Oxonica’s deal with bus fleet puts company on right road

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Feb. 7, 2005 — It’s been an arduous 12-month journey and a lot of buses for Oxonica Ltd. and its subsidiary Cerulean International. But they reached their destination in December when the transportation company Stagecoach Group announced it would put Cerulean’s nanotechnology-based fuel additive in its entire fleet of 7,000 buses.

“From Stagecoach’s view, it’s pretty straightforward,” said Stuart Anderson, Cerulean’s business director. “They’re looking for a fleet benefit, so they threw the lot at us.”

Cerulean launched a trial program with Stagecoach in 2003 to test its product Envirox in 1,000 diesel buses during various seasons. Using its own validation process, Stagecoach wanted to know if Envirox could improve its fuel efficiency while also lowering emissions.

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After a year, Stagecoach announced 5 percent reduction in fuel consumption and an equivalent reduction in pollutants. The figures, which cover all types and conditions of buses, were deliberately set at the low end, according to Kevin Matthews, chief executive of Oxonica and Cerulean.

“Stagecoach was mindful of being too bullish about efficiency,” he said. “They wanted to be reasonably conservative. The 5 percent is achievable.”

Envirox contains cerium oxide, a well-understood catalyst that facilitates the combustion process by creating a cleaner burn. But at a conventional scale it tends to settle at the bottom of the combustion chamber. “It’s like putting sand in,” Matthews said. “It’s not good for the engine.” Nanoparticles, on the other hand, remain suspended in fuel.

Envirox is one of two products Oxonica has placed on the market. A spinout from the University of Oxford in the United Kingdom, Oxonica was formed in 1999 to commercialize the intellectual property of nanomaterials experts Peter Dobson and Gareth Wakefield.

The company’s platform technology allowed it to look for numerous commercial opportunities. It is focusing on three different applications: fuel additives, nanomaterials for personal care products and biodiagnostics. It already has sales for Envirox and Optisol, an ultraviolet light-absorbing product used in sunscreens.

Oxonica began testing its fuel additive several years ago in Hong Kong in a program using city buses and vehicles. In 2002, Oxonica created the subsidiary Cerulean International to concentrate on the fuel application. Cerulean International, in turn, established Cerulean Asia-Pacific to speed up the marketing of Envirox in the East.

Cerulean International and Stagecoach agreed in September 2003 to test Envirox in buses in London and its vicinity. “The technology was pretty much developed when we had the product in Asia,” Anderson said. “We had to show it would work properly in different types of buses and different environments.”

Envirox poured into a diesel fuel storage tank immediately disperses and stays dispersed, Anderson said. The fuel can then be pumped into buses. The technology is compatible with existing tanks, fuel lines and engines.

Many vehicular combustion systems fail to burn all the fuel available to them. The unused fuel becomes a polluting byproduct in emissions. A catalyst like Envirox helps engines burn more fuel, which make them cleaner and more efficient. To be attractive for customers like Stagecoach, Cerulean must ensure that the fuel savings and environmental incentives exceed the cost of the additive.

“This is a substantial benefit to Stagecoach,” Matthews said. “It makes economic sense and environmental sense.”

Matthews and Anderson see the Stagecoach rollout as only the start for Oxonica and Cerulean. They are exploring deals with other customers who use diesel fuel in everything from trucks to boats to power generators.

They also are developing ties with influential corporations such as the chemical giant BASF. BASF Venture Capital GmbH is an investor in Oxonica. They anticipate revenues and partnerships will help them build their existing commercial ventures while investing more in their research and development efforts.

“We’re at the end of a very long road,” Anderson said. “But it’s not the end, really.”

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