In answer to a public challenge six months ago, biotech company Solazyme is to announce a deal today to start supplying oil derived from algae feedstock to biodiesel maker Imperium Renewables.
Solazyme has entered into a biodiesel feedstock development agreement under which Solazyme is to generate algal oil for Imperium’s biodiesel production process.
Under the agreement, Solazyme is to grow proprietary strains of microalgae, extract the oil, and deliver it to Imperium, which then intends to convert it into fuel.
Industry observers haven't expected any company to be in a position to provide meaningful commercial quantities of algal oils in the near future, given difficulties in cultivating the right strains of algae and the challenge of extracting oil from it cost-effectively.
But Solazyme co-founder Jonathan Wolfson, president and chief operating office, told Inside Greentech that his traditionally "media-shy" company is farther along than many might think.
"Our technology is advanced enough that we're producing the kinds of quantities that were interesting to do a deal with. We'll be delivering agreed-upon quantities [to Imperium] this year."
Wolfson wouldn't clarify exactly what those quantities would be, however.
He did say that beyond the Imperium relationship, Solazyme expected to hold public demonstration projects this year, showing fuel made from its algal oil powering an internal combustion engine.
Speaking at an event last December with companies pursuing algae oil for biofuels, Imperium CEO Martin Tobias said, in front of hundreds of investors, that he'd "buy 1,000,000 gallons of algae oil today if anyone here on the panel can deliver it." (see Inside Greentech's Biofuel from algae on horizon, say experts.)
At that time, nobody on the panel, which included leading algae companies LiveFuels and GreenFuel Technologies, made commitments.
Why not? Getting oil out of algae cost effectively has turned out to be difficult.
Government researchers experimenting with algae oil extraction have been using centrifuges, which have been expensive and scale poorly. Front-running well funded commercial developers—which, in addition to LiveFuels and GreenFuel, also include Solix Biofuels and Aurora BioFuels—are investigating other techniques.
When asked about Solazyme's extraction process, Wolfson was coy.
"I think we're probably going to keep that under wraps for a while. This is a pretty competitive space. There's certainly money going in, as you know. You can file for intellectual property six ways to Sunday, but there are some things that you should keep private as long as possible."
"I can tell you we've spent a couple of years developing technology around extraction."
Wolfson made it clear that Solazyme does not feel it is at commercialization economics with the technology yet, but said the company is a lot closer than many people believe algae is currently.
"I won't tell you that the economics of extraction are exactly where we want them to be in the long run, but we've made giant strides to get a point where we now feel comfortable that we'll be able to get to the extraction price per gallon that we think is appropriate."
Imperium Renewables has submitted an S-1 filing to the Securities and Exchange Commission, announcing its intention to become publicly traded, and, as a result, is now in a quiet period.
Founded in 2003 and headquartered in South San Francisco, Solazyme is focused on the engineering and optimization of algae for production of biofuels and health and wellness materials. In March, the company raised a $8m+ Series B, plus $2m of debt. The Roda Group led the financing, with participation from Harris & Harris and other undisclosed investors (see Inside Greentech's Another week, another three Khosla biofuel investments.)
Imperium Renewables currently operates a 5 million gallon per year biodiesel production facility, but is constructing a 100 million gallon per year facility in Grays Harbor, Washington, scheduled to open next month.
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