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BioFuelBox Opens Its First Fat-to-Fuel Plant

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BioFuelBox_PICWe’ve heard hardly a peep from BioFuelBox, a 3-year-old biofuel startup backed by Draper Fisher Jurvetson and Element Partners, since it raised its first round of $9.46 million back in 2007. But now the San Jose, Calif.-based quiet company says it’s ready to hit the market in a big way. On Monday BiofuelBox announced it has opened – and begun operating – its first biodiesel refinery, a 1-million-gallon-per-year plant that turns waste grease, oil and fat into low-sulfur biodiesel.

It’s an interesting move at a time when other biodiesel plants are being idled, shuttered and put up for sale. But BioFuelBox says its biodiesel is cost-competitive with diesel from petroleum, that it’s already bringing in revenue, and that it expects to have 10 factories up and running by the middle of 2011, with its first profits early in the same year.

In addition the second plant is already underway, says Richard Reddy, vice president of marketing. BioFuelBox eventually plans to build hundreds of these refineries, he said, but claims it only needs “a couple dozen” to become “wildly profitable.”

The key is technology that allows BioFuelBox to cost-effectively use impure oil that previously has been too costly to turn into biodiesel. The process enables the plants to make financial sense at small 1-million-gallon sizes so they can be located – and the fuel they produced can be used – near the supply of grease, reducing the costs of transporting either the feedstock or the fuel.

While the company wouldn’t disclose details about its proprietary system, called Novostream, Reddy said it involves three steps to extract oil from watery contaminated waste streams, convert the oil into fuel and then purify the fuel so it meets ASTM standards. The whole process takes about 15 minutes, and BioFuelBox uses buffer tanks to store waste and even out the supply so its factory can run 24 hours a day, he said.

The factory in American Falls, Idaho, gets its supply of grease from a wastewater treatment plant, said Richard Reddy, vice president of marketing for the company, adding that the company then sells the fuel to an unnamed diesel retailer, which sells the fuel regionally. Future plants might also sell fuel to the grease supplier, if that supplier also runs diesel trucks, school buses, or farm equipment, he said.

Here’s how the supply system works in Idaho: Restaurants and other high grease generators set up grease traps to keep the gunk from clogging up the pipes. When those traps are pumped out, the grease – mixed with water – goes to wastewater treatment plants so that the water can be reclaimed and cleaned up, and the rest of the grease usually gets thrown away. BioFuelBox takes that gunk and turns it into fuel. BioFuelBox finances, owns and operates the plant, signing 10 year (or longer) deals for the grease, and makes money by selling the biodiesel.

Aside from trapped grease, the company also is going after industrial waste, such as oil used in factories that pre-cook food so it can be quickly reheated in a home microwave, for example, or cooked more quickly at a restaurant. While most of the grease at the Idaho plant comes from restaurants, one of the sources is a potato processor that pre-cooks things like French fries, tater tots and hash browns, Reddy said. Some of the oil can be reused or resold, but the contaminated oil that’s unusable for other applications gets sent to BioFuelBox’s plant. For future plants, BioFuelBox also plans to make use of fats from municipal and agricultural facilities, such as animal rendering facilities that produce plenty of excess chicken, pork or beef fat.

BioFuelBox’s technology was developed by its chief scientist, Greg Anderson, who developed it to eliminate the fuel cost for his local senior citizens’ bus, Reddy said. Founders Steven Perricone, CEO, and Patricia Bright, vice president of sales, found him through mutual acquaintances and saw the potential to use that technology for a larger purpose. The company is in the process of raising its second round of funding now, Reddy said.

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