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Appalachia SAF from Hardwood : 545_75

Biorefinery size 545,000 tons per year and distance from a logging road is less than 3 mile​.

Five biorefineries could be located in the Central Appalachia area

  • The biorefineries are located at
    • Surry, NC
    • McDowell, NC
    • Morgan, KY
    • Knox, KY
    • Tazewell, VA
  • Total feedstock cost delivered to biorefineries — $190.0 million with an average delivered cost of $70/ton
  • Average per ton-mile distance from field to biorefinery facility is 64.0 miles each ton of hardwood travels.
Map showing locations for five biorefineries in the Central Appalachia area. Locations of biorefineries are Surry, North Carolina; McDowell, North Carolina; Morgan, Kentucky; Knox, KY and Tazewell, VA.
Legend for map of locations of three biorefineries located in Central Appalachia area.

Biorefinery Cost of Feedstock

CountyStateQuantity Forest residuesTotal CostTransportationAverage DistanceTotal Feedstock Cost
Dry short tons$/yearton milesmiles/ton$/ton
SurryNC545,223$32,550,84625,615,28347.0$59.70
McDowellNC545,484$35,907,26632,002,16358.7$65.83
MorganKY545,023$37,217,10228,333,16552.0$68.29
KnoxKY544,998$40,010,92135,869,83665.8$73.41
TazewellVA545,094$44,301,94452,816,68196.9$81.27
Total/Average2,725,823$189,988,079174,637,12964.1$69.70

BEA Regions

BEA Regions

Quantity of Forest Residues Supplied to the Biorefineries by BEA region

BEASurryMcDowellMorganKnoxTazewellTotal
Tons
1038,348233,957662272,967
29142,567238,882381,448
3117,239134,9153,899156,053
3374,12974,129
4028,9921,51330,504
66350,9845,53829,783386,305
68146,550146,550
8126824,5232,52960,873134,050222,243
88230,22710,043240,270
94296,806239,04820,537556,391
11614,85114,851
138138,384105,727244,111
Total545,223545,484545,023544,998545,0942,725,823

Cost of Delivered Forest Residues Supplied to the Biorefineries by BEA region

BEASurryMcDowellMorganKnoxTazewellTotal
Dollars
10$2,470,026$13,878,828$47,687$16,396,541
29$9,750,733$20,556,055$30,306,789
31$1,151,025$9,775,639$397,942$11,324,605
33$5,395,973$5,395,973
40$1,973,297$154,017$2,127,315
66$20,096,216$411,867$3,020,238$23,528,322
68$9,945,156$9,945,156
81$17,998$1,895,775$194,258$4,662,918$9,038,683$15,809,632
88$17,133,741$1,002,478$18,136,219
94$19,902,840$17,119,203$1,652,219$38,674,262
116$1,095,059$1,095,059
138$8,815,581$8,432,625$17,248,206
Total$32,550,846$35,907,266$37,217,102$40,010,921$44,301,944$189,988,079

Cost to Transport forest residues to biorefinery

BEASurryMcDowellMorganKnoxTazewellTotal
Dollars
10$881,752$3,141,726$11,994$4,035,472
29$2,158,730$8,023,535$10,182,265
31$298,666$2,728,024$206,583$3,233,274
33$1,544,918$1,544,918
40$847,294$73,675$920,970
66$4,058,134$131,390$1,476,849$5,666,373
68$3,101,550$3,101,550
81$4,890$817,980$89,359$1,613,310$2,019,404$4,544,943
88$4,901,706$437,130$5,338,837
94$4,142,980$4,152,787$473,558$8,769,325
116$451,846$451,846
138$2,697,295$3,650,442$6,347,738
Total$7,940,738$9,920,671$8,783,281$11,119,649$16,373,171$54,137,510

Average miles a ton of feedstock travelled

BEASurryMcDowellMorganKnoxTazewellTotal
Ton-miles
107443005848
290049010886
3156650017167
3300670067
400094015797
6637770016047
6806800068
8159108114854966
880006914072
940045567451
11600098098
1386300011184
Total475952669764


Biorefinery Information

  • Biorefinery capacity is measured by feedstock input
  • In this analysis, biorefinery input was 545,000 dry tons per year
  • Assuming a Gasification Fischer Tropsch biorefinery with expected production in terms of  
    • Sustainable Aviation Fuel – 40%
    • Diesel – 40%
    • Naphtha – 20%
  • 1,090,000 wet tons dried 10% moisture content
  • Working 330 days/year and 10 hours/day, 16-17 trucks must be emptied every hour or 1 truck every 4 minutes if they are hauling 20 tons of chips. If they have a longer trailer and can haul 22.5 tons of chips, then they need to unload 14 to 15 trucks per hour. 

The biorefineries

Each with a capacity of 545,000 dry short tons or 495,000 dry MT per year

  • Three biorefineries were located.
    • Surry, NC
    • McDowell, NC
    • Morgan, KY
    • Knox, KY
    • Tazewell, TN
  • Each producing
    • SAF – 12.6 million gallons
    • Diesel – 10.7 million gallons
    • Naphtha – 6.2 million gallons
  • Gross revenues
    • Fuel – $683 million
    • RINS — $265 million
      • Assumes RIN price of $1.22 and an EV factor of 1.7 for SAF and Diesel.
  • Breakeven plant gate fuel price when assuming RINs and a 12.2% on investment
    • SAF — $4.65/gallon
    • Diesel – $4.76/gallon
    • Naphtha – $4.03/gallon

Biorefinery Operations

Biorefinery Investment and Operating

SAF Prices
CountyStateBEA Investment (CAPEX)Operating (OPEX)No IncentivesWith RIN Incentive
Million $$ per gallon
SurryNC66$561$110$6.29$4.55
McDowellNC10$562$113$6.42$4.68
MorganKY94$562$114$6.47$4.73
KnoxKY94$563$117$6.57$4.83
TazewellVA81$564$121$6.73$4.99$6.73$4.99

RIN values based on D3 July-Dec 2020 RIN average value or $1.22 multiplied times the EV value of 1.7.
Adapted from Brandt, K, Tanzil AH, Garcia-Perez M, Wolcott M, 2021, GFT_CAEP-v6.xlsm, Excel Notebook, January 1,2021 email.

Operating Expenses

Biorefinery Operating Expenses - Fixed Operating Cost 44%; Feedstock 28%; Catalytic Cost 3%; Utilities 22% and Salary 3%.

Fixed Operating Costs include:
1% of FCI for insurance, 1.5% of FCI for local taxes, and 6% of FCI for maintenance. In addition, Overhead is estimated at 60% of salaries.

FCI=Fixed Capital Investment


Economic Impact of Investment to the Central Appalachian Region if the five Biorefineries Are Established

  • With an investment of $2.8 billion, $2.4 billion is spent in the region
  • This results $4.1 billion in total TIO resulting in a multiplier of 1.66. For every million dollars spent, an additional $0.66 million is generated in the regional economy.
  • This results in an increase in gross regional product of $1.99 billion.
  • Employment increases also.
  • Over 28,000 jobs are created during the construction period of these biorefineries.
  • Resulting in $1.4 billion in labor income when incorporating the multiplier effect.

Total Industrial Output (TIO Million 2021$)

TypeDirectIndirectInducedTotal
GFTv5428.1135.2143.6707.0
Salary GFTv5112.50.0108.6221.1
Logging48.012.028.988.9
Proprietor Income, RINs and Salaries380.70.0290.6671.3
Transportation58.625.024.4108.1
   Total1,027.9172.2596.11,796.2

Employment (Number of Jobs)

TypeDirectIndirectInducedTotal
Operating GFTv52254025861,213
Salary GFTv500804804
Logging512.7205.5206.7924.9
Proprietor Income, RINs and Salaries002,1462,146
Transportation561163173897
   Total1,2997713,9165,986

Gross Regional Product (GRP Million 2021$)

TypeDirectIndirectInducedTotal
Operating GFTv5234.362.578.5375.3
Salary GFTv5112.50.059.0171.5
Logging31.37.216.154.6
Labor380.70.0159.3540.0
Transportation32.012.113.757.8
   Total790.881.9326.61,199.2

Total industry output is defined as the annual dollar value of goods and services that an industry produces. Employment represents total wage and salary employees, as well as self-employed jobs in a region, for the both full- and part-time workers. Labor income consist of employee compensation and proprietor income. Total value added is defined as all income to workers paid by employers (employee compensation); self-employed income (proprietor income); interests, rents, royalties, dividends, and profit payments; and excise and sales taxes paid by individuals to businesses.


Final Comments

  • Using the  ASCENT GFT to SAF TEA and BioFLAME to simulate the location and transportation of feedstock, it is determined in this static modelling approach that the biorefinery could sell their SAF at $6.29 to $6.73 per gallon with a rate of return of 12.2% on their investment.  If the wood qualified for RINs, the price would be reduced to $4.67 to $5.11 per gallon assuming D3 RIN price of $1.22 per gallon and an EV factor of 1.7. 
  • The economic analysis demonstrates, using GFT, to be feasible, the airlines will need to purchase the fuel at a price higher than current levels of aviation fuel or additional subsidies will be required in order to incentivize production.
  • Regional impacts do occur.  It is estimated that the increase in supply chain expenditures would lead to an annual increase of $1.0 billion through direct expenditures and $1.8 billion after the multiplier affect is occurs.
  • In addition, the investment in five biorefineries of $2.8 billion leads to a regional impact of $4.3 billion.
  • The analysis assumes that no additional investment will be required in the logging industry or the transportation industry.