The cellulosic ethanol sector got even more crowded today, with Minneapolis, Minn.-based Novus Energy joining up with the U.K.'s Oxford Catalysts for a pilot plant that aims to produce the next generation fuel from organic waste.

The first tiny 100 gallon per day facility is expected to be up and running in the spring of this year.

"We're in the final stages," John Offerman, president of Novus Energy, told Cleantech.com. "We're fabricating the components right now to do the biogas to liquid fuels process."

Offerman said Novus has been working on the project with the U.S. Department of Energy for the past three years and has already run the process at a room-size scale.

The company, which is in the middle of raising a $7.5 million C round from angel investors, plans to use an anaerobic bio-digester to process waste, setting up plants on-site at food and agricultural processors, landfills and municipal wastewater treatment plants.

Novus' system will produce methane-rich biogas, and then use Oxford Catalysts' technology to convert the biogas into feedstock for fuel-grade alcohol.

The pilot plant will go up in Laramie, Wy., at the Western Research Institute, which is affiliated with the University of Wyoming.

Novus isn't the only company trying to get ethanol from waste.

Broomfield, Colo.'s Range Fuels, which started work on a planned 100 million gallon per year plant in Georgia in November, also expects to be able to use a similar assortment of feedstocks for its process (see Range Fuels' Mitch Mandich breaks ground).

Range Fuels uses thermo-chemical conversion in its system.

And BlueFire Ethanol (PINKSHEETS: BFRE) has secured a site in Northern Los Angeles County, at a landfill near Lancaster, California for a new modular biorefinery that will target an initial production level of approximately 3 million gallon per year, turning waste into fuel.

The company already has a pilot facility at a landfill in Southern California producing 18.6 million gallons per year from green and wood waste.

Although the biofuel business is in a slump due to a glut of ethanol and high corn prices, Novus' Offerman said the current market wouldn't affect them as they're not going to be in commercial production for at least a year.

He also said his company's process was flexible and could react to changing demands.

"We make a series of alcohols in our process, including methanol," he said. "But we understand also if the market moves to butanol, or even diesel, we could even adapt our process to make diesel."

The pilot plant is expected to run for about a year, but Novus is already planning to start work on a demonstration scale facility in the spring at the Minn-Dak Farmers Cooperative, a sugar beet processor in Wahpeton, N.D.

"It's about a million gallon per year facility that will run off of yeast waste and sugar beet pulp," said Offerman.

The company expects its first full-scale plant to be operational in 2009 to 2010, and to roll out dozens of facilities over the following five years.

The alliance with Oxford Catalysts provides funding for the U.K. company to further develop key steps of its conversion process, and to design the large-scale plants.

The British group, which is licensing its technology to Novus, projected revenues of up to $197,325 in 2008 from its strategic alliance with Novus, and expects royalty income to average up to $750,000 per year for each full-scale plant.

Oxford Catalysts' technology is based on research done at the University of Oxford's Wolfson Catalysis Centre, headed by professor Malcolm Green, who founded Oxford Catalysts in 2004.

The company raised $29.6 million on the Alternate Investment Market of the London Stock Exchange in 2006.

Most of Novus' investors are ethanol farmers, but operators of landfills and other sites where Novus is likely to set up shop will also benefit from the company's business.

"There's always going to be something in it for our site partners," said Offerman.

"Whether it's going to be revenue sharing, or whether they're going to get back organic fertilizer, or whether they're going to get that plus some purchase of their feedstock at some price, those are all going to be negotiated separately."

He pointed out that sites would also get waste mitigation issues solved with a partnership.

In addition to the North Dakota sugar beet facility, Novus currently has plans to build refineries at a Minneapolis landfill, an Idaho potato plant, and an Iowa site converting farm cornstover and hog waste.

Novus also expects to introduce the technology in Europe, where a similar number of facilities are planned.