Project number: 2007-241
Project Status:
Completed
Budget expenditure: $70,000.00
Principal Investigator: William Ryan
Organisation: Kondinin Group
Project start/end date: 30 Oct 2007 - 31 Jul 2008
Contact:
FRDC

Need

The Western Rock Lobster Industry is facing cost and return challenges. Catch predictions are low for the next three years. With best estimate for the 2007/2008 season being only 9900 tonnes. Currency exchange rates are moving against exporters. Fuel prices have risen sharply and forward projections in the medium and longer term suggest continuing increases. Greenhouse gas abatement is becoming central to government planning and future policies and could impact severely on industries where fuel is a major part of their cost profile. Currently fuel represents approximately 20% of the opperating costs of the fishing business. Governments may mandate fuel emission limits, or require that they be offset through credit arrangements and they may mandate biofuel use levels in transport fuels.
Biofuels have the potential to play a part in relieving cost, emission and fuel source pressures in the future. The Western Rock Lobster Industry needs to understand the opportunities biofuels offer it. There is much general and often misleading information available on biofuels. There is a need to examine the potential for biofuels in a dispassionate and objective way, specifically in relation to the Western Rock Lobster Industry so that the industry can take informed decisions about the possible role biofuels might have in the future of the industry.
Fishermen, processing works and others need to be well informed about biofuel, especially biodiesel production technologies and use. Also they need to be in a position to approach government, financiers and others with a detailed business case when wishing to capitalise on biofuel opportunities.

Objectives

1. Analysis of fuel use by the Western Rock Lobster Industry including distribution infrastructure and logistics .
2. Analysis of biofuel production possibilities for the Western Rock Lobster Industry including sources of raw materials, byproduct opportunities, and logistics of manufacture, storage and distribution.
3. Technical and economic advantages and disadvantages of biofuels for the industry including appropriate fuel standards and engine warranty issues .
4. Potential business cases, possible business structures and sources of capital for the development of a biofuel industry serving the Western Rock Lobster Industry
Final Report • 2010-05-21 • 196.52 KB
2007-241-DLD.pdf

Summary

Rapidly rising fuel costs are of great concern to the Western Australian Rock Lobster Industry.  Fuel costs have risen about 40% in the past three years and now represent approximately 30% of operating costs for boat owners. Fuel is the next largest cost after labour.  Fuel prices are expected to continue to rise and there are no nearby technologies available to replace diesel – or biodiesel- in marine engines.
The Western Rock Lobster Council sought to examine a number of avenues to keep the industry profitable, and, recognizing the developments in biofuels in recent years and given the existence of agricultural industries nearby to the lobster boat anchorages, decided to seek an analysis of the potential for biofuels for the WA rock lobster industry. 
The WRLC sought the assistance of The Kondinin Group, which has wide experience in analysis of rural and regionally based industries and are leaders in communication of technology changes to industry, to examine the potential for biofuels
Kondinin and the WRLC recognized that several business models needed to be investigated ranging from single boat owners making their own biodiesel, to consortia of several boatowners meeting the fuel demands of the group, to large regional manufacturing facilities meeting the fuel requirements of the whole industry. The project also examined within and between season supply and demand issues for fuel and raw material supplies as they affected the viability of a biofuels business.
 
The analysis of fuel use by the western rock lobster industry.

There was estimated to be 485 boats operating in the fishery in 2008.  Each boat has an average fuel consumption of about 62,200 litres per annum.  This equates to an annual fuel usage by the industry of 30.16 million litres,
The boats operate out of 16 ports from Kalbarri in the north to Augusta in the south.
 
Baileys Marine Fuels (Scott Bailey) is a major modern marine fuel distributor with facilities around Australia. Baileys are estimated to service 75-80 % of the western rock lobster fishing fleet. The balance of fuel is supplied by other significant operators such as the Two Rocks Marina facility and the Comen Ltd/Jurien Boatlifters facilities at Jurien and Cervantes. Several smaller suppliers meet needs at the minor anchorages.
Biofuel production possibilities for the Western Rock Lobster Industry including sources of raw materials, byproduct opportunities and logistics of manufacture, storage and distribution.
Biofuel is a generic term generally used to define biodiesel and bioethanol. Western Australian lobster boats are universally powered by diesel engines and therefore biodiesel was the only product considered in this project.
 
Biodiesel can be made from a range of oils and fats sourced from both plants and animals.  The major raw materials available in Western Australia include Canola, mustard, tallow, used cooking oil and palm oil.  The manufacturing process is quite simple and involves reacting the oil with methanol and a catalyst to produce biodiesel and glycerol.  The extraction of oil from seeds such as canola results in the production of canola meal that is used as a feedstock by the livestock industry.
Biodiesel production can be carried out at scales from a single operator making fuel to meet the fuel needs of a lobster boat, to a local cooperative meeting the needs of several boat owners, to a large regional production plant providing fuel for the whole industry.
To meet the needs of a single boat would require feedstock of about 160 tonne of canola per annum to produce 60,000 litres of biodiesel along with about 96 tonnes of canola meal.  It is estimated that the capital cost for this level of production would be between $30,000 and $70,000.  This increases to $400,000 to $600,000 for a 10 boat consortium and to $16 to $24 million for an industrial plant sufficient to meet the needs of the whole industry.
Canola, the most likely raw material, is produced in the agricultural areas immediately adjacent to the coastal ports used by the rock lobster industry and therefore minimises the transport costs.
 
Technical and economic advantages and disadvantages for biofuel for the industry including appropriate fuel standards and engine warranty issues.

There are no technical disadvantages in the use of biodiesel compared to mineral diesel. Overall biodiesel provides large reductions in tailpipe emissions of total hydrocarbons (HC), Carbon monoxide and particulate matter. There is a slight rise in the undesirable green house gas nitrous oxides.  Biodiesel is also considered to be more biodegradable than mineral diesel and therefore would be less harmful on the marine environment in the event of a fuel spill.
 
Biodiesel is only economic to produce if the cost of production is equal or less than the price of mineral diesel.  The price of mineral diesel in Western Australia benchmarks against Singapore  ‘Gasoil 50 ppm Sulfur diesel’
The three main components impacting on the economics of biodiesel production are the price of canola (or other raw material), the price of canola meal and the Gasoil 50 price all of which vary over time.  A canola price of $600 per tonne and a meal price of $400 per tonne equates to a biodiesel price of about 170 c/l.
For biodiesel to compete with mineral diesel it must conform with the Australian fuel standards.  This is generally easily achieved particularly in the larger industrial plants.
One of the restrictions on the use of biodiesel is risk that it will void the manufacturers warranty on the engine. While some engine manufacturers are changing their attitudes towards biodiesel and their engine warranties it is essential that boatowners fully understand the implications of using biodiesel in their particular engine prior to doing so.
 
Potential business cases, possible business structures and sources of capital for the development of a biofuel industry serving the Western Rock Lobster Industry.

The business case for the production of biodiesel is based on the capital investment required, the technical feasibility of the process and the ongoing cost of production of biodiesel.  The capital investment required for different sized plants is well understood and there is a lot of information available on it.  The production process is also well understood and very feasible at a range of plant sizes.  The third component, the cost of production, will remain the major factor determining the business case and will continue to depend on the relative differences in prices of the raw materials and how they relate to the ongoing price of mineral diesel.  In the period of this project, December 2007 to November 2008 there has been great variation in the price of all three components with a period where biodiesel could compete to a period where it was very uncompetitive.  Continued large movements in the prices of these components will make it extremely difficult to invest in biodiesel production with any degree of certainty.
This project provides a detailed framework that will enable the western rock lobster industry to continually assess the feasibility of substituting biodiesel for mineral diesel into the future.
Final Report • 2010-05-21 • 1.78 MB
2007-241-STUDY.pdf

Summary

In 2007, in response to increasing fuel prices the industry representatives requested that the Western Rock Lobster Council investigate the use of biodiesel in the rock lobster industry.

The WRLC commissioned the national independent farming group the Kondinin Group to investigate the feasibility of using biodiesel in the lobster industry.  Kondinin Group was selected as it undertakes similar research on behalf of its members on a wide range of topics.

With financial support from FRDC, this project has now been completed.  This report provides a thorough and comprehensive review of all aspects of the use of biodiesel in our industry, presented in a very clear and simple format.

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