New Generation Biofuels (fka NGBF)

[Dragonwing]

New Generation's Growth Indicates the Market Is Ripe
for Biofuel

April 6, 2010

By George Berkheimer, STAFF WRITER

Legend has it that everything King Midas touched turned to gold. In a similar manner, nearly everything touched by Columbia-based New Generation Biofuels (NGBF) has the potential to turn green.

According to company CEO Cary Claiborne, New Generation uses proprietary technology to produce renewable, lower-emission alternative biofuels from plant oils and animal fats.

"We use a wide variety of different feed stocks that goes through a blending process," he said, with the primary source coming from waste vegetable and soybean frying oil acquired from restaurants through bulk collectors and processors. "Not only is our product cleaner to burn than fossil fuels, it's also cleaner to make than petroleum-based fuels," Claiborne said. "We don't need a chemical reaction to produce it, and we have no byproducts left over from the process." Recent test burns of New Generation's product have yielded positive results showing mono-nitrogen oxide reductions of up to 60% compared to distillate fuels and virtually no particulate emissions. Testing also confirmed low levels of sulfur dioxide, virtually no unburned hydrocarbons and comparable carbon monoxide levels compared with diesel fuel.

Expansion Planned
Formed in March 2006 as H2Diesel in Florida, NGBF streamlined its operations by moving its corporate headquarters to Columbia last summer shortly after delivering the first commercial truckload sale from its Baltimore production facility.

Since then, New Generation's customer base has grown through new sales contracts, distributor contracts and letters of intent. The company also amended its initial license agreement with PTJ Bioenergy Holdings, the licensor of NGBF's technology, to expand its reach beyond the North America, Central America and Caribbean territories specified in the original agreement.

Under terms of the amendment, New Generation will receive a 5% royalty fee from technology-related revenue outside the original territory and an additional 5% sales commission for customer introductions and sales assistance outside these territories. NGBF's first commercial-scale plant in Baltimore produced more than 200,000 gallons of biofuel in 2009. "We're ramping it up as we go," said Claiborne, noting that the company is planning to triple production capacity this year from 5 million gallons to 15 million gallons per year and hire up to six full-time employees to operate the plant. Eventually, he said, production could reach as much as 50 million gallons per year in Baltimore. NGBF currently employs 12.

Broad Market
According to a Third Quarter 2009 financial results report, NGBF signed seven sales contracts as of Sept. 30 last year for potential customer orders of more than 10 million gallons on an annual basis. The company also executed non-binding letters of intent with several businesses located in Costa Rica, Puerto Rico and Canada that are now evaluating the prospect of licensing NGBF's technology with the intent of constructing additional biofuel manufacturing facilities and marketing NGBF biofuel. "We're currently holding discussions with a group in China that is interested in exploring markets both in that country and in the United States," Claiborne said. For the moment, NGBF's business model pursues a royalty-based combination of licensing and franchising.

"This is the ideal technology to license or franchise because it doesn't take up a lot of space," Claiborne said. "Large utilities or manufacturing companies can put a dedicated plant on site and it will only take up half an acre."

Maryland emerged as the perfect location for New Generation from a number of company viewpoints and surveys, Claiborne said.

"We have access to more customers in this area than in Florida, particularly for heating sales," he explained, "and we're closer to Washington, D.C., for our regulatory concerns."

Claiborne also said he considers Howard County a business-friendly location based on his prior experience as CFO for Osiris Therapeutics, a Columbia-based biotech company, and as vice president for financial planning with Constellation Energy.

Local Potential
Locally, the market is slowly beginning to reveal more of its potential for New Generation.

Among the Maryland companies to sign on with NGBF last year was Chaney Enterprises of Waldorf. The concrete and aggregate marketer is seeking to make an initial switchover to biofuel in its hot water boilers. The contract also provides for additional scope to ultimately supply biofuel for a large number of off-road vehicles. "The renewable nature of ... biofuel allows us to reduce our carbon footprint in something as easy as switching our boiler fuel over from fossil fuels to NGBF biofuel," said Bill Childs, president and CEO of Chaney Enterprises. "[I]t was an easy decision to make the switch."

Working through Tri Gas & Oil, the company's biofuel marketer in Maryland, NGBF completed a successful test burn of its biofuel product in January at Washington College in Chestertown. Two of the college's steam plant boilers burn No. 6 heating oil in the winter, and a third uses No. 2 diesel oil in the summer. Administrators are looking to replace the No. 2 fuel with a cleaner, greener option.

"The college is constantly looking for new and innovative ways to reduce our carbon footprint while not increasing our energy costs," explained Briggs Cunningham, who serves as Climate Action Coordinator for the Center for Environment & Society at Washington College.

According to Cunningham, the college burns about 100,000 gallons of No. 2 fuel every year.

"The BTU content was a little less for the biofuel but we can burn it without making any equipment modifications and the switchover is basically cost-neutral," he said. "From a lower emissions standpoint, biofuel seems to make a lot of sense for us. Our senior staff is studying the data now and will make a decision soon."

The test puts teeth into Washington College's 2007 decision to sign onto the American College & University Presidents Climate Commitment, which is designed as a nationwide effort by higher learning institutes to reduce greenhouse gas emissions, promote research and educational efforts aimed at re-stabilizing the earth's climate, and accelerate progress toward climate neutrality.

Favorable Conditions
The potential market for biofuel amounts to well over 10 billion gallons per year in the United States alone, Claiborne said. "From the standpoint of being an energy business, renewable biofuel is a [stable] field to be in at the moment," Claiborne said.

"Between legislation and the fact that the Environmental Protection Agency seems to be taking a stronger stand on utilities and companies emitting greenhouse gases, there is a growing list of reasons that companies are starting to look to renewable fuels as alternatives," he said.

Moreover, many businesses are beginning to have serious discussions about ways they can show themselves as being cleaner and greener than they have been in the past. "It's an image boost for some businesses," Claiborne explained. "We feel that's going to help us in the future, regardless of the recession."

http://www.newgenerationbiofuels.com/media/The%20Business%20Monthly%20Interview%20With%20Cary%20J.%20Claiborne.pdf