Biodiesel An Introduction to Biodiesel and Guidelines for Usage

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1 Biodiesel An Introduction to Biodiesel and Guidelines for Usage

2 What is Biodiesel? Biodiesel is a clean-burning, renewable fuel made from vegetable oils, animal fats and recycled cooking oil and greases. The manufacturing process for biodiesel combines oils and fats with methanol and a catalyst to produce fatty acid methyl esters, which is commonly referred to as biodiesel. Vegetable oils such as rapeseed, canola, soybean and palm oil are the most common raw material for commercial-scale biodiesel production. Biodiesel is an environmentally-friendly, effi cient alternative to conventional petroleum-based diesel and can be used in a variety of ways. Biodiesel has physical and chemical properties similar to conventional petroleum-based diesel. The current specifi cation for biodiesel fuel is ASTM D6751. ASTM is a standards group comprised of engine and fuel injection equipment manufacturers, fuel producers, and fuel users whose standards are recognized in the U.S. by governmental entities, including state agencies responsible for ensuring fuel quality. So called biofuels that do not meet the ASTM standard are not legally biodiesel fuels and should not be used in diesel engines. Biodiesel is typically used as an additive to conventional diesel fuel, ranging in content from 2% to 50% or more. Consequently, biodiesel fuel is often referred to by the percentage of biodiesel in the fuel. For example, B20 is a blended fuel that contains 20% biodiesel and 80% conventional diesel. B20 is a common blend because it provides a good balance between costs, performance, and environmental benefi ts. Biodiesel is a legally registered fuel and fuel additive with the U.S. Environmental Protection Agency. Biodiesel is also a recognized alternative fuel under the Energy Policy Act of 1992 (EPAct) as amended in 1996 and 1998, and thus qualifi es under the alternative fuel vehicle purchase provisions of EPAct (provided a B20 or higher blend is used). CRIMSON RENEWABLE ENERGY L.P.

3 About Crimson Crimson Renewable Energy L.P. is an innovative engineering and technology driven renewable fuels producer with strong energy industry production and logistics experience. Crimson Renewable Energy s initial areas of focus are Biodiesel and conversion of waste biomass into Renewable Bio-Gas. Crimson Renewable Energy is a new business unit of Crimson Resource Management Corp., one of the leading independent oil and gas producers in California with additional holdings involved in petroleum pipelines, natural gas processing, oil fi eld services, asphalt production and materials handling. Our total commitment to excellence, quality and customer support forms the foundation for our operations, and combined with our experience and strength, positions Crimson Renewable Energy to be a leader in renewable fuels production and distribution in the western U.S. Commitment to Ensuring the Highest Quality Renewable Fuels. Crimson Renewable Energy is committed to excellence in its renewable fuel quality, storage, and handling. To ensure that its renewable fuels will meet or exceed the highest industry standards, Crimson Renewable Energy has invested signifi cant resources in the development and testing of its renewable fuels production processes, and will continually strive to lead the way in renewable fuel production in the future. Superior Customer Support. Crimson Renewable Energy typically works with wholesalers, distributors and terminal operators to market its renewable fuels. We are dedicated to providing a high level of hands-on, local support and education to ensure a successful experience for all participants in the value-chain for renewable fuels. Development of Large Capacity Biodiesel Refi neries. Crimson Renewable Energy is developing two large-scale biodiesel refi neries in California in 2007 and 2008 that will have a combined capacity of 75+ million gallons per year. These two facilities utilize a production process designed by Crimson s engineering team that features new, innovative techniques and systems for biodiesel production. The Crimson Renewable Energy biodiesel refi neries will the largest biodiesel production facilities in California and among the largest in the U.S. Crimson Renewable Energy is currently offering quality bulk biodiesel fuel to the wholesale market from its facility in Bakersfi eld, California, and is actively engaged in forming partnerships with wholesalers, terminals and other participants in the value chain for biofuels. Renewable Bio-gas Production/Processing. Also on the horizon for Crimson Renewable Energy is the development of a facility near Bakersfi eld, California to collect waste biomass from dairy and feedlot facilities and convert this into clean renewable biogas and other valuable by-products. This new facility will utilize a combination of advanced technologies for waste separation/ management and bio-gas production/processing.

4 Who Uses Biodiesel Fuels? Biodiesel usage is growing rapidly in every market segment where conventional diesel fuel is used. Some of the leading types of consumers of biodiesel fuels include state and municipal governments, school districts, U.S. Department of Defense, agriculture, commercial trucking, cruise ships and mining. In fact, the largest user of biodiesel in the United States is the U.S. Navy. Many cities and states have begun to require that their trucks and buses use biodiesel fuels. Notable examples of municipal users in California include the cities of San Francisco, San Jose, and Santa Monica. Some states such as Washington, Louisiana and Minnesota now also mandate that a certain percentage of all diesel fuel sold must be biodiesel. In April 2006 the Governor of California issued an Executive Order encouraging the production and use of biodiesel and other biofuels, and calling for state agencies to work together to advance biofuel programs in California. In January 2007, several bills relating to biodiesel were introduced in the California legislature, including a bill calling for a biodiesel mandate similar to that in other states and another bill calling for tax incentives for biodiesel use. State and Municipal Governments School Districts U.S. Department of Defense Agriculture Commercial Trucking Cruise Ships Mining CRIMSON RENEWABLE ENERGY L.P.

5 Benefi ts of Biodiesel Fuels Biodiesel fuel provides several advantages compared to conventional diesel as well as other important benefi ts. Renewable Fuel that Decreases Dependency on Foreign Petroleum Products. Because biodiesel is made from renewable sources and requires only 31% of the energy contained in one gallon of fossil fuel 1, biodiesel fuels extend our national petroleum supplies and reduce our reliance on imported oil. This is especially important in California where in 2004, 36% of all crude oil used was imported from overseas. 2 Reduces Harmful Emissions and Pollutants. Biodiesel fuels reduce emissions of various pollutants and global warming gases such as CO, CO2, hydrocarbons and particulate matter by as much as 50% compared to conventional diesel. 3 Because biodiesel fuels can substantially reduce air toxics such as particulate matter and hydrocarbon emissions that have been proven to cause cancer and other life threatening illnesses, signifi cant health benefi ts are also realized via biodiesel superior emissions profi le. The higher the percentage content of biodiesel, i.e. using B20 instead of B5 fuels, the greater the reduction in harmful emissions and pollutants. CA-NV Air Quality Safe. Biodiesel contains no hazardous materials and is regarded as safe to use. A number of studies have found that biodiesel biodegrades much more rapidly than convention diesel and thus is being increasingly used in environmentally sensitive areas such as wetlands, marine environments and national parks. A B C D E A = Best/Cleanest in the US; E = Worst/Dirtiest in the US Easy to Use. Biodiesel is a drop in technology for fuel blends of B20 or less. No new equipment or engine modifications are necessary. B2 to B20 blends can be stored in existing diesel fuel tanks and pumped with current diesel equipment. To ensure a problem-free experience with biodiesel, certain precautions should be taken as noted in the following section Guidelines for Biodiesel Usage. Improves Lubricity. Low lubricity diesel fuel may cause high wear and scarring, whereas high lubricity fuel may provide reduced wear and longer component life. Biodiesel fuel blends offer significantly higher lubricity than conventional diesel. This may be particularly important since nearly all diesel fuel is now Ultra Low Sulfur Diesel that has poor lubricating qualities.

6 Guidelines for Users of biodiesel fuels can ensure a long-term, trouble free experience by following certain basic guidelines and being aware of where potential problems can arise. Quality Control Biodiesel users should always ensure that the biodiesel used in their fuel blends meets the latest ASTM D6751 specifi cation. ASTM D6751 is based on the physical and chemical properties needed for safe and satisfactory diesel engine operation. This specifi cation ensures the quality of biodiesel. Storing Biodiesel Fuels Biodiesel is best stored in tanks that do not have any residual water, sediments or other contaminants. Heat and sunlight can accelerate oxidation; therefore storage in clear totes is not advisable. Biodiesel made from feedstock high in saturated fats, i.e. Palm Oil or Tallow, tends to oxidize slower, and consequently has higher storage stability. Exposure to oxygen reduces the storage life of biodiesel fuels. In general, B20 tends to have a longer storage life than B100. The National Biodiesel Board recommends that B20 blends be used within six months, which is comparable to current practices recommended for conventional diesel. When storing biodiesel for longer periods, the use of nitrogen blankets and anti-oxidants and/or stability additives is suggested. Since the acid level and viscosity can increase as biodiesel ages in storage, users can also perform acid number and viscosity tests before using biodiesel fuels that have been stored for lengthy periods. Cold Weather Performance Unlike gasoline, conventional diesel can start to gel as temperatures drop substantially. Biodiesel fuels also have cold weather performance limitations, but these limitations are more severe when using a pure biodiesel B100 fuel. The potential for cold fl ow problems in biodiesel fuels can be moderated by dilution via blending with conventional diesel, which also makes the use of cold fl ow additives practical. Thus, a B5 fuel will generally have very few cold fl ow issues beyond that normally experienced with conventional diesel fuel. B20 typically has a cloud of point o F and a pour point of o F above conventional diesel. When using B20 in below freezing temperatures, cold fl ow performance can be managed by i) using cold-fl ow additives, ii) ensuring that the conventional diesel used in the blend is a winter diesel that has a suffi ciently low cloud point, i.e. some winter diesel blends achieve very low cloud points by including No. 1 diesel. However, at biodiesel levels above 20%, managing cold fl ow performance can be a more signifi cant challenge and may require engine block or fuel fi lter heaters. CRIMSON RENEWABLE ENERGY L.P.

7 Biodiesel Usage Managing the Solvent Effects of Biodiesel in Engines Biodiesel in its pure form (B100) is a solvent, and may loosen and/or dissolve sediments in fueling systems that are left by conventional diesel fuel over time. Thus, when fi rst using biodiesel fuel, particularly if using a B20 or higher blend, users may experience fuel fi lter plugging upon the fi rst few weeks of use. It is recommended that biodiesel users monitor their fi lters for plugging more closely during initial use. The potential for fuel fi lter plugging typically goes away after the fi rst few tanks of fuel. Some users of B20 or higher blends will take the precautionary measure of changing the fuel fi lters after consuming the first or second tank of fuel. B100 is not compatible with certain hoses and gaskets because it can degrade certain types of rubber compounds, causing leaks or total inoperability. Likewise, B100 may over time permeate some types of plastics such as polyethylene or polypropylene. Older vehicles manufactured before 1993 are more likely to contain seals, gaskets, etc. that will be affected by B100 over long periods of time. B100 is also not compatible with some metals (i.e. brass, bronze, galvanized metal surfaces), which can result in the formation of high levels of sediment. B20 or lower biodiesel blends minimize most issues associated with material compatibility. According to the U.S. Department of Energy, Experience over the last 10 years with B20 indicates compatibility with all existing elastomers in diesel fuel systems, even those that are sensitive to higher blends [of biodiesel] such as nitrile rubber. 4 Engine Warranties Using biodiesel fuel only impacts the warranty as it relates to fuel related problems directly attributed to biodiesel. According to the Guidelines At-A-Glance Ensure that biodiesel meets ASTM D6751 specifi cation Make sure storage tanks are free of water and sediments Take precautions for long-term storage; best to use biodiesel fuels within 6 months When using B20+ blends in below freezing temperatures: consider the use of cold fl ow additives consider using a wintergrade conventional diesel in the biodiesel blend. B20 or lower fuels minimize most issues associated with material compatibility Check and/or replace fuel fi lters during fi rst few weeks of use Engine warranties B5 and under is typically OK; check with engine OEM for B20+ fuels U.S. Department of Energy, Federal law prohibits, the voiding of a warranty just because biodiesel was used it has to be the cause of the failure. 5 Most OEM dealers and customer service departments currently tell their customers that 5% biodiesel blends (B5) are acceptable, with the requirement that the pure biodiesel used in the fuel blend adheres to ASTM D6751. Some OEMs warranties now cover the use of biodiesel blends up to B20 for certain engine models. For an updated list of OEMs and their position on warranty coverage for biodiesel usage, visit the National Biodiesel website at:

8 Further Information For further information about biodiesel fuels, including pricing and how to purchase Crimson biodiesel in California and surrounding states, please contact Crimson Renewable Energy at References 1. This estimate includes the energy used in diesel farm and transportation equipment, fossil fuels used to produce fertilizers, pesticides, steam and electricity, and methanol used in the biodiesel manufacturing process. Source: A Life Cycle Inventory of Biodiesel and Petroleum Diesel for Use in an Urban Bus, National Renewable Energy Lab, May 1998 (from U.S. Department of Energy s Biodiesel Handling and Use Guidelines, March 2006) 2. California Energy Commission, Alternative Fuels Market Assessment, October A Comprehensive Analysis of Biodiesel Impacts on Exhaust Emissions, United States Environmental Protection Agency, EPA420-P , October 2002 and U.S. Department of Energy Biodiesel Handling and Use Guidelines March 2006 DOE /GO U.S. Department of Energy Biodiesel Handling and Use Guidelines March 2006 DOE /GO U.S. Department of Energy Biodiesel Handling and Use Guidelines March 2006 DOE /GO Crimson Renewable Energy L.P th Street Suite 1010 Denver, CO

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