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Home arrow Blog arrow 1/23/08-Startup teams with Chevron on algae fuel

1/23/08-Startup teams with Chevron on algae fuel PDF Print E-mail
Written by David R. Baker   
Wednesday, 23 January 2008
Solazyme, a Bay Area startup that makes diesel fuel from algae, said Tuesday that it will work with oil giant Chevron Corp. to perfect its technology.

The two companies revealed few details about their agreement, including the amount of money involved.

But the alliance highlights the growing interest in using algae as a fuel source, an idea that has been discussed for decades but has never fully left the lab. And it marks the latest attempt by San Ramon's Chevron to invest in the same alternative fuels that many people - including some of the oil industry's fiercest critics - hope will one day replace petroleum.

Solazyme has already spent years working with different strains of algae to create fuel, using a fermentation process that the South San Francisco company likens to brewing beer. Now Solazyme needs to increase its production and drive down the cost. That's where Chevron comes in, said Solazyme Chief Executive Officer Jonathan Wolfson.

"The reason to work with a company like Chevron is because they have everything from soup to nuts," he said Tuesday. "They know how to get fuel produced in bulk, get it to the car, and it's reliable."

If all goes according to Solazyme's plans, the company should be able to produce biodiesel at a commercially competitive price within two or three years, Wolfson said. The company this week is driving a Mercedes diesel car - powered by Solazyme fuel - around Utah's Sundance film festival, which is screening a documentary on renewable fuels that features the company.

"It's straight off the floor," Solazyme President Harrison Dillon said of the Mercedes. "The consumer can just buy a diesel car, and our fuel goes right in."

The company wants its fuel to be cheap enough to compete with petroleum diesel even if oil prices fall back to $50 or $45 per barrel. Crude oil now sells for about $89 per barrel.

Chevron has benefited handsomely from high oil prices. But the company has also started dabbling in biofuels and other alternative energy sources.

In autumn, Chevron formed an alliance to explore algae fuels with the National Renewable Energy Laboratory, part of the U.S. Department of Energy. The company also invested in a Texas biorefinery that makes biodiesel from soy beans but was sued in December by one of its partners after Chevron decided not to put more money into the project.

Solazyme isn't the only startup looking at algae as a fuel source. Nor is the idea particularly new. Researchers explored producing methane gas from algae as far back as the 1950s.

The National Renewable Energy Laboratory in Golden, Colo., spent almost 20 years working with algae, starting in 1978. Algae naturally produce a type of oil, and the lab's researchers examined more than 3,000 strains to see which had the most potential to make oil in large quantities. They built open-air, algae-growing pools in Roswell, N.M., to test their theories.

But like many other energy research programs started in the 1970s, the algae study eventually lost its funding, closing shop in 1996. The federal Energy Department decided to put the money into exploring cellulosic ethanol instead. Plus, oil was relatively cheap at the time. The search for substitutes lost its urgency.

"Back then, wholesale diesel was like 60 cents per gallon," said Al Darzins, a group manager with the lab's National Bioenergy Center. "So obviously, that's all changed."

Now, the lab is exploring algae again, working with Chevron. But unlike Wolfson, Darzins says algae fuel won't hit the market soon.

"Is this going to be commercial in the next couple of years? I don't think so," he said. "There's a lot of research needed both on the engineering side and the biology side. Remember, if this going to work, it has to be dirt cheap."

Last Updated ( Wednesday, 23 January 2008 )
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