Staff Paper P06-12 August Staff Paper Series

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1 Staff Paper P06-12 August 2006 Staff Paper Seres The Economcs of Harvestng and Transportng Corn Stover for Converson to Fuel Ethanol: A Case Study for Mnnesota by Danel R. Petrola DEPARTMENT OF APPLIED ECONOMICS COLLEGE OF FOOD, AGRICULTURAL, AND NATURAL RESOURCE SCIENCES UNIVERSITY OF MINNESOTA 1

2 Staff Paper P06-12 August 2006 The Economcs of Harvestng and Transportng Corn Stover for Converson to Fuel Ethanol: A Case Study for Mnnesota Danel R. Petrola The analyses and vews reported n ths paper are those of the author. They are not necessarly endorsed by the Department of Appled Economcs or by the Unversty of Mnnesota. The Unversty of Mnnesota s commtted to the polcy that all persons shall have equal access to ts programs, facltes, and employment wthout regard to race, color, creed, relgon, natonal orgn, sex, age, martal status, dsablty, publc assstance status, veteran status, or sexual orentaton. Copes of ths publcaton are avalable at Informaton on other ttles n ths seres may be obtaned from: Wate Lbrary, Unversty of Mnnesota, Department of Appled Economcs, 232 Classroom Offce Buldng, 1994 Buford Avenue, St. Paul, MN 55108, U.S.A. Copyrght (c) (2006) by Danel R. Petrola. All rghts reserved. Readers may make copes of ths document for non-commercal purposes by any means, provded that ths copyrght notce appears on all such copes. 2

3 The Economcs of Harvestng and Transportng Corn Stover for Converson to Fuel Ethanol: A Case Study for Mnnesota Danel R. Petrola Department of Appled Economcs, Unversty of Mnnesota, USA Abstract Corn stover harvest and transport cost functons were estmated for two harvest operatons for a proposed bomass-to-ethanol converson faclty located n southern Mnnesota, USA. Ths work presents an alternatve methodology to estmatng corn stover quanttes and harvest costs at the county level, takng nto account county-specfc yelds, transportaton dstances, eroson constrants, machnery specfcatons, and other key varables. Monte Carlo smulaton was also used to estmate the probablty dstrbuton of costs under alternatve assumpton on key parameters whose values vary wdely n the lterature. Margnal stover cost for 50MM gal/year of ethanol output was estmated at $54/dt ($0.77/gal ethanol) for the more ntensve harvest method and $65/dt ($0.80/gal) for the less ntensve method. Costs were greater than $62/dt ($0.89/gal) for a faclty producng > 200MM gal/year under the more ntensve harvest method, and greater than $84/dt ($1.21/gal) for the less-ntensve harvest method. Monte Carlo smulaton estmated a mean margnal cost of $52/dt ($63/dt under the less ntensve harvest method) for 50MM gal ethanol output, wth an $11 ($9) standard devaton. Costs were found to be at or below $62/dt 90 percent of the tme ($71/dt for the less-ntensve method). An $11/dt standard devaton n stover cost would result n a $0.16/gal swng n ethanol cost. Overall, costs were found to be consstently hgher than those found n the lterature, but even under a varety of parameter assumptons, costs tended to stay wthn a $10/dt range of the mean. Keywords: bomass, corn stover, economcs, ethanol, lgnocellulose, Monte Carlo I. Introducton Concerns surroundng the dependence on rogue states for ol as well as the recent spke n ol prces have resulted n wdespread efforts to secure new domestc sources of energy. These sources nclude, but are not lmted to, corn ethanol, desel derved from soybean ol and other fats, and wnd, solar, and hydrogen energy. All of these, wth the excepton of hydrogen energy, are beng produced at the commercal scale, albet n relatvely small quanttes. Another potental source beng studed s bomass. Bomass s defned as any plant or plant-derved materal, and ncludes anythng from corn stover and forest resdue to anmal manure and urban 3

4 waste. Due to ts relatve abundance, corn stover (cobs, stalks, and leaves) s of partcular nterest. It s estmated that the Unted States currently produces 75 mllon dry tons (US) of corn stover annually; by comparson, the next most abundant agrcultural source of bomass s manure, at 35 mllon dry tons annually (Perlack et al., 2005). The objectve of ths work s to derve a corn-stover cost functon specfcally for a proposed bomass-to-ethanol faclty located n Farmont, Mnnesota. Its focus s on the methods used to estmate delvered stover costs and ther applcaton to the proposed Mnnesota ste. Prevous work has attempted to estmate costs of collecton and transportaton of corn stover, but the estmates presented are very general, and do not account for varatons n yeld and transportaton dstance, two of the key varables n determnng the economc feasblty of stover as a fuel feedstock. For example, Gallagher et al. (2003) estmated costs of corn stover collecton and transport usng the same cost parameters for all countes and crops, although they dd allow yelds and nutrent-replacement costs to vary across countes. Perlack and Turhollow (2003) present a thorough analyss of machnery costs specfc to corn stover, but ths study assumed a sngle value for corn yeld, stover yeld, and corn acreage densty over a 14,000 square-mle collecton area. Sokhansanj and Turhollow (2002) assumed a sngle corn yeld, stover yeld, and transportaton dstance for ther work. Sayler and Von Bargen (1993) comes to closest to the current study n terms of methodology, focusng on a specfc faclty locaton and specfc countes n Nebraska, adjustng for eroson constrants usng county-level data, and presentng a detaled account of feld operatons. However, they made smplfyng assumptons on stover yelds, s focused on southern Nebraska, and the study tself s 13 years old. The possble excepton to these studes s a GIS-based cost-estmaton model developed by Graham, Englsh, and Noon (2000). Unfortunately, the results presented n there were for swtchgrass, not corn 4

5 stover, and when the model was used for corn stover collecton by Sheehan et al. (2004), ts focus was on Iowa, and no detals were provded as to how the estmates were derved. It should be noted, however, that these studes are an excellent source of techncal data such as machne parameters, assumptons on bale sze, mass, densty, etc. In contrast to the works cted above, Schechnger and Hettenhaus (2004) detaled an actual stover collecton project, recountng the experences of stover collecton n Iowa and Wsconsn. Ths paper s a non-techncal report that gves clear, easy-to-read descrptons of the methods used wth good dscussons of problems encountered and practcal advce. Fnally, the work of Rchey, Lljedahl, and Lechtenberg (1982) must be mentoned. Thers was an analyss of a small stover-collecton experment at Purdue Unversty, and may be the semnal corn-stover collecton study. The method employed by ths work falls n between that of the two aforementoned groups of studes. Lke the latter group, ths study presents estmates for collectng and transportng corn stover for delvery to an actual locaton; lke the former group, however, the estmates presented here are hypothetcal, not the results of an actual collecton event. Consequently, and n contrast to prevous work, ths study derves estmates based on actual hstorc yelds and actual transportaton dstances for each county n the study regon. Furthermore, usng county-specfc data from Walsh (2005), resdue avalablty n each county s adjusted for water and wnd eroson constrants such that eroson does not exceed USDA-establshed tolerable sol loss levels. Although the desred results are locaton specfc, ths work also offers a conceptual framework for estmatng quanttes and costs of stover collecton, transport, and storage. Addtonally, ths study can be consdered a spreadsheet-based alternatve to the GIS-based model presented by Graham, Englsh, and Noon (2000). Also, ths study presents the results of 5

6 senstvty analyss usng Monte Carlo smulaton on the most uncertan (and contentous) parameters: corn yelds, stover mosture content, stover collecton effcency, and farmer partcpaton rate. Fnally, because the present researcher was nterested prmarly n the potental of corn stover to be converted nto fuel ethanol, n addton to results n terms of tons of stover and costs per ton, ths work presents results n terms of gallons of ethanol produced and costs n terms of dollars per gallon of ethanol. It should be noted well that the cellulose-toethanol technology s stll n ts prelmnary stages, and that no commercal facltes exst, although Iogen Corporaton clams that ther technology s now ready for commercal use. Issues surroundng the mplementaton of such facltes, fnancng, market condtons, etc., are crtcal to the success of ths technology, but are beyond the scope of ths work. II. Conceptual Framework II.A. Corn Stover Producton Please refer to Table 1 as a gude to notaton used throughout ths secton. The best avalable data on stover quanttes s derved from county-level corn yeld estmates from USDA- NASS (2005). Therefore, for each county, a sngle quantty of stover avalable wll be determned based on county level corn acres harvested, corn yelds, and assumed collecton effcency. Ths sngle quantty can be conceved of as comng from a stover yeld functon of the followng form. Let Q be the quantty of corn stover produced n county (n bone-dry lbs). Then Q = a y (1) where a s the number of acres harvested n county, and y s the average county yeld n lbs per acre reported for county (t s assumed that the dry-weght rato of stover to corn gran s 1:1). Let q be the per-acre quantty of corn stover that could be harvested n county : 6

7 q = y (2) Now, once the total quantty of stover produced s determned, t s necessary to compare that quantty to the quantty of stover that can be techncally harvested as well as the quantty that must reman n the feld to satsfy eroson, sol-organc carbon, and other envronmental constrants for a gven tllage practce. Let 0 method m, where collected and baled, let m h 1 represent the harvest effcency of harvest m h = 1 ndcates that 100 percent of the stover n the feld can actually be t e represent the per-acre quantty that must reman n the feld due to eroson constrants for county under tllage practce t, and let tm s represent the per-acre quantty of stover that can actually be removed gven eroson and technology constrants. Further, t s assumed that the quantty that can actually be removed s equal to the quantty actually collected. Then, f q = and t m tm m e q h, then s q h (3) f q t m tm t e < q h, then s = q e. (4) Equatons (3) and (3 ) can be condensed nto s tm m t = Mn(q h, q e ). (5) Furthermore, let tm S be the total quantty of stover collected n county under tllage practce t and collecton method m, such that tm m t S = a p[mn(q h, q - e )] (6) where p s the partcpaton rate of farmers (assumed to be dentcal for all countes). 7

8 Let tm c II.B. Collecton costs be the collecton cost per acre for collecton method m for an acre under tllage practce t n county. Collecton cost per ton wll vary across countes and wll depend on stover collected per acre (whch depends on corn yeld). Therefore, per-ton collecton cost for collecton method m under tllage practce t n county can be represented as: ~ c tm = c / s (7) tm tm for tm s > 0, and undefned otherwse. Let II.C. Nutrent replacement cost tm n be the nutrent (fertlzer) replacement cost per acre under tllage method t for collecton method m n county. Nutrent replacement cost per ton wll vary across countes and wll depend on quantty of stover collected per acre. Therefore, nutrent replacement cost per ton n county can be represented as: n ~ = n / s (8) tm tm tm for tm s > 0, and undefned otherwse. Let II.D. Transportaton Costs ~ z x be the 1-ton-per-mle cost of transportng stover usng method z, and let dj be the travel dstance from each county node to each potental plant node j. Each truck s assumed to return to ts orgn after delvery, and thus cost s a roundtrp estmate. Thus, the total roundtrp transportaton cost for a ton of stover from county to plant j wll be: z z x~ j = d j. (9) 2 x ~ 8

9 II.E. Total Delvered Cost Therefore, the total delvered cost tmz C ~ j of collectng, transportng, and storng 1 ton of stover from county under tllage practce t to plant j, usng collecton method m and transportaton method z can be represented by the functon: C ~ ~ ~ ~ ~ + tmz tm z tm m j = c + x j + n + u b (10) where u ~ s the per-ton cost of unloadng and stackng the stover at the plant and cost of storage for bales collected usng collecton method m. Substtutng equatons (2), (5), (7), (8), and (9) nto (10) yelds: C ~ x~ u~ + m b s the per-ton tmz tm m m t z m j = (c + n ) / Mn( yh, y e ) + d j + b. (11) m t for Mn( yh, y e ) > 0, and undefned otherwse. III. Appled Analyss The above framework was appled to a case study of a proposed corn-stover-to-ethanol faclty located n Farmont, Mnnesota. 1 It was assumed that ths faclty would be able to draw stover supples from all of Mnnesota and border countes n Iowa, South Dakota, and Wsconsn. However, harvest was restrcted to those countes wth average annual corn producton of at least 10 mllon bushels (see Fgure 1). 2 It was frst necessary to estmate the total quantty of stover produced and avalable for harvest, whch was accomplshed by obtanng annual county-level corn producton data as well as quanttes of stover that can be removed such that eroson constrants were satsfed. It was then necessary to estmate the feasble quantty of 1 The locaton of the plant s somewhat arbtrary. Martn County, where Farmont s located, s n the heart of the corn-producng regon of Mnnesota and northern Iowa, has access to state and nterstate hghways and ralroads, and s crossed by major gas and lqud ppelnes. It s lkely, however, that many of the surroundng countes would have equal potental. 2 The resultng study area covers a total of 54,252 square mles. None of the Wsconsn border countes met the producton threshold. 9

10 stover that could be removed wth the exstng technology; ths requred the constructon of machnery sets and estmates of per-hour, per-acre, per-bale, and per-ton costs for each machne operaton. These results were then combned wth transportaton cost estmates and other drect costs to arrve at county-specfc delvered costs, whch, when combned, produced a corn-stover cost functon for the Mnnesota converson faclty. Table 2 contans the values for parameters assumed throughout the analyss. III.A. Estmate of Stover Quanttes Acres harvested and corn yelds were obtaned from USDA-NASS (2005) for the years Bone-dry weght of a bushel of corn gran was assumed to be 47 lbs (Larson, Holt, and Carlson, 1978). 3 Walsh (2005) reported quanttes of stover necessary to reman n the feld for two tllage regmes: current mx of tllage practces and all no-tll. Walsh s estmates account for wnd and water eroson only, and were estmated such that eroson s kept at or below tolerable sol-loss levels. A 50-percent farmer partcpaton rate was assumed and tested for senstvty later n the analyss. III.B. Stover Collecton Operatons Two collecton methods were constructed for ths paper. The frst method assumed that the spreader on the combne would be turned off such that the stalks would be deposted n a wndrow behnd the combne. The wndrows would then be baled usng a large round baler. It 3 There s, apparently, some controversy surroundng ths rato. Larson, Holt, and Carlson (1978) based ther dry weght rato on a bushel weght of 56 lbs. Ths weght s generally assocated wth a gran mosture content of 15.5 percent, thus ther rato mplctly assumes that the stover wll have an equal mosture content. Ths mplct assumpton s confrmed somewhat by the results of Womac, Igathnathane, Sokhansanj, and Pordesmo (2005), who report a stover mosture content of 16 percent when gran s combne-harvested at 15 percent mosture. Thus, for bone-dry weght, one should multply the quanttes of stover calculated usng the 56 lbs/bu standard by approxmately Other studes, however, have based ther bone-dry estmates on the 56 lb/bu fgure, thus overestmatng the amount of dry stover actually avalable. 10

11 was assumed that ths method collects 30 percent of total stover produced. 4 The second method assumed that the combne spreader would be on and scatter the plant materal gong through the combne. A stalk shredder would then shred the stalks, and a rake would be used to wndrow the stalks. Stover would then be baled usng a large rectangular (square) baler. It was assumed that ths method collects 40 percent of total stover. 5 The assumptons on collecton effcency were tested for senstvty later n the analyss. Table 3 contans the set of operatons, machnery, and cost nformaton for the two collecton operatons. A John Deere 557 round baler pulled by a 60 HP tractor was assumed to be used that would produce 62 wde x 54 dameter bales weghng 739 lbs (dry) (assumng 8.99 lbs/ft 3 densty). A larger baler was ntally used based on a bale sze of 62 x 72, as used n Sokhansanj and Turhollow (2002), Schechnger and Hettenhaus (2004), and Perlack and Turhollow (2002). However, these bales were too wde to load two across on a standard semtraler wthout exceedng Mnnesota hghway traler restrctons. Thus, the smaller baler producng smaller bales was used. Based on the recommendatons of Schechnger and Hettenhaus (2004), the optonal mega-tooth pckup and hgh-mosture kt were added to the baler cost. Addtonally, t was assumed that bales would be wrapped n plastc mesh rather than twne to reduce losses durng transportaton and for better water sheddng durng storage. Further, round bales n Schechnger and Hettenhaus (2004) were wrapped n plastc three tmes around, 4 Ths may be a conservatve estmate. Schechnger and Hettenhaus (2004) reported that ths collecton method collected percent of total stover; however, they also report that the average amount collected n the part of the project that reled more heavly on ths method averaged 1.25 dry tons per acre, whch s not necessarly consstent wth a 45-percent estmate. Forty-fve percent mples a total stover quantty of 2.78 tons, whch s a lttle more than half of the total estmated for countes n ths study. Usng ther 1.25-ton fgure and the average quantty of stover producton estmated here (3.85 tons/acre), we get a fgure of 32 percent. 5 Ths may be a conservatve estmate. Schechnger and Hettenhaus (2004) reported that ths collecton method collected up to 70 percent of total stover; however, they also report that the average amount collected n the part of the project that reled more heavly on ths method averaged 1.55 dry tons, whch s not necessarly consstent wth a 70-percent estmate. Seventy percent mples a total stover quantty of 2.21 tons, whch s about half of the total estmated for countes n ths study. Usng ther 1.55-ton fgure and the average quantty of stover produced estmated here (3.85 tons/acre), we get a fgure of 40 percent. 11

12 so ths assumpton was also used here. Once the stover was baled, t was assumed that an Inland 2500 automated bale pcker pulled by a 130 HP tractor would collect the bales from the feld and transport them to the feld edge to be loaded on sem tralers. The Inland 2500 has a capacty of 14 round bales. A John Deere 3220 Telehandler wth a Fronter Bale Hugger attachment was assumed to be used to transfer bales from the Inland to the sem traler. For the square-bale method, t was assumed that a 20-ft stalk shredder pulled by a 130 HP tractor would make the frst pass over the spread stover, followed by a John Deere 705 Twn Rake pulled by a 60 HP tractor to form the wndrows. A Hesston 4790 large square baler pulled by a 130 HP tractor would then be used to bale the wndrows, producng bales 36 hgh x 48 wde x 96 long, weghng 1,342 lbs (dry) (assumng a densty of lbs/ft 3 ). Ths baler was chosen because, although t does not produce the largest square bales, t produces a bale sze that maxmzes the avalable sem-traler weght capacty. Square bales were assumed to be held together wth twne, and a knotter cleaner attachment was added to the baler to reduce knotter problems. Bales were then assumed to be collected and moved to the feld edge usng an Inland 4000 bale pcker, wth a capacty of 8 square bales. A John Deere 3220 Telehandler ftted wth a Fronter Bale Squeezer would then be used to transfer the bales to a sem traler. Tractor and stalk shredder purchase prces were taken from Lazarus and Selley (2005), whereas baler and baler-attachment prce data were taken from Iron Solutons (2005). Bale-wrap and twne costs were taken from Schechnger and Hettenhaus (2004), and bale-pcker prces were obtaned from Yeo (2005). Rake and telehandler prces were taken from John Deere (2005). All per-hour machnery costs were estmated usng Lazarus and Selley s machnery cost spreadsheet (2005), as were the per-acre costs of the stalk shredder, rake, and balers. Purchase 12

13 prce was assumed to be 90 percent of the lst prce. It was assumed that tractors and telehandlers were used 500 hours annually and all other machnery was used 250 hours annually. Per-bale costs of bale wrap and twne were taken drectly from Schechnger and Hettenhaus (2004). Per-bale costs for the bale pckers were calculated from the per-hour cost assumng that the pcker made three loads per hour (.e., 3 x 14 round bales per hour and 3 x 8 square bales per hour). 6 Per-bale cost for the telehandler was calculated from the per-hour cost usng Sokhansanj and Turhollow s (2002) assumpton that 48 bales could be transferred per hour. 7 The remanng per-bale costs and per-acre costs were specfc to each county because they depended on the quantty of stover avalable per acre. Per-ton costs were a drect converson from per-bale costs. III.C. Nutrent Replacement When corn stover s left n the feld, plant nutrents contaned theren eventually make ther way nto the sol as the resdue decomposes. Thus, when the stover s harvested those nutrents are removed wth t, and hence unavalable to the subsequent year s crop. Therefore, a potental cost to the farmer s that of replacng these nutrents wth the use of artfcal fertlzers n order to mantan crop producton levels. The crop nutrents of nterest are ntrogen, phosphorus, and potassum. However, because n ths analyss soybeans follow corn, ntrogen does not need to be replaced. Larson, Holt, and Carlson (1978) report that corn resdue conssts of 0.18% P and 1.33% K. In terms of quantty of fertlzer, these percentages translate nto Yeo (2005) mentoned that some farmers were able to collect up to 80 round bales per hour. I assumed a rate of half that, rounded up to the next full load. Sokhansanj and Turhollow (2002) reported conflctng collecton rates for ther bale mover: They reported a machne capacty of 1 ha/hr for the bale mover and an assumpton of 3.72 Mg/ha (dry) of stover baled; thus, they mplctly report a collecton rate of 3.72Mg/hr (dry). However, n the very next column they reported a rate of work of 6.23 Mg/hr, whch would be 1.67 ha/hr, not one. Furthermore, n terms of 577 kg round bales, these two rates translate nto 6.5 bales (3.72 Mg) and 10.8 bales (6.23 Mg) per hour. However, n the next column, they reported a rate of work of 14 bales/hr. 7 Sokhansanj and Turhollow (2002) report a rate of work for ther telescopc handler of Mg/hour, whch, assumng a bale sze of 577 kg, s 64 bales per hour. However, n the next column, they reported a rate of work of 48 bales/hr. 13

14 lbs of phosphate and 44.3 lbs of potash per ton of stover removed. 8 Schechnger and Hettenhaus (2004) report replacement quanttes of 7.0 lbs of phosphate and 35 lbs of potash, and Nelsen (1995) reports 3.6 lbs of phosphate and 19.7 lbs of potash per ton of stover removed. Takng the average of the three, t s necessary to replace 6.2 lbs of phosphate and 33.0 lbs of potash per ton of stover removed. USDA (2006) reports average phosphate ( superphosphate ) and potash (potassum chlorde) fertlzer prces of $0.12 and $0.08/lb, respectvely, resultng n an average nutrent replacement cost of $4.21/dry ton of stover removed. III.D. Transportaton Dstance from each Mnnesota county was based on dstance from the county seat to Farmont, and was taken from the Offcal Mnnesota Hghway Mleage Tables (State of Mnnesota, 1976). Dstance from each county seat for border states was calculated usng the Rand-McNally onlne dstance calculator (2005). There are several ssues to consder for transportaton and storage, and Perlack and Turhollow (2002) present a good dscusson of them. The frst ssue s whether the bales wll be hauled drectly to storage n a bale mover pulled by a farm tractor or staged at the feld edge then loaded onto flatbeds pulled by sems. The second ssue s the number and locaton of the storage stes themselves. One could assume many small storage stes located close to the felds or one (or a few) storage ste(s) located close to the plant. The thrd ssue s the method of transportaton from storage to plant. In the project reported n Schechnger and Hettenhaus (2004), sem trucks were used for the porton of the project dealng mostly wth square bales, but for round bales, self-contaned bale movers pulled by tractors (some hgh-speed tractors) were used. They reported that gven dentcal loads, a hgh-speed 8 Ths calculaton assumes the use of phosphate fertlzer that s 45% P, and potash that s 60% K. 14

15 farm tractor had a cost advantage over a sem-truck for a 70-mle round trp. 9 Sokhansanj and Turhollow (2002) assumed that round bales were transported drectly from the feld to storage (5 mles away) wth a bale mover pulled by a tractor, whereas square bales were transported n a self-propelled bale stacker-mover. They gave no dscusson of transportaton from storage to the plant. Perlack and Turhollow (2002) noted that the key dfferences are bale-carryng capacty and loadng/unloadng operatons. Trucks wth flatbed tralers carry a larger load but need to be loaded and unloaded wth telescopc handlers; self-loadng bale movers pulled by a tractor carry smaller loads and are more expensve to operate, but do not requre separate loadng and unloadng equpment. They concluded that for round bales, drect haulng wth bale movers was cheaper than stagng and haulng wth sems (up to a faclty sze of 3,000 dry tons/day). For square bales, however, they found that stagng and haulng wth sems was cheaper for all but the smallest faclty sze. Ther dstance from feld to storage was between 3.1 and 8.7 mles (one way). They concluded n ther dscusson on transport from storage to plant, however, that hghspeed tractors pullng bale wagons were not cost compettve wth trucks beyond a haul dstance of a few mles. It was assumed n ths report that all baled stover would be staged at the feld edge then transported to storage by sem trucks to regonal storage stes. Dstance from feld to storage was assumed to be 5/12 of the square-root of each county s total land area, and costs were based on a round trp. 10 Dstance from storage to converson faclty was assumed to be equal to the 9 The comparson usng dentcal loads seems rrelevant. Sems can haul larger loads, whch along wth the speed advantage, are the man reasons for preferrng them over farm tractors. 10 It was assumed that storage stes would be 10 acres n sze, whch results n an average of 1.5 stes per county. Assumng a square county, the square root of the area yelds the length of one sde, and half that s the radus. The furthest dstance traveled n a county to a storage ste s from a corner; assumng that the travel path forms an L shape, ths dstance from the feld to the storage ste s 5/12 of the square-root of the area. 15

16 dstance from county seat to Farmont, MN. For delvery of stover to a plant located n the same county, the dstance was calculated by takng ½ of the square root of the county total area. 11 The decson to use flatbed sems was based on the fact that most farms would be able to supply stover suffcent to fll a sem-truck load, and because sems carry larger loads, the number of trps can be reduced substantally. It was assumed that the maxmum cargo load for sems was 23 tons (Frun, 2005). However, ths maxmum may not necessarly be acheved. It was assumed that the sem traler has 9 x 9 x 48 of cargo space, bales have a 16-percent mosture content, and that the dry densty of round and square bales s 8.99 and lbs/ft 3, respectvely. The traler dmensons would thus allow for 3 hgh x 2 wde x 6 long = 36 square bales; however, such a load would exceed the weght lmt of 46,000 lbs. Thus, 27 square bales could be loaded for a total weght of 44,736 lbs. For round bales, the traler dmensons would allow for 2 bottom rows and one top row of 9 bales each, for a total of 27 bales. Ths load would wegh only 23,760 lbs. 12 The cost per loaded mle was assumed to be $3.60 for loads wthn 25 mles of the plant, $2.35 for loads between 26 and 100 mles, and $1.90 for loads travelng greater than 100 mles (USDA-AMS, 2006). Fnally, t was assumed that the cost of unloadng and stackng bales at the storage ste was equal to the cost of usng the telescopc handler for smlar purposes on farm: $3.10 and $1.71 per ton for round bales and square bales, respectvely. 11 The square root of the area gves the average of the heght and wdth of the county; for smplcty of ths calculaton, t s assumed that the plant s located n the center of the county; the greatest travel dstance s from a corner of the county; t s assumed that travel would be a rght-angle path to the plant; therefore, that dstance would be 2 tmes half the square root of the radus, and that fgure s halved to derve the average dstance traveled from any pont n the county to the plant. 12 Ths result calls nto queston the assumpton of Perlack and Turhollow (2003), who assume that m x 1.5 m round bales weghng 768 kg each could be transported on a 16.2 m sem traler, and hence, nearly max out the assumed legal 22,680 kg (46,000 lbs) load lmt. The problem s that two of these bales placed sde by sde would exceed the standard 2.6 m wdth maxmum set by the State of Mnnesota. Thus, unless they are assumng over-szed loads, ther load effcency s overestmated, and ther resultng transport costs are lkely underestmated. 16

17 III.E. Storage The wndow for harvestng corn stover s about 21 days, runnng from about the mddle of October to the begnnng of November (Mohr, 2006). Consequently, a good deal of storage s needed to supply a plant processng only corn stover throughout the year. The storage ste would requre good dranage and ether a gravel or concrete base for ease of equpment use and vehcle traffc (Schechnger and Hettenhaus, 2004). To accommodate equpment and vehcle traffc (drveways, etc.), as well as necessary spacng between bale stacks, t was assumed that the total square footage necessary for the storage ste would be twce the square footage of the space requred for the bales themselves. Round bales are assumed to be wrapped n plastc, and therefore, can be stored outdoors. Square bales, however, are not wrapped, and would requre ndoor storage. Square bales were assumed to be stacked 6 hgh, and round bales were assumed to be stacked n pyramds of 50 (12 bales long, 5 hgh). A storage-loss factor of 2 percent was assumed for both bale regmes. Land rent was assumed to be $100 per acre, and land preparaton cost, $30,000 per acre. Buldng cost whch was needed for square bales only, was found to range between $1.50 and $6.00 per square foot (Huhnke, 2004; Frun, Wlcke, and Schmdt, 1995); an average buldng cost of $3.75 per square foot was assumed here. The ste was assumed to deprecate over 20 years, and debt servcng and overhead was assumed to be 15 percent of buldng cost annually (Frun, Wlcke, and Schmdt, 1995). Equpment cost (telescopc handler) was estmated to be $1.15 per bale. Storage costs are ndependent of the number or locaton of storage stes;.e., no economes of scale are assumed for larger storage stes, whch may be a smplfcaton. Accountng for all of ths nformaton, t was estmated that total storage costs are $12.94 per dry ton for square bales and $7.31 per dry ton for round bales. Although costs are hgher for square bales, the total land area needed for storage s about half 17

18 that of round bales. Furthermore, buldng costs are crtcal. If buldng costs are actually closer to $1.50 per square foot, then storage cost for square bales s $6.59 per dry ton; f closer to $6.00 per square foot, then storage cost s $18.32 per dry ton. Table 4 contans estmated storage costs, as well as land requrements and other key estmates for each plant output level, assumng 10- acre storage stes. III.F. Bale Densfcaton An mportant ssue that s not dscussed much n the lterature s bale densfcaton nto brquettes, pellets, wafers, etc. Ths process has the potental to sgnfcantly reduce transportaton and storage costs, and to mprove materal handlng and processng, leadng, perhaps, to addtonal cost reductons. Some work has been done by Man et al. (2006) and Sokhansanj and Turhollow (2004) to establsh estmates for densfcaton processes. Ther results were ncorporated here to estmate costs of ncludng a densfcaton step n the present system. Man et al. (2006) reported sgnfcant reductons n per-ton cost for larger densfcaton plant szes relatve to smaller ones. Consequently, ths report adopted ther cost estmates for a 75,000 annual ton faclty, whch was the second largest faclty sze reported, wth a densfcaton cost of $23.33 per dry ton. 13 Densfcaton ncreases stover densty from 9 (round bales) and 14 (square bales) to 39 lbs/ft 3 (bulk densty). It was assumed that a densfcaton faclty would be located at each regonal storage ste, so that no addtonal haulng cost be ncurred. Because the stover must be hauled to the storage-densfcaton ste as bales, there s no opportunty for transportaton cost savngs for ths segment. Furthermore, because bales would arrve at the plant at a rate exceedng those processed, stover would be stored as bales, not as 13 Ths fgure was arrved at by subtractng ther estmated raw materal cost from the total cost and convertng to dry weght assumng 10-percent mosture for densfed stover. 18

19 densfed stover, and thus storage costs would be dentcal to that of the non-densfed stover regmes. Addtonally, t was assumed that the demand from the converson faclty would be such that the densfed stover would need to be mmedately hauled to the converson faclty; therefore, no on-ste densfed-stover storage would be requred. Regardng transportaton cost to the converson faclty, there are substantal gans made relatve to haulng round bales, as densfcaton doubles the load weght, reducng per-ton transportaton cost by half. For square bales, however, the cost reducton s small, as a load of square bales s nearly at capacty already, and there s thus lttle room to take advantage of the substantal ncrease n densty. Results assumng densfcaton are reported along wth those for baled stover. IV. Base-Case Results Wth regard to eroson, t was found that under current tllage practces, eroson constrants lmted the quantty of stover that could be collected n countes along the Msssspp Rver, some n northern Mnnesota, Plymouth County n northwestern Iowa, and all of the South Dakota study countes. Under no-tll, eroson was a lmtng factor durng just one of the fve years of yeld data for only a handful of countes n Mnnesota, Iowa, and South Dakota. Thus, eroson constrants effectvely elmnated the South Dakota countes as sources of stover under current tllage practces. However, eroson was not a lmtng factor n any of the major cornproducng countes n the study, whch le prmarly n southern Mnnesota and northern Iowa. Table 5 contans the estmated margnal cost and transport dstance of delvered stover as well as the total square mles of harvest area necessary to supply corn stover for ethanol plant output of 25, 50, 100, 150, and 200 mllons gallons annually, respectvely. Ethanol quanttes are based on a converson rate of 69.9 gallons per dry ton of stover, whch s more conservatve than that of Aden et al. (2002), who report a converson rate of 89.7 gallons per dry ton. 19

20 Margnal transportaton dstance s 33 mles for the smallest plant output level under both bale regmes, except for densfed stover harvested as round bales, wth a margnal dstance of 35 mles. Harvest area s greater under the round-bale regme (2,559 square mles for undensfed and 2,225 for densfed) than that of square bales (1,857). Densfcaton dd not affect margnal transport dstance or harvest area for stover harvested as square bales. As output ncreases, margnal transport dstance and harvest area ncrease; ths occurs at a faster rate under the roundbale system. The greatest dfference n margnal transportaton dstance between the two systems s 24 mles, at the 150MM gallon output level, and the greatest dfference n harvest area s 5,270 square mles at the 200MM gallon output level. These dfferences n transport dstance and harvest area are more clearly understood by examnng Fgures 2, 3, and 4 whch contan maps of the countes that would supply stover for each ncrease n plant output (because densfcaton dd not affect square bales, Fgure 3 represents both the undensfed and densfed cases). Regardng cost, the undensfed square-bale method was cheaper for all plant output levels (see Fgure 4). It was hypotheszed that the square-bale method, although more expensve on a per-acre bass, would be cheaper on a per-bale and per-ton bass due to the hgher harvest effcency per acre. Ths was found to be false at the county level, as the round-bale harvest method was found to be cheaper on a per-acre, per-bale, and per-ton bass. Furthermore, storage costs were found to be more expensve on a per-ton bass for square bales. However, the cost curve for the square-bale method was everywhere below that of the round-bale method because although the round-bale method was cheaper per ton, the square-bale method allowed for more stover to be harvested n each county, and hence the lowest-cost countes were able to contrbute more to supply at lower cost. Furthermore, the square-bale method allowed for more mass to be 20

21 transported per sem, and thus transportaton costs were lower for ths method. Thus, although the round-bale method was cheaper wthn a gven county, the square-bale method was cheaper on the whole. Ths relatonshp dd not hold for densfed stover, however, because the domnant cost dfference s transportaton cost to the converson faclty, whch, under densfcaton, s dentcal for the two balng systems. The remanng two cost dfferences, transportaton cost to storage (whch vares from county to county but s always advantage square bales) and bale storage cost (advantage round bales by about $6) determne the advantage. If, for a gven producton level, the dfference n transportaton cost of the margnal county exceeds $6, then the square-bale method has the lower cost; otherwse, the round-bale method s lower cost. The result s the crossng pattern exhbted by the two densfed-stover curves n Fgure 4. The margnal cost of a 25MM gallon plant, for example, was estmated at $56/dry ton ($0.80/gal of ethanol) usng undensfed round bales and $50/dry ton ($0.71/gal of ethanol) usng square bales. As the quantty of stover requred ncreased wth plant output, the cost dfference between the two bale methods wdens, as shown by Fgure 4. As Table 5 shows, margnal cost ncreased by $12 from the smallest to largest plant sze under the square-bale harvest method, but by $28 under the round-bale method. In terms of ethanol, these dfferences represent an ncrease of $0.18 versus $0.41 per gallon. Furthermore, the results ndcate that even at output levels, undensfed square bales are the cheapest method. Densfcaton becomes cost compettve wth round bales around the 150MM gallon output level, but s stll more than $20 per ton more expensve than undensfed square bales. 21

22 V.A. Senstvty Analyss Monte Carlo smulaton was used to conduct senstvty analyss of key parameters on delvered bale costs. The parameters tested were crop yelds, farmer partcpaton rate, bale mosture content, and stover collecton effcency. In order to conduct ths analyss, t was necessary to specfy probablty dstrbutons for each of the parameters. Very lttle s known of these dstrbutons, but reasonable assumptons could be made n order to conduct the analyss. For crop yelds, a dscrete unform dstrbuton was assumed such that yelds from any of the fve years durng were equally lkely to occur. Note that all of the countes experenced a gven year s yelds together;.e., one county s 2000 yeld could not be assumed whle another county experenced yelds from For farmer partcpaton rate, nothng s known that would ndcate what sort of probablty dstrbuton would exst; therefore, a unform dstrbuton wth a mnmum of 25 percent and a maxmum of 75 percent was used. For bale mosture content, a varety of data exst. In an expermental settng, Womac, Igathnathane, Sokhansanj, and Pordesmo (2005) estmated a mean mosture content and standard devaton of combne-harvested corn stover of 16 and 11 percent, respectvely. The experments of Rchey, Lljedahl, and Lechtenberg (1982) resulted n mosture content levels of 13.9, 14.3, and 33 percent for round bales, and 30 percent for stacks. Schechnger and Hettenhaus (2004) reported that durng the harvest, mosture ranged between 11 and 35 percent, averagng just under 27 percent. Sokhansanj et al. (2002) reference a 1966 study that reports mosture levels of cobs, husks, and stalks and leaves at 19, 24, and 33 percent, respectvely, when gran s at 15 percent mosture. Other studes have assumed mosture levels of 25 percent Perlack and Turhollow (2003) and 20 percent Sokhansanj and Turhollow (2002). Gven that ths range of estmates s centered around percent and appears to be postvely 22

23 skewed (values tend toward the lower end of the scale), t was decded to assume a log-normal dstrbuton wth the mean and standard devaton reported n Womac et al. (2005), truncated at 80 percent mosture content. Fnally, there s very lttle certanty concernng stover collecton effcency. Estmates range from around 25 percent (round bales and stacks n Rchey, Lkledahl, and Lechtenberg, 1982 and Sokhansanj et al., 2002), to forty percent (round and square bales n Sokhansanj and Turhollow, 2002; round bales n Schechnger and Hettenhaus, 2004), to 70 percent (square bales n Schechnger and Hettenhaus, 2004). Wth ths meager amount of nformaton, a trangular dstrbuton was chosen, wth a mnmum, mode, and maxmum of 25, 30, and 50 percent for the round-bale method, and 30, 40, and 70 percent for the square-bale method. Crystal Ball (2006) smulaton software was used n conjuncton wth Mcrosoft Excel to randomly draw values for each varable from each dstrbuton and calculate the resultng delvered stover cost 10,000 tmes. It was hypotheszed that tllage practce would mpact results durng senstvty analyss because collecton effcency would be allowed to vary smultaneously. For ths reason, four smulatons were run separately, assumng round and square bales under both current tllage and no-tll practces. Because densfcaton adds a constant per-ton cost to the total costs and because ts mpact on transportaton costs s small, senstvty analyss was not conducted on the densfed stover scenaros. V.B. Senstvty Analyss Results Table 7 contans the summary statstcs for each of the four smulatons: square-balng method under current tllage practce and under no-tll, and round-balng method under current tllage practce and no-tll. Note that ths analyss was done only for output of 50MM gallons per-year, and that reported costs are margnal costs per dry ton of stover delvered. The mean 23

24 margnal cost for the square-bale method under both tllage practces was about $52 per dry ton, wth a standard devaton around $11. For the round-bale method, mean and standard devaton were about $63 and $9 respectvely. A statstcal test of the means between the two square-bale scenaros and the two round-bale scenaros under alternatve tllage practces concluded that they were not sgnfcantly dfferent, respectvely. 14 I.e., the hypothess that choce of tllage practce does not sgnfcantly mpact mean stover cost, even when collecton effcency s allowed to vary, could not be rejected. The stover-cost probablty dstrbuton functons for the four scenaros are plotted n Fgures 3 through 6, respectvely. 15 As Fgures 6 through 9 llustrate, under the gven probablty dstrbuton assumptons of the ndependent varables, stover cost exhbts a log-normal probablty dstrbuton, wth costs most lkely to fall n the $40 to $60 range for square bales, and n the $50 to $70 range for round bales. Although the probablty dstrbuton functons for the round-bale scenaros, as llustrated, are b-modal, ths s smply a consequence of lumpy data, and has to do, prmarly, wth the value taken by the farmer partcpaton rate. Ceters parbus, when farmer partcpaton rate s specfed at 65 percent, margnal stover cost for the round-bale method s $55 per dry ton; when t decreases to 64 percent, t jumps to $60. Thus, cost only takes on a value between $56 and $59--the range of cost values found n the trough between the two peaks n Fgures 8 and 9-- rarely, when the values of the other parameters combne wth the farmer partcpaton rate n such a way to brng that about. Although the same phenomenon occurs wth the square-bale 14 A vsual nspecton of the probablty dstrbutons of costs revealed log-normal dstrbutons (see Fgures 6-9). The data were then transformed nto natural logarthms and replotted, whch revealed normal dstrbutons. Consequently, a two-sample t-test could be performed on the natural logarthms of the means and varances. Wth 9,998 degrees freedom and alpha equal to 0.05, t-crtcal was 1.96; the t-statstc for comparng the square-bale method under dfferent tllage regmes was -0.07; for the round-bale method, t was The probablty dstrbuton functons are truncated at the upper tals for aesthetc purposes. 24

25 method, ths trough does not appear n Fgures 6 and 7 because the gap between cost values s smaller and mperceptble as llustrated. In terms of percentles, 90 percent of smulated costs were below $62 for square bales, and below $71 for round bales. Thus, even wth the wde swngs n assumptons tested here, costs would stll most lkely fall wthn the $10 of the mean. However, n terms of cost per gallon of ethanol, a swng of $10 per dry ton of stover represents a swng of $0.14 per gallon of ethanol. Thus, whle ths range may be consdered small, t may ndeed be sgnfcant n terms of predctng expected profts of an ethanol faclty. 16 In addton to the probablty dstrbuton, Crystal Ball also reports rank correlaton coeffcents between the dependent varable (corn stover cost) and each ndependent varable. Rank correlaton, whch s a measure of the strength of assocaton between two varables, s calculated by rankng all observatons of each varable then computng the correlaton between the ranks of each par of varables. Reported rank correlatons are found n Table 8. For square bales, rank correlaton between stover cost and bale-mosture content was around 0.70, for collecton effcency, and for farmer partcpaton rate. Thus, for square bales, cost appear to be more heavly nfluenced by mosture content (postve), then by collecton effcency (negatve), then farmer partcpaton rate (negatve). Influence on cost of round bales, however, was more even, wth each parameter rank correlaton coeffcent around 0.50 (absolute value). These results, as well as the shape of the probablty dstrbuton functon (log normal) ndcate that bale mosture content contrbuted (postvely) sgnfcantly to determnng cost, and that t played a relatvely greater role for square bales than for round. Furthermore, the opposte was true for farmer partcpaton rate, whch negatvely nfluenced the margnal cost of round bales more than square. Note that no correlaton coeffcent s reported for crop yeld due to the way 16 Recall that these estmates do not nclude any payment to the farmer. 25

26 n whch crop yelds were determned durng smulaton; t was not possble to calculate a coeffcent that was meanngful. VI. Conclusons Ths work syntheszed and mproved upon past work to derve estmates of what t would cost to harvest and transport stover for the purpose of convertng t to fuel ethanol. In addton to offerng a general framework, ths work presented a case study for a proposed locaton under a varety of ethanol output levels. Addtonally, ths work explctly accounted for dfferences n costs due to varatons n county yelds, harvest rates, stover avalablty, transportaton dstances, and storage and densfcaton costs. Fnally, ths work presented the frst senstvty analyss conducted of key cost parameters, usng Monte Carlo smulaton to estmate probablty dstrbuton functons for stover costs over a varety of parameter specfcatons. The results here ndcate that, n general, cost per ton of stover does not ncrease drastcally as ncreased ethanol output levels are assumed, all else equal. In terms of gallons of ethanol, the ncrease s about 20 cents per gallon. However, senstvty analyss revealed that costs can fluctuate substantally when dfferent assumptons of key parameters are assumed, although they are most lkely to vary by no more than about $0.28 per gallon ($20 per ton stover). Thus, ths work offers some dea as to the certanty range of costs of stover collecton and transport. Among other thngs, ths work s lmted by ts assumptons on collecton technology; t s lkely that f corn stover catches on as a major fuel feedstock that new, more effcent technques wll be developed that wll drve down costs. Addtonally, t s expected that research wll lead to more effcent cellulase enzymes that wll result n more ethanol per ton of stover, hence reducng the quantty of stover necessary for a gven quantty of ethanol. Ths study assumed an ethanol yeld that may be consdered conservatve (69.9 gallons per dry ton) n 26

27 comparson to Aden et al. (2002) (89.7 gallons per dry ton) and Iogen Corporaton--one of the most well-known cellulose-to-ethanol success stores who s clamng yelds of 81 gallons per dry ton. Furthermore, f removal of stover from farm felds turns out to have no substantal negatve consequences n terms of eroson, sol-carbon levels, and feld readness for the next year s crop, then t s lkely that more farmers wll be wllng to offer stover each year. Fnally, t s lkely that once such facltes are operatonal, t would be optmal to dentfy alternatve feedstocks to use throughout the year n order to reduce or elmnate the need for long-term storage of corn stover, whch, under the current estmates, adds between $7 and $13 to the total cost per dry ton. It s reasonable to envson a faclty processng corn stover n the fall, but processng a dfferent feedstock, such as wnter wheat straw durng the wnter and swtchgrass durng the summer. All of these have the potental for ether dramatcally ncreasng the quantty of feedstock avalable n close proxmty to the plant or reducng costs, and hence the potental for substantally lower stover-derved ethanol costs. Note well, however, that these estmates do not nclude any payment to the farmer, other than for replacement of removed nutrents. It s lkely that some addtonal payment reflectng market condtons wll be requred to create the necessary ncentve for farmers to make ther stover avalable. Fnally, t s of crtcal mportance to determne the mpact of corn stover cost uncertanty on expected converson-faclty proftablty. As was noted n the senstvty analyss, one standard devaton from the mean estmated cost of a ton of stover translates nto a $0.16 per gallon) swng n ethanol cost. Research nvestgatng ways n whch ths uncertanty can be reduced or how the fnancal rsk assocated wth ths uncertanty may be handled s the subject of future research. 27

28 Acknowledgements The author would lke to thank Vernon Edman and Doug Tffany for revewng ths manuscrpt, and to Bll Lazarus, Jerry Frun, and Steve Taff for revewng earler versons. Fundng for ths research was from a Unversty of Mnnesota Intatve for Renewable Energy and the Envronment grant Lqud Fuels from Bomass: An Integrated Borefnery Approach. 28

29 References Aden, A., M. Ruth, K. Ibsen, J. Jechura, K. Neeves, L. Sheehan, et al. Lgnocellulosc Bomass to Ethanol Process Desgn and Economcs Utlzng Co-Current Dlute Acd Prehydrolyss and Enzymatc Hydrolyss for Corn Stover. Report NREL/TP , Natonal Renewable Energy Laboratory, Golden, CO, June Decsoneerng, Inc. Crystal Ball Verson 7.2.1, Denver, CO: Frun, J. Department of Appled Economcs, Unversty of Mnnesota. Personal communcaton, December Frun, J., W.F. Wlke, and D. Schmdt. Transportaton and Storage, n Sustanable Bomass Energy Producton, Vol. 1: Dedcated Feedstock Supply System, Fnal Draft. Unversty of Mnnesota Center for Alternatve Plant and Anmal Products: Sant Paul, MN, Gallagher, P.W., M. Dkeman, J. Frtz, E. Wales, W. Gauther, and H. Shapour. Supply and Socal Cost Estmates for Bomass from Crop Resdues n the Unted States. Envronmental and Resource Economcs 24(2003): Graham, R.L., B.C. Englsh, C.E. Noon. A Geographc Informaton System-based modelng system for evaluatng the cost of delvered energy crop feedstock. Bomass and Boenergy 18(2000): Huhnke, R.L. Round Bale Hay Storage. Fact Sheet F-1716, Oklahoma State Unversty Coooperatve Extenson Servce, Iron Solutons. Northwest Regon Offcal Gude, Dealer Edton, Sprng 2005, Regon D, Volume 11, Issue 1. John Deere. Buld Your Own Equpment, accessed September Larson, W.E., R.F. Holt, and C.W. Carlson. Resdues for Sol Conservaton, n W.R. Oschwald (ed.) Crop Resdue Management Systems. Specal publcaton No. 31, Am.Soc.Agron., Madson, WI, Lazarus, W. and R. Selley (2005). Farm Machnery Economc Cost Estmaton Spreadsheet (MACHDATA.XLS) [Computer software]. Retreved from Mohr, P. Corn stover burns brghter as alternate energy source. The Farmer 124 (January 2006): 1, 6. Nelsen, R.L. Questons Relatve to Harvestng & Storng Corn Stover. Agronomy Extenson Publcaton AGRY-95-09, Agronomy Department, Purdue Unversty, September Perlack, R.D. and A.F. Turhollow. Assessment of Optons for the Collecton, Handlng, and Transport of Corn Stover. Oak Rdge Natonal Laboratory Report ORNL/TM-2002/44, September Perlack, R.D. and A.F. Turhollow. Feedstock cost analyss of corn stover resdues for further processng. Energy 28(2003): Perlack, R.D., L.L. Wrght, A.F. Turhollow, R.L. Graham, B.J. Stokes, and D.C. Erbach. Bomass as Feedstock for a Boenergy and Boproducts Industry: The Techncal Feasblty of a Bllon-Ton Annual Supply. Report ORNL/TM-2005/66, Oak Rdge Natonal Laboratory, U.S. Department of Energy, Aprl Rand McNally. Maps & Drectons: Get Mleage, drectons/drgetmleageinput.jsp, accessed October Rchey, C.B., J.B. Lljedahl, and V.L. Lechtenberg. Corn Stover Harvest for Energy Producton. ASAE: Transactons of the ASAE 25(1982): ,

30 Sayler, R. and K. Von Bargen. Feasblty of Corn Resdue Collecton n Kearney, Nebraska Area. Report of Fndngs for Western Regonal Bomass Energy Program, Unversty of Nebraska-Lncoln Industral Agrcultural Products Center, Aprl Schechnger, T.M. and J. Hettenhaus. Corn Stover Harvestng: Grower, Custom Operator, and Processor Issues and Answers: Report on Corn Stover Harvest Experences n Iowa and Wsconsn for the and Crop Years. Oak Rdge Natonal Laboratory Report ORNL/SUB , Aprl Sheehan, J., A. Aden, K. Paustan, K. Kllan, J. Brenner, M. Walsh, and R. Nelson. Energy and Envronmental Aspects of Usng Corn Stover for Fuel Ethanol. J. Industral Ecology 7(2004): Sokhansanj, S. and A.F. Turhollow. Baselne Cost for Corn Stover Collecton. ASAE: Appled Engneerng n Agrculture 18(2002): Sokhansanj, S., A. Turhollow, J. Cushman, and J. Cundff. Engneerng aspects of collectng corn stover for boenergy. Bomass and Boenergy 23(2002): State of Mnnesota. Offcal Mnnesota Hghway Mleage Tables. Report MINN. P.S.C. 8-D, Department of Publc Servce, St. Paul, Unted States Department of Agrculture-Agrcultural Marketng Servce. Gran Transportaton Report, December 15, Unted States Department of Agrculture-Economc Research Servce. Average U.S. farm prces of selected fertlzers for , Table 7, from U.S. fertlzer use and prce, accessed March Unted States Department of Agrculture-Natonal Agrcultural Statstcal Servce. Quckstats, accessed August Unted States of Amerca. Natonal Atlas of the Unted States. accessed March Walsh, M. Unpublshed data. M & E Bomass, Oak Rdge, TN, Womac, A.R., C. Igathnathane, S. Sokhansanj, and L.O. Pordesmo. Bomass Mosture Relatons of an Agrcultural Feld Resdue: Corn Stover. Transactons of the ASAE 48(2005): Yeo, J. Personal communcaton, 21 October Buhler/Inland Manufacturng. 30

31 Table 1. Index and varable reference gude for conceptual framework. Symbol Explanaton ndex of countes = 1,, I m ndex of harvest methods, m = 1,, M t ndex of tllage methods, t = 1,, T j ndex of plant locatons, j = 1,, J z ndex of transportaton methods, z = 1,, Z Q total stover produced n county (lbs) q per-acre stover produced n county (lbs) a corn acre n county y per-acre corn yeld (lbs/ac) n county h m m stover harvest effcency of harvest method m, 0 h 1 t e per-acre quantty of stover (lbs) that must reman n the feld due to eroson constrants for county under tllage practce t tm S total quantty (lbs) of stover collected n county under tllage practce t and collecton method m tm s per-acre quantty (lbs) of stover harvested gven eroson and technology constrants p farmer partcpaton rate, 0 p 1 tm c per-acre harvest cost for harvest method m n county tm c~ per-ton collecton cost for collecton method m under tllage practce t n county tm n per-acre nutrent (fertlzer) replacement cost for harvest method m under tllage method t n county n~ per-ton nutrent (fertlzer) replacement cost for harvest method m under tllage method t n tm county ~ z x 1-ton/mle cost of transportng stover usng transport method z x~ total per-ton cost of transportng 1 ton stover from county to plant j z j d j travel dstance (mles) from each county node to each potental plant node j ~ u per-ton cost of unloadng and stackng stover at plant storage tmz C ~ total delvered cost of harvestng and transportng 1 ton of stover usng harvest method m under j tllage practce t from county to plant j, usng transportaton method z 31

32 Table 2. Base-case parameters used for stover collecton and transport analyss, for round- and square-bale methods. General Crop Yeld Year Avg Stover-to-Gran dry-weght rato 1:1 Corn gran bushel bone-dry weght, lbs 47 Farmer Partcpaton Rate 50% Stover to Ethanol Converson Rate, undenatured gal/dry ton 69.9 Plant onlne tme, hrs 8406 Collecton Round Square Stover Collecton Effcency 30% 40% Bale Sze (da x w / l x w x h), ft 4.5' x 5.17' 8' x 4' x 3' Dry Bale Densty (dry), lbs/ft Dry Bale Weght, lbs 739 1,342 Bale Mosture Content 16% Actual Bale Weght, lbs 880 1,598 Bales pcked by bale pcker per hour Bales moved by telehandler per hour 48 Transport Maxmum sem cargo load, lbs 46,000 Sem traler usable cargo space, ft 9' x 9' x 48' Bales per sem load Cargo weght per sem load, lbs 23,760 44,736 Cost per loaded mle (sem-hauled) (0-25 mles) $3.60 Cost per loaded mle (sem-hauled) ( mles) $2.35 Cost per loaded mle (sem-hauled) (>100 mles) $1.90 Unloadng/Stackng cost at plant per bale $1.15 Storage Number of days drect hauled 21 Storage losses 2% Number of square bales stacked hgh 6 Number of round bales stacked hgh 5 Storage ste sze, acres 10 Land costs, $/acre/year $100 Land prep, $/acre $30,000 Equpment cost (telescopc handler), $/bale $1.15 Buldng Cost, $/sq ft $3.75 Buldng/Land-prep Lfe, years 20 Densfcaton Densfed Stover Bulk Densty, lbs/ft Densfed Stover Mosture Content 10% Densfcaton Cost, per ton (dry) $23.33 Cargo weght per sem load, lbs 46,000 32

33 Table 3. Estmated machne operatng costs for collectng corn stover. Round-Bale Method HP Lst 2005$ Purchase Hrs/yr Per-Hour Per-Acre Per-Bale Per-UST Source 130 HP MFWD Tractor 130 $8,000 $79, A 60 HP Tractor 60 $25,200 $22, A JD 557 Round Baler 60 $21,311 $19, $54.27 $10.81 B Megatooth Pckup $900 B Hgh-mosture kt $300 B Surface Wrap $2,900 B Bale Wrap (3 tmes) 250 $1.70 $4.60 C Inland 2500 Bale Mover 130 $20,775 $18, $70.99 $1.69 $4.57 D Deere 3220 Telehandler 114 $75,432 $67, $55.00 $1.15 $3.10 E Deere Fronter Bale Hugger $1,000 F Square-Bale Method HP Lst 2005$ Purchase Hrs/yr Per-Hour Per-Acre Per-Bale Per-UST Source 130 HP MFWD Tractor 130 $88,000 $79, A 60 HP Tractor 60 $25,200 $22, A Stalk Shredder 20ft 130 $19,222 $17, $60.65 $7.82 A JD 705 Twn Rake 60 $13,213 $11, $32.54 $4.20 E Hesston 4790 Rectangular Baler 130 $82,089 $73, $98.40 $9.66 B Knotter cleaner $1, B Bale Twne 250 $0.72 $1.07 C Inland 4000 Bale Mover 130 $31,795 $28, $65.50 $2.73 $4.07 D Deere 3220 Telehandler 114 $75,432 $67, $55.00 $1.15 $1.71 E Deere Fronter Bale Squeezer $1,000 F Sources: A: Lazarus (2005), machdata.xls B: Iron Solutons NW Regon Offcal Gude Spr 2005, Regon D Vol.11 Iss. 1 C: Schechnger & Hettenhaus 2004 D: Personal communcaton wth Jack Yeo, Buhler/Inland, 21 OCT 2005 E: Deere.com "buld your own" F: Prce assumed 33

34 Table 4. Corn stover storage estmates. Annual ethanol producton, MM gal Stover stored (w/losses), dry tons 343, ,398 1,372,796 2,059,194 2,745,592 Stover stored (w/losses), tons as s 408, ,140 1,634,281 2,451,421 3,268,562 If Round Bales are used: Number of Bales 928,563 1,857,125 3,714,250 5,571,376 7,428,501 Bale Storage area, sq ft 10,369,444 20,738,888 41,477,777 62,216,665 82,955,554 Bale Storage area, acres ,428 1,904 Number of 10-acre Storage stes Number of Bales per ste 38,690 38,690 38,690 38,961 38,893 Tons stover per ste 17,024 17,024 17,024 17,143 17,113 Number of days supply Annual Land/prep cost $380,879 $761,759 $1,523,518 $2,285,277 $3,047,036 Annual Equpment cost $2,127,956 $4,255,912 $8,511,824 $12,767,736 $17,023,648 Total Storage Cost/actual ton $6.14 $6.14 $6.14 $6.14 $6.14 Total Storage Cost/ton as s $7.31 $7.31 $7.31 $7.31 $7.31 If Square Bales are used: Number of Bales 511,443 1,022,887 2,045,774 3,068,660 4,091,547 Bale Storage area, sq ft 5,455,396 10,910,792 21,821,584 32,732,376 43,643,168 Bale Storage area, acres ,002 Number of 10-acre Storage stes Number of Bales per ste 39,342 39,342 40,113 40,377 40,510 Tons stover per ste 31,428 31,428 32,045 32,256 32,362 Number of days supply Annual Land/prep cost $3,269,042 $6,538,084 $13,076,168 $19,614,253 $26,152,337 Annual Equpment cost $1,172,058 $2,344,115 $4,688,231 $7,032,346 $9,376,462 Total Storage Cost/ton as s $10.87 $10.87 $10.87 $10.87 $10.87 Total Storage Cost/dry ton $12.94 $12.94 $12.94 $12.94 $

35 Table 5. Stover demand and margnal costs, countes, and dstance for each plant output level and bale type. Round Bales (fgures n parentheses are for densfed case) MM annual gallons ethanol Stover Demand (dry tons) Margnal Cost ($/ton) Margnal Cost ($/gal ethanol) Margnal Transport Dstance (mles) Total Harvest Area (sq mles) ,787 $56 ($71) $0.80 ($1.02) 33 (35) 2,337 (2,225) ,574 $65 ($76) $0.92 ($1.09) 49 4, ,431,147 $74 ($80) $1.05 ($1.14) 72 9, ,146,721 $78 ($82) $1.12 ($1.18) , ,862,295 $84 ($86) $1.21 ($1.22) ,832 (19,884) MM annual gallons ethanol Square Bales (fgures n parentheses are for densfed case) Stover Margnal Margnal Demand Margnal Cost ($/gal Transport (dry tons) Cost ($/ton) ethanol) Dstance (mles) Total Harvest Area (sq mles) ,787 $50 ($72) $0.71 ($1.04) 33 1, ,574 $54 ($76) $0.77 ($1.09) 48 3, ,431,147 $56 ($79) $0.81 ($1.12) 55 7, ,146,721 $60 ($82) $0.86 ($1.17) 77 10, ,862,295 $62 ($84) $0.89 ($1.20) ,665 35

36 Table 6. Summary statstcs from Monte Carlo smulaton ($/dry ton). Statstcs Square-Current Square-NoTll Round-Current Round-NoTll Trals 10,000 10,000 10,000 10,000 Mean Medan Standard Devaton Varance Skewness Kurtoss (peakedness) Mnmum Maxmum

37 Table 7. Rank correlaton coeffcents between smulated varables and margnal stover cost. Varables Square- Current Square- NoTll Round- Current Round- NoTll Bale Mosture Content Farmer Partcpaton Rate Stover Collecton Effcency

38 Fgure 1. Study area consdered for corn stover harvest (Unted States of Amerca, 2006). Yellow oval denotes converson faclty locaton. 38

39 Fgure 2. Countes of orgn for round-baled stover to supply converson faclty producng 25 mllon gallons annually (red), 50 (add yellow), 100 (add green), 150 (add blue), and 200 (add purple) (Unted States of Amerca, 2006). The black oval denotes the locaton of the converson faclty. 39

40 Fgure 3. Countes of orgn for square-baled stover to supply converson faclty producng 25 mllon gallons annually (red), 50 (add yellow), 100 (add green), 150 (add blue), and 200 (add purple) (Unted States of Amerca, 2006). The black oval denotes the locaton of the converson faclty. 40

41 Fgure 4. Countes of orgn for densfed stover harvested as round bales to supply converson faclty producng 25 mllon gallons annually (red), 50 (add yellow), 100 (add green), 150 (add blue), and 200 (add purple) (Unted States of Amerca, 2006). The black oval denotes the locaton of the converson faclty. 41

42 Fgure 5. Supply curves for round and square bales of corn stover, dollars per dry ton. $90 $85 $80 $75 $/dry ton stover $70 $65 $60 $55 $50 Square Bales Round Bales Densfed - Square Bales Densfed - Round Bales $ Ethanal Produced (MM gal/year) 42

43 Fgure 6. Probablty dstrbuton of margnal costs ($/dry ton): current tllage and square-bale method. Fgure 7. Probablty dstrbuton of margnal costs ($/dry ton): no-tll and square-bale method. 43

44 Fgure 8. Probablty dstrbuton of margnal costs ($/dry ton): current tllage and roundbale method. Fgure 9. Probablty dstrbuton of margnal costs ($/dry ton): no-tll and round-bale method. 44