The Gas Company has begun refining local fish oil into natural gas at its West Oahu plant in a pilot project that will eventually produce up to 1 million gallons a year of renewable fuel.

The project will replace from 5 percent to 7 percent of the petroleum-based naptha that the Gas Company currently uses to produce synthetic natural gas, and production could be expanded to comprise half of the company’s output in a few years, said Jeff Kissel, The Gas Company’s president and CEO.

While the company has started the project with fish oil, it intends to use other animal and vegetable byproducts as it ramps up.

"The production of renewable natural gas is a major milestone that will allow us to provide sustainable energy from local agricultural products that were previously discarded or shipped out of state," Kissel said. "We’re making a contribution to the substantiality of the food and agricultural sectors in this island community."

The company will hold a ceremony today attended by Gov. Neil Abercrombie to announce the new project.

There is more than enough non-food-grade oil and fat available from Hawaii’s fishing, cattle, pork and poultry industries to meet the Gas Company’s production target of 1 million gallons of renewable natural gas a year, Kissel said. The company also plans on trying other locally produced inedible vegetable oils, including algae and jatropha, to determine what materials work best as production is scaled up, according to Kissel.

The pilot project is expected to last 12 to 18 months before production is expanded, he said. If successful, the project could indirectly boost livestock production in the state if farmers are guaranteed a market for some of the waste products from their operations, Kissel added.

The Gas Company is buying the renewable oils and fats at a price that is slightly less than what it pays for naptha, a byproduct from the crude oil refining process.

"The key is that it allows us to reduce the amount of petroleum we use," Kissel said, noting that Hawaii relies on crude oil for 90 percent of its energy consumption.

The Hawaii Renewable Energy Development Venture, funded by the U.S. Department of Energy, awarded a $1 million grant to The Gas Company for the project. The company received no tax credits for the endeavor.

The Gas Company provides synthetic natural gas and liquified petroleum gas to more than 68,000 homes, businesses and government offices throughout the state for cooking, water heating, clothes drying and other uses. The renewable natural gas will be combined with the petroleum-based synthetic natural gas distributed through the company’s 1,100-mile Oahu pipeline.