Suburban Propane to acquire stake in Oberon Fuels

Suburban Propane Partners says it will purchase a 39 percent stake in San Diego-based Oberon Fuels, a development-stage producer of low-carbon, renewable dimethyl ether (rDME) transportation fuel.

Oberon has been focused on the research and development of a practical and affordable pathway to zero-emission transportation through its proprietary production process. Its rDME fuel is a cost-effective, low-carbon, zero-soot alternative to petroleum diesel, the company says. Suburban Propane has also committed to provide additional funding to support continued development efforts to begin commercializing a rDME/propane blended product.

“At Suburban Propane, we recognize the need to reduce the nation’s carbon footprint and improve overall air quality,” says Michael Stivala, Suburban Propane president and CEO, in a press release. “The current clean-burning attributes of propane are a positive contributor to the goals of decarbonization, particularly when used as a replacement for gasoline and diesel in the transportation sector. Through our Go Green with Suburban Propane initiative, we are committed to the development of innovative solutions to further reduce the emissions profile of propane and to creating a pathway to zero carbon emissions.

“Our investment in Oberon Fuels is perfectly aligned with our strategic growth initiatives, and our commitment to being a pioneer in the transition to a sustainable energy future,” Stivala adds. “We are very excited to partner with the team at Oberon Fuels to realize our joint vision of bringing DME technology together with propane to dramatically lower the carbon footprint.”

With recent grant funding from the California Energy Commission, Oberon is developing rDME for a novel use: a blending agent with propane. Traditional clean-burning propane can offer immediate opportunities to reduce carbon emissions in the transportation sector compared to gasoline and ultra-low sulfur diesel.

With an estimated carbon intensity value of -278, according to the California Air Resources Board, and similar handling and storage properties as propane, rDME can be an ideal blending agent that can reduce the carbon intensity of propane. Under the U.S. Environmental Protection Agency’s Renewable Fuel Standard, rDME is eligible for renewable identification number credits when produced from dairy biogas using the Oberon process.

During 2021, Oberon is expected to begin production of rDME from pulp mill waste (with an annual production capacity estimated at 1.6 million gallons) at its demonstration facility in California’s Imperial Valley. Suburban Propane will have the exclusive rights to work with Oberon to market and sell rDME and rDME/propane blends in the United States, Canada and Mexico.

In connection with the transaction, Oberon Fuels President Rebecca Boudreaux has been named president and CEO, taking over from longtime investor and former CEO Ruben S. Martin III, who now owns an equal equity stake in Oberon with Suburban Propane. Martin is a veteran of the midstream oil and gas industry and transportation space, serving as president of Martin Resource Management Co. since 1981 and its publicly traded affiliate, Martin Midstream Partners. Oberon’s co-founder and longtime COO, Elliot Hicks, will continue leading Oberon’s operational and engineering efforts, and the management of Oberon will retain their current ownership interests in Oberon.

“Suburban Propane is making a bold statement that innovative approaches can drive sustainability across the industry,” Boudreaux says. “This is an opportunity for two molecules – DME and propane – to come together and provide the world with a cost-effective, clean-burning fuel that offers a pathway to carbon neutrality. We could not be happier to be working with Suburban Propane to bring this technology to the market and meet the increasing demands for lower emissions.”

Featured photo courtesy of Suburban Propane and Oberon Fuels