SUGAR LAND, Texas -- Rick Greenwood knows that the wider use of biodiesel is one necessary piece of the alternative-fuel puzzle, and he also knows the hurdles to spreading the message and getting it into more tanks.
Greenwood, the chief executive of BlueStar Health Inc., Sugar Land, Texas, oversees a BlueStar company named Zeon Fuel Inc. It manages seven fuel and c-store sites owned by a Houston distributor, but is undertaking a new mission: to acquire locations in southeast Texas so that it can market the biodiesel that it buys and blends.
"We're going to honor those [management] contracts, but we're merging Zeon into BlueStar primarily for the purpose of moving out from under that model and getting into identifying, acquiring or leasing locations so that we are in the position of having more control over what pumps we deliver our fuel to," Greenwood told CSP Daily News.
Zeon secured a commercial credit commitment last week from Walker Commercial Funding, Houston, to make those acquisitions possible. Greenwood said the target locations are existing truck stops along major routes. Zeon will blend biodiesel, made from soybeans, with petroleum diesel at a 20/80 ratio, and sell it from the acquired or leased sites. Greenwood stressed the newness of the venture; he couldn't divulge a timeline for growth because it hadn't yet been shared with shareholders.
"You want to walk before you run, and you want to take three steps before you let go of the walker," Greenwood said. "We're being kind of deliberate and controlled in how we're moving forward. My background is in commercial banking, and like commercial banking this is a high-volume, thin-margin business, and you can do great things if you know how to manage thin margins. But if you miss-step, thin margins aren't very forgiving."
BlueStar Health chairman Naved Jafry said of the credit agreement: "Having the ability to secure locations quickly is important to our goal of getting the story out and introducing our customers to the benefits of biodiesel and other bio-fuels. For this industry to succeed in achieving more than a level of sales, we must have a commercially viable network in place."
Greenwood said the fuel Zeon sells must be 20% biodiesel because at higher levels the alternative fuel acts as a solvent. The result can be a clogging of fuel filters. He said one struggle will be that his company will have to make money while educating the consumer about biodiesel.
According to Greenwood, the acquired or leased locations will have to sell traditional fuel until such time as there's feedstock that's cost-effective and in enough supply to replace petro diesel and gasoline. It will obviously still be a part of the mix, and we will certainly still offer it."
"The biggest change will be the fuel we offer," he added. "As our trucking customers adopt biofuels, we want to make it available on more and more pumps. Again, we have to be economically sensitive to make this a viable business. We can't put biodiesel in all those tanks and not have them use it."
Greenwood addressed other factors that consumers would have to get used to. Like ethanol, consumers lose a slight amount of gas mileage; at a 20/80 ratio, said Greenwood, the loss is negligible. Also, said Greenwood, "Pricewise, it's easyif it's too expensive I don't buy it."
In September, BlueStar Health, an outpatient physical therapy clinic operator, completed filings to the U.S. Securities and Exchange Commission to re-list on the OTC Bulletin Board. The company is currently trading under the symbol BLSH on Pink Sheets.
The filings made it possible for BlueStar, which had not had an operating business unit since March of 2006, to merge with biodiesel company Zeon Fuel, re-launching BlueStar into the energy business.
Prior to 1996, the company was called Taurus Petroleum and was in the oil business. Between 1998 and 2003, the company operated as Taurus Entertainment Cos. Inc., owning and operating adult nightclubs.
In 2004, the company entered the physical therapy, rehabilitation and wellness services industry, changing its name to BlueStar Health.
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