Submitted to: Engineering Management Journal
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 1/25/2010
Publication Date: 9/10/2011
Citation: Simonton, J., Collins, T., Holt, G.A., Beruvides, M. 2011. Manufacturing vegetable oil based biodiesel: An engineering management perspective. Engineering Management Journal. 23(3):57-64.
Interpretive Summary: The use of cottonseed for biodiesel production has been a growing topic of research given the latest economic, political, and societal emphasis on reducing dependency on fossil fuels. This paper reports on an economic model to evaluate the feasibility of producing biodiesel from cottonseed given prices of grains and other feedstocks. The model was based on using a transesterification process for the conversion of the cottonseed oil to biodiesel. Results indicate that even with tax incentives, the success of the operation is doubtful under current and foreseeable conditions. Given the emphasis of renewable fuels and the desire for producers to be able to produce fuel from the crops they grow, it can be easy to lose perspective of the economics of a process, especially in light of regulations requiring use of bio-fuels and large tax incentives. It is important for managers and investors alike to cut the Gordian Knot of such initiatives when the economics dictate.
Technical Abstract: According to the USDA, 6.45 million tons of cottonseed was produced in 2007. Each ton will yield approximately 44 to 46 gallons unrefined oil. Cottonseed oil bio-diesel could have the potential to create a more competitive oil market for oil mills. The proposed cost model is based on an existing cottonseed oil operation utilizing the trans-etherification process for the conversion to bio-diesel. The cost modeling indicates that for cottonseed oil to become an economic source of biofuel the current market demand for the product both in seed and oil form would have to be outweighed by the market for biofuels.