Dynamotive Adds BioOil to the Biofuels Mix

PRETORIA, South Africa () -- Looking for a promising bet on a potentially winning young company with technology that addresses energy security and greenhouse gas emissions? So are large and growing numbers of investors across the U.S. and around the world. If so, you might want to put Dynamotive USA, Inc., a wholly-owned subsidiary of Vancouver's Dynamotive Energy Systems Corp. [OTCBB:DYMTF], on your short list.

The company on May 29 announced that it will supply an initial 14 tonnes of biochar, a soil enrichment agent, as part of a project led by Heartland BioEnergy LLC in Iowa's Corn Belt to improve soil fertility and crop yields, as well as take carbon dioxide out of the atmosphere.

That's just the tip of the proverbial iceberg, however. The announcement is one in a string of recent initiatives that paves the way for large-scale use of Dynamotive's proprietary BioOil biomass-to-fuel and biochar production processes in the Americas and overseas.

"Cellulose-based fuels present the next frontier in sustainability and Dynamotive's pioneering position in advanced generation biofuels is further enhanced through the achievement of this new milestone," said Dynamotive's President and CEO Andrew Kingston in a media release announcing the commissioning of the company's new BioOil generation plant in Guelph, Ontario.

Building BioOil-BioChar Capacity

The first BioOil test run at Dynamotive's new BioOil plant in Guelph, one in a planned series of tests before bringing the plant into full production, used approximately 40 cubic metres of wood waste to produce intermediate grade BioOil, which has a higher energy value than its regular grade BioOil. Dynamotive's original plant, located in West Lorne, Ontario midway between Detroit and Toronto, is undergoing reconstruction.

Dynamotive has a minority interest in the Guelph plant, which is being developed in a partnership with Megacity Recycling Inc. and operates under a jointly owned corporation named Evolution Biofuels Inc. Built with Argentinean energy engineering company TECNA, engineers are reviewing operational data and testing is being conducted on the fuel produced, according to the company.

Company management notes that industrial fuels represent approximately 20% of hydrocarbon use worldwide, and the company is moving forward with plans to market BioOil to industrial companies under the 'BioOil Plus' brand as "a green and cost competitive alternative to heating oil, fuel oil, natural gas and propane in industry."

The Process

The production process converts sawdust, wood chips and other waste wood and biomass into BioOil, a greenhouse gas neutral biofuel that can be used to generate electricity and to power industrial processes that make use of fuel oil.

Dynamotive's carbon/greenhouse-gas-neutral fast pyrolysis technology uses medium temperatures and oxygen-free conditions to turn dry, waste cellulosic biomass into BioOil(R) for power and heat generation. The BioOil can be further converted into vehicle fuels and chemicals.

BioOil combustion produces little or no carbon dioxide, nitrogen or sulfur oxides, and it is a price competitive replacement for #2 and #6 heating oils used widely in industrial boilers and furnaces, according to management.

"BioOil combustion produces little or no carbon dioxide, nitrogen or sulfur oxides...When combusted it produces substantially less smog-precursor nitrogen oxides emissions than conventional oil as well as little or no sulfur oxide gases, which are a prime cause of acid rain."

A co-product of the process is biochar, a dry soil concentrate that can be used to enrich agricultural soils, the forerunners of which were used in ancient times in the Amazon to rejuvenate soils and enhance their productivity.

"The soils created then are now known as 'terra preta,' which means black soil, and are considered among the most fertile in the world," according to company information.

In addition, Dynamotive demonstrated in earlier tests that BioOil Plus can be a cost-effective input in biomass to liquid processes (BTL), used as means of delivering biomass energy to BTL plants. This, in turn, can "break down cost and logistic barriers to the production of mobile fuels from biomass," management asserted.

Carbon Negative

The biooil-biochar production process is apparently able to provide a means of producing greenhouse gas emissions free fuels and electricity while taking carbon dioxide and greenhouse gases out of the atmosphere and improve agricultural yields - a concept and process that has been dubbed carbon negative.

Biochar has been shown to enrich and rejuvenate nutrient poor and depleted agricultural soils, as well as providing a means of long-term carbon sequestration. Also of significance, the production process is not dependent on food crops, a growing concern when it comes to ethanol and biodiesel production.

"Because the biochar does not readily break down, it could sequester, apparently for thousands of years, nearly all the carbon it contains, rather than releasing it into the atmosphere as the greenhouse gas carbon dioxide. Crucially, we expect it to boost agricultural productivity significantly through its ability to retain nutrients and moisture and host beneficial soil micro-organisms," said Dr. Desmond Radlein, Dynamotive's chief scientist behind the company's proprietary fast-pyrolysis technology, said in a media release.

Testing and Expansion Plans

Dynamotive's biochar will be used in a biomass-to-fuels and soil enrichment project led by Heartland BioEnergy LLC. Field trials will involve three strips of corn crop land 800 feet long and 30 feet wide. One strip will have no char applied, 2.5 tonnes of char per acre will be applied on the second, and the third will receive 5 tonnes per acre.

"For several decades, scientists have recognized that the most productive soils in Europe have a char base, classifying these lands as 'black carbon' based. The role of char was poorly understood and believed to be an indirect effect, resulting from the routine burning of crop residues from naturally productive soils over centuries. Recent research from South America has shown that the application of char to low productivity soils can turn them into highly productive soils," according to Dynamotive.

"Not only has Dynamotive's biochar the potential to raise high-yield rates of corn another 20%, but we believe there is a real possibility the char trial could also result in evidence that could point the way to dramatic improvements in water quality, which could have far-reaching beneficial consequences," Heartland BioEnergy's Dr. Lon Crosby said in a media release.

Cornstalks represent the single largest source of annually renewable energy in the U.S., and Iowa will produce over 40 million tons of cornstalks harvestable on an annual and sustainable basis, according to Heartland BioEnergy LLC.

Heartland proposes to build a prototype biorefinery as a precursor to a series of such facilities located strategically across the Corn Belt that would use up to 17% of the 10 million dry tons of annually available cornstalk biomass within a 50-mile radius.

Producing BioOil in Argentina

Dynamotive's Argentinean subsidiary Dynamotive Latinoamericana S.A. on May 10 announced the signing of an agreement with Argentina's Provincial Government of Corrientes and engineering firm TECNA to develop up to six biofuel plants.

Subject to further negotiation and signing of definitive and binding agreements, "the joint focus of the four-party agreement is to tackle environmental issues arising from vast stockpiles of decomposing wood waste and substantially increase electricity generating capacity in this forested region of Argentina," according to Dynamotive.

The partners said that the expected cost for the six-plant project cost is projected to be between $120 and $140 million. Funding is anticipated to be provided by a group of banks and other private sources.

The proposed goal of the project is to build an initial two facilities in Virasoro and Santa Rosa,

Argentina that will produce 'green' electricity using BioOil for fuel. Each is expected to provide a minimum of 6-8 megawatts of exportable electricity. Four plants would be for BioOil production only.

Looking Forward

During the remainder of 2007 management expects to achieve key milestones for its existing projects, as well as add to them. They stated that having two plants in operation later this year will give Dynamotive a competitive leg-up in the marketplace by "demonstrating the production of cellulose-based fuels at commercial levels well ahead of our competitors."

"By enhancing productivity of the land and crop yields, sequestering carbon by putting it back into the soil, and producing alongside ethanol and biodiesel our BioOil that displaces hydrocarbon fuel use in industrial applications, we aim to show, with our partners, a virtuous circle of land, crop, fuel and environment management. The Amazonian Indians created the most fertile soils in the world, and today we may be able to benefit from adopting their land management methods," Kingston said.

"Dynamotive believes that BioOil presents a third alternative liquid fuel to coexist with ethanol and biodiesel.... By being able to exploit any cellulose raw materials, e.g. forest industry residues-- bark, biomass from fields--I believe we can become a great contributor to the energy mix and accelerate the adoption of cellulose based fuels."

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