Cellufuel’s plan to open a demonstration biofuel facility in Brooklyn, N.S., this summer is just the first step of an ambitious industrial enterprise intent on having 10 plants within five to six years producing $200 million in annual revenue.

The Halifax company captured media attention late last year when the provincial government said it would set up a facility in the former Bowater Mersey paper mill in Brooklyn, near Liverpool, which had just closed due to weak demand for paper. The biofuel facility, financed in part from a $500,000 contribution from the provincial government, will be the company’s first plant producing biodiesel from wood.

But the Cellufuel story has the potential to be far bigger than what was reported last month.

First incorporated in New Brunswick in 2008, Cellufuel was founded by four forestry industry veterans with experience in industry and finance. They have already raised $500,000 from a New York buyout shop with strong links to the biofuel industry. And they have licensed proven technology in the most energy-efficient process they could find for producing energy from wood products.

 “One of the reasons we’ve focused on this technology — and believe me, we’ve looked at lots of alternatives — is it is so energy efficient,” said Cellufuel CEO Chris Hooper in an interview. “Wood is about 80 per cent efficient in converting to diesel. Burning wood is only 20 per cent efficient.”

Cellufuel now plans to open a demonstration facility in Brooklyn this summer, which will have a capacity to produce about one million litres of diesel annually. Given that this is the first biofuel plant to rely completely on wood as a feedstock, the founders hope it will validate the technology.

Hooper and his partners — Tor Suther, Veselin Milosevic and Ed McKay — then hope to establish a larger facility with a 20-million-litre capacity somewhere in Eastern Canada, which it hopes will be in production in the spring of 2014. Within five years after that they hope to have about 10 of these plants, concentrated in Eastern Canada. Hooper said the company plans to locate them close to the source of wood to reduce the costs of shipping the feedstock.

To finance these first two plants, Cellufuel hopes to raise about $40 million in capital in the next two years, comprising about $11 million to $12 million in equity and the rest in debt. Hooper, who previously worked for private equity giant Cerberus Capital Management in New York, has already begun discussions with potential investors.

Within five to six years, the founders hope their 10 plants will produce a total of 200 million litres of diesel and $200 million in revenue annually.

The Brooklyn facility will serve as the company’s research and development facility, where it will strive to produce its own intellectual property.

Hooper foresees no problem in finding a market for the refined product because Canadian laws now require that all diesel sold in the country comprise at least two percent biofuel.