ALGONA, Iowa — While much of the world fumes over escalating fuel prices, a small company in north central Iowa is quietly hoping to make gasoline obsolete as an engine fuel.

Research at the Hydrogen Engine Center Inc. is done in an early 1900s red brick armory at the Kossuth County fairgrounds.

There, a clean six-cylinder engine that looks like it could have been pulled from a Ford pickup has been running for 110 hours, not quite half the 300 hours it must continuously run for certification. The company, led by a retired Ford Motor Co. engineer, hopes to meet Environmental Protection Agency automotive 2007 emission standards.

All 81 parts are original Oxx Power, the brand name the company has given all its engines.

The engine can run on a number of fuels including hydrogen, ethanol, natural gas, propane or digester gas from landfills.

The company, started by Ted Hollinger, 65, is initially focusing on making more efficient, environmentally friendlier engines to replace those used in generators and in forklift trucks, airline ground equipment, irrigation pumps, tractors and buses.

Ford, General Motors and Chrysler have dropped industrial engine production as they've cut costs, leaving what Hollinger said is a ready-made market for his fledgling company.

"Our engine has to bolt in where the old engine went and can't be a thread off," he said. "If you do that and you make improvements in it so that it gets rid of emissions and it's more efficient, then I think people are going to like it."

The company incorporated in Iowa in 2003 and two years later in Canada. It merged with Green Mt. Labs in August 2005 and became a publicly traded company under the name Hydrogen Engine Center Inc.

Hollinger said he insisted that his company have a product to sell from day one instead of starting up as a research and development firm.

The company's products include a six-cylinder engine and a three-cylinder version for small engine applications.

The company has found immediate interest in its hydrogen-powered generators that use five engines.

Brad Van Horn, an engine distributor with Northern Power Productions of Minneapolis, said some orders are already placed for the generators as they approach the production phase.

"The level of excitement is huge," he said.

Van Horn, who sells in Minnesota, North Dakota, South Dakota and Nebraska, said he gets calls daily from companies running irrigation equipment in Nebraska. Airports needing to replace the Ford engines in their baggage handling and other ground service equipment will also be a large market.

The company said American Airlines alone has 9,500 vehicles likely to be converted to alternative fuels over the next decade.

While the engines drive a revenue stream for the company, engineers are working to improve the technology of engines that run on hydrogen and other clean fuels.

Bob Mendlesky, another retired Ford engineer, light ups when he describes the potential for the engines his shop is developing.

He said there are obstacles to making cars powered with hydrogen-fueled internal combustion engines. To carry enough hydrogen, the fuel tank would have to be under extremely high pressure, he said. In addition, tanks made to that specification cost as much as the engine to power the car.

Hydrogen technology is better suited for generator applications and for industrial uses at its current stage of development, he said.

A better solution may be engines that run on ammonia, Hollinger said.

Development of ammonia as a fuel must include ways to improve its combustibility. Ammonia does not readily spark like other fuels, but Hollinger is determined to overcome some of the obstacles.

"I tell people that I'm no dumber now than when I was at Ford Motor Co. If I can invent at Ford, I can invent here," Hollinger said. "I don't think that there's any reason we can't. Will we? I don't know."

Hollinger said he doesn't expect his small company to make major breakthroughs in the automotive propulsion, but he's willing to work with Ford or any other company working on clean fuel technology.

"I hope in the future the automotive people will look at our stuff and incorporate some of our ideas," he said. "Somebody needs to do something now."

Source: Associated Press