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The production of ethanol requires significant amounts of natural gas, electricity and water.
Natural Gas
. Ethanol plants produce process steam from their own boiler systems and dry the distillers grains co-
product via a direct gas-fired dryer. Depending on certain production parameters, our ethanol plants are expected to use
approximately 22,000 to 32,000 British Thermal Units of natural gas per gallon of production. The price of natural gas can be
volatile; therefore, we use hedging strategies to mitigate increases in gas prices. We have entered into certain service
agreements for the natural gas required by our ethanol plants and pay tariff fees to these providers for transporting the gas
through their pipelines to our plants.
. Our plants require between 0.5 and 1.0 kilowatt hours of electricity per gallon of production. Local utilities
supply necessary electricity to all of our ethanol plants at market-based rates.
. Although some of our plants satisfy the majority of their water requirements from wells located on their
respective properties, each plant also obtains potable water from local municipal water sources at prevailing rates. Each
facility operates a filtration system to purify the well water that is utilized for its operations. Local municipalities supply all
of the necessary water for our plants that do not have onsite wells. Water quality is very important. Much of the water used in
an ethanol plant is recycled back into the process. The plants require boiler makeup water and cooling tower water. Boiler
makeup water is treated on-site to minimize minerals and substances that would harm the boiler. Recycled process water
cannot be used for this purpose. Cooling tower water is deemed non-contact water (it does not come in contact with the
mash) and, therefore, can be regenerated back into the cooling tower process.
Corn Oil Production Segment
We operate corn oil extraction systems at all nine of our ethanol plants. The corn oil systems are designed to extract
non-edible corn oil from the thin stillage evaporation process immediately prior to production of distillers grains. Corn oil is
produced by processing syrup and evaporated thin stillage, through a decanter style centrifuge or a disk stack style centrifuge.
Corn oil has a lower density than water or solids which make up the syrup. The centrifuges separate the relatively light oil
from the heavier components of the syrup, eliminating the need for significant retention time. De-oiled syrup is returned to
the process for blending into wet, modified, or dry distillers grains.
Industrial uses for corn oil include feedstock for biodiesel, livestock feed additives, rubber substitutes, rust preventatives,
inks, textiles, soaps and insecticides. Our corn oil is primarily sold to biodiesel manufactures and, to a lesser extent, feed lot
and poultry markets. We generally transport our corn oil by truck to locations in a close proximity to our ethanol plants,
primarily in the southeastern and midwestern regions of the United States.
Agribusiness Segment
We operate our agribusiness segment primarily through our wholly-owned subsidiary, Green Plains Grain Company
LLC, which is a grain and farm supply business with three primary operating lines of business: bulk grain, agronomy and
petroleum. We have seven locations in northwestern Iowa with approximately 19.6 million bushels of grain storage capacity,
3.6 million gallons of liquid fertilizer storage and 12,000 tons of dry fertilizer storage. We operate at five locations in western
Tennessee with grain storage capacity of approximately 13.7 million bushels. We also own and operate grain elevators in
Essex, Iowa, Hopkins, Missouri and St. Edward, Nebraska, with grain storage capacities of approximately 1.9 million, 2.0
million and 1.9 million bushels, respectively. We believe our agribusiness operations increase our operational efficiency,
reduce commodity price and supply risks, and diversify our revenue streams.
Bulk Grain.
We buy bulk grain, primarily corn, wheat, and soybeans, from area producers and provide grain drying and
storage services to those producers. The grain is then sold to grain processing companies and area livestock producers. We
have grain storage capacity of approximately 39.1 million bushels, not including the on-site storage capacity at each of our
ethanol plants. This capacity supports the grain merchandising activities at our Central City, Lakota, Obion, Ord, Shenandoah
and Superior ethanol plants. These bulk grain commodities are readily traded on commodity exchanges and inventory values
are affected by market changes and spreads. To attempt to reduce risk due to market fluctuations from purchase and sale
commitments, we enter into exchange-traded futures and options contracts designed to serve as economic hedges.