Valero Energy Corporation (NYSE: VLO), one of the largest US oil refiners, took another step into the alternative fuel space by forming a joint venture with algae-to-fuel company Algenol Biofuels Inc.
The companies did not disclose how much Valero will invest in the algae technology. They said they will explore combining Algenol's Direct to Ethanol® technology with Valero's infrastructure for production and distribution
Algenol Biofuels Inc. is a privately owned company founded in 2006. It recently made a series of announcements including the award of a $25 million grant from the Department of Energy as part of the American Recovery and Reinvestment Act, to build a facility in concert with its partner on the project, The Dow Chemical Company (NYSE:DOW).
Algenol also announced a partnership with The Linde Group to develop CO2 capture and management technologies to increase biofuel production from algae. Lee County, Florida is also supporting Algenol with a $10 million incentive grant to open a new 40,000 square foot facility in Lee County.
Valero made a strong move into ethanol production last year, purchasing 11 US ethanol plants at bargain prices, following the bankruptcy of ethanol company VeraSun. The acquisitions gave Valero corn ethanol production capacity of 1.1 billion gallons per year. The refiner is thus in a good position to meet blending requirements for its 2.8 million-barrels-per-day refinery output.
The acquisitions also gave Valero a stake in cellulosic ethanol company Qteros.
Valero is not the only big oil company investing in alternative fuel development. Last month French oil major Total (NYSE: TOT) took a seat on the board of biofuel company Coskata Inc. after contributing an undisclosed amount to a recent round of funding.
Royal Dutch Shelll (NYSE: RDSA) has invested in Iogen, Codexis and a Brazilian joint venture with Cosan S.A. (CSAN3.BR). BP (NYSE: BP) has investments in Verenium and Qteros. And ExxonMobil (NYSE: XOM) is looking further down the development path to third-generation synthetic and algae-based fuels by investing $600 million in research led by Synthetic Genomics.
Read more green business news.
Disclosure: no positions