Pearson Fuels General Manager Mike Lewis has poured plenty of work over the years into building ethanol stations around California.
His 11 stations account for more than one-third of the 30 existing in the state.
That’s about to change. The San Diego company has received $10.9 million in federal and state grants to install 55 ethanol fuel stations around the state.
Pearson will target areas with the highest concentration of “flex-fuel” vehicles. The first station will be installed on India Street near the airport, said Lewis.
“I guess my reaction was I felt a sense of validation to what we’ve been doing all these years,” he said. “We built the first E85 (station) on the West Coast in 2003. And it was the only E85 pump in California for four years.”
Now he’s got 55 more on his plate.
“I guess it makes you feel good,” he said.
The stations are essentially a single Pearson-branded ethanol pump and underground storage tank at existing gas stations. The fuel is a mixture known as E85, which is 85 percent ethanol and 15 percent gasoline. It can be used by modern flex-fuel cars, which run on either gasoline or E85.
E85 is cleaner burning than gas and is renewable. However, its popularity often depends on the more volatile price of gasoline, which last summer cost considerably more than E85. Currently, E85 is running at $2.59 per gallon and gasoline just dropped to $2.89 gallon, but prices fluctuate, Lewis says, and E85 can range from $1 less per gallon than gas to occasionally even more than gasoline.
Cars also get lower mileage on E85.
And then there’s that “food for fuel” controversy with ethanol, which is primarily made from corn.
Lewis calls that a smoke screen.
“When people have a problem with ethanol, I say ‘compared to what?’ Compared to oil it’s better, but compared to something that doesn’t exist?”
The coming innovation of ethanol production will not be from food, but biowaste, says Lewis, who reached out to a company that’s close to commercializing “cellulosic ethanol” from corn stovers, which are the leftover leaves and stalks after harvest.
AE Biofuels of Cupertino partnered with Pearson on its grant application.
“You hear about making ethanol out of something other than corn — almost none of that is really happening in the real world. We feel these guys are further along than anyone,” Lewis said. “Our intention is to bring in non-corn ethanol by the end of next year.”
Andy Foster, AE Biofuels president and COO of the biofuels division, says the company has demonstrated the cellulosic ethanol production at its Butte, Mont., facility and is in talks with several California plants to license the process.
It uses an enzyme cocktail to ferment the biomass into a usable ethanol.
Pearson Fuels would be the first commercial deployment of cellulosic ethanol, Lewis said.
AE Biofuels will also be helping Pearson on E85 purchasing from producers.
“In the meantime, we’re working with Mike to help him get good prices on E85 to supply the stations,” said Foster, whose company employs 20 people in Cupertino and 40 in India. “We would work through some of the sources we have.”
Foster says they’ll also provide back office resources for Lewis — who is essentially a three-man operation — as he negotiates with station owners to install the E85 infrastructure at their businesses.
“Our goal is to work with him to help do these build-outs,” Foster said. “Mike has largely done this by himself. We’ve got a larger company with more resources to help him get it done.”
Pearson does not disclose revenues.
Playing Catch Up
The state is under pressure by the federal government to increase its output of renewable fuels.
A new federal mandate requires that 36 billion gallons of fuel sold in the United States be from renewable sources by 2022 — and the state’s share is expected to be 20 percent.
“We expect the lion’s share to be ethanol, whether it’s sugar cane, cellulose or other renewable sources,” says Gordon Schremp with the California Energy Commission, which awarded Pearson $4 million of the $10.9 million. The remaining $6.9 million was awarded by the U.S. Department of Energy, through its Clean Cities program.
Next year, the state will increase its ethanol mixture in gasoline from 7 percent to 10 percent, which will boost ethanol output to 1.5 billion gallons a year.
“That will help meet our fair share obligations. It’s more than we need to do,” he says. “But by 2012 or 2013, that volume of ethanol won’t be enough to meet the total fair share commitment from the federal mandate.”
Hence more E85 stations. A lot more.
Assuming carmakers start producing more flex-fuel vehicles — increasing the current number from 400,000 to 4 million on California roads by 2022 — and car owners choose E85 half the time they fill up, the state would need 27,000 to 30,000 E85 stations by 2022, he said.
“That’s a significant increase in the number of dispensers,” he said.
Ned Randolph is a freelance writer for the Business Journal.