By Ernest Scheyder

ORONO, Maine (Reuters) - Efficiency and simplicity have long eluded renewable-fuel researchers, but a Maine scientist has developed a two-step process he says can make oil from the cellulose in wood fiber.

This process, far less complex than competing methods, creates an oil that can be refined into gasoline, jet fuel or diesel and removes nearly all oxygen -- the enemy of fuel efficiency.

"It's unique and it's simple," said Clay Wheeler, the University of Maine chemical engineering professor who discovered the process last year with two undergraduates. "This is important because the more complex the technology, the more expensive it's going to be."

In heavily wooded Maine, logging produces a lot of scrap tree stumps, tops and branches that are unusable for making lumber or paper.

While additional research is needed, if Wheeler's process is ultimately able to be commercially developed, it could help forest-rich states generate their own fuel from that scrap.

For a video on the process, click on: http://link.reuters.com/vak54s

In the first step of Wheeler's process, wood is bathed in sulfuric acid, isolating the sugars in cellulose and producing an energy-intense organic acid mixture.

That mixture is then heated with calcium hydroxide in a reactor to 450 degrees Celsius (840 Fahrenheit), a step that removes oxygen.

What drips out is a hydrocarbon liquid that chemically mimics crude oil.

For every ton of cellulose processed, Wheeler is able to make about 1.25 barrels of oil equivalent, a unit of energy comparable to the amount of energy produced by burning one barrel of crude oil.

The acids and calcium hydroxide are recycled at the end of the process, cutting costs, he said.

The most expensive part is the wood itself, Wheeler said. At current wood biomass prices, he acknowledged his process is not economically competitive with traditional crude oil refining.

"But we anticipate that the value of the fuel will continue to increase as petroleum becomes more scarce," he said.

The economic viability of the project is a source of concern, said Andrew Soare, an analyst who tracks alternative fuel technologies at Lux Research, a technology advisory firm.

"Further understanding of costs is key to this reaction," Soare said. "I think this process certainly does have a chance to go somewhere."

Paul Bryan, program manager at the U.S. Department of Energy's Biomass Program, said a project's economics are a key factor for any future funding support.

"If the outputs are a lot more valuable than the inputs, that's the first step to success," he said.

The journal Green Chemistry plans to publish a study later this year on Wheeler's process, which does not use catalysts or bacteria as most other alternative fuel methods do.

Wheeler is now studying just what makes his process tick. He accidentally stumbled upon it 11 months ago while trying different reactions with biomass and acids.

He does not know exactly what happens inside the reactor during the second phase, when the oil is actually produced, but he knows what he can make with it.

During a recent tour of his Maine laboratory, Wheeler refined his fuel into gasoline that can be used in existing engines.

"We've had independent laboratories test this, and without any upgrading, it was 82-octane gasoline," Wheeler said.

That is a lower octane rating than you find at gas stations -- most are at least 87 -- but traditional crude oil refining uses several steps to reach that mark.

"We think we can get there," Wheeler said of the higher octane rating.

NEW INNOVATIONS AND PRODUCTS

Even though the United States has 10 percent of the world's forest land, its pulp and paper industry has slowly declined in the past 50 years due to shrinking paper demand.

In August, paper shipments fell 6.4 percent from the same month last year and box production slipped 2.7 percent, according to the American Forest and Paper Association.

Wheeler's process could entice the paper industry to take a second look at Maine, Oregon and other timber-rich states.

"This is the kind of stuff you could do in a pulp and paper mill," Wheeler said. "Paper plants are already used to high temperatures."

University of Maine officials are hoping Wheeler's process creates jobs in a state with a 7.6 percent unemployment rate.

"These mills are the heart of communities in Maine and they need new innovations and products," said Renee Kelly, director of economic development initiatives at the university. "Pulp and paper are very cyclical, commodity businesses."

(Reporting by Ernest Scheyder and David Fazekas; editing by Andre Grenon)