OUTLOOK — After years of failing to generate a profit by selling electricity generated from cow manure, Dan DeRuyter of George DeRuyter & Sons dairy in Outlook is ready to give the natural gas market a try.

This summer, work is expected to begin on a pipeline to connect his digester to the Williams Northwest Pipeline, a major supply line throughout the West and Northwest.

A 3.7-mile-long pipe will be installed from his digester on Dekker Road to the supply line, a roughly $2.8 million project. Helping fund that work is Yakima County, which recently approved a $1.4 million economic development grant for the work. DeRuyter has partnered with a renewable energy company to provide the rest of the funds.

Generators now used to produce electric power will have to be removed, making way for a scrubber that will clean the gas to pipeline standards. In all, the project will cost roughly $12 million. In addition to the pipeline and scrubber, a new nutrient recovery system will installed.

The company working with DeRuyter, Promus Energy of Seattle, will seek funding from the state Clean Energy Fund, which is administered by the state Department of Commerce, said Promus Energy President Dan Evans. He said he’s currently in the underwriting process with the fund manager, but wouldn’t divulge details about how much the project stands to receive.

Evans also said he has several interested private investors.

The pipeline from DeRuyter’s digester will be equipped with access points so the other five dairies in the area can easily connect in the future if they install digesters. The county will own the pipeline and lease it to the dairy.

“It sounds promising to be a profitable way to deal with dairy waste,” said Yakima County Public Services Director Vern Redifer. “It deals with a bunch of quality-of-life issues as it relates to the smell of manure.”

When DeRuyter built the $3.8 million digester in 2006, he saw it as profitable way to deal with cow manure, which has been a point of contention among environmentalists and area residents. But not long afterward, rates paid to DeRuyter by Pacific Power fell to 3.5 cents per kilowatt-hour, less than half what they were when he started. He could sell the power, but it would be at a loss.

Now, with increasing interest across the country in natural gas as an alternative fuel for truck fleets and its potential for undercutting the cost of diesel fuel by nearly half, DeRuyter envisions a new market for the methane produced by his 3,150 dairy cows.

Promus Energy specializes in renewable energy projects with an emphasis on natural gas. The company will operate the digester and the conversion of methane to natural gas.

“My biggest thing is, if we can improve what we are doing and not lose money, that’s a benefit,” he said on a recent afternoon at his dairy. “I honestly believe that this is going to be a model for the dairy industry.”

Natural gas as fuel has enormous potential, Evans said in a telephone interview from Seattle.

Evans said he has preliminary contract agreements to sell as much natural gas as DeRuyter can produce, but said it’s too early to identify the buyers.

“That’s not a problem,” Evans said of selling the natural gas. “And it’s worth many times more than the electricity that can be produced by a digester.”

Cascade Natural Gas potentially could be interested if DeRuyter can create a steady, reliable supply that meets industry standards, said Bismark, N.D.-based spokesman Mark Hansen.

“We’re always looking at that type of renewable energy in the marketplace,” he said, noting that Cascade has not had any formal discussions with DeRuyter or Promus Energy about buying natural gas. “There’s always a possibility.”

DeRuyter’s digester produces enough electricity to power anywhere from 600 to 800 homes. It has the potential to generate the equivalent, in natural gas, of 4,300 gallons of diesel fuel a day, Evans said.

A large inventory of cheap natural gas nationwide is causing a shift in the “energy equation,” he said. As a result, transit and trucking fleets are now converting to natural gas, and Seattle taxis have already done so.

Tax incentives and carbon credits — the value of methane emissions avoided at dairies by capturing them in a digester — are making it possible for the renewable energy sector to produce natural gas, Evans said.

“It’s a very clean, renewable fuel and we’re able to sell that competitively because of those credits,” he said.

Evans said getting more dairies on board makes the economics even more appealing. Five other dairies in the area of DeRuyter’s make up about 20,000 cows, which produce an amount of waste equal to the amount that roughly 2.8 million people would produce, according to a study by the Environmental Protection Agency. All those dairies combined have the potential to produce a natural gas equivalent of about 20,000 gallons of diesel fuel a day, Evans said.

The other dairies have yet to build digesters, but some are now interested, he said.

For years, dairies have been criticized for their dust, odor and contribution to groundwater pollution, including high levels of nitrates in household wells in the Lower Valley, which has the state’s largest concentration of big dairies.

Digesters help by breaking down manure into methane gas and killing pathogens such as E.coli. Inside a digester, manure slowly snakes through a trough while it’s broken down by bacteria — a 20-day process — creating methane.

DeRuyter said dairies in the area have made efforts to improve their impact on the environment.

“I know a lot of dairy operations who invest a lot to make their operations better, and that’s what we’re doing,” he said.

Natural gas isn’t the only product of a digester. On the backside of the digester is a nutrient recovery system that converts liquid and solids from the process into fertilizer, which is sold.

The new system will improve how solids are extracted from liquid, leaving cleaner wastewater that will not have to be trucked off. Currently, a sludgy wastewater is left and has to be spread on nearby fields, Evans said.

DeRuyter won’t be the first dairyman to put such a plan into motion. Fair Oaks Dairy, a consortium of dairy operations in Indiana, is powering its fleet of trucks using natural gas produced from digesters, while also selling fertilizer.

“We’ve got a lot of dairies watching to see what happens,” Evans said.