A unit of Seal beach-based Clean Energy Fuels Corp. has signed a deal with Republic Services Inc. to build a Tennessee plant that will process landfill gas into a renewable energy source.

The plant, located near the Memphis suburb of Millington, will compress gas from a nearby landfill operated by Republic and redistribute the cleaner derivative as vehicle fuel, alternative power or sell it to other industrial customers.

Production, slated to begin in late 2013, is initially expected to yield some 4 million diesel gallon equivalents of renewable natural gas fuel annually−enough to fuel 260 commercial trucks a year.

The plant is projected to steadily increase production to more than 5.7 million diesel gallon equivalents annually during the first decade of operation.

The deal is the second of its kind between the companies. Another project at Republic's Sauk Trails Landfill in Canton, Michigan, is expected to begin production next month.

Phoenix-based Republic is one of the largest waste management and recycling companies in the world, with a market value of about $10.17 billion.

Clean Energy is the largest builder and operator of natural gas stations in the U.S., with sales of nearly $293 million in 2011.

It has yet to clear earnings hurdles amid a push to build and expand what it’s calling “America’s Natural Gas Highway.”

Major transportation arteries in California, Texas and the Midwest are expected to have natural gas stations spread out every 250 miles or so when the multiyear project concludes.

The company is targeting the largest segment of the market: heavy-duty haulers that consume some $30 billion of fuel annually. That dwarfs the public sector and waste management industries combined.

Oilman and corporate investor T. Boone Pickens started Clean Energy as a tiny part of his Dallas-based Mesa Petroleum in the late 1980s. He split it off in the late 1990s.

Clean Energy shares fell 1.2% in Thursday trading, pushing its market value down to $1.15 billion.