Federal Biofuel Awards Made for Green Refinery Projects in 15 States, Including Pilot Plants for Sapphire Energy, BioEnergy Intl.

12/4/09Follow @bvbigelow

Sapphire Energy, the San Diego-based algae biofuels startup that got much of its venture funding out of Seattle, and BioEnergy International of Quincy, MA, are among 19 biofuel refinery projects that were designated today to get as much as $564 million in federal funding.

Sapphire spokesman Tim Zenk says the company got a $50 million grant and $54-million loan guarantee needed to build a 300-acre integrated algal biorefinery in Southern New Mexico. He describes it as a pre-commercial demonstration plant intended to validate the economics as well as the technology Sapphire has developed to produce “green crude” that is equivalent to crude oil. BioEnergy also received a $50 million grant to build a demonstration plant in Lake Providence, LA, that is intended to use sorghum as a replacement for crude oil in the production of succinic acid, a petrochemical feedstock. The process developed by BioEnergy to convert sorghum into succinic acid also uses less energy per ton of succinic acid produced than the petroleum-based process.

Of the 19 projects designated to get funding in an announcement issued jointly today by the Energy and Agriculture Departments, Sapphire and BioEnergy account for two of four recipients that got $50 million each in grants. Most of the awards were less than $25 million, although more than $81.1 million was provided for an existing biomass ethanol refinery being built in Fulton, MS, by Bluefire Ethanol of Irvine, CA. The funding came through the American Recovery and Reinvestment Act to accelerate the construction and operation of pilot, demonstration, and commercial-scale biofuel facilities.

In the statement, Energy Secretary Steven Chu says, “These projects will help establish a domestic industry that will create jobs here at home and open new markets across rural America.” The grants announced today are collectively matched with more than $700 million in loan guarantees and other types of private and non-Federal cost-share funds.

The government also designated a $25 million grant for ZeaChem, a cellulosic ethanol company based in suburban Denver, CO, that is developing a pilot plant along the Columbia River in Boardman, OR, about 160 miles northeast of Portland. The project is intended to demonstrate the feasibility of using hybrid poplar trees grown as a crop to produce fuel-grade ethanol. The pilot plant also is intended to evaluate the feasibility of using other agricultural biomass as ethanol feedstocks.

In its list of recipients, the government says the funding for Sapphire is designated for a facility in Columbus, NM, intended to cultivate algae in ponds that will ultimately be converted into green fuels, such as jet fuel and diesel, using a refining process developed by Sapphire’s partner, Louisiana-based Dynamic Fuels. Venture funding for Sapphire has come from Arch Venture Partners of Seattle, Bill Gates’ Cascade Investment, Venrock Associates of Menlo Park, CA, and the UK-based Wellcome Trust.

Zenk says Sapphire intends to break ground for the project near the end of 2010, and production operations are expected to begin a year later.

“After we validate the techno-economics around this, then we’ll go to a fully commercial, 10,000-barrel-a-day facility,” Zenk says. That process would likely require operating the plant for a year, which means it will be at least three years before Sapphire will be ready to make a decision to move forward with full commercial operations.

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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