November 13, 2006 3:15 PM PST

Microgy lands deals to help it turn cow manure into natural gas

Alternative energy start-up Microgy has lined up contracts for an essential element to bring natural gas to California homes: cow manure.

Six dairies in California have agreed to allow the company to install thermophilic digesters on their farms. The digesters heat up, and then break down cow manure into biogas. Removing the carbon dioxide turns biogas into natural gas, which the company plans to ship down pipelines.

Golden, Colo.-based Microgy has already signed long-term contracts to supply gas to California utility PG&E.

When fully operational, the digesters will be capable of extracting 2.5 billion cubic feet of natural gas out of manure annually--enough to heat 50,000 homes. Concurrently, the digesters capture nearly 1 million metric tons annually of greenhouse gas emissions. Buyers of the gas will likely also qualify for carbon emissions credits, recently enacted in the state.

Microgy, a division of Environmental Power, is setting up a similar chain of digesters in Texas. The company used to try to sell the digesters to farmers, who could then use the gas themselves or sell it. Joseph Gallo Farms, one of the six dairies included in Monday's announcement, already uses its own manure-created gas to power farm equipment. Most farmers, though, don't want to sink the capital into digesters, so Microgy now builds and owns the digesters, and tries to make money from selling the gas.

While farmers don't get the gas from their manure under these agreements, the digesters rid them of the expenses of disposing of manure.

Elsewhere, the University of California, Davis has started running an experimental digester that converts food scraps into natural gas.

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