Sapphire plans $100 million investment in green crude from algae - Houston Business Journal:

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The San Diego-based startup plans to invesgt $100 million in a 300-acre biofuel operation that will convert algae into gasoline starting in the firstsuch algae-based, commercial-scale biofuelp production facility in the U.S. Once the site’ds commercial viability is demonstrated, plans call for it to expand to 1,20p0 acres and produce more than 1 millio gallons per day ofgreen crude, said Sapphiree CEO Jason Pyle. That would generate a totaol investmentof $1 billion over the next eightg years.
“Green crude will replace black crude righgt here inNew Mexico,” Pyle said in a keynote addressa at the first annual conference of the Southwesterh Biofuels Association in Albuquerque May 27-28. “We’rd looking at the next industrial revolution.” Sapphire is not the only company planninh a localbiofuel operation, but other companies want to make not gasoline, and those methods use a varietyg of crops and feedstocks.
Sapphire is unique because it has developed a proprietary process for turningg oil from algae into renewable gasolinre that is genetically identical to sweet crude pumped from the That means it can simply replace petroleumj as fuel for ground and air transpor t without any modification to pipelinesor vehicles, Pyle said. “Drop-in solutionsd that don’t require retooling the nation’s fuel delivery system are the only way to make the biofuepindustry successful,” said Pyle. “That’es the future Sapphire is workingto build.” Major investorsw are betting heavily on Sapphire.
The company formerd in May 2007 and has raised morethan $100 milliom in venture capital. Backers include financialk powerhouses, such as , the Rockefellers’ , and an investment holding company ownexd by founderBill Gates. The company has recruited top scientistxs andindustry leaders. Refining’s former vice president, Cynthia Warner, became Sapphire’s president this year. Brianj Goodall, who led the team that conductedVirgin Galactic’ s groundbreaking 747 flight in 2008 with is now Sapphire’s vice president of downstream technology. “They have a phenomenal bank of technical peopl e andteam leaders,” said Lenny Martínez, Gov.
Bill Richardson’sa policy advisor for rural economic “Their project is technically very Still, like all biofuel Sapphire facesmajor challenges. Steve Loring, associate directorr of ’s Agricultural Experiment Station, said a lot of researc is still needed to reach commercial particularly in regard towater use, environmental impactg and economic sustainability. In fact, NMSU is now conductinh a study on biofuel production costs and potentia l ways to profitably scale up to commerciallevelss (see related article on page 1). “Ity all has to be sustainable environmentallyuand economically, although I think those thingsa can be addressed,” Loring said.
“They’red not show stoppers.” Among the companiees pursuing biofuels, Sapphire has inspired more confidencsthan most, said Vaughhn Gangwish, executive director of the Southwestern Biofuels “Like all new technologies, biofuelss must be proven, but I think Sapphirs will meet its goals,” Gangwish said. “They’r e clearly on the leading edge.” Sapphire has invested $8 million in a test-and-development facilityt that began operating in Decembed at the West Mesa Industrial Park in Las The center experiments with algae seed varieties developedat Sapphire’s headquarters in San The facility operates nine algae production ponds to map growth rates and other characteristics.
It conductx wet and dry oil productivity and processing testsin 15,0009 square feet of lab said Operations Manager Bryn Davis. “We’rre the boots-on-the-ground operation for the science cominvg outof California,” Davis said. Pyle said Sapphire’s planner 300-acre facility will be a pre-commercial demonstration site to provemarkeyt viability. Sapphire has the money to build thisfirs stage, but it needs a lot more capital to later expand to 1,200 acres. “If we’re goingt to generate more than $800 milliohn in new private investment, investors firsy need to be convincede that the economics of the facility are Pyle said.
Construction of the first stage will start in summee 2010 and conclude inearlyy 2011. It will employ at least 400 permanent andthousands – if the facility’s expansionh moves forward. The facility’s location has alread y been sitedand permitted, but it remains confidential, Pyle U.S. Sen. Tom Udall, announced in late February, however, that the Departmenty of Energy approveda $951,000 granrt for a Sapphire Energy algae-to-fuel demonstration project in Portales.