Blue Fuel Energy plans to build a refinery in British Columbia to produce low-carbon gasoline from natural gas with a smaller carbon footprint than gasoline from conventional refineries. The refinery aims to eventually produce 100% renewable gasoline using renewable hydrogen produced from water electrolysis and captured carbon dioxide. This process could allow the production of gasoline without any fossil fuels, demonstrating a potential pathway for the oil industry to transition to renewable fuels. The project faces challenges in securing financing due to the untested nature of the technology, but could serve as an example for bridging the fossil fuel industry to renewable energy sources.

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A shorter version of this story appeared originally in the Toronto Star.
By Tyler Hamilton
As oil giants headquartered in Calgary face the reality that the best days for
their industry could be behind them, the towns of Chetwynd and Dawson
Creek in northwestern British Columbia hold out hope that better times lie
ahead.
It is on about 1,000 acres of land straddling both municipalities that a small
B.C.-based company called Blue Fuel Energy plans to build an industrial-
CARBON CAPTURE, CLEANTECH, LOW-CARBON TRANSITION
COULD PROPOSED B.C.
REFINERY BE THE FUTURE OF
LIQUID FUELS?
JANUARY 9, 2016

2. scale refinery that could create enough low-carbon gasoline to fuel 20 per
cent of vehicles in Canada’s third-largest province.
Called the Sundance Fuels project, it’s expected to create about 1,500
construction jobs and another 150 permanent positions. But beyond a
boost to the local economy, the project carries broader significance for
what it represents to Canada’s petroleum sector: a path to phasing out the
“fossil” from its fuels in a world that must dramatically reduce its green‐
house-gas emissions.
Blue Fuel chief executive Juergen Puetter, the
mastermind behind the $2.5 billion-plus
project, has coined the term “liquid electricity”
to describe the clean synthetic fuel his venture
will produce. Initially, Blue Fuel’s pump-ready
gasoline will be made from plentiful B.C. natur‐
al gas, not Alberta crude oil, and will have a
carbon footprint 10 per cent smaller. It will
achieve this by making its refinery more effi‐
cient than conventional refineries and using
zero-emission hydro and wind power from
B.C.’s grid to drive as many steps in the process as possible.
Not bad – enough, in fact, to comply with low-carbon fuel standards in
B.C. and California – but nothing to brag about.
It’s just the start, says Puetter, whose ambition seems to have no limit. “By
having the refinery in place, we could ultimately make our fuel not just low
carbon, but 100 per cent renewable,” he says.
PROVEN TECH
How would that work? It comes down to basic chemistry. Any refinery that
makes gasoline is just juggling carbon and hydrogen molecules – hence
the word hydrocarbons. The molecules in natural gas are reformulated into
something call synthesis gas, which in turn is refined into methanol. In Blue
Fuel’s case, it plans to use technology licensed from ExxonMobil to con‐
vert that methanol into gasoline.
But natural gas, or any fossil fuel for that matter, doesn’t have to be the
original hydrocarbon source. Puetter’s longer-term plan is to install ma‐
chines called electrolyzers that use clean B.C. electricity to split water into
oxygen and hydrogen gases. Carbon would come from the CO2 emissions
captured from existing industrial facilities or, as technology evolves, directly

3. from the air. Over time, the idea is that the supply of waste CO2 and re‐
newable hydrogen will grow and the use of natural gas will shrink. Eventu‐
ally, the fossil in the fuel is squeezed out of the final formula.
“Nobody so far has been able to prove this to be fundamentally wrong,”
says Puetter, conceding that it’s been a challenge raising the capital to get
the project moving. Still, he’s aiming for gasoline to start flowing out of
Sundance by 2020. “If I told you this has been easy I’d be lying.”
Puetter isn’t a mad inventor who hatched the idea in his garage. He has a
track record, having founded several successful businesses – including
Bionaire, a maker of indoor environmental control products, and Hydroxyl
Systems, a water and wastewater treatment company. He developed the
first commercial wind farm in B.C. and for five years sat as chairman of
federally funded Sustainable Development Technology Canada, where he
is still a board member.
The fact that Michael Macdonald, former senior vice-president of global
operations at Methanex, the world’s largest methanol maker, joined Blue
Fuel as its president lends serious credibility to the venture; as does the
decision by RBC Capital Markets to lead the company’s hunt for financing.
Blue Fuel is also not the only company pursuing this idea. The first com‐
mercial plant to produce gasoline from natural gas began operation 30
years ago in New Zealand, and in 2011 a company called Carbon Recy‐
cling International opened up a small refinery in Iceland that makes
methanol out of captured CO2 and hydrogen produced from clean electric‐
ity.
Even German carmaker Audi is testing the wa‐
ters. It has partnered with a company called
Sunfire to make “e-diesel” made from CO2 and
renewably produced hydrogen. A portion of its
clean fuel has also been made from CO2 cap‐
tured directly out of the air using technology
developed by Zurich-based Climeworks.
Closer to home, a Calgary-based company
called Carbon Engineering wants to use CO2
collected from its own air-capture technology to produce gasoline using a
different process than the one Blue Fuel has chosen. “Our vision has al‐
ways been about doing this at large scale,” says company CEO Adrian
Corless.

4. Puetter says he can see Carbon Engineering one day becoming a supplier
of CO2 to Blue Fuel. “But first we need to reduce the cost of CO2 capture,”
he says. “It’s coming down, but it’s not economical yet on a large scale.”
CARBON NEUTRAL GASOLINE?
Still, the technology exists and it’s easy to see a future where the liquid fu‐
els we use don’t add carbon to our atmosphere. It’s a tall order. But if oil is
truly an economic addiction, synthetic fuel made from recycled carbon
could be what methadone is to a heroin addict, and would address the re‐
ality that not all vehicles – from big trucks to airplanes – can run on battery
power alone.
“There’s a market opportunity coming that really is quite extraordinary,”
says Puetter, envisioning a day when big oil companies make their prod‐
ucts with clean energy, instead of using fossil fuels to extract and produce
dirtier fossil fuels.
The oil giants, after all, are already in the business of making liquid hydro‐
carbons. They have the project management experience, engineering skills
and deep pockets needed to gradually transition from fossil to clean syn‐
thetic fuels, and the existing infrastructure – such as pipelines – to get their
product to market.
“We believe we’ll be the first plant that is truly a gateway to that future,”
added Puetter. “Our refinery will hopefully be a poster child for bridging the
fossil fuel industry to renewables.”
Leah Lawrence, president and CEO of SDTC and past chair of the Calgary
Chamber of Commerce, said Blue Fuel Energy is an important piece of the
ultimate puzzle: what Canada’s energy sector might look like in a carbon-
constrained world.
“For the first time we’re seeing a rapid uptake of technologies where before
we couldn’t see how they all fit together,” said Lawrence. “Now we’re see‐
ing it. Now you can see how a transition might happen.”
So is the oil industry paying attention? Does it care?
“It’s astounding how the oil boys club in Calgary is unwilling to change,”
says Puetter, admitting that what he’s trying is “outside the box” and with‐
out precedent in Canada. The financial community has been an equally
tough sell. “All they see is the risk. They don’t see the upside,” he says.

5. This article was part of a series produced in partnership by the Toronto Star
and Tides Canada to address a range of pressing climate issues in Canada
leading up to the United Nations Climate Change Conference in Paris, De‐
cember 2015. Tides Canada is supporting this partnership to increase pub‐
lic awareness and dialogue around the impacts of climate change on Cana‐
da’s economy and communities. The Toronto Star has full editorial control
and responsibility to ensure stories are rigorously edited in order to meet its
editorial standards.
BLUE FUEL ENERGY CARBON ENGINEERING SYNTHETIC GASOLINE