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Biofuel race is a global pursuit for Jersey's Primus, funded by Israel Corp.
|Wednesday, June 27, 2012
By Eliot Caroom/The Star-Ledger
|Investing in a startup is never a sure bet, but the payoffs can be huge. In that respect, Primus Green Energy is a quintessential example of a bootstrapping business.
The Hillsborough company hopes to revolutionize the energy sector by producing high-octane gasoline and jet fuel -- so-called "drop-in" products that can be substituted for current fuels in existing vehicles. It's a section of the green tech industry focused on fueling the majority of America's existing 250 million motor vehicles, not the growing but still small number of electric and compressed natural gas cars and trucks.
Primus believes it can compete with oil, currently at $80 or $90 a barrel, depending on its source, as long as the fossil fuel stays around $65 a barrel or higher.
But the company isn't alone in the race to commercially produce gasoline substitutes from biological sources -- companies are trying to make fuels out of everything from algae to corn to wood pellets.
"No doubt about it, there are lots and lots of advanced biofuel developers both based in the United States, some in Canada, some in Europe and further afield," said Pavel Molchanov, who follows energy businesses for Raymond James & Associates. "There's plenty of competition."
Molchanov said the industry is in the early stages, and not all companies will survive out of more than 100 he estimates are in business nationwide.
"Five years from now when this industry is, hopefully, in the mainstream of production, there will be a much more limited set of competitors," Molchanov said. "It's not going to be two or three, it might be a couple dozen, but it's clearly going to be compressed."
Primus has promise. It raised $40 million from its main investor (although it had hoped for more support), and a demonstration project is producing gas (but not yet in commercial quantities).
That could change by 2013 if the company has its way. It plans to build an approximately $200 million commercial plant in partnership with Bechtel, an engineering giant with a history of scaling up new technology.
The company is attracting the support of a spectrum of federal officials and Jersey politicians not just for its technology, but because it ties together New Jersey and Israel, where the company's only major investor thus far, Israel Corp., is based.
Israel Corp. is the country's largest holding company, listed on the Tel Aviv Stock Exchange, and owns stakes in other energy-related business like Better Place, an electric car battery swap business that Gov. Chris Christie visited on his trip to the Middle East.
Some New Jersey leaders see the work as a benefit to Israel and the United States, not only for economic or environmental reasons, but also geopolitical ones.
"We are spending billions of dollars overseas with hostile nations (for oil)," said Assemblyman Upendra J. Chivukula (D-Somerset).
Chivukula, who visited Israel for an energy seminar thanks to the American Jewish Committee, commended Israel Corp. for "investing in the future" with its stake in Primus.
So, exactly how promising is Primus?
Some proof is in the gasoline. When the company last Friday showed off gasoline produced from its pilot project, U.S. Rep. Leonard Lance (R-7th Dist.), Chivukula, and former Gov. Jim Florio looked on as a car started up on gasoline made from wood pellets.
A planned demonstration-size plant will produce 33 liters of gas an hour, or 4 to 5 barrels a day, said Primus Vice President George Boyajian.
Wood pellets are vaporized, and the elements are used to make natural gas. Or Primus staff can use natural gas itself. Either way, another reactor converts that natural gas to gasoline fit to fuel an SUV or a hybrid.
The next question the company faces is how it will grow from its current 40-person staff at its Hillsborough headquarters -- and where.
Company officials say they're looking at sites for commercial plants that will cost between $100 million and $300 million, and are focusing most of their attention outside of New Jersey.
Boyajian said eastern Pennsylvania, Texas, Louisiana and Canada are all being considered.
If the company builds up facilities and work force outside of the state, its headquarters could move, Boyajian said, but it will keep a Jersey presence.
"I don't know about corporate," Boyajian said. "Certainly the R&D will remain at our current location."
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