Exxon Ups the Algae Ante Big Time

By Eric Wesoff

Wow.

Synthetic Genomics announced a $300 million agreement with Exxon (XOM) to research and develop next generation biofuels using photosynthetic algae. And according to the New York Times, Exxon is going to invest another $300 million in in-house research.

That investment will occur over a number of years – but that's still a lot of cash. It's more than the total amount of venture capital invested in algae startups since 2005. A drop in the bucket for Exxon but still, big money.

I've written extensively and skeptically about the hype in this very nascent industry and the breathless claims of algae biofuel firms scaling up at a "pump-parity" price. But Exxon believes and has put its money where its mouth is. (Actually the money came from Exxon Mobil Research and Engineering). And it's going to take an investment of this scale to get algae to market in any significant way.

Here are some recent algae blog entries:

• Algenol: the Elephant in the Room

• Algae Fantasists

• Open Ponds vs. Closed Bioreactors

The Times quoted Synthetic Genomics dynamic founder, J. Craig Venter, as saying, “I came up with a notion to trick algae into pumping more lipids out."

But here's a telling line from the story: "Both companies said they still had a range of problems to solve that include determining what types of algae to use and whether it is more efficient to grow them in open ponds or in closed containers called bioreactors."

If these are still questions at SGI and Exxon – how to grow the algae and which species or strain – then these firms have betrayed that we are still very early in the Research portion of the program, we are not yet at the Development part of R&D.

Venter is a man of action and it's not a good bet to wager against him. But the problem with algae – is that it's not just tricking the algae to pump more lipids out. There's an entire process chain in algae farming that needs to be optimized – algae growth, algae harvest, drying and more. And again, if they are still talking about closed photobioreactors for mass algal fuel deployment, then Exxon and SGI have a lot to learn.

Still – great news for algaepreneurs and an investment at the necessary scale in dollars and time to get algae out of the test tube and into the tank. More on this story soon.

The U.S. uses billions of barrels of gasoline each day.

Comments

[A Barrel Full:]

The Synthetic Genomics method seems to promise much, not least the ease of extraction of the oil. For Exxon Mobil, the added attraction is that the oil can be used in existing refineries in the place of crude.

Exxon incidently has the largest refining capacity of any company in the world.

Jul 14 10:38 AM

[sfjdfjdfhm:]

I love the last sentence. It makes perfect sense... oh wait no it dosent.
www.eia.doe.gov/basics...

Jul 14 01:15 PM

[petersterling:]

At best algae will produce 20,000 gallons per acre per year. thats after investing maybe $250,000 per acre in plastic pipes etc.

Then it still costs $20/bbl to refine it into biodiesel using perhaps 80 barrels of water per barrel of fuel..

The economic math simply does not work!

Jul 14 03:23 PM

[Alan von Al...:]

Tax write-off, playing pattycake with Obama/Gore, and happytalk PR hooey (like BP's laughable "beyond petroleum"). Zero chance of any commercial scalable fuel production from algae.

Jul 14 03:25 PM

[Eric Wesoff:]

I meant millions of barrels per day. Apologies for the error.
Corrected at our website at greentechmedia.com


On Jul 14 01:15 PM sfjdfjdfhm wrote:

> I love the last sentence. It makes perfect sense... oh wait no it
> dosent.
> www.eia.doe.gov/basics...

Jul 14 05:35 PM

[Mad Hedge F...:]

As a former research biochemist at UCLA, I have long viewed biofuel as a huge waste of time, because there are not enough hamburger stands in the whole world to generate the needed grease for recycling. Ethanol was never more than expensive pork for corn producing swing states, and it’s no surprise they are going bankrupt, even with large subsidies. That’s ignoring the fact that they were burning food to power our chrome wheeled Cadillac Escalades, driving up prices for the starving masses in emerging markets. But when Exxon (XOM) commits $600 million to move algae from the realm of science fiction to mass production, I have to sit up and pay attention. This is not a company that is interested in tree hugging or saving the world, but in the hardnosed business finding and selling energy for a profit. There is no law confining them to the oil business, and it is wise for them to find alternatives while they have the bucks to do it. Never underestimate the power of pond scum. Algae have been used for centuries to produce agar and additives for food, cosmetics, and medicines. You’re probably already eating more than you realize. According the Exxon (XOM), one acre of algae also has the ability to produce 2,000 gallons of fuel per year, compared to 650 gallons for palm trees, 450 gallons for sugar cane, and 250 gallons for corn. As any marine biologist will tell you, these simple organisms accomplish this by absorbing massive amounts of carbon dioxide and turning it into oxygen, killing two birds with one stone from an environmentalist’s point of view. The catch is that no one has ever tried to do this on an industrial scale, and the production problems are certain to be formidable, with enormous inputs of water and nutrients required. Of course, you probably wouldn’t want to live next door to where this is happening. But if we have to hold our nose to beat the next energy crisis, so be it.

Jul 15 12:24 AM

[Alan von Al...:]

400,000 US trucks x 50,000 miles a year @ 8mpg = 2.5 billion gallons
= 1.25 million acres of algae + plumbing, water, harvest, debt service
= all the farmland in Utah ($9 bil) + capex ($5 bil) + running cost
= $4 per gallon

Jul 15 03:07 AM

[Alan von Al...:]

250 million US cars and light trucks x 20,000 miles a year @ 20mpg
= all the farmland in California + Nevada + Arizona + New Mexico

Jul 15 03:25 AM

[Alan von Al...:]

sorry, I dropped a decimal place, make that:

all of the farmland in California + Nevada + Arizona + New Mexico + Texas + Kansas + Iowa + Nebraska + Oklahoma + Louisiana + Georgia + Florida + Mississippi + most of Mexico

Jul 15 03:37 AM

[Ferdinand E...:]

For Exxon, 600 million dollars "over a number of years" is chump change. It's also good for the image - you know, going green.

But even if their latest departure doesn't live up to the dreams of environmentalists, it might have something to offer. Maybe not as much as we would like, but something. It deserves some attention

Jul 15 09:31 AM

[jerrydd:]

I think this is just another greenwash, tax scam as oil companies know that they can just F-T yard, forest, crop waste biomass into clean gasoline/diesel and electricity cost effectively as they do it now with stranded NG called GTL. They have built multiple plants in the ME too. But they don't want to do anything that might wean the US, world off of oil.

Alan von Al I looked up your website and as I thought you are a lying oily.

First one wouldn't power all vehicles with algae. Nor do they average 20mpg, more like 27mpg. Average mileage is more like 8k/yr. A much better biomass, F-T BTL is growing grasses or other biomass on marginal land with everything known vs the pig in a poke like algae.

For fuels will be eff/conservation which will be 50% as the cheapest fuel is that one doesn't use. As the price of oil will go up with a bullet as soon as the economy recovers, this, the below will happen because money talks.

For cars 50% of them in 20 yrs will be EV's as will most delivery trucks because they will cost 1/3 to run and no more to buy. Now add many will be much smaller, lighter as most trips, 80% are under 2 people and 40 miles. A nice 100 mile range, 80mph cyclecar EV could be built profitably for under $10k that gets 250mpg equivalent cost wise in real mass production. Check out the 100mpg X-Prize contest for examples.

For semi's they will be NG hybrids.

So make your money on oil now as in 10 yrs it won't be king anymore so don't go too long on oil.

Jul 15 09:56 AM

[Alan von Al...:]

Just the opposite. Oil is cheap today. For cars 50% of them in 20 years won't be EVs, nor will most delivery trucks. They'll be off the road too expensive to operate.

Jul 15 10:11 AM

[Shale Gas:]

Perhaps Exxon is making the investment for political reasons, as $600 million is nothing for them.

Jul 15 10:55 AM

[happycajun:]

Mad - while I generally hold the old ER&E organization in high regard, I certainly don't think that if Exxon does it, it must be a good business move. I am old enough to remember the last boom, when they bought Emerson Electric (on the belief that high efficiency motors would be part of the future with electricity replacing internal combustion engines in many applications) and zilog (the Z80 CPU chip that was actually much better situated than the Intel 8080 of the day, and word processing.... and Mobil bought Montgomery Wards. The lesson learned was not that any of those weren't important businesses of the future, but that they were departures beyond the "core competencies" of the Exxon and Mobil cultures.

As a biofuel source, algae has much greater potential than corn or sugarcane on a BTU/acre basis - but it also depends on some rather significant basic science breakthroughs, and some major "developemental" hurdles. Exxon Mobil certainly has an outstanding ability to fund such fundamental research. In today's world, any commercial attempt would probably be spun off to a contained business unit of the company that could be severed, or operated rather autonomously. But any way you slice it - biofuels has very little potential to make a major dent in our future energy needs - the numbers just aren't there. As such, I think this is as much for publicity as it is to produce energy from alternative sources.

Jul 15 11:18 AM

[George Marc...:]

If Exxon were really serious about developing an algal oil industry, it would be focusing on public/private partnerships with some of the 16,000 publicly-owned wastewater treatment plants in the US. Anaerobically digested wastewater influent provides the essential ingredients for rapid algae growth: high nutrient digester liquid and carbon dioxide. See, Ishida et al., US Pat.No. 4,354,936 and Hayes et al., US Pat.No. 4,722,741. Treated wastewater effluent from the treatment plant would be the water source for biodiesel synthesis from the algal oil. These inputs (plus sunlight necessary for algae growth) are essentially cost-free feedstock for algal biodiesel production. Converted wastewater treatment plants would then become "waste-to-fuel" plants.

Photobioreactors may be an unnecessary capital cost. Lipid-producing algae could be grown at the wastewater treatment plant site in a high-carbon dioxide atmosphere (from the anaerobic digester) on "algaewheels". See, oldcastleprecast.com/o.... Algaewheels reduce the surface area required for algae propagation by 75%. After the lipids are extracted from the algae, the algal residue could be returned to the anaerobic digester to generate additional carbon dioxide and methane for plant operations.

Interestingly, because methane (in addition to carbon dioxide) is also produced by anaerobic digestion, the Hayes process (also called the Gas Technology Institute's HIMET process), allows methanol to be produced at the same site. Methanol is the primary input necessary for the transesterification of vegetable oils to biodiesel.

A public/private partnership could prove to be an excellent business model for a domestic algal biodiesel industry-- assuming that the major oil companies are actually interested in that type of fuel development.

Jul 15 11:45 AM

[jerrydd:]

Alan von Al wrote
Just the opposite. Oil is cheap today. For cars 50% of them in 20 years won't be EVs, nor will most delivery trucks. They'll be off the road too expensive to operate

That just makes no sense. Oil will be in very short supply as everyone is realizing we hit peak oil last yr. As you know we are only finding 1bbl for every 4bbl we use in the world. This makes oil rise in price. No?

Vs EV batteries are dropping in cost with Lithium now below sealed lead batteries in cost and Sodium batteries are dropping fast too. EPA, SAE and everyone else knows EV's are 3x's as eff as ICE's and agrees EV drives are the future. As EV's are much more simple, 1 moving part in the motor and no transmission, etc and battery cost dropping once in mass production they will be cheaper to make. No?

As electricity can be made from most any energy source including many for free like wind and solar it will be the low cost energy of the future because anyone with the equipment which is dropping in price can make their own. No?

These are basic facts backed by physics, economics. Please explain what vehicles will be run on in 20 yrs if not electricity and why?

Judging by your avoiding the facts in my earlier post about the mis-information in your post that make yours foolish, this should be interesting.

Jul 15 02:59 PM

[Alan von Al...:]

The fleet will shrink. Pretty straightforward equation: higher and higher oil prices cut discretionary spending, especially transportation. We disagree about the cost structure of alternative (wind, solar, biofuel, CNG) energy for motive power. Battery-powered combine harvesters in Kansas? CNG-powered Bradleys and Humvees? No way.

This thread was about algae. I disbelieve the 2000-gal per acre claim, but I accepted it for the sake of argument and showed that there isn't enough US farmland (water and sunshine) to 'grow' a new oil industry, forget the capital investment. If price were no object, 100% government mandated and funded, you still couldn't do it without shutting down agriculture, dairy, cattle ranching.

Coal-fired fighter jets?

Jul 15 04:52 PM

[longoil:]

Ferdinand is right!

$600 million is chump change for Exxon.
They spend $30 billion a year on share buybacks.
This algae investment is 2% of that.

I believe this is more of public relations exercise for Exxon,
to help shed the bid bad oil company image.

Jul 18 09:12 AM