A dozen spherical cages each with a diameter half the length of a football field would be submerged in state waters off the Big Island if plans are realized to establish the largest open-ocean fish farm in Hawai'i.

The Honolulu company proposing to raise sashimi-grade 'ahi last week published a final environmental impact statement with the state, clearing a major regulatory hurdle in the effort to start operations projected to generate more than $100 million in annual sales.

The venture, if realized, would be the third aquaculture farm in Hawai'i raising fish from eggs and growing them to market size in underwater ocean cages.

It also would be the biggest in terms of production and space occupied — 12 million pounds of fish a year raised below 247 acres of sea surface 2.6 miles off Kawaihae, north of the resorts in West Hawai'i.

At $108 million, projected revenue from the farm at full production in 2014 would be quadruple the $25 million generated by Hawai'i's two existing open-ocean aquaculture companies in 2007, the latest year for which data are available.

"We're trying to revolutionize fish farming," said Bill Spencer, who co-founded Hawaii Oceanic Technology Inc. in June 2006 with the idea to raise bigeye and yellowfin tuna from egg to plate.

Hawaii Oceanic's plan is to spawn and raise fish to 5-pound fingerlings in tanks on land, then grow them to 100 pounds in the ocean over 18 months.

The company is working with the University of Hawai'i-Hilo's Pacific Aquaculture and Coastal Resource Center and private contractor Planktonics Inc. in Kona to breed fingerlings, and according to Spencer is close to an independent validation of the design of the cages it calls "oceanspheres."

Hawaii Oceanic plans to export most of its product, trademarked as King Ahi, to Japan and the U.S. West Coast in large part because the fish command higher prices there.

Also, even though 'ahi caught in Hawaiian waters supply just 20 percent of local consumption, Spencer said the company wants to be sensitive about not competing too heavily in the local market. Hawaii Oceanic plans to supply no more than 10 percent of local 'ahi demand, though it could supply more if desired.

Each of the 12 cages in the company's plan would be capable of producing about 2 million pounds of fish a year, though only six cages would be harvested each year for a total annual production of 12 million pounds.

The company has much work to do before commercial production can start, including negotiating an ocean lease with the state, raising capital to build and deploy the first of the oceanspheres and perfecting the spawning cycle of captive 'ahi.

Spencer said he expects a contractor to inform Hawaii Oceanic this week on how much each oceansphere will cost, which will allow him to begin seeking investors to back the project after a lease is obtained. Production is estimated to begin with one cage by the end of 2011 and all 12 cages by 2014.

MAJOR RISK

But perhaps a bigger challenge for the company, which has spent more than $1 million to date, is breeding and rearing the fish.

"It's a big risk they're taking," said Kevin Hopkins, a professor of aquaculture at UH-Hilo and interim director of the Pacific Aquaculture and Coastal Resource Center.

Hopkins, who is on Hawaii Oceanic's board of advisers, said the research center has been working under contract with Hawaii Oceanic for about a year breeding bigeye tuna, but that no one in the world has perfected the cycle of spawning and keeping enough baby tuna alive for economical production.

"It's at the research phase right now," Hopkins said, adding that researchers in Miami, Panama, Australia and Japan are working on the same goal with a variety of tuna.

Paul Troy, who co-founded Hawaii Oceanic with Spencer, is the company's chief technology officer and is focused with Spencer on the breeding challenge among other things.

Troy has a doctorate in oceanography from UH-Manoa and was trained at a lab in Panama that has been spawning 'ahi from eggs for more than a decade.

"This is sort of a giant demonstration project," said Spencer, a self-described serial entrepreneur who is Hawaii Oceanic's chief executive officer.

Kerry Umamoto, vice president of seafood distributor Hilo Fish Co., said Hawaii Oceanic's plans to create a sustainable 'ahi fishery are filled with excitement and uncertainty.

"I believe they have the right idea," said Umamoto, who spent three months on a bluefin 'ahi farm in Spain. "But nobody knows what will happen."

$9 A POUND AVERAGE

Bigeye 'ahi can earn fishermen anywhere from roughly $6 to $12 a pound, depending on quality. At $108 million in annual sales, Hawaii Oceanic's projection assumes an average price of $9 a pound.

If successful, Hawaii Oceanic would dramatically expand open-ocean aquaculture in a state where industry growth has incredible potential given the environment but remains relatively constrained given the technical and permitting challenges.

There are only two operating open-ocean fish farms in the state, one raising moi off West O'ahu and one raising amberjack off West Hawai'i.

The first was Cates International, now known as Grove Farm Fish & Poi LLC, which began commercial operations in 2001 off 'Ewa Beach. The company is seeking to increase annual moi production from 1.2 million pounds to 5 million pounds by expanding its ocean lease from 28 acres to 61 acres. The moi are grown to about 1 pound each for harvest.

On the Big Island, Kona Blue Water Farms has been commercially producing amberjack, trademarked as Kona Kampachi and harvested at about 5 pounds, since 2005 under a 90-acre ocean lease offshore from Kona's Keahole Airport. But the company is in the process of scaling back annual production from about 1 million pounds to 600,000 pounds because of trouble producing fish economically in part because of high costs to transport fish to the Mainland.

There have been at least two prior attempts to farm 'ahi in Hawai'i, but they involved catching wild juvenile fish and growing them in ocean cages.

Ahi Farms Inc. in 2003 applied for a federal permit to operate a farm off the Wai'anae Coast to farm yellowfin and bigeye tuna, a year after Ahi Nui Tuna Farming LLC applied for a state lease to grow the same species off Kawaihae.

Both ventures drew opposition for their impact on wild fish stocks, and neither project has advanced.

Hawaii Oceanic's environmental impact statement excludes the possibility of growing fish from wild catches. The company would catch only initial broodstock, which it would spawn in captivity and repeat the breeding cycle from the captive fish. Once a year, seven additional wild fish would be caught to diversify the gene pool.

CRITICS CONCERNED

Open-ocean fish farming has attracted critics concerned about environmental impacts from concentrations of uneaten food and fish waste, the potential hazard of cages to other sea creatures including whales, and the possibility of cages attracting other fish, including sharks.

Monitoring of existing fish farms suggests that water quality isn't significantly harmed by food or waste, while sharks attracted to the cages have only rarely been observed, Hukilau and Kona Blue have said.

For Hawaii Oceanic, the cages would be deployed in considerably deeper water than the two other farms — 1,320 feet compared with around 200 feet.

Spencer said strong currents in the area will disperse all waste and leftover food. "It will never reach the bottom," he said.

Boats are free to navigate, but not catch fish, over the leased area, though Hawaii Oceanic's environmental study said interviews with local fishermen indicated that no one fishes in the area. The area also is a mile outside the Hawaiian Islands Humpback Whale National Marine Sanctuary.

Another difference between Hawaii Oceanic's model and the two existing farms is that the 'ahi cages wouldn't be anchored, but would hover about 65 feet below the surface using a combination of ballast, thruster control and surface buoys.

Hawaii Oceanic anticipates employing 22 people earning an average annual salary of $51,500 at full production, and indirectly supporting 40 additional jobs.

"We got a tremendous vote of confidence from the local community," Spencer said, citing a public hearing held in April that drew positive testimony. The company has addressed a variety of concerns and questions in the environmental study, including protocols for handling potential disease and safety of the oceanspheres in a tsunami or hurricane.

"The ocean has reached pretty much maximum sustainable yield," he said. "The only way to meet increased demand for fish is aquaculture. The ocean just can't produce enough."