As part of our "crush first" strategy, we are focusing right away on the most pressing challenge facing the biodiesel industry in the Pacific Northwest: making available high quality, locally produced biodiesel feedstock.

Imperium Renewables has built and is now operating a facility in Grays Harbor, Washington that has the capacity to produce 100 million gallons of fuel per year, which means that additional in-state biodiesel production capacity is not the greatest need facing the state's emerging biodiesel fuel industry right now.

Using the business name Pacific Coast Canola we will begin our Warden project with the construction of a canola oilseed crushing facility that will have the capacity to make RBD (refined, bleached, & deodorized) canola oil. Canola oil results in an extremely high quality biodiesel feedstock, in part because of its excellent cold weather properties. Another benefit of canola is that it can be grown locally by Washington farmers. After construction starts, we will begin contracting for local canola planting through our partner CHS, the largest farmer's cooperative in the country.

We are working hard to complete financing for the oilseed crushing facility this spring, with construction beginning soon thereafter. Construction will be complete within approximately 15-18 months, and we expect to be operational by early 2010. We are committed to adding biodiesel fuel refining facilities at the Warden location when either additional biodiesel demand supports the significant private investment needed to build the biodiesel facilities, or we are able to sign longer-term biodiesel contracts that make such financing feasible. We hope to begin serious discussions with others about such contracts shortly after breaking ground on our canola crush facility. In the meantime, we will make biodiesel feedstock produced at the Warden site available for biodiesel production.

We are excited about our "crush first" strategy. It will allow us to get started on our project while at the same time advancing a number of important State of Washington biofuel policy goals, including:

• In-state oilseed crushing capacity necessary to increase the State of Washington's renewable fuel standard (RFS) for biodiesel from 2% to 5%.
  
  
• New demand for locally grown canola, which will help the State meet the RFS requirements for feedstock grown in Washington.
  
  
• Support for other Northwest biodiesel projects by providing them with high quality, locally produced biodiesel feedstock.
  
  
• Increased energy independence and significant environmental and public health benefits.
  
  
• Rural economic development, as the "crush first" strategy will deliver significant jobs and economic development benefits to Warden as soon as we start construction.
  
  
• Statewide economic benefits, by allowing many local dollars to be spent on Washington canola (rather than on imported palm oil or Mid-West soy oil) and on locally produced (rather than imported) dairy cow meal, an important co-product of the oilseed crush process.