The Kansas ethanol facility has unique features that enhance its market position.The Kansas plant produces ethanol, distiller's
wet and dry grain, and has an on-site facility that produces
wheat gluten. The facility uses approximately 70% milo as a feedstock and is located in the largest milo growing region in the United States. Milo, also known as grain sorghum, can be used interchangeably on an equal basis with corn as a feedstock in the ethanol production process. Historically, the price of milo is lower than the price of corn, creating a competitive advantage for the Russell facility. The remaining 30% of feedstock is wheat starch, which is transferred from our gluten facility as a separated food waste.
The Texas Plants.The strategic locations of the Hereford and Plainview plants
in the Texas Panhandle place them directly
in cattle country and are prime locations for the distiller's wet grain market. Texas is the largest importer of DDGS in the United States, importing over 3 times the equivalent DDGS produced at in-state ethanol plants. As a result, the local markets for the Company's wet distiller's grain co-product are extremely desirable. This provides White Energy with a significant competitive advantage as we can avoid the significant costs related to drying and transporting DDGS.
Another advantage of the Texas Plants' location is that they are located in close proximity to the target ethanol markets of California and Texas, the #1 and #2 states, respectively, in terms of total domestic ethanol consumption. Given the proximity to the Burlington Northern Santa Fe, LLC ("BNSF") main rail line, which runs through Amarillo and Lubbock, the Texas Plants have direct access to a highly efficient, nationwide transportation infrastructure. This advantageous location provides for reduced rail freight travel time (5-7 day turns) between the plants and their target end markets. This reduction in travel time reduces the number of required railcars under lease at the Texas Plants, which in turn reduces comparable operating expenses. The California and Texas markets represent approximately 9.0% and 7.3% of total domestic ethanol consumption. By optimizing transportation logistics and reducing wait time, White Energy is able to serve these demand centers in a more efficient manner than many competing facilities.
A third advantage is that the Texas plants are connected to key rail lines, allowing the efficient receipt of grain from a variety of origination points in addition to local resources. Lastly, natural gas in the Texas panhandle typically costs less than many Midwest ethanol plants. When you combine the cost savings with the usage savings, the result is about half the per gallon natural gas cost of a Midwest ethanol plant.