T. Boone's Clean Energy Fuels Buys Texas Trash-to-Gas

Looks like T. Boone Pickens sees his next millions in gas from Texas trash. This morning Clean Energy Fuels, the natural gas vehicle distribution company where Pickens is the director and largest shareholder, said it has purchased Dallas Clean Energy (DCE) for $19.1 million. DCE is the owner of the McCommas Bluff landfill gas processing plant, which the firms claim is the third largest landfill gas operation in the U.S.

Given that Clean Energy Fuels has yet to turn a profit, the company is turning to other sources to help with the purchase, including a (Update: Sorry about that guys, we corrected this) Clean Energy Fuels is using $19.1 million in cash from Camco International for the purchase, a $30 million credit facility from Dallas-based PlainsCapital Bank to help with both the acquisition and future capital investments in the landfill. Landfill gas developer Cambrian Energy already owns 30 percent of DCE, and Clean Energy Fuels says it will “partner” with the firm on the deal.

The decomposition of organic matter produces natural gas, which can be cultivated through landfills rigged with efficient gas collection infrastructures. The McCommas Bluff landfill is owned by the city of Dallas, which actually plans to close the landfill itself in 2042. The group estimates the site will continue to produce methane up to 30 years after it’s closed. Even for that time frame it’s still valuable, and with the price of oil still at record levels, investors are eying alternative sources, like landfills, for natural gas.

Late last year Energy Investors Funds and Enpower Corp. bought Landfill Energy Systems, which owned, operated and serviced 22 landfill gas projects that kick out 80 MW and 60 million cubic feet of gas a day. And one of the larger waste management companies, Waste Management Inc. (WMI), has been working to expand the 17 waste-to-energy plants it runs through its subsidiary Wheelabrator.

Clean Energy Fuels can likely use the trash-produced natural gas in its fueling distribution system. The company owns 170 natural gas fueling stations in 12 states in the U.S., and in British Columbia and Ontario. And last April 2008, the company opened its first CNG station in Lima, Peru, through the company’s joint venture, Clean Energy del Peru.

In Clean Energy Fuels latest quarterly filing it actually states that it has various plans to raise funding for acquisitions:

We may also seek to acquire companies or assets in the natural gas fueling infrastructure, services and production industries, and we will have to raise additional capital as necessary to fund any such acquisitions, which are not budgeted for in our 2008 business plan.

We’re not sure how much gas the landfill can add to Clean Energy Fuel’s distribution, but it does make the fuel more eco-friendly. While natural gas is cleaner than burning gasoline to run cars, it’s still a fossil fuel with a constrained supply — in contrast to gas from landfills, which is fuel from waste. Producing dollars from trash is an equation we’re sure Pickens likes a lot.