San Diego’s Sapphire Energy Plans Bio-Refinery in New Mexico as ‘Algaeus’ Begins Promotional Cross-Country Tour

9/8/09Follow @bvbigelow

I got a phone call from Tim Zenk, a spokesman for San Diego-based Sapphire Energy, shortly before the hoopla began this afternoon in San Francisco, where a Toyota Prius hybrid electric car is setting out on an eco-friendly cross-country tour. Instead of using conventional gasoline, the Prius (which has been christened “Algaeus”) will use a blend of algae-based gasoline and conventional gasoline on a journey of more than 3,000 miles.

Aside from attracting media attention, the 10-day, San Francisco-to-New York road trip is intended to demonstrate that the technology needed to produce gasoline from algae is a reality. Sapphire provided the estimated 50 gallons of gasoline the hybrid-electric passenger car needs for the journey. Zenk tells me the biofuel was produced by a Centroleum refinery in Louisiana, which refined “green crude oil” from algae harvested at Sapphire’s 100-acre biofuel pilot facility near Las Cruces, NM.

Sapphire CEO Jason Pyle outlined the startup’s strategy for me in November, a couple of months after Sapphire landed at least $100 million in a secondary venture capital round from Bill Gates’ Cascade Investment, Arch Venture Partners, and Venrock Associates. In January, Sapphire showed a jet could fly on jet fuel made from its “green crude” and in April the company doubled its estimated production capability for 2011, saying that by then the company will be capable of producing 1 million gallons of biofuel annually.

Algae Pond

Algae Pond

Sapphire now has about 140 employees in San Diego and New Mexico, with about 100 at its San Diego headquarters. Sapphire’s pilot facility near Las Cruces has been “up and running since the beginning of the year,” Zenk says. He describes the 100-acre plant as a small-scale research project that has been testing different strains of algae, as well as different growing conditions. The startup also has 235 patents (pending and issued) covering its processes—from genetically engineering algae to maximize the production of biological oils to extracting the oils, which constitute the “green crude” that can be refined into gasoline, diesel, and jet fuel.

Meanwhile, Zenk says Sapphire is pushing forward with plans to build a 300-acre “integrated algal biorefinery” in Southern New Mexico. The project is expected to take three years to build out, Zenk says, and “at that point in time, we’ll be tightly integrated with a refining partner.” He says Sapphire has been meeting with a diverse group of prospective partners that might contribute to the company’s overall business strategy. “It may or may not be necessary to have a big oil partner,” Zenk says.

“We’re an energy company,” Zenk says. We’re not a bioscience company per se. So for us to have a relationship with a partner, they need to understand that we’re in the business of producing energy and not just doing big science projects.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • Jake

    I love the idea of using algae, but an article like this points out the problem that start-ups have in moving to serious production scale. Namely, that making biofuels with algae will never be as predictable as refining a barrel of oil. Small deviations in temperature or light could really change the behavior of the cells, so cheap outdoor ponds may never be the answer, and if you have to build really predictable and dependable bioreactors to make your system steady and stable it may never be cost effective. I hope I’m wrong, but algae-based energy has some serious hurdles to clear. With that said, big oil is the perfect place to get the huge-scale engineering done.

  • http://www.xconomy.com/author/bbigelow/ Bruce V. Bigelow

    Thanks for your thoughtful comments Jake. The industry seems to be divided in this “open pond vs. bioreactor” debate. The downside to bioreactors, as I understand it, is the same problem I had with my aquarium when I was a kid. You have to regularly clean the inside glass or plexiglas.

  • Pingback: Algaeus lives! A modified Prius goes cross-country on fuel from algae | Innovation Toronto

  • energy guy

    No bio refinery is coming from Sapphire…

    These guys are lying through their teeth…

    They will just take VC investers for a ride and have a jolly good time….

    They can not grow algae in their ponds… have not made oil out of their algae….

    All lies