HILO, Hawai'i — A company that wants to use eucalyptus or other biomass to produce millions of gallons of diesel fuel on the Big Island is seeking leases on up to 37,000 acres of state land. SunFuels Hawaii LLC also is negotiating with private landowners for land to grow fuel.

The project to create new plantations and build a refinery to produce the diesel would involve an investment of "hundreds of millions of dollars," said SunFuels General Manager John Ray. If the project is successful, fuel production would begin in eight to 10 years.

Ray said the company is aiming to produce 11 million to 13 million gallons of diesel annually, which is roughly the amount of diesel the Big Island consumes now for transportation purposes. For that level of production, SunFuels will need about 25,000 acres of eucalyptus.

Producing diesel locally from biomass will cost more than diesel made from imported oil costs today, but Ray said SunFuels is banking on increasing oil prices to make the locally produced diesel competitive in the years ahead. The fuel would be market ready, meaning no modifications of vehicle engines would be necessary.

The process involves what the company calls a Carbo-V gasification technology that can convert a variety of biomass fuels such as woodchips and straw into synthetic gas, which can in turn be converted into fuels such as diesel or even jet aviation fuel, according to a description of the process supplied by SunFuels.

The thermal gasification system can also process municipal solid waste and construction waste such as lumber. Ray said SunFuels does not intend to accept municipal waste, but would take waste lumber if it is available.

SunFuels was formed by Michael Saalfeld, a Waimea resident who owns a controlling interest in the German company Choren Industries, which licenses the Carbo-V technology.

Saalfeld "is extremely focused and intent on developing this project in Hawai'i, so he brings an enormous amount of experience to the table in regard to energy development, and in terms of financing energy projects on a very large scale," Ray said.

"He didn't move to Hawai'i with any intention of being in business, but quickly grasped the magnitude of the challenges with regard to food and energy sustainability," Ray said. "He decided to jump in with both feet and see what he might be able to contribute."

The refinery would take up about 25 to 30 acres, and would employ 120 to 130 people. No site has been selected for the refinery, which would be built on private land, but Ray said it would be built as close as possible to the sources of biomass.

Ray described the refining process as "very elegant." The plant produces its own electricity, and has minor wastewater emissions that may need treatment, but has no smokestack emissions, he said.

The company has been looking for land to grow eucalyptus in Ka'u, Hamakua, North Hilo and Waimea. The state Board of Land and Natural Resources on Friday will consider whether to approve, in principle, a 50-year lease covering up to 37,000 acres of state land to SunFuels mostly in the Mana Road area of Hamakua and North Hilo.

Significant amounts of that state land would not be planted even if the lease is approved. Areas that would not be planted include terrain such as gulches where planting would not be feasible, and mauka areas that are sensitive because they are closer to palila bird habitat on Mauna Kea, Ray said.

Most of the state land is now leased as pasture. Ray said SunFuels sees a need to support both trees and ranching on portions of the land, and "we're developing a management plan that will allow trees and grazing at the same time."

The company has also met with the state Department of Hawaiian Home Lands, which has additional pasture land in the area.

Ray said SunFuels expects to employ about 60 people planting and harvesting trees.

Eucalyptus and other biomass crops are suddenly getting a great deal of attention as a potential source of fuel on the Big Island.

A company called Hamakua Biomass Energy is proposing a 30-megawatt power plant in Pa'auilo that would be fed by about 14,000 acres of eucalyptus the company bought from Hancock Timber Resource Group.

Meanwhile, a company called Hu Honua Bioenergy is proposing a 24-megawatt biomass power plant at the former Hilo Coast Processing Co. mill, a site where C. Brewer & Co. originally burned bagasse.