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Texas Poop-to-Gas Biofuel Plant Creates Stink, Hits Hurdles
2010-11-24 22:00:00.7 GMT
By Paul M. Barrett
Nov. 25 (Bloomberg) -- Erath County, Texas, produces two
commodities in bulk: milk and manure.
Visitors to the Victorian-era courthouse in Stephenville,
the county seat, 70 miles (113 kilometers) southwest of Fort
Worth, are greeted by an imposing fiberglass cow named Moola.
The tons of waste produced by bovine herds have created,
well, a stink in the area, Bloomberg BusinessWeek reports in its
Nov. 29 edition. For years, officials in downstream Waco accused
the dairies of contaminating the water supply.
When a New York-based renewable energy company proposed
taking the muck off farmers' hands at no charge, everyone loved
the idea. The plan was to transform the manure into a climate-
friendly gas for energy.
"It was going to be win-win for everyone," says July
Danley, head of the Stephenville Chamber of Commerce.
Poop-to-gas plants -- the technical term is anaerobic
digesters -- are not new. They're big in China and northern
Europe, thanks to government subsidies.
In the U.S. the technology has support from green groups.
"I'm very high on that approach," says James D. Marston,
director of the Environmental Defense Fund's energy program.
Federal grants and loans to the industry totaled $37.2 million
through 2009. While the number of projects has increased from a
dozen in 1990 to more than 150 today, according to federal
statistics, they're generally more modest in scale than abroad.
Biggest Digester
The exception is Texas, where everything is bigger. Here,
on the outskirts of Stephenville, North America's largest
digester facility sprawls across 73 acres (30 hectares). The
surrounding air smells as pungent as one would expect.
Shaped like fat grain silos, the eight, five-story
anaerobic digesters that form the core of the 22-employee plant
were humming on a recent autumn morning.
Manure mixed with water was flowing into the computer-
controlled 916,000-gallon (3.47 million-liter) digesters. There
the sludgy organic material decomposes into biogas -- mostly
methane -- which is refined into pipeline-quality natural gas.
The developer, Microgy Inc., signed contracts to supply
utilities in Texas and California, saying the plant could meet
the energy needs of 10,000 homes. The U.S. Environmental
Protection Agency promoted the project on its website, and
Microgy said as recently as May that it did not need government
backing to succeed.
"We're sustainable without incentives," Executive Vice
President Michael Hvisdos told the website ClimateWire.
Bankruptcy Filing
In July, Microgy's parent, Tarrytown, New York-based
Environmental Power Corp., filed for bankruptcy, saying it would
liquidate. The company was partly a victim of its own ambitions;
it expanded too quickly, with projects in California, Colorado
and Wisconsin, and borrowed too much. Environmental Power's
revenue jumped 62 percent in 2009 from a year earlier, to
$4.7 million, while its losses more than doubled, to
$36 million. A Securities and Exchange Commission filing from
April shows long-term liabilities totaling $50 million.
It wasn't just an excess of debt that sank the enterprise.
The death of national climate legislation exacerbated
Environmental Power's difficulties and hampered the renewable
energy market more broadly.
If Congress had created a system to reduce carbon emissions
by setting caps and encouraging companies to trade pollution
permits, projects such as the one in Erath County would have
benefited by selling credits linked to the clean energy they
produce.
Cheap Natural Gas
The surging supply and falling price of natural gas didn't
help either, denting the competitiveness of more expensive
renewable energy. Environmental Power's former Chief Executive
Officer Richard E. Kessel declined to comment.
There may be hope for the Stephenville project. In
November, a buyer scooped up the plant at the bargain-basement
price of $3.3 million. Riding to the rescue -- and signaling at
least some long-term confidence in manure-to-energy -- is
Element Markets LLC, a Houston-based carbon-trading firm co-
founded by Lou L. Pai.
Pai has had a long and, at times, controversial career in
energy. After working at ConocoPhillips and DuPont Co., he
landed at Enron Corp. in the 1990s, where he led the retail
energy unit.
Enron Experience
Pai left Enron six months before it collapsed in late 2001,
pocketing more than $265 million from exercising Enron options
and selling stock, according to a U.S. Senate panel. Without
admitting wrongdoing he agreed to forfeit $25 million to settle
SEC allegations that he abused inside information to dodge
investment losses before Enron's demise. He was not charged. Pai
did not respond to messages seeking comment.
Randall N. Lack, Element's chief marketing officer, says
"the biomethane market can provide clean energy and reduced
emissions while being commercially successful."
Element might have better luck revving up the Texas plant,
because the bankruptcy process has stripped the facility of its
daunting debt burden. The company says on its website that it
works with utilities, municipalities, and companies to develop
renewable energy, trade environmental credits and nurture new
clean energy ideas. One of the images on the site is a handsome
brown cow mooing under a wide-open sky.
For Related News and Information:
Top environment stories: GREEN <GO>
More climate-change news: NI CLIMATE <GO>
Top energy page: TOP NRG <GO>
Most-read environment stories: MNI ENV <GO>
-- Editors: Will Wade, John Lear
To contact the reporter on this story:
Paul M. Barrett in New York at +1-212-617-1573 or
pbarrett17@bloomberg.net.
To contact the editor responsible for this story:
Reed Landberg at +44-20-7330-7862 or
landberg@bloomberg.net
