With gasoline passing $3 a gallon, business must be good for anyone involved in alternative energy projects.
Such is the case for Diversified Energy Co., a company founded by former space satellite producer Dave Thompson to provide engineering and other services to developers of renewable energy technologies.
Started in late 2005, the Gilbert-based company has signed five contracts worth more than $2 million so far and has seven other projects pending that will bring about $7 million in additional revenue, said Phillip Brown, president and CEO of the fledgling company. He expects the firm, which has nine employees, will have a positive cash flow by the end of this year.
“We’re fastening our seat belts here. The rocket sled is starting to vent the red-fuming nitric acid. I think it’s about to go vertical,” Thompson said, using terminology drawn from his career in rocketry.
Thompson, who sold his former company, Spectrum Astro, to General Dynamics in 2004, has plenty of reasons to believe that his new venture is in the right business. Gasoline prices are expected to reach record highs, and the United States is as dependent as ever on unstable foreign sources of energy.
“We knew the transportation energy situation would get worse, and it has,” Thompson said.
Diversified is focusing on two domestic technologies that it believes have the best promise for providing meaningful help in the shortest time: conversion of coal to cleaner-burning gas and liquid forms and production of biofuels.
Three of the company’s contracts are related to a new coal gasification technology developed by Carefree-based Alchemix Corp. The companies believe it will be cheaper than existing coal-to-gas systems because it involves lower capital costs. In addition to being a fuel itself, the synthetic gas produced in the process can be converted with further refining into diesel, gasoline or jet fuels, Brown said.
Another benefit of the technology is it could use other materials such as tires or wood chips as a feedstock, he said. The two companies are working on projects to convert waste wood to syngas at a pulp mill in California and coal to syngas at a wallboard plant in Indiana. In both projects, the syngas would serve as a substitute for natural gas, a fuel whose price has risen sharply the past few years.
Diversified also is providing technical services for a proposed power plant in southeastern Arizona that would be fueled by syngas made from coal. The process would be much cleaner than burning the coal directly as in conventional coal-fired electric plants, Brown said.
The company also is providing engineering help on a U.S. Department of Defense project to make jet fuel from oil-based crops such as soybeans or palm oil, using technology developed by a nonprofit affiliate of the University of North Dakota. The initial goal is to produce 100 liters of military-grade jet fuel within 18 months, he said. Eventually, the technology could be used as a renewable source of fuel for commercial airliners, he said.
Diversified has submitted proposals to other federal agencies to develop projects related to Centia, a biofuel produced from crops and animal fats that can be converted directly into a substitute for gasoline. Thompson likes Centia, developed at North Carolina State University, because it can be used in existing vehicles and the nation’s current liquid fuels infrastructure, unlike ethanol-based fuel, which cannot be transported in pipelines and requires special flex-fuel vehicles.
He likes coal because it is abundant in the U.S. but concedes its prospects have been hurt by the increased attention on global warming. Even in its cleaner forms, coal releases greenhouse gases that will need to be captured to avoid contributing to climate change. But he added that the nation’s demand for energy is so enormous that coal will have to be used.
“The market dynamic is unstoppable,“ Thompson said. “We have got to find a way to use coal.”