VANCOUVER — It started out as a research project that aimed to strike a blow for the environment by getting diesel engines to run on cleaner alternatives, such as natural gas.
In 1994, University of British Columbia Professor Philip Hill could see that manufacturers of diesel engines -- currently the backbone of the world's commercial transportation system -- would come under increasing pressure to reduce the level of cancer-causing particulates spewing from vehicle exhaust fumes.
The 62-year-old professor hoped to take advantage of the situation by developing technology that would allow natural gas to be used as the main fuel in diesel engines.
But needing $20,000 keep his project going, Professor Hill turned to a Saskatchewan lawyer named David Demers, who was financing software startups at time and thought the project had potential.
"It seemed like they were trying to solve a very big problem,'' said Mr. Demers, who agreed to dig into his own pocket and write a cheque for the required amount.
A decade later, Westport Innovations Inc., headquartered in a leafy part of Vancouver, has 150 employees, and has evolved into a joint venture with one of the world's leading engine manufacturers, Cummins Inc. of Columbus, Ind.
Westport's pioneering technology has helped the company to grow in leaps and bounds -- so quickly, in fact, that the firm tops the Deloitte Technology Fast 50: a list of the 50 Canadian technology companies who have shown the most revenue growth over the past five years.
Westport is growing at an impressive clip, but they're not done yet. In the next three years, Westport hopes to double its annual revenue.
It's aiming for $100-million, as countries like China and the United States turn to cleaner fuels, such as natural gas, in a bid to clean up the air above their cities.
But despite such rapid growth, the company has yet to achieve the breakthrough that might kick-start the commercialization of technology that led to its formation.
Westport officials hope this will change when two of North America's largest sea ports -- Los Angeles and Long Beach -- implement a plan to reduce air pollution from containerized traffic in California's San Pedro Bay area.
Under the Clean Air Action Plan, the ports are hoping to cut the level of diesel particulate matter emissions in the region by 80 per cent over a 5-year period.
"We are trying to clean up the air so that it doesn't have such an impact on the health of our neighbours,'' said Theresa Adams Lopez, a spokeswoman for the Port of Los Angeles.
Ms. Adams Lopez said the plan will focus on replacing thousands of so called "dirty trucks'' that run on diesel with vehicles powered by newer, cleaner technologies.
"This is a huge milestone that we are looking at,'' said Michael Gallagher, Westport's president and chief operating officer.
The Port of Los Angeles has already earmarked $21-million (U.S.) this year to fund pollution reduction initiatives.
Within the next few weeks, each port is expected to issue requests for proposals from companies such as Westport.
Initially, Mr. Gallagher expects the ports to target companies who can supply 125 heavy-duty trucks powered by liquefied natural gas engines, a number he believes will rise to 5,000 within the next five years. "This puts us in a position for very large growth around this [project],'' he said.
What Westport officials are hoping is that California's air cleanup plan will be a catalyst for commercializing its core High Pressure Direct Injection (HPDI) system.
The technology is designed to allow diesel engines to run on clean-burning natural gas, thereby cutting emissions of cancer-causing particulates in exhaust fumes.
At its heart are fuel injectors that inject both diesel fuel and natural gas into the combustion chamber of the diesel engine.
Unlike conventional combustion engines, diesel engines do not use spark plugs to ignite the fuel. Instead, the fuel is ignited by compressing the air within the cylinder, thus giving the engine its power stroke.
Since natural gas won't ignite under the same heat as diesel, Westport says it has overcome the problem by using a small injection of diesel to act as a pilot ignition to initiate the combustion of cheaper and cleaner natural gas.
Hopes that HPDI would become one of the solutions to global warming and looming oil shortages made Westport a high profile name during the dot-com boom, driving its stock price to an all-time high of $26.40 in February 2000.
However, 95 per cent of the company's revenue is generated by a joint venture company -- owned equally by Cummins and Westport -- which manufactures and sells spark-ignited compressed natural gas engines to cities like Beijing, where about 2,800 units are being used to drive transit buses.
Financial analysts are watching for signs that efforts to clean up the air in California really are the breakthrough that the company has been seeking for HPDI."We recommend investors wait for confirmation that customers are buying the technology in sizable quantities before taking a position in this stock,'' said MacMurray Whale, an equity analyst with Sprott Securities Ltd. in a recent research report. The shares closed at $1.11 on the TSX on Wednesday.
Analysts who follow the company also say they need to be convinced that it can overcome challenges posed by the high cost of refuelling infrastructure.
Currently, natural gas engines represent a very small stake (roughly 0.2 per cent) of the world's transportation fleet.
In an interview, Mr. Demers, who is now Westport's chief executive officer, says he finds the skepticism in the Canadian financial community "very frustrating.'' "Everybody else in the world seems to get it,'' he said, adding that the company's biggest shareholder is U.S. private equity firm Perseus LLC.
Westport's ultimate goal, he said, is to allow natural gas to be seen as a reliable alternative fuel within the transportation sector. "We feel that we have just scratched the surface with our success to date in terms of what our opportunities are,'' Mr. Demers said.
It is a vision that doesn't expect natural gas to emerge as "the" solution to the problems caused by fossil fuels and rising oil prices. "[Rather] it will be part of a total solution,'' added Mr. Gallagher.
Having seen its revenue increase to $43.5-million in the fiscal year ended March 31, 2006, from $32-million two years ago, the company is betting that sales will continue to rise as consumption of natural gas increases in countries like China.
Westport is negotiating deals to sell natural gas engines to Chinese truck companies, with the first sales expected by the end of this year.
It is also drafting an ambitious plan to create "green corridors" on high-traffic routes between major Chinese cities and ports, so that trucks can get access to natural gas supply stations along the route.
In keeping with its goals, Westport recently signed a partnership deal with Beijing Tianhai Industry Co. Ltd. to manufacture liquefied natural gas (LNG) tanks in China for sale to the trucking industry. BTI is Asia's largest manufacturer of compressed natural gas containers, producing 1.5 million units per year.
Each company will contribute $400,000 (U.S.) toward the joint venture company, called BTIC Westport Inc., which aims to be a low-cost manufacturer of LNG tanks for sale in markets in California and elsewhere. The companies will share the profits on an equal basis. Westport is providing the technology, with BTI contributing its manufacturing capabilities.
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