RPI and Encon Will Test "Home Grown" Bio-Oil

WOOD-RIDGE, N.J., Nov. 15 -- Ron McKeown, President and CEO of Rotary Power International Inc. (OTC Bulletin Board: RPIN) ("RPI"), and Dr. Peter B. Fransham, President of Encon Enterprises Inc. ("Encon"), announced today that RPI and Encon have entered into an agreement to begin a testing program to use Encon's bio-oil as fuel for an RPI rotary engine. If testing proves successful, it is anticipated that bio-oil would be used as a fuel for electrical power generation sets utilizing RPI's rotary engines.

Encon's bio-oil, which has approximately the same heating value as wood but enjoys the advantages of being liquid fuel, is produced by rapidly heating biomass (wood, straw, manure, agricultural waste, etc.) in a specially designed reactor. Based on Encon's analysis, capital and operating costs for electrical power generation sets utilizing bio-oil will be competitive with traditional fuels.

As a first step in this venture, Encon will move its pilot power generation plant to RPI's facility in Wood-Ridge, NJ and begin testing bio-fuels on an existing RPI rotary engine. This first phase, to begin in late November 2001, is expected to develop the necessary bio-fuel specifications for optimized combustion of the bio-fuels in a rotary engine. RPI has agreed to contribute a 15-horsepower rotary engine and attached generator set to this project, as well as up to 20 hours of engineering services.

In announcing the agreement with Encon, Ron McKeown, President of RPI, stated, "The combination of Encon's unique and cost effective biomass conversion technology and our rotary engine is expected to result in an integrated power production package that will compete in future energy markets while, at the same time, reducing the demand for fossil fuels".

Dr. Fransham, President of Encon, commented, "Encon selected RPI's rotary engine over other available engines because of its unique combustion design, its spark injection, and its ability to burn a broad spectrum of fuels. Encon has been searching for a viable multi-fuel engine that can utilize bio-oil products. The wide range of horsepower of RPI's engines and their application for generating electricity provide Encon with the essential technology to convert bio-oil into useful energy".

Encon estimates that there is a combined potential for approximately 8,500 generating plants in North America and Europe in the 500 kW size range utilizing bio-oil as fuel. If this market is fully developed, small power systems in the United States and Canada could produce some 1500 MW of electric energy from such renewable sources. Encon also believes that another 2,000 plants could be fueled by animal manure, helping to solve a growing environmental problem. In total, Encon estimates that there is a market potential for over 10,000 integrated bio-oil/rotary engine power generation systems.

Encon is currently in the process of designing a 5 ton per day process demonstration power generation plant to be installed at a wood processing facility in New York State. Commissioning of the plant is expected in the second quarter of 2002 and construction and development of the plant has a budget of US $450,000. Encon has applied for funding for this plant from several New York and Canadian government agencies. Assuming the successful testing of bio-oil as a fuel and subject to the execution of a definitive agreement between the parties, RPI expects to participate as a partner with Encon in this plant.