MTBE REPLACEMENT? PLANT DERIVATIVE IS MYSTERY INGREDIENT.

Byline: Jim Steinberg Staff Writer

SAN BERNARDINO - Officials of a technology firm believe they have stumbled on a gasoline additive that's much easier to swallow than the groundwater-contaminating MTBE used today: A longtime food additive.

``I would be very surprised if you haven't eaten some of it during the past month,'' said Peter Jonker, a consultant to San Bernardino-based Kelly Space & Technology which is developing the secret formula, a derivative of plants the company won't identify.

The company has applied for a patent for its Kelly Green Oxygenate and is raising nearly $2.5 million needed to pay for an extensive nine-month testing program in accordance with U.S. Environmental Protection Agency standards.

The fuel supplement was discovered at a time when California is pushing to remove MTBE - an additive that makes gasoline burn cleaner - by the end of the year. MTBE is blamed for serious groundwater contamination.

So far the only viable alternative is ethanol, primarily made from Midwest corn. But some analysts worry that the gasoline additive problem has parallels to last year's energy crisis: One hitch in the process could mean tremendous spikes in gasoline prices, they say.

Michael S. Kelly, chairman and chief technical officer, says that his product base is found in plants nationwide and as an FDA-approved food additive poses no environmental risk.

``In its long history on this planet, the chemical has never shown up in water,'' he said.

Jonker added it will also be easy on the wallet because it's cheaper to produce and transport.

Still, the technology - if it does all the privately held firm believes it will - will generate upward of $430 million annually in royalties.

Kelly hopes his test product, labeled A-107, will make it a major replacement player in what is now the nation's 43 billion-gallon-per-year MTBE market.

He discovered the product's usefulness in gasoline about 18 months ago as a spinoff from tests to develop a nontoxic rocket fuel.

Michael J. Gallo, president and chief operating officer of KST, said that after conducting several blind sample tests, an excited technician from Automotive Testing called up to find out what was really in A-107.

Subsequent tests showed the initial results were not a fluke, he said.

Kelly brought in Jonker, who has broad experience and contacts in the energy industry and with regulatory agencies.

Gallo said that originally Kelly Green Oxygenate will be synthetically produced at a refinery. KST is close to reaching a preliminary agreement with a refinery to build a pilot plant to demonstrate the project, he said.

Later, Gallo envisions most of the Oxygenate would be obtained from agricultural operations, as is most of the nation's ethanol.

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Photo:

(color) Peter Jonker, left, president of Global Energy Systems LLC, Michael Gallo, center, president and CEO or Kelly Space & Technology Inc., with Michael Kelly, inventor of the Kelly Green Oxygenate gasoline additive.

Rodrigo Pena/Staff Photographer