Submitted to: Applied Engineering in Agriculture
Publication Type: Peer reviewed journal
Publication Acceptance Date: 2/20/2004
Publication Date: 6/1/2004
Citation: Holt, G.A., Simonton, J.L., Beruvides, M.G., Canto, A. 2004. Utilization of cotton gin by-products for the manufacturing of fuel pellets: An economic perspective. Applied Engineering in Agriculture. 20(4):423-430. Interpretive Summary: The use of biomass materials as a fuel source has recently been an item of renewed interest. The objective of this research was to determine the construction and operating cost associated with a facility designed to produce fuel pellets from cotton by-products generated from a cotton gin. The gin used in the study processes an average 55,000 bales a year. The pellet manufacturing plant would be located adjacent to the gin and process the by-products as they are being generated. The COBY process developed at the USDA-ARS Cotton Production and Processing Research Unit in Lubbock, TX, would be utilized to manufacture the fuel pellets. Traditionally, the COBY process has incorporated extruders into the operation. However, this analysis was preformed by replacing the extruders with a commercial size tub grinder and three pellet mills to allow for greater throughput (i.e. increased hourly capacity). The economic analysis incorporated cost of constructing the facility as well as variable costs of transportation, labor, manufacturing, power, raw material supply, and maintenance. The evaluation used was performed by modeling the variable costs and assessing their effect on a specified return on investment (ROI) of 15%. Results from the forecast model indicate the probability of obtaining a 15% ROI to be 27.3% and 49.1%, depending on whether the product was shipped to market by either truck or by rail, respectively. All analyses performed included the costs of shipping the product to market from a production plant located near Lubbock, TX. The market locations evaluated in this study were Albuquerque, NM, Denver, CO, and Kansas City, MO.
Technical Abstract: The objective of this study was to explore the cost feasibility of creating a fuel pellet manufacturing operation utilizing cotton gin byproducts from a commercial gin processing 55,000 bales of cotton per year. An economic model was developed and evaluated in order to conservatively address the effects of key elements such as marketing, transportation, and manufacturing. The cost system model was developed and analyzed to examine the factors influencing the sensitivity of critical areas such as cost and profits. The cost system model simulated changes for twenty-four cost variables associated with the proposed fuel pellet operation. Results from the analysis indicate the probablility of obtaining a 15% return on investment (ROI) varied depending on the mode of freight used to ship the product to any of the distribution hubs evaluated. If the product was shipped by truck, the ROI was 27.3%, or 49.1% when shipped by rail. Based upon the information contained in this study, it appears that a fuel pellet operation can be a viable means of utilizing cotton gin by-products to enhance revenue.