Navy ships in the Pacific Rim will run on used cooking oil and algae in a test this coming summer.
But where in the world will the Navy find such a fuel?
The Defense Logistics Agency has the answer. DLA purchased half a million gallons of drop-in bio-fuel for that test as part of a new agreement — and a huge contract — between DLA, the Navy and the Agriculture Department.
While the biofuel purchase will amount to just a drop in the bucket, so to speak, in terms of the Navy fleet’s annual fuel use — more than 1.26 billion gallons — the Navy sees the contract as a high-water mark because it “accelerates the development and demonstration of a homegrown fuel source that can reduce America’s, and the military’s, dependence on foreign oil,” a Navy press release states.
Bruce Blank, the energy director of the DLA’s bulk petroleum business unit, joined In Depth with Francis Rose to discuss the procurement process.
One of the main differences is the supplier base, Blank said. For traditional petroleum, DLA works with the familiar major suppliers, such as ExxonMobil, he said.
“When you start buying some of the alternative fuels — it is a nascent industry with only a few players that can actually produce usable quantities at this point,” Blank said.
Because DLA is purchasing a commodity, in essence, it uses competitive procurements under the rubric of low-price, technically acceptable.
“What we’re looking for is a product that can be a drop-in replacement for the petroleum-derived fuels that we buy now,” Blank said. “So, as long as they can meet the specification, there’s no necessarily better product than any other.”
Because the biofuels market is still up and coming, a contract with DLA can be highly sought-after for biofuel companies, Blank said. “It is obviously a good news story that they can tout to potential investors,” he added.
DLA deploys quality-assurance and technical experts to review offers from unfamiliar companies and to ensure their facilities are up to snuff.
The continuing biofuels testing trials undertaken by many of the military services have helped bend the cost curve. In addition to the Navy, the Army and the Air Force have made big biofuel buys recently.
And while biofuels remain more expensive than petroleum-derived fuels, the price is slowly coming down.
“It is accurate to say the price has come down over the past two years or so,” Blank said, even to the point where the latest Navy purchase is only about half what the initial buys were, he added.