Wood, oil firms form bio pact.

Byline: Randi Bjornstad The Register-Guard

Oil and timber giants Chevron Corp. and Weyerhaeuser Co. announced Thursday that they will team up to study the prospects for turning wood and wood byproducts into clean-burning biofuel for sale at the gas pump.

The companies said the venture would combine Chevron's expertise in fuel technology with Weyerhaeuser's capacity to generate cellulose, the fibrous "backbone" of plants and trees and a promising component in the fledgling biofuel industry.

Finding alternatives to dwindling fossil fuels and decreasing dependence on petroleum from foreign sources have spurred research in alternative fuel sources in recent years.

`Chevron is investing in `cellulosic' biofuels because we believe they will play a role in meeting future energy growth,' Dave O'Reilly, chairman and CEO of Chevron, said in a news release announcing the partnership.

The project will focus on determining what sources of cellulose work best for vehicle fuel and how to produce them most economically.

William Jaeger, an Oregon State University professor in the College of Agricultural and Resource Economics, said Thursday he had not heard about the partnership between Chevron and Weyerhaeuser.

However, he and fellow OSU researchers Thorsten Egelkraut and Robin Cross recently completed an analysis of biofuels that showed that "the economics don't look really good for cellulosic fuels at this point."

While biofuel based on wood cellulose offers greater net energy than gasoline, canola biodiesel or corn ethanol, the cost to produce it exceeds the amount it could be expected to generate in sales, the study concluded.

"I don't know if it's wishful thinking (on the part of Chevron and Weyerhaeuser) or whether they have good reason to expect they can bring the production cost down," Jaeger said. "This may be an effort to patent a technology that might make it more feasible to produce, or they may be looking at it compared with what they think will be the future cost of gasoline."

Biofuel differs from traditional gasoline because it is renewable. One form of biofuel, ethanol, comes from corn or sugarcane. Other biofuels include biodiesel, made from soy beans, sunflowers or other refined vegetable oils.

Biofuels produced from crops also used for food have generated criticism because they take farmland away from food production, potentially raising grocery costs and limiting the amount of surplus food available for export to countries suffering from famine.

`But with cellulosic-based biofuels, there's a lot of forest, grass and straw that can be (harvested) that doesn't affect farmland,' Jaeger said. "That's one of the reasons people are interested - if the technology can be improved so it becomes more economical, the prospect of large-scale production would be better. There is reason to be hopeful."

Both Weyerhaeuser and Chevron declined to discuss how much they're investing in the project, or what their time line is.

Local Weyerhaeuser spokesman Mike Moskovitz said he doesn't know whether the Weyerhaeuser facilities in Lane County will be involved in the research project.

"We just don't know yet," Moskovitz said. "This idea is brand-new for all of us."