CNET News Video: Fill your car for $1.10 a gallon?
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CNET News Video: Fill your car for $1.10 a gallon?

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Menlo Park, Calif.'s ZeaChem has come up with a way to turn wood chips into ethanol that will sell for around $1.50 a gallon or less when it comes out in 2010. Brewing and petrochemical technology go into the mix. News.com Editor at Large Michael Kanellos talks with founder Dan Verser and CEO James Imbler about their plans for cheap fuel.

[ Music ] ^M00:00:02 >> Hi, this is Michael Kanellos at News.com and what do you get when you mix beer and oil? You get biofuels. Or at least that's the hope at ZeaChem, a new biofuel start-up in Menlo Park. They've combined experts from the Cooler's Brewery and people from the petrochemical industry to come up with a new process to turn woodchips into fuel. Let's go take a look. >> We are using wood chips to start with, but you can use other things. This is corn stover, this is switchgrass, another thing and this is pine. You can use other kinds of trees. And it is grinded up and in the lab, we grind it up pretty fine. >> And then the sawdust is fed to these guys. This tube contains microorganisms that convert the sawdust into sugars. >> They're really, really easy to grow. The cloudiness is organisms suspended in the broth. >> It's not an exotic microorganism. The microorganism they use is found in horse manure, termite guts -- pretty much everywhere in nature. >> These are the fermenters we use in the lab. >> The microorganisms do their work in this. It's a fermenter. ZeaChem claims they can get about 162 gallons per ton of wood compared to a 115 gallons to competitors. >> We will be able to produce ethanol at 80 cents a gallon. >> Really. >> And at that price you're competitive with oil down in the 30 to 40 dollar a barrel range. >> Is that 80 cents at the wholesale level or at the pump or...? >> That's 80 cents at the plant gate. >> Okay. >> It's always sold ethanol at the plant. >> Right. So, estimated, what, you know what would I get at the pump? >> That would be -- that would be probably you've got 50 cents tax, probably about 50 a gas. Assuming everything goes well, we should have some test ethanol out in the market probably year 2010. Our first product will actually be a chemical intermediate and then we'll be selling ethanol after that. ^M00:01:41 [ Music ]

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