Friday, July 10, 2009

Houston's Terrabon leading "grassoline" revolution

The company, called Terrabon, is perfecting a renewable fuel it calls “green gasoline” that is nearly identical to petroleum gasoline but can be made from just about any kind of organic material, from sewer sludge to cornstalks.

As such, it addresses some of the biggest problems that have dogged ethanol, the leading U.S. alternative fuel today, and could hold potential in moving the U.S. away from fossil fuels.

“If you can make a molecule that looks a lot more like gasoline, that’s the Holy Grail for the biofuels industry,” said Aaron Brady, an oil analyst with IHS Cambridge Energy Research Associates.

Yet it may be a while before America is driving on green gasoline.

While Terrabon has had success with test batches and recently received the backing of a major oil refiner, the fuel still has not been proved on a large scale. Ethanol also has a big head start and far more political support.

That’s why, for the moment, Terrabon officials are focused on fine-tuning their process for what they see as the inevitable day when oil prices rise again and urgency returns to biofuels research.

“One of the reasons we built this was to find out what we didn’t know,” said Malcolm McNeill, Terrabon’s chief financial officer, standing in 100-degree heat next to the $3.5 million Bryan research facility that the company calls Energy Independence I.

At the facility, which opened last fall, Terrabon has been testing a technology known as MixAlco. Developed by scientists at Texas A&M University, it uses an acid fermentation process that can convert “anything that rots,” as one company official put it, into chemicals that can be further processed into gasoline.

By the end of the summer, Terrabon plans to be producing some 300 gallons per day of green gasoline from chopped sorghum using the Bryan facility and a second in College Station that does the final conversion to gasoline.

But it soon hopes to begin building a much larger plant in Port Arthur with the backing of San Antonio’s Valero Energy Corp., the nation’s largest oil refiner. In April, Valero said it would be the lead investor in the first installment of equity financing for Terrabon.

A 2007 energy law requires blending of 36  billion gallons of biofuels into the nation’s fuel supply by 2022 as part of an effort to reduce the country’s dependence on oil, help American farmers and reduce tailpipe emissions.

Though 15 billion gallons of that will be corn ethanol, more than half of the mandate requires the use of second-generation biofuels that are made from nonfood crops like switch grass and organic waste like wood chips.

Five plants under construction in the U.S. will produce “cellulosic” ethanol made from some of these other sources.

But widespread distribution of ethanol still faces hurdles. Besides the costs of equipping the nation’s automobiles and fuel distribution infrastructure to handle increasing amounts of the highly corrosive fuel, ethanol achieves lower fuel efficiency than conventional gasoline.

Green gasoline, however, behaves much more like conventional gasoline, with comparable fuel economy and compatibility with existing oil infrastructure, Terrabon says.

Plus, the company believes it can produce the fuel for $1.75 per gallon—cheaper than estimates for some cellulosic ethanol technologies.

Andy Aden, a biofuels researcher at the National Renewable Energy Laboratory in Golden, Colo., calls Terrabon’s cost projections “optimistic” and said scaling up green gasoline technology could face unforeseen logistical problems.

But he said at least a dozen companies are working on “infrastructure compatible” biofuels, including Wisconsin’s Virent Energy Systems and California’s Amyris Biotechnologies.

“It’s definitely the long-term solution,” Aden said.

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