Bixby is in China trying to perfect its system

  • Article by: DAVID SHAFFER , Star Tribune
  • Updated: December 21, 2011 - 9:46 PM

Commercializing the coal-to-gas technology has proven difficult.

Even as federal authorities investigate its former executives, cash-strapped Bixby Energy Systems keeps trying to perfect its coal-to-gas technology halfway around the world.

For the past six months, engineers for Bixby and its partners have spent much of their time working in Ordos, China, a city in the coal region of inner Mongolia, about 470 miles northwest of Beijing.

The site is one of three in China where the first Bixby gasification units are being installed. Bixby announced in October that the Ordos unit produced gas for the first time -- three months after first projected.

The path to commercializing the technology has been rocky, with setbacks and missed completion targets, according to a report sent to shareholders. So far, the synthetic gas produced by the unit has been burned off in a flare, and none has been sold commercially, the company says.

Indeed, the company's board told shareholders in a letter this week that it would stop issuing target dates, though it believes the technology works.

"I am still optimistic about the technology," said Gil Gutknecht, a Bixby board member who has been leading the company. "It would be a whole lot easier if we didn't have these other problems," he added, referring to the federal investigation.

In an interview Wednesday, Gutknecht said he hopes that modifications early next year to Bixby's gasification unit and to gas off-take equipment supplied by the Chinese customer are the last hurdles to commercialization.

A stockholder suit filed earlier this year by Gutknecht, a former U.S. representative from Rochester, Minn., and Illinois businessman James Bergeron helped oust former Bixby executives, including CEO Robert Walker, who was charged Wednesday with lying to investors.

Under its new leadership, Bixby has cooperated with federal authorities investigating allegations of securities fraud. In return, prosecutors recently offered Bixby a deal to defer prosecution of the corporation and possibly later dismiss any charges.

Bixby has been on the verge of financial disaster for months.

"We're struggling," said Gutknecht. He said Bixby's stockholders and its marketing partner in China have come up with cash in recent months to keep the commercialization effort alive.

The Bixby process is an updated version of a technology that produces gas from partial combustion of coal. Beginning in the late 19th century, this "town gas" was piped to streetlights and homes in many U.S. cities, but the industry disappeared in the 1950s as natural gas pipelines spread.

David Shaffer • 612-673-7090

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