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Market Analysis and Strategy
BioPetrol Ltd.’s innovative process is targeted at the following market segments:
Municipal Wastewater Treatment Plans (29 million
ton in the
Treating and disposal of animal waste (est. 500
million tons in the
- Biomass – any Carbon feedstock (numerous tonnage)
Initially the company intends to focus on applications for extracting oil from urban wastewater treatment plants (WWTPs). The BioPetrol process addresses two very important issues:
1 Avoid the need to transport sewage sludge offsite (94% of the sludge is converted) eliminating that cost and environmental hazard.
2 Lower the operational costs of the WWTP with a cost effective management solution compared to current sludge removal and disposal expenditures.
Proposed Revenue Model
Strategic Option # 1:
BioPetrol will sell its sludge disposal plants directly to WWTPs. BioPetrol will be in charge of installing and launching the plant, but will not operate it.
Revenue Model: BioPetrol will seek revenues from two sources: 1) a 10% markup on the equipment sold to the WWTP, and 2) a licensing/royalty fee of $8-$12/ton of wet sludge treated by the WWTP. The average price for BioPetrol’s medium-size plants is projected to be about $3.5 million, and a large plant for a city of 1.25 million populations is expected to sell for $5.0 million.
Strategic Option # 2:
BioPetrol will not sell its sludge treatments plants to WWTPs, but instead will assume full responsibility for installing and operating the plant at the WWTP’s site. To this end, BioPetrol will most probably seek financing under the so-called Build, Operate, and Transfer (BOT) model. The latter typically provides for establishing a consortium of companies that form a joint venture for specific regions and assign the proposed technology to that joint venture on an exclusive basis. The consortium will secure the required funds for constructing and operating the BioPetrol Ltd. plant, considering both equity and long-term bank loan.
Revenue Model: BioPetrol will generate revenues from two major sources: 1) receiving the now avoided sludge tipping fees from the WWTP, and 2) selling the fuel oil surplus to off-site users, or savings on fuel purchases for on-site electricity generation.
A Large BioPetrol Plant
- Working Data –
City = 1.25 million population Fuel oil yield, % 42.4%
Operation efficiency 80% Fuel oil yield, ton 7,726
Wet sludge quantity, ton/day 240 Fuel oil yield, barrels 60,736
Wet sludge quantity, ton/yr 70,080 Price of fuel oil (barrel), $ 45
Dry matter (DM) 26% Market value of -
Sludge, TonsDryMatter/day 62 generated fuel oil, $ million 2.73
Sludge, TDM/yr 18,221 WWTP payment ($55 wet ton) 3.85