Waste-to-Fuels Startup Terrabon Hauls in Waste Management Investment

Terrabon has landed another investment partner -- this time, it's Waste Management-- in its pursuit of commercially viable green gasoline, a renewable fuel made from the organic waste found in your local landfill.

BNET wrote about Houston, Texas-based Terrabon back in April, when Valero Energy, the largest U.S. refiner, became a lead investor in the company.

Consider this latest investment and partnership with Waste Management, also based in Houston, as the third leg on a stool. Without it, well, you'd have a two-legged stool, which isn't very useful. Meaning, Terrabon has the technology, Valero has the refining and Waste Management -- as North America's largest trash collector -- has access to all of that organic waste.

Tim Cesarek, managing director in organic growth at Waste Management, would not disclose the investment amount. Cesarek did say, the investment is part of Waste Management's renewable energy strategy and is optimistic with the technology. Valero's investment has not been disclosed either.

The question, is of course, even with loads of investment partners is this or can this be a commercially viable project? Terrabon's chief financial officer Malcolm McNeill says yes.

"The DOE asked the same question when we were applying for the grant," McNeil said in a phone interview Wednesday. "They wanted to know, what is the end game?"

Once the kinks are worked out and if they take an aggressive stance, Terrabon could have 40 waste-to-fuel facilities -- each capable of handling 220 tons of non-food biomass a day and eventually turning it into 5.5 million gallons annually -- by 2016 or so., McNeill said. He added that with a 220-ton per day facility -- the most economic size -- it would cost $2 per gallon.

Of course, the kinks are the hard part.

Terrabon was formed in 1995 to commercialize three technologies developed at Texas A&M University, including its MixAlco acid fermentation, the key to its green gasoline. Terrabon received about $4.5 million in investments until 2007 when the company began moving from research into deployment, McNeil said. He would not reveal how much has been invested in the company since then, except to say it's been substantial.

Here's how the green gasoline process works: Terrabon takes organic waste like grass clippings and sewage sludge and treats it with lime to make it more digestible. The biomass is fermented to produce a mix of carboxlyic acids. Water is removed from the product to form non-hazardous organic salts.

Those salts are trucked to a refinery, where they are treated with chemicals and converted into gasoline, diesel or jet fuel. This is not ethanol, however. It has higher energy value than ethanol, which makes it comparable to regular gas.

Terrabon's next step is to build a $40 million plant in Port Arthur, Texas, McNeill said. The company has applied for a $25 million Department of Energy grant and should know whether it has been awarded the funds by October or November of this year, McNeill said. The facility would be able to handle 55 tons of waste a day and ultimately produce 1.3 million gallons of fuel a year, he said.

"The challenge is the process engineering," said McNeill, who added they have already learned a great deal since its advanced biofuels research facility in Bryan, Texas opened earlier this year.

The company obviously needs to reduce its costs and scale up its technology to a commercial level. To do this, they have to improve its material handling process -- essentially sorting through all of the plastic, old bicycles and other junk, and getting to the waste they want -- and the dewatering process, McNeill said.

The deawatering process uses what Terrabon calls its advanced vapor compression evaporation technology or the easier acronym AdVe. AdVe is an advanced desalinazation process that uses compression and heat to reduce the broth of organic waste down to the crystalized biocrude. The technology also is used to make brackish, salty water potable.

Additional BNET coverage of Terrabon:

• Oil Refiner Valero Plows More Money into Renewables With Terrabon Investment