JUNIPER OIL DISTILLATION AND MARKETING PROJECT

WESTERN JUNIPER COMMERCIALIZATION PROGRAM

FINAL REPORT December, 1996 - Ver. 2
The Confederated Tribes of the
Warm Springs Reservation of Oregon
Business & Economic Development Branch
Project Manager: J. Yesenofski




TABLE OF CONTENTS




Executive Summary


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Project Initiation, Objectives and Scope

In September of 1994 the Confederated Tribes of Warm Springs presented to the Multi-Region Strategies planning group a proposed research project to distill the essential oils out of Western Juniper trees (species Juniperus Occidentalis) for purposes of determining whether there were viable commercial business opportunities that could be generated from this use of the Western Juniper biomass. This research project was later incorporated into the an overall Western Juniper Commercialization Program, involving a number of other projects seeking to find markets for Western Juniper lumber and products, and was then submitted through the Oregon Economic Development Department as a proposed economic development project.

The proposed Western Juniper Commercialization Program was submitted to Governor Kitzhaber for review, and on April 18th, 1995 the Confederated Tribes of Warm Springs was advised that funding for the Juniper commercialization program, including the proposed oil recovery and marketing project, was approved by the Governor.

On August 29th, 1995 the Confederated Tribes of Warm Springs was advised by the Klamath County Economic Development Association (KCEDA) that they were empowered to authorize the commencement of spending for the oil recovery and marketing project. However, because of the need to execute agreements between the funding and contract administration agencies, and the agencies that would actually do the projects, the agreement between the Confederated Tribes of Warm Springs and KCEDA was not formally executed until April 1996. With the formal contract agreements finalized it was then possible to move ahead with the execution of the project. Copies of the relevant correspondence initiating this are included as Appendix A in this report, for reference.

The objectives of this research were as follows:

This project was not intended to be a comprehensive analysis of the many combinations of variables that would be involved in this test including the nature, sex, age, size, etc. of the trees themselves; the nature of the land upon which the Juniper is growing; the altitude and water availability; or the many other variables involved in the harvesting, handling and preparation for use, as well as the many variables of the distillation process itself. To this end it was envisioned that a reasonable test distillation facility would be set up for use in distilling oil from Juniper materials that would be obtained, handled and processed in a nonspecialized way such that most anyone who would want to duplicate this process could readily do so.

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Project Implementation Schedule (1996)

Date Activity
April 30 Contract between KCEDA and the Confederated Tribes finalized.
May 10 Project management and technical/ marketing support agreements finalized. Equipment site and support agreement with Warm Springs Forest Products Industries (WSFPI) plant finalized.
May 17 Space at WSFPI plant cleared for distillation unit. Distillation unit placed at WSFPI.
May 20 Authorized Juniper cutting area toured, trees cored, selected and marked. Arrangements made with Tribal Natural Resources Branch for harvesting, bagging and hauling crew (for fee).
June 6 First harvesting: two trees harvested. Bagged leaf material, and bole wood, brought to distillation site.
June 7, 11 First distillations: two batches of bagged leaf materials.
June 19, 20 Second harvesting of two trees. Cook two batches of bagged leaf materials.
July 1 Chip and cook first batches of bagged bole wood.
July through November Continue harvesting and cooking as needed to refine process and obtain oils needed for marketing samples.
July 1 Begin commercial marketing activity.
July 30 Gas chromatography results of leaf oil, boil oil and distillation waters received from Flora Research.
August through October Continue commercial marketing efforts.
November 1 Do extra cookings to obtain additional oil for samples.
November 15 Prepare sample hunters scent spray bottles to sample retail application market
December 1 Expand retail test marketing of sample spray bottles for general/ seasonal aromatic uses.
December 17 Final report draft completed.
December 24 Final report completed and distributed.


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Distillation Equipment: Installation and Use

The distillation system was obtained under contract from the Essential Oil Co., Lake Oswego, Oregon, which also was retained under contract to provide technical distillation assistance and product marketing services to the commercial essential oils marketplace. An agreement was made with Warm Springs Forest Products Industries (WSFPI) to site the still in a little used portion of their lumber processing plant at Warm Springs, Oregon. The site was accessible by vehicles and heavy equipment, and was generally out of the way of their normal business operations.

The distillation system itself consisted of a retort for holding the raw materials and was capable of handling 250 to 300 pounds of materials when fully charged. The steam outlet from the retort was via an insulated pipe which carried the steam to a condenser and separator which would take the output of the retort, condense the steam into water, and then separate the condensate into oil and the distillate runoff "waters" (which were the secondary byproduct of the process).

Distillation in the retort was accomplished by piping steam to the retort from the plant bsteam system which supplied steam at approximately 350 degrees F and between 125 and 150 pounds per square inch. The condenser required the piping-in of cooling water in order to facilitate the condensing of the steam output from the retort. The separator for separating the oil from the distillate waters obtained the condensate by gravity feed from the condenser. Once in the separator, oil floating on the condensed liquid could be tapped off separate from the distillate waters. The distillate waters were then allowed to feed via a gravity connection to a 20 gallon catch drum which caught the runoff waters from the distillation in progress.

The distillate catch drum was connected via a transfer pump to a 400 gallon holding tank (provided by WSFPI) such that the distillate waters from the catch drum could be pressure-pumped periodically from the catch drum to the holding tank. The plant then provided disposal services for the run-off waters by emptying the holding tank as needed.

Much of the in-kind costs associated with the project were related to the costs involved in the installation of the equipment and providing the steam, water, supplemental lighting, holding tank and disposal services needed to facilitate operations.

When used for distillation operations the raw materials to be distilled were bagged in burlap bags weighing approximately 15 to 25 pounds each, depending upon the nature of the material being distilled. This was necessary in order to facilitate removal of the distilled materials from the retort after distillation, since the retort needed to be loaded and emptied through the top via the tilting back of a hinged lid.

The system operated essentially as a zero pressure system with ambient atmospheric pressure in the retort and condenser. However, there was considerable expertise needed in the management of the volume of steam being applied to the retort during the distillation process, and the amount of cooling water flow to the condenser, in order to balance the throughput of the system such that the condenser was able to effectively condense the quantity of steam coming out of the retort such that there would be no loss of oil through vaporization.

Though the test system was substantial, and was very effective for purposes of this project, it nevertheless was a manually operated system that, when operating, required constant attention and fine tuning by a knowledgeable operator. The Essential Oil Company provided the expertise and the training needed for those involved to effectively run the system and, as time went on, those involved did become more expert in managing the process.

The hard copy report contains photographs which show the distillation system in place at WSFPI in Warm Springs.

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Juniper Selection, Harvesting and Processing

Location - The Juniper harvest site, as approved by the Tribes' Range and Agriculture Committee, was situated approximately 2 1/2 miles S. - S.E. of the Warm Springs community on a terrace, and at an elevation of approximately 2,500 feet, between the Tenino Creek and Seekseequa Creek drainages. The map at the end of this section (hard copy report only) marks the location of the Juniper harvest area in relation to the town of Warm Springs on the reservation.

Soil - The soil in the harvest area consisted primarily of Type I Lavey-Drybed-Madras bounded by Type II Simas-Ruckles-Antoken, which at this location is a very dry, sandy silt and stony loam. Click here for a general soil map for the Warm Springs Reservation, and an associated soil type legend. The location of the Juniper harvest area is marked for reference.

Tree Density and Ages - In the Juniper harvest area the density of trees appeared in general to be approximately 12-20 trees per acre with some substantial variance (more or less) depending on the specific location. Sections which seemed to have mostly larger mature trees also seemed to have fewer younger trees around them. The bulk of the geographic area and space was taken up by relatively mature trees, the average of which appeared to be between 50 and 150 years old. During the course of the study the trees that we took down out of that area all fell within that age range. Mature trees were chosen with the assumption that they would provide the best oil yield. Most of the trees harvested and used for purposes of this study were between 75 and 125 years old. The mature trees typically seemed to vary between 20 and 40 feet high, with a substantial variance in the diameter of the foliage canopy, as well as substantial variance in the density of leaf or foliage on the tree. Most trees in the harvest area appeared to be in reasonably good health. During the course of this study none of the trees that were cut down or core-sampled were materially diseased. They all had very solid boles without any material decay in the interior of the bole.

Tree Selection - The trees that were chosen for use in this test were clearly the more mature trees, with robust foliage, and preferably of a deeper or darker green color. Some were chosen that were heavily laden with green berries, and some were chosen that were devoid of berries. Given the level of expertise on site we could not effectively determine the sex of the trees. Upon researching into it further it is our understanding that the sex is difficult to determine at any point in time since the tree changes sex periodically as it goes through its berry- producing and non-berry-producing cycle. Most of the trees that were harvested were cored in order to determine their health through the bole into the heart wood, and all samplings showed healthy trees. More specifics on the characteristics of the first six trees harvested for use is as follows:

DATA #1 #2 #3 #4 #5 #6
Age (yrs.) 65 135 100 160 100 100
Height (ft.) 40 ft. 35 ft. 25 ft. 30 ft. 25 ft. 30 ft.
Diameter @ Base (in.) 24" 30" 24" 28" 20" 20"
Est. Percent Heartwood (%) 50 60 50-60 50-60 40-50 40-50
Berries Sparse Sparse Sparse Sparse Heavy Heavy

Harvesting - Harvesting of the tree and its related materials was done by a crew provided by the Natural Resources Branch of The Confederated Tribes. The Natural Resources Branch, for a variety of reasons, including fire danger, insists that work done on the Reservation be done by folks who are authorized, and who have the proper training, safety equipment, and administration. For this reason the project chose to contract with the Natural Resources Branch for the materials harvesting and hauling activities.

The harvesting operation was fairly standard in that the tree was cut down and de-limbed, after which the ends of the branches containing leaf were nipped off and then gathered up into tightly packed burlap bags. Though the process was somewhat labor intensive, this was necessary because of the need for bagged materials for use in the distillation retort so that the waste materials could be readily removed from the retort after distillation. The bole was cut up into manageable logs, and the bagged leaf and the logs were brought back and deposited under cover near the still site at the WSFPI plant. Typically it would take a three man crew essentially a full work day to get to the site, find the tree to be harvested, cut it down, bag 30-35 bags of limbs, cut up the bole, and then transport it all back to the plant at Warm Springs.

When it was necessary to distill bole wood the logs were split at the distillation site. A rented chipper was brought to the site and the chipping and bagging of the bole was done on site immediately prior to their use in the distillation process. This was necessary because of the tendency of the Juniper to dry very rapidly in the dry Warm Springs climate, particularly during the summer, thereby losing a good deal of its oil and decreasing the yield of the process. In general, it was found that the quicker the Juniper materials were used after harvesting the better the yield, because of this drying and loss factor. More information on this and its effect on the yields is given in the section on Oil Distillation Process and Results.

Waste Disposal - In keeping with the tribe's Integrated Resource Management Plan for the Reservation, the waste materials from the distillation process were then taken back to the site from which the trees were being harvested, and were distributed across the landscape as ground cover. In this way the spirit of the plan, which calls for the leaving of the branches and boughs at the site of tree harvesting in order to facilitate nutrient restoration into the soils, was accomplished.

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Distillation Process and Results

Materials Preparation - All the materials to be distilled were placed into sealed burlap bags. The leaf materials were bagged on site at the harvesting area to facilitate their easy transport back to the still site. Bole wood needed for distillation was brought back to the still site in 15" logs where it was chipped and bagged immediately prior to distillation to prevent evaporation losses. As mentioned previously, the bagging was necessary to facilitate the loading of the retort, but most particularly to facilitate the emptying of the retort after the distillation process since the retort was a top-loading device with no facility for removing waste materials out the bottom after the distillation was completed.

After some negative experience, distillation was scheduled either the afternoon of the same day of the harvesting, or the following day, in order to minimize oil loss through evaporation. Information given later in this section will show some of the effects of the loss of oil on yield because of evaporation in the hot and dry summer climate at Warm Springs. When not able to immediately utilize the distillation materials, they were brought inside and kept under cover (out of the sun) until it was time for them to be used. If the materials were left over night they would be wet down with cooling water, or covered with extra burlap bags (also wet), to facilitate evaporative cooling minimizing the oil loss. After the distillation process was completed the bags were removed from the retort with the aid of a long fisherman's gaff because of the high temperature of the materials after distillation. The rate of drying of the materials in the summer climate at Warm Springs was absolutely astounding. We did not make accurate measurements of what the weight loss would be for both the leaf and the logs on a daily or weekly basis, but the weight change of the materials was easily noticeable, and attendant oil loss was reflected in the yields.

This raises the issue of whether or not the materials could be dried in a more controlled environment that would allow water to evaporate from the materials while still maintaining the oil content, in order to give a higher yield for a given weight of materials. We were not able to pursue this within the scope of this project but it would be worth investigating by anyone who might consider getting into the Juniper oil distillation business in the future.

Still Preparation - Prior to starting the distillation process it was necessary to purge the steam and water lines in order to insure that clear steam and clean water to the system. This was typically the first step in preparing for a distillation run. Next, the materials in the burlap bags were loaded into the retort and packed in as tightly as possible in order to provide maximum biomass in the retort for the distillation run. When loading the retort with bagged leaf materials in their natural state, the retort would typically hold between 200 and 225 pounds of the material, depending upon the degree of care taken in loading the burlap bags, and in packing the materials tightly in the retort. The same consideration was true when bagging the chipped bole wood, however the velocity of the chip flow out of the chipper would usually insure a fairly tight packing of materials in the burlap bags. Therefore a charge of bole wood in the retort would typically weigh 225 to 275 pounds, on average about 25 or 30 pounds more than if the retort were charged with leaf material.

Prior to loading the retort we found it desirable to preheat the system, particularly the retort, in order to minimize cooking times once the materials were in place. The retort was uninsulated and therefore was subject to considerable heat loss, depending on the ambient air temperature, and wind velocity, on that particular day. To minimize heat loss in the system the retort transfer pipe was insulated, and that seemed to give a more consistent cooking process.

Once fully loaded with the retort lid down and securely fastened, and all other system components properly connected, the steam and cooling water were slowly applied and increased in flow. The optimum point that was being searched for in this process is the point at which there was enough steam passing through the system to heat the materials as rapidly as possible, without spilling out as steam from the condenser bleed- off tube. When that happened it was necessary to either cut back a little bit on the steam or to increase the cooling water flow to the condenser, and this balancing process was the one that it took some experience to master.

During the cooking process, a certain amount of condensate from the steam accumulated in the bottom of the retort. There is a valved tap-off to allow this water to run off. The amount of water in the retort was managed to see whether maintaining some water in the bottom would keep the retort at a more even temperature and therefore increase the rate of oil production. However, it was found that it did not seem to make a material difference in yield whether the water was allowed to accumulate in the bottom of the retort or whether it was allowed to just run.

In the system that was used for test purposes on this project the key system limitation was the size of the condenser. Only a fraction of the steam available (perhaps a 25 psi flow) was utilized before we over-drove the condenser and allowed the live steam to escape from the condenser relief tube, thereby causing a loss in oil yield since the escaping steam would carry its attendant oil along with it. There was plenty of cooling water with which to cool a larger condenser. Therefore, with a larger condenser, one could apply more steam to the retort thereby potentially increasing the rate of oil production and certainly the oil yield for any given period of time.

Typically, once experience was gained with this particular system as to how to bring the retort up to cooking temperature of 210 degrees F., oil production began between 30 minutes and one hour after applying steam, depending upon the type and weight of the materials packed into the retort.

On some of the distillation runs the oil production was measured relative to the cooking time and the results of these measurements are given in the yield tables, following.

Oil Take Off - As the system approached cooking temperature (210 degrees F.) steam from the retort would begin to pass through to the condenser and be condensed into a liquid distillate containing both oil and associated waters. This liquid distillate was gravity-fed into a separator which allowed the oil to rise to the top of a separate section of the container, at which point there was a valved take-off outlet from which the oil could be drained off. The run-off waters from the bottom of the separator were then allowed to gravity-drain into the 20-gallon catch drum, from which the waters were periodically pumped into the 400 gallon holding tank. It is important to note that those run off waters were produced at the rate of approximately 300 to 350 gallons of run-off waters for each gallon of oil produced. This is important because in further work on the project, and further market research, it was determined that the waters may have some useful applications, and may have a substantial market value.

Yield Results - Following is a table which shows the oil yield from the various batches of materials that were distilled showing the type and weight of materials, the distillation time, the oil yield and any other pertinent information relative to the distillation of that particular batch such as the time between harvesting of the materials and the cooking of the materials. Copies of the Distillation Record for each batch distilled are included in Appendix B (hard copy report only).

Distillation Table

Juniper Leaf
Batch # #1 #2 #3 #4 #7
Batch Weight (Lbs.) 222# 216# 204# 178# 252#
Cook Time (hrs.) 3.0 1.0 2.5 2.5 2.0
Oil Yield (grams) 325.5 g. 44.4 g. 157.2 g. 197.1 g. 287.7 g.
Percent Yield (by weight) 0.32% 0.045% 0.170% 0.244% 0.250%
Days Since Harvesting 1 5 1 1 1
Berry Amount Sparse Sparse Heavy Immature Sparse Sparse

Distillation Table

Juniper Bole Wood
Batch # #5 #6 #8
Batch Weight (lbs.) 257# 224# 222%
Cook Time (hrs.) 4.25 2.5 3.0
Oil Yield (grams) 202.6 g. 65.8 g. 175.5 g.
Percent Yield (%) 0.174% 0.065% 0.174%
Notes Chipped: 4 days prior Chipped: 4 days prior Chipped: 1 day prior

Though a measure of oil yield as a function of time was not rigorously pursued, a few batches were measured to determine oil yield during the cooking process. The results are given in the following table.

Distillation Table
Timed Yield Data: Grams of Oil

Batch # First Hour Second Hour Third Hour Fourth Hour Total Grams
#5 (Bole) 123.0 g. 36.5 g. 35.1 g. 8.0 g. 202.6 g
#7 (Leaf) 211.5 g. 76.4 g. -- -- 287.7 g.
#8 (Bole) N/A 135.0 g. 40.5 g. -- 175.5 g.

This data, along with information and observations obtained during the distillation of all batches, generally confirmed the earlier test distillation work done by Kurth and Ross of Oregon State University(1) as follows:

For clarity, it should be noted that "cooking time" is measured from when liquid distillate first begins to pass through the condenser, and does not include the time required to heat the retort and distillation materials to cooking temperature. Distillations performed on this particular system usually resulted in a first pass-through of distillate out of the condenser when the retort temperature reached 195 - 200 degrees F. This usually occurred 30 min. - 60 min. after steam was applied to the retort, and varied mostly with the amount of pre-heating done to the system before the cooking process was begun.

Subsequent to the test distillations done in June, July and August, additional batches were distilled in both October and November to provide additional oil and waters at the request of potential customers. It was interesting to note that the oil yield from these batches (leaf; done from trees that had a minimum of immature berries) was substantially greater than from the batches distilled in late spring and early summer. Following is a Distillation Table which shows the distillation results of these later batches.

Distillation Table
Batch # #9 #10 #11 #12 #13
Material Leaf Leaf Leaf Leaf Wood
Batch Weight (lbs.) 265# 276# 189# 166# 181#
Cook Time (hrs.) 4.0 4.0 3.0 2.5 3.25
Oil Yield (grams) 550 g. 550 g. 322 g. 261 g. 354 g.
Percent Yield (by weight) 0.46% 0.44% 0.375% 0.346% 0.42%

Though this data is scientifically inconclusive, it has resulted in speculation that there is a significant seasonal variation in the oil content of the leaf. Minimum oil when the tree is in the peak of its growth season; maximum oil as the tree approaches dormancy. If true, this act could have a significant impact on the economics of a potential oil-based business, and is an area fur further research. Another possible explanation is that, in the hot, dry summer weather of Central Oregon, the oil evaporates out of the leaf material faster than the tree can replace it.

It is also important to note one change from the original goals of the project: no meaningful work was done on the distillation of dried Juniper berries. This task was eliminated because of the following factors:

In a climate different from Warm Springs the dry berries may be more recoverable. However, in the interest of achieving the primary objectives of this project, a judgement was made that the dried berries were not a viable, attractive business resource.

The following Yield vs. Distillation Time chart maps the results of all distillation batches. Note that the highest yields were from the first batch (done in June), and from the last five batches done in October and November. The anomaly of the yield from the first batch (1L) can not readily be explained. Later experience led us to believe that the extraordinarily low yield from leaf batch two (2L) was due to oil loss from drying since the batch was not cooked until about a week after it was harvested, though it was kept under cover during that time. Interestingly, Kurth & Ross(1) also had some unexplained low yields in their work.

oils_graph.gif - 11.8 K

Comparison with Previous Work - The report published by Kurth and Ross, Oregon State College, No. C-3, dated 1954 (included in the Bibliography as Exhibit 1) provided the most useable benchmark information with which to compare the resutls obtained in this project. Key comparative observations are as follows:

Chemical Analyses - Following are example pages from a gas chromatography analysis report on Juniper leaf oil from batch number WS1JL. The analysis was done by Flora Research of San Juan Capistrano, California, a firm that specializes in gas chromatography analysis of essential oils. Included with the data are graphs that show the relative magnitude of the different chemicals contained in the oil.

oils2.jpg - 46.4 K oils3.jpg - 175.3 K oils4.jpg - 72.2 K oils5.jpg - 31.0 K

Complete copies of all gas chromatography analyses reports are included in Appendix C (hard copy only) for reference, and includes an analysis of the distillate "waters".

Some of the relevant conclusions from an analysis of the chemical content of the oil are:

Summary: Observations and Conclusions

Project experience with the harvesting, preparation and distillation of Western Juniper materials has resulted in the following broad conclusions, with a high degree of confidence:



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Production Cost Analysis

As mentioned previously, the distillation unit used for this test project was only capable of handling approximately 250 pounds of materials at a time. Though a distillation system of this size may be adequate for an entrepreneur or small business that is seeking to serve consumer markets with specialty oil products, a larger system, capable of handling a ton (2,000 pounds) of distillation material at a time, would be essential if oil were being produced for the commercial (bulk) oils market.

Based on the experience of this project, and making logical extrapolations for supplying a distillation system of commercial size, the following assumptions are relevant:

Based on these assumptions, following is a comparative cost model which estimates the cost of processing 2,000 pounds of chopped leaf materials.

Cost Analysis
2000 Pounds Juniper Leaf Distillation
250#
Capacity
2000#
Capacity
Materials Weight 2000# 2000#
Man-Days Needed to Harvest 2 1.33
Cost of Trees -0- -0-
Retort Batches Needed 8 1
COSTS:
Harvesting Costs
- Labor
- Amortized Equipment and Transportation

$240.00
75.00

$160.00
50.00
Distillation Costs
- Labor
- Amortized Still Cost
- Operating Supplies and Fuel

480.00
80.00
50.00

60.00
40.00
50.00
Total Product Cost $925.00 $360.00

Yield and Commercial Value:
Wood Oil Leaf Oil
Oil Yield - One (1) gallon (8 pounds);
Commercial value

$ 60.00

$480.00
Water Yield - 300 gallons;
Commercial value @ $1.00 per gallon

300.00

300.00
Potential Commercial Product Value $360.00 $780.00

The obvious points of interest in this analysis are that:

The key determinant in this economic equation is, of course, the relatively low yield (0.40% - 0.45% under optimum conditions) of oil from the Western Juniper leaf materials in a zero-pressure system as was used for this project.

The economic profile for the distillation of wood oil would be even more unfavorable since:

Process Yield vs. Product Value
Product Value
(w/o waters)
Product Value
(with waters)
Oil Yield
(Percent)
Oil Yield
(Lbs.)
Leaf Wood Leaf Wood
0.35% 7.0# $420 $52 $720 $352
0.4% 8.0# $480 $60 $780 $360
0.5% 10.0# $600 $75 $900 $375
0.6% 12.0# $720 $90 $1,020 $390
0.7% 14.0# $840 $105 $1,140 $405
0.8% 16.0# $960 $120 $1,260 $420
0.9% 18.0# $1,080 $135 $1,380 $435
1.0% 20.0# $1,200 $150 $1,500 $450
1.25% 25.0# $1,500 $187 $1,800 $487
1.50% 30.0# $1,800 $225 $2,100 $525

Economic Leverage Points - Looking at the cost analysis for the distillation of fresh (wet) leaf materials, following are factors which could materially change the cost (and therefore profitability) profile of the oil recovery process:



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Market Test Results

The methodology for doing the market test on the Juniper oil included the determining of target market applications, the development of a market segmentation scheme, the development of a list of potential customers in the market, market sampling, an analysis of similar and "competitive" products that are on the market today, and the distillation of market feedback to determine market interest and potential pricing of the Juniper oil in the target market segments.

The Essential Oil Company of Lake Oswego, Oregon, was contracted in this project to provide the test distillation still, technical distillation services, and test marketing services. The Essential Oil Company is in the business of providing many different types of essential oils to brokers, blenders and manufacturers throughout the world. Hence they have the product and market knowledge necessary to do a reasonable market test of the Juniper oil for purposes of determining its market value and potential as the basis of a business enterprise.

Target Applications

A list of the best possible target applications for the oils of Juniperus Occidentalis is as follows. This list was the basis for developing a target customer list of firms that provide either raw oil or blended oils to companies that produce the end products in these application areas, or in some cases are the companies that in themselves produce the end products and take them to either the wholesale or retail markets.

Market Sampling

Small samples of essential oils, and in some cases the distillate waters, distilled during the course of the Juniper oil project were sent to prospective buyers of such materials for appraisal. In some cases, results of the gas chromatography testing were also disclosed. Feedback from the potential customers on the applicability of the oils or waters to their products and markets was solicited.

After analyzing the potential markets it was determined that, for purposes of this market test the potential target markets broke down into the following major sectors:

The list of potential industrial and commercial customers used for purposes of market sampling is considered proprietary to the Essential Oil Company because of the highly competitive nature of this industry. Hence the list is not included for general distribution in this report but will be sent under proprietary acknowledgment to the program manager (Larry Swan) and the project administrator (Candice Richard at KCEDA) for their files. Requests for access to this list should be made through either Larry Swan or Candice Richard, who can then forward the request to Robert Seidel of the Essential Oil Company in Lake Oswego, Oregon.

Competitive Products

Other manufacturers and distributors were contacted regarding the availability and pricing of competitive or similar oils, particularly those of the cedar, spruce, pine, fir and hemlock families. Following is the list of oils available in the commercial marketplace of some of the products which might be considered similar and/or competitive to Western Juniper oils.

The above list represents pricing for various "needle" oils.

Market Results

Following are the results and conclusions from the feedback obtained from the test marketing activities.

Conclusions

There is a high degree of confidence that there would be a market for the Juniper leaf oil at prices ranging from $25 a pound to $75 a pound for the leaf oil, depending on the sector and the segment being served. The volume of oil required to serve this market is highly uncertain at this point because it involves the development of new scent products and the development of the markets for those products. However, as part of this project, a few dozen one ounce scent spray bottles of 20% oil solution, in alcohol, were prepared to test customer acceptance of them as a hunter scent mask product. Later, the test was broadened to include the use of that same product as a room scent, and as a scent for artificial Christmas wreathes, Christmas trees, etc. A few gift shops specializing in those seasonal products were sampled and oil spray samples were left with them. The response to both the hunter scent and the use of the same spray scent bottle as a room or seasonal scent were both very good. These products would make good entrepreneurial business opportunities.

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Business Opportunity Conclusions

Commercial (Bulk) Products: In developing a business opportunity analysis on a commercial (bulk wholesale sales) basis, the following assumptions are in order.

Using a standard production unit of one ton (2,000 pounds) of materials as the standard production unit for cost estimates, following are the profitability profiles for both leaf and wood oil, at different process yields.

Profitability Profile: Leaf Oil
Oil Yield
0.3% 0.4% 0.6% 0.8% 1.0% 1.5%
Product (lbs) 6# 8# 12# 16# 20# 30#
Revenue $360 $480 $720 $960 $1,200 $1,800
Costs
Production $360 $360 $360 $360 $360 $360
Marketing and Sales 72 96 144 192 240 360
G&A, and Other 96 96 96 96 96 96
Total Costs $528 $552 $600 $648 $696 $816
Gross Profit (loss) ($168) ($72) $120 $312 $504 $984
Gross Profit (%) (47%) (15%) 17% 32% 42% 55%

Profitability Profile: Wood Oil
Oil Yield
0.3% 0.4% 0.6% 0.8% 1.0% 1.5%
Product (lbs) 6# 8# 12# 16# 20# 30#
Revenue $45 $60 $90 $120 $150 $225
Costs
Production $360 $360 $360 $360 $360 $360
Marketing and Sales 9 12 18 24 30 45
G&A, and Other 96 96 96 96 96 96
Total Costs $465 $468 $474 $480 $486 $501
Gross Profit (loss) ($420) ($408) ($384) ($360) ($336) ($276)
Gross Profit (%) (993%)------------------------------------------------------------>(123%)

A profitability analysis of marketing the runoff distillate runoff waters, at $1.00 per gallon, once the market for this produce were fully developed, would be as follows, at a standard yield of 300 gallons of waters for each ton of materials processed.

Profitability Profile: Waters
Product (gallons) 300 gal.
Revenue $300
Costs
Production (10%)
Marketing & Sales (20%)
G&A, Other (5%)
Total Costs

$30
60
15
$105
Gross Profit $195
Gross marginal Profitability 65%

For an established business selling both oil and waters, the profitability profiles would be as follows:

Profitability Profiles: Oils and Waters
Oil Yield
0.3% 0.4% 0.6% 0.8% 1.0% 1.5%
LEAF OIL
Total Revenue $660 $780 $1,020 $1,260 $1,500 $2,100
Gross Profit (oil) ($168) ($72) $120 $312 $504 $984
Gross Profit (waters) $195 $195 $195 $195 $195 $195
Total Gross Profit $27 $123 $315 $507 $699 $1,179
Gross Profit (%) 4% 16% 31% 40% 47% 56%
WOOD OIL
Total Revenue $345 $360 $390 $420 $450 $525
Gross Profit (oil) ($420) ($408) ($384) ($360) ($336) ($276)
Gross Profit (waters) $195 $195 $195 $195 $195 $195
Total Gross Profit ($225) ($213) ($189) ($165) ($141) ($81)
Gross Profit (%) (Loss)------------------------------------------------------------------>

These analyses show the difficulty of making a profitable commercial business out of the distillation of oil from Juniper wood on a dedicated business basis, even if the waters from the process are marketed. However, the distillation of Juniper leaf oil shows promise, but is much dependent on the estimated market price for the oil ($60.00 per pound) for which there is not an established market -- or a truly competitive product -- today (see Test Market Results.)

Following is a graph which shows the changing profitability of leaf oil as process yield changes, with and without the marketing of the associated distillate "waters".


Commercial Conclusions:

The critical determinants driving the viability of a Juniper oil business in the commercial marketplace are:

This project has shown that, even given reasonable extrapolations for economies of scale, at the current market price of $7.50 per pound (competitive with Virginia Red Cedar -- Juniperus Virginiana oil), and with maximum anticipated product yields of 1.5%, the business would still not be profitable. Both price and yield would both have to increase 50% - 100% in order to make this a viable business opportunity.

An except to the above statement would be a case where a distiller could set up in conjunction with an existing Juniper processing operation and use (free) readily available waste materials. Processing (distillation) and other costs would remain the same, however $210 of production costs (per 2,000 pound batch) could be saved by not having to harvest and transport Juniper materials. Though this would help, it would only change the wood profile as follows:
Oil Yield
0.3% 0.4% 0.6% 0.8% 1.0% 1.5%
Gross Profit
Oil Only ($210) ($198) ($174) ($150) ($126) ($66)
Oil and Waters ($15) ($3) $21 $55 $69 $129

If a commercial market could be found for the distillate waters, then this scenario takes on a modest business attractiveness at the upper end of the anticipated yield spectrum.

Using price/positioning estimates based on the markets for other needle oils, the business potential for Juniper leaf oil is attractive, particularly if yield can approach those achieved by Kurth and Ross in a pressure distillation system (1.0% - 2.0%). The break-even point for leaf oil is at a yield of approximately 0.5%, that almost achieved in the projects small, zero-pressure distillation apparatus. This without considering the potential for revenue from sale of the distillate "waters".

If estimates of leaf-oil process yield and market price are reasonably correct, and if the distillate waters can be marketed, then the distillation of leaf oil becomes a very attractive business opportunity with gross profit of 42% at the 1.0% yield level, and 55% at the 1.5% yield level.

Entrepreneurial/Retail

Market sampling has shown that there is opportunity to enterprising entrepreneurs to make a business of distilling Juniper, and possibly other aromatic botanicals, for use in their own specialty retail products (see Test Marketing Results). The products for this opportunity would be pre-packaged oils and other specialty "scent" products for home, commercial, aroma therapy and other "mood" applications, as well as for the hunter's scent - mask market.

For this business opportunity only a modest-size distillation unit would be required (the 250 pound capacity still used in this project is a good example). The key to business viability comes from using oil to create a large volume of small, pre-packaged retail products from a small volume of oil. Oils are often packaged down to 1/4 oz. sizes (or less) for a pure oil, and other spray-scent products are a mixture of oil and alcohol in a 5% or 10% (1/20 or 1/10) oil/alcohol solution. This provides enormous product and revenue leverage from small amounts of oil. It does require, however, that the entrepreneur be prepared to do the packaging, marketing and selling of the products (at wholesale) to the appropriate customer (chain stores; gift shops, etc.). A business analysis for this opportunity follows:

Key Assumptions

Profitability Profile: Packaged Retail Products

Product
1/4 oz. Pure Oil One Ounce Scent Spray
Raw Oil Product 1.0 gallon 1.0 gallon
Packaged Sale Items 512 bottles 1,280 spray ounces
Wholesale Price $5.00 $3.00
Revenue $2,560 $3,840
Costs
Production 925 925
Packaging, Marketing & Sales 768 1,536
Other Business Exp. 256 384
Total Costs $1,949 $2,845
Gross Profit $611 $995
Gross Profit (%) 24% 26%

If the oil were commercially available at $480 per gallon wholesale, as estimated in the commercial analysis, rather than having an entrepreneur distill it themselves at a cost of $925 per gallon, the profitability of a retail products business would look as follows.

Profitability Profile: Packaged Retail Products

Using Purchased Commercial Oil
Product
1/4 oz. Pure Oil One Ounce Scent Spray
Revenue $2,560 $3,840
Costs
Purchased Oil 480 480
Packaging, Marketing & Sales 768 1,536
Other Bus. Exp. 256 384
Total Costs $1,504 $2,400
Gross Profit $1,056 $1,440
Gross Profit (%) 41% 38%

Retail Conclusions:



Return to Contents

Bibliography

(1) E.F. Kurth and J.D. Ross (1954), "Volatile Oil From Western Juniper", Report #C-3: Oregon Forest Products Laboratory, Oregon State University.

(2) Robert P. Adams (1987), "Investigation of Juniperus Species of the United States for New Sources of Cedarwood Oil": Economic Botany, New York Botanical Garden.

(3) H.L. Gholz (1979), "Structure and Productivity of Juniperus Occidentalis in Central Oregon": School of Forestry, Oregon State University.

(4) Robert P. Adams (1987), "Yields and Seasonal Variation of Phytochemicals from Juniperus Species of the United States": Biology Department, Baylor University.