fee (% Sales) 3%

Table IV. Assumptions and Conversion F actors Used in Financial CalculationBIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 70 July 2004 Table V. Pro Forma Income Statement for a Stand Alone Bio-oil Plant Bio-oil Sale Price $0.47 per gallon Stand Alone Bio-Oil Plant

Net Sales

Bio-oil $ 2,099,434

Char $ 159,924
Electricity - Chemicals - Total Sales $ 2,259357

Cost of Goods Sold

Labor & Overhead $ 599,040 19 %

Feedstock $ 819,720 25 % Electricity $ 556,838 17 %

Consumables $ 112,968 4 %

Maintenance $ 280,000 9 %

Total CGS $ 2,368,565

Gross Profit / (Loss) $ (109,208)

Operating Expenses

SG&A $ 131,160 4 % Cost of Money $ 491,880 15 % Royalty $ 67,781 2% Property Tax $ 168,000 5% Total Operating Expense $ 858,821

Net Profit / (Loss) $ (968,029)

Break Even Bio-oil Price $ 0.71 /gal Break Even Electricity Price $ - /kWh

Break Even Chemical Price $ - /lb

20% ROI Bio-oil Price $ 0.76 /gal

Assumptions

Feedstock $ 18 /ton

Bio-oil Sale Price $ 0.47 /gal

Price of # 2 Fuel Oil $ 0.86 /gal

Char Sales Price $ 47 /ton Electricity Sale Price $ - /kWh

Chemicals Sale Price $ - /lbBIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 71 July 2004 Table VI. Pro Forma Income Statement for a Stand Alone Bio-oil Plant Stand Alone Bio-Oil Plant

Net Sales

Bio-oil $ 3,394,829

Char $ 159,924
Electricity - Chemicals - Total Sales $ 3,554,752

Cost of Goods Sold

Labor & Overhead $ 599,040 18 %

Feedstock $ 819,720 25 % Electricity $ 556,838 17 %

Consumables $ 177,738 5 %

Maintenance $ 280,000 8 %

Total CGS $ 2,433,335

Gross Profit / (Loss) $ 1,121,417

Operating Expenses

SG&A $ 131,160 4 % Cost of Money $ 491,880 15 % Royalty $ 106,643 2% Property Tax $ 168,000 5% Total Operating Expense $ 897,682

Net Profit / (Loss) $ 223,735

Break Even Bio-oil Price $ 0.71 /gal Break Even Electricity Price $ - /kWh

Break Even Chemical Price $ - /lb

20% ROI Bio-oil Price $ 0.76 /gal

Assumptions

Feedstock $ 18 /ton

Bio-oil Sale Price $ 0.76 /gal

Char Sales Price $ 47 /ton Electricity Sale Price $ - /kWh

Chemicals Sale Price $ - /lbBIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 72 July 2004 4. To achieve a 20% ROI, one or more of the following would be needed:

a) The price paid for feedstock is lowered to $2.50 per ton.

b) Sell to customers with lower oil consumption, i.e. those who do not buy at tank car prices. Irving Oil’s 2003 contract price to small business in the Littleton, NH area ranged from $1.10 to $1.29 per gallon. Assuming $0.05 per gallon de livery cost, the equivalent price for a gallon of bio-oil would be $0.63 - $0.74 per gallon.

c) Reduce operating cost: Co-locat ing the bio-oil plant with an existing power plant such as Whitefield Power & Light could lower operating cost. Savings of appr oximately $768,000 are estimated as
follows:

(1) By sharing the existing w ood handling facilities, capital equipment needs can be reduced by an estimated $800,000, thus reducing the cost of money approximately $90,000 annually.

(2) Co-sharing of labor could reduce savings by approximately $365,000 annually.

(3) Utilization of waste heat from the power plant rather than using char and bio-oil to dry the feedstock, thus allowing all of the char and bio-oil produced to be sold. This would result in increased sales of approximately $240,000 annually.

(4) Assuming electricity could be purchased directly from the plant at a savings of $0.008 /kWh would result in a savings of approximately $73,000 annually.

(5) By co-locating with an existing wood fired power plant and selling bio-oil to a mix of customers at an average sales price of $0.55 per gallon a 20% ROI could potentially be
achieved. See Table VII.



### VII. Alternative Plant Configuration s: Combined Bio-oil / Electric Generating Plant.

A. Power generating plant utilizi ng a direct-fired gas turbine.

1. Operating Cost: Capital cost to in clude a direct-fired gas turbine and equipment necessary to connect to the grid would cost an additional $3M. 32 This would require an additional $600,000 in equity and an additional $265,000 in cost of money annually. The proposed turbine would generate 2.5 MW of electricity and consume approximately 75% of the bio-oil generated. 27BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 73 July 2004 Table VII. Pro forma Income Statement For Bio-oil Plant Co-Located with Wood Fired
Power Plant Bio-Oil Plant Co-Located with Wood Fired Power Plant

Net Sales Bio-oil $ 2,613,600 Char $ 232,650
Electricity -

Chemicals - Total Sales $ 2,846,250

Cost of Goods Sold Labor & Overhead $ 299,520 11% Feedstock $ 819,720 31% Electricity $ 426,250 16% Consumables $ 142,313 5% Maintenance $ 240,000 9% Total CGS $ 1,927,803

Gross Profit / (Loss) $ 918,448

Operating Expenses SG&A $ 65,580 2% Cost of Money $ 421,611 16%
Royalty 85,387.50 3% Property Tax $ 144,000 5% Total Operating Expense $ 716,579

Net Profit / (Loss) $ 201,869

Break Even Bio-oil Price $ 0.50 /gal
Break Even Electricity Price - /kWh

Break Even Chemical Price - /lb 20% ROI Bio-oil Price $ 0.55 /gal

Assumptions
Feedstock $ 18 /ton Bio-oil Sale Price $ 0.55 /gal
Char Sales Price $ 47 /ton
Electricity Sale Price - /kWh

Chemicals Sale Price - /lbBIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 74 July 2004 2. Profitability: Assuming the current price paid for electricity on the open market to be $0.03959 /kWh * there would be an operating loss of approximately $1.82M annually. The breakeven price would be $0.123/kWh and to achieve 20% RO I would require $0.138/ kWh.
See Table VIII.

3. Energy Credits: There are numerous state and federal bills being considered to provide credits fo r producing “clean electricity”. 33

These include CO 2 , SO 2 , NO
x and renewable portfolio standards (RPS). To date Connecticut, Mass achusetts, and Rhode Island have
enacted an RPS standard. With all of these measures becoming reality one can envision an additi onal 4-7 cents /kWh. This support is not a certainty and if enacted would be several years before the effects would be completely reali zed. The assumption is that one cannot rely on energy credits at this time.

B. Convert an existing wood fired plant to burn bio-oil.

1. Converting the boiler to burn bio- oil would be less expensive; however, the existing steam turbine at the wood fired power plant is rated at 16 MW. Operating the turb ine off peak would not be costeffective. To fully utilize the existing steam turbine would require scaling the bio-oil plant to 250 tpd. This option is outside the scope of this study.

2. Another alternative would be to eliminate both the existing wood fired boiler and steam turbine, re placing them with a 2.5 MW directfired gas turbine. This option is also considered to be outside the scope of this study.



### VIII. Alternative Plant Consid erations: Bio-oil Refinery

A. Existing commercial bio-oil plants are c onsidered bio-refineri es in that higher value added products are “refined” from the bi o-oil. The residual bio-oil is then used in a combined cycle application to produce proce ss heat and/or generate electricity via a steam turbine. An exam ple of this is the Ensyn plant operated by Red Arrow in which food flavorings are extr acted from the bio-oi l and the residual bio-oil is used to generate process heat for the Red Arrow plant. Ensyn’s new plant under construction in Renfrew, Ontario will presumably produce a phenolic resin for the fiberboard industry and the residual bio-oil will be used to produce electricity. Cost considerations for a bio-refinery are as follows:

1. The basic pyrolysis operation is th e same as discussed for a standalone plant. In addition, one must add the additiona l expense of the

• Whitefield Power & Light reported that the aver age monthly energy clearing price, May 1999 – February 2003 was $0.03959/ kWh. WP&L estimates their break-even cost, which includes their current cost of feedstock to be $0.045/ kWh.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 75 July 2004 Table VIII. Pro forma Income Statement fo r a combined Bio-oil / Electric Generating
Plant. Bio-Oil Power Generating Plant

Net Sales Bio-oil $ 614,196 Char $ 159,924 Electricity $ 867,021

Chemicals - Total Sales $ 1,641,141

Cost of Goods Sold Labor & Overhead $ 599,040 17% Feedstock $ 819,720 24% Electricity $ 322,164 9% Consumables $ 82,057 2% Maintenance $ 430,000 12% Total CGS $ 2,252,981

Gross Profit / (Loss) $ (611,840)

Operating Expenses SG&A $ 131,160 4% Cost of Money $ 755,387 22% Royalty $ 49,234 1% Property Tax $ 258,000 7% Total Operating Expense $ 1,193,781

Net Profit / (Loss) $ (1,805,621)

Break Even Bio-oil Price $ - /gal Break Even Electricity Price $ 0.122 /kWh Break Even Chemical Price $ - /lb 20% ROI Electricity Price $ 0.138 /kWh

Assumptions Feedstock $ 18 /ton Bio-oil Sale Price $ 0.55 /gal Char Sales Price $ 47.00 /ton Electricity Sale Price $ 0.040 /kWh Chemicals Sale Price $ - /lbBIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 76 July 2004 refinery operation. Actual configurat ion and cost of the refinery are proprietary; however, from discussi ons with Ensyn management it is estimated that capital equipment cost would be approximately $1MM with a total installation cost of approximately $2MM. Operating costs have been adjusted proportionally.

2. Chemical Extraction: A 25% re duction in bio-oil production is
assumed when chemicals are extracted. This is consistent with analysis showing that typically 30% of the bio-oil recovered is a socalled phenolic/neutral fraction. It is estimated that this phenolic fraction will yield approximately 12% by weight phenolic resin. For a 100-tpd plant this represents a production of approximately 1.6 million pounds of phenolic resin annua lly. In a paper by Dr. Esteban Chornet it is reported that the valu e of such lignin-derived chemicals is $3.00 per kg ($1.36 per lb). 31 The price of charcoal is reported as $120 per tonne ($109 per ton).Using these prices the income from
the sale of resins and charco al would be approximately $2.18MM and $0.371MM annually. A pro forma income statement based on the above assumptions is presented in Table IX.



### IX. Co- Location of a Bio-Refinery with an Existing Wood Fired Power

Plant

A. Economically, the best configuration woul d be to co-locate a bio-refinery with an existing wood fired power plant. A pro forma income statement is presented in
Table X.

B. Selling bio-oil at $0.55 a gallon, char at $109 per ton and chemicals at $1.36 a pound, a net profit of approximately $1.12 MM annually could be realized. Reducing the sales price of chemicals to $0.85 per pound or jointly reducing the sales price of char and chemicals to $47/ton and $0.97/lb respectively would still provide a 20% ROI.



### IX. References

1a Innovative Natural Resource Solutions LLC and Draper Lennon, Inc. Identifying and Implementing Alternativ es to Sustain the Wood-Fired El ectricity Generating Industry in New Hampshire. Prepared for the NH Department of Resources and Economic Development. January 2002.

1b Innovative Natural Resource Soluti ons LLC and Draper Lennon, Inc. Use of Low Grade and Underutilized Wood Resources in New Hampshire. Prepared for the NH Department of Resources and Economic Development. February 2001.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 77 July 2004 Table IX. Pro forma Income Statement for a Bio-Refinery Stand Alone Bio-Refinery

Net Sales Bio-oil $ 1,719,749 Char $ 370,887 Electricity $ - Chemicals $ 2,177,435 Total Sales $ 4,268,070

Cost of Goods Sold Labor & Overhead $ 599,040 16% Feedstock $ 819,720 21% Electricity $ 612,521 16% Consumables $ 213,404 6% Maintenance $ 380,000 10% Total CGS $ 2,624,685

Gross Profit / (Loss) $ 1,643,385

Operating Expenses SG&A $ 206,160 5% Cost of Money $ 667,551 17% Royalty $ 128,042 3% Property Tax $ 228,000 6% Total Operating Expense $ 1,229,753

Net Profit / (Loss) $ 413,632

Break Even Bio-oil Price $ 0.55 /gal Break Even Electricity Price $ - /kWh Break Even Chemical Price $ 1.10 /lb 20% ROI Chemical Price $ 1.29 /lb

Assumptions Feedstock $ 18 /ton Bio-oil Sale Price $ 0.55 /gal Char Sales Price $ 109 /ton Electricity Sale Price $ - /kWh Chemicals Sale Price $ 1.36 /lbBIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 78 July 2004 Table X. Pro forma Income Statement For Bio-Refinery Co-Located with Wood Fired
Power Plant Bio-Refinery Co-Located with Wood Fired Plant

Net Sales Bio-oil $ 1,719,749 Char $ 370,887 Electricity $ - Chemicals $ 2,177,435 Total Sales $ 4,268,070

Cost of Goods Sold Labor & Overhead $ 299,520 9% Feedstock $ 819,720 26% Electricity $ 468,875 15% Consumables $ 213,404 7% Maintenance $ 340,000 11% Total CGS $ 2,141,519

Gross Profit / (Loss) $ 2,126,552

Operating Expenses SG&A $ 103,080 3% Cost of Money $ 597,283 19% Royalty $ 128,042 4% Property Tax $ 204,000 6% Total Operating Expense $ 1,032,405

Net Profit / (Loss) $ 1,094,147

Break Even Bio-oil Price $ - /gal Break Even Electricity Price $ - /kWh Break Even Chemical Price $ 0.68 /lb 20% ROI Bio-oil Price $ 0.87 /lb

Assumptions
Feedstock $ 18 /ton Bio-oil Sale Price $ 0.55 /gal Char Sales Price $ 109 /ton Electricity Sale Price $ - /kWh Chemicals Sale Price $ 1.36 /lbBIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 79 July 2004 2 Innovative Natural Resource Solutions LLC. Markets for Low-Grade Wood in New Hampshire. Prepared for the Governor’s Office of Energy and Planning. January 2004.
and references therein.

3 Ensyn Technologies, Inc. web site, www.ensyn.com

4 DynaMotive Energy Systems Corporation web site, www.dynamotive.com

5 Renewable Oil Inte rnational web site, www.renewableoil.com

6 Innovative Natural Resource Solutions LLC. Feedstock Availability and Pricing. Prepared for the New Hampshire Office of Energy and Planning. January 2004. and
references therein.

7 Letter from the NH Division of Fore sts & Lands on House Bill 787 to Rep. John Thomas, Chair, NH House Committee on Scie nce, Technology and Energy. March 5,
2003.

8 Czernik, Stephan. Review of Fast Pyro lysis of Biomass. Presentation by National Renewable Energy Laboratory, Department of Energy. Concord, NH. August 16, 2002.

9 Bridgewater, Tony. A Guide to Fast Pyrolysis of Bi omass for Fuels and Chemicals. PyNe Guide 1, Aston University. March 1999.

10 Ensyn Group, Inc. Bio-Oil Combustion Due Diligence : The Conversion of Wood and
Other Biomass to Bio-Oil. June 2001.

11 www.SciTecLibrary.ru

. The Review of Modern Technologi es of the Production of Liquid Fuel from Biomass using Fast Pyrolysis, June 12, 2000.

12 Bridgewater, A. V., “An Introduction to Fast Pyrolysis of Biomass for Fuels and
Chemicals” in Fast Pyrolysis of Biomass: A Handbook , edited by Bridgewater, A. et.al. (CPL Scientific Publishing Serv ices Limited, Newbury, 1999), pp. 1-13.

13 Diebold, J. P. and Bridgwater, A. V. “Overv iew of Fast Pyrolysis of Biomass for the Production of Liquid Fuels” in Fast Pyrolysis of Biomass: A Handbook , edited by Bridgewater, A. et.al. (CPL Scientific Publishing Services Limited, Newbury, 1999), pp.
14-32.

14 Lédé, J. Diebold, J. P., Peacocke, G. V. C., and Piskorz, J. “The Nature and Properties of Intermediate and Unvaporized Bi omass Pyrolysis Materials” in Fast Pyrolysis of Biomass:
A Handbook , edited by Bridgewater, A. et.al. (CPL Scientific Publishing Services Limited, Newbury, 1999), pp. 33-49.

15 Morris, Keith, Johnson, Warren and Thamburaj, Raj. Fast Pyrolysis of Biomass for
Green Power Generation . 1 st World Conference and Exhi bition on Biomass for Energy and Industry, Seville, Spain. June 2000.

16 Morris, Keith, Piskorz, Jan a nd Majerski, Piotr. BioTherm TM : A System for Continuous Quality, Fast Pyrolysis BioOil. 4 th Biomass Conference of th e Americas, Oakland, CA. September 1999.

17 Diebold, J. P. “A Review of the Toxicity of Biomass Pyrolysis Liquids Formed at Low Temperatures” in Fast Pyrolysis of Biomass: A Handbook , edited by Bridgewater, A. et.al. (CPL Scientific Publishing Servi ces Limited, Newbury, 1999), pp. 135-163.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 80 July 2004 18 Sturzl, Ray. The Commercial Co-Firing of RTPTM Bio-Oil at the Manitowoc Public Utilities Power Generating Station. June 1997.

19 Ensyn Technologies Inc. Boiler Performance and Emission Compliance of Pyrolysis
Oils. Prepared for Natural Resources Cana da, Ottawa, Ontario. Catalogue No. M91-
7/424-1997E. October 1995.

20 Wong, J.K.L., Banks, G.N. and Whaley, H. Flame Tunnel Emissions Testing of ENSYN Liquid Bio-Fuels. Canada Centre for Minera l and Energy Technology. May 1995.

21 CSP Environmental Consultants, LTD. Canmet Flame Tunnel Stack Air Emissions During Burning of Two Ensyn RTP Biomass Fuels. Prepared for Ensyn Technologies Inc.
March 1995.

22 Hogan, Ed. The Pyrolysis Bio-Refinery Concept for the Production of Green Fuels and
Chemicals. Presentation by Natural Resources Canada. Concord, NH. August 2002.

23 Boulard, David. Bio-Oil: The New Crude . Presented by Ensyn Technologies Inc. Concord, NH. August 2002.

24 Ensyn Patent

25 DynaMotive Technologies Corp. Presenta tion at Bio-Oil Briefing Workshop, Concord, NH. August 2002.

26 Piskorz et. al., United States Patent No. 5,728,271 “Energy Efficient Liquefaction of Biomaterials by Thermolysis.” March 1998.

27 Magellan Aerospace Corporation. Presenta tion at Bio-Oil Briefing Workshop, Concord, NH. August 2002.

28 Renewable Oil International. Presentation at Bio-Oil Briefing Workshop, Concord, NH. August 2002.

29 Private communication. D oug York, Plant Manager, Whitefield Power & Light.
November 2003.

30 Private communication. Eric Kingsley, Vice President, Innova tive Natural Resource
Solutions LLC. November 2003.

31 Hess Corporation. Consumer Tank Car Pri ces for No. 2 Oil per gallon at NY Harbor, October 29, 2003.

32 Private communication. DynaMotive Technologies Corp. June 2002.

33 Innovative Natural Resource Solutions LLC. Energy Issues for Possible Bio-oil Production Facility. Prepared for the NH Office of Energy and Planning. January 2004.
and references therein.

34 Chornet, Esteban. Technical Review of the River Va lley Pyrolysis Project: MarketReady Products and Near-Market Products Derived from Pyrolysis Oil. June 2003.BIO-OIL COMMERCIALIZATION PLAN

Cole Hill Associates Page 81 July 2004 

### X. Appendix I

The attached CD contains a folder entitled Pro Forma Income Calculations. This is an Excel Spreadsheet with all of the fina ncial assumptions and conversion terms as well as calculations for all plant configuratio ns considered in this report. Using this spread sheet, recipients will be able to make their own assumptions by changing the input parameters and thus assess the fi nancial impact of these changes on the various plant options considered herein.