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December 3, 2009
Sapphire Energy was awarded a $50 million grant from the Department of Energy to cultivate algae in ponds that will ultimately be converted into green fuels, such as jet fuel and diesel, using the Dynamic Fuels refining process. Also on Friday, the U.S. Department of Agriculture said it would give Sapphire Energy a $54.5 million loan guarantee from the 2008 Farm Bill's Biorefinery Assistance Program to build a demonstration plant in New Mexico.
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December 3, 2009
Sapphire Energy will receive $104.5 million in federal funding to build a commercial scale, algae-based biofuel operation near Columbus in southern New Mexico.
The U.S. Department of Energy awarded $50 million in stimulus money for the project, and the U.S. Department of Agricultural approved a $54.5 million loan guarantee under the Biorefinery Assistance Program, which was authorized in the 2008 Farm Bill.
California-based Sapphire, which formed in 2007, has developed a proprietary process for turning oil from algae into renewable gasoline that is genetically identical to sweet crude pumped from the ground. The company calls its green crude a "drop-in solution" to the search for alternative fuels because its algae-based gasoline can simply replace petroleum as fuel for ground and air transportation, without any modification to refineries, pipelines or vehicles.
The company will use the federal funds to build and operate a commercial-scale demonstration plant to grow algae in ponds and refine it into a variety of fuels for ground and air transportation. The project is expected to create 750 direct and indirect jobs, said Gov. Bill Richardson in a news release.
"Investments in advanced biofuels are crucial to improve America's energy independence and to keep energy dollars at home," Richardson said. "This project will create jobs, invest in new technology and boost the economy in rural New Mexico."
USDA Rural Development State Director Terry Brunner said the project will have a huge impact on Luna County along the Mexican border, where Columbus is located.
"New Mexico is making great strides in the development and expansion of algae-based biofuels in the United States," Brunner said. "An investment this large in a small community like Columbus certainly reinforces President Obama's efforts to develop alternative energy sources while creating economic development opportunities in our rural areas."
Sapphire has an option to buy roughly 2,200 acres of land near Columbus. Once the demonstration project shows the commercial viability of Sapphire's operation, the company hopes to expand the facility into a 1,200-acre operation that can produce more than 1 million gallons per day of green crude, Sapphire CEO Jason Pyle told the New Mexico Business Weekly last June.
The company has raised more than $100 million in private equity. Investors include financial powerhouses, such as ARCH Venture Partners, the Rockefellers' Venrock and Cascade Investment LLC - an investment holding company owned by Microsoft founder Bill Gates.
Sapphire already operates an $8 million test-and-development facility at the West Mesa Industrial Park in Las Cruces. The center experiments with algae seed varieties developed at Sapphire's headquarters in San Diego.
Pyle said Gov. Richardson helped a great deal to secure the federal funding to move forward with company plans.
"Gov. Richardson is a true advocate for smarter energy resources," Pyle said. "His leadership has played crucial role in the federal grant funding for our algae-based fuel work. This is a win-win for New Mexico, Luna County and Sapphire Energy."
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September 9, 2009
Sapphire Energy, maker of an algae-based replacement for gasoline and jet fuel, unveiled its plug-in hybrid electric vehicle today in front of San Francisco's city hall -- combining several promising technologies aimed at slashing carbon emissions.
The car, aptly dubbed the "Algaeus" -- built into the shell of a Toyota Prius -- will take off today on a 10-day nationwide tour, stopping first in Sacramento, where governor Arnold Schwarzenegger is planned to pour a vial of algae into its gas tank. Sapphire's algal biofuel, called "green crude," is significant because it's a drop-in fuel, meaning it works with current automotive technology, no newfangled advancements necessary.
The technology is relatively simple. Sapphire grows the algae in salt-water ponds at its facility in New Mexico. It adds a combination of carbon dioxide -- trapped and sequestered from industrial sources, thereby limiting their emissions as well -- and sunlight. And through a proprietary microbial process, it produces hydrocarbons capable of replacing gas. Unlike ethanol, the fuel is not alcohol based, and it's not just an additive, emphasizes Sapphire CEO Jason Pyle.
The Algaeus, which supposedly gets 150 miles per gallon, was unveiled today to showcase Sapphire's technology -- though technically, the company has nothing to do with the building of cars, and certainly not the plug-in hybrid aspect of the model. The event also celebrated the debut of the film FUEL, a documentary about America's addiction to oil and the damage it causes. It took director Josh Tickell, who also founded anti-fossil fuel nonprofit the Veggie Van Organization, 11 years to make the film, which will premiere on Sept. 18 in New York when the Algaeus finishes its trek.
The car is part of a caravan that includes several other green vehicles, including an all-electric motorcycle and a classroom-fashioned bus powered by rooftop solar panels. The latter contains models and materials showing how Sapphire's technology works and why it's important that viable replacements are found for fossil fuels. The plan is to have the caravan tour college campuses following its cross-country drive.
Sapphire has already proved its technology in several key arenas. Late last year, it signed deals with companies like Continental Airlines and Boeing to successfully test out algae-based jet fuel. And the San Diego-based startup says it will be building a larger demonstration plant (capable of producing 2 million gallons of diesel and 1 million gallons of jet fuel a year), also in New Mexico, in the coming months to refine its process even more. There's no doubt that algae is capable of powering vehicles, it's whether or not it can be scaled for commercial use that matters most. But Sapphire's Pyle is confident on this count.
"I think algae is one of the only viable technologies for this," he said. "What else can scale to 10 billion, 50 billion gallons? Very few sources." Because algae doesn't require arable land, or even potable water (salt water works just as well), it won't suck up valuable resources needed by others, giving it room to grow rapidly and cheaply, Pyle adds.
These same characteristics also make algae important to surrounding communities where green jobs could go a long way. For example, Sapphire's current facility in New Mexico-- a state that could use agricultural revenue -- employs 140. And its new demo plant will employ even more.
The only hurdle standing in algal biofuel's way is government policy, Pyle says. In order for any alternative fuel of its kind to be widely adopted, renewable fuel mandates and emissions restrictions will need to be implemented and strongly enforced. The Obama administration is headed in the right direction, with its recommended changes for the country's energy mix, but no major shift can happen until legislation like Waxman-Markey becomes a reality.
"The main challenge is not technical, it's willpower," Pyle says. "People told us this technology was impossible a year ago, but now here it is ready to go. It's going to take a huge act of will for our government to effect a real change."
In order to hasten this shift, Sapphire is in talks with corporate giants like General Electric, as well as government agencies like the Department of Agriculture, to convince stakeholders that algae-based solutions are set to become a reality.
It also has a healthy stream of funding, having raised more than $100 million in capital from Arch Venture Partners, the Wellcome Trust, Venrock, and, notably, Bill Gates'Cascade Investment.
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April 17, 2009
Citing a breakthrough, San Diego's Sapphire Energy, a startup developing algae-to-fuel technology, today doubled its estimated production for 2011, saying that by then the company will be capable of producing 1 million gallons of diesel and jet fuel annually.
"We have made a recent significant technological breakthrough within our company and, combined with our ongoing development improvements, we're able to project a higher number," said C.J. Warner, who was named Sapphire's president in December. "This is pretty exciting for us and, given the urgency of finding a renewable fuel solution across the nation and around the globe, we wanted to share our updated time line." Warner, who provided the comment by email through a spokeswoman, did not explain the nature of Sapphire's breakthrough.
Sapphire says it has developed proprietary methods that enable algae growing in non-potable water in desert areas to produce a "green crude" substitute that requires no changes to the petrochemical industry's pipeline and refining infrastructure.
In a statement released by Sapphire around a military energy and fuels conference in Alexandria, VA, Sapphire vice president Brian Goodall said the company's technology is ready now. The company says production will ramp up over the next several years, hitting the 1 million gallon figure sometime in 2011, climbing to 100 million gallons annually by 2018, and then to 1 billion gallons of fuel per year by 2025. Sapphire says this means it could be supplying enough fuel to meet nearly 3 percent of the country's 36 billion gallon renewable fuel standard.
In January, Sapphire participated in test flights that successfully substituted jet fuel made from its "green crude" for conventional jet fuel. Aviation fuel is viewed as a key market for the biofuels industry because the U.S. Air Force is the largest single customer, and the specifications are more rigorous than for any other transportation fuel. The company says it has conducted several test flights with commercial airlines Continental and JAL.
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March 13, 2009
Money to build an algae biofuel plant is officially headed Roosevelt County's way.
Pres. Barack Obama signed the omnibus appropriations bill Wednesday. The legislation includes $951,000 for the Sapphire Energy Algae to Fuel Demonstration Project.
The project aims to develop and grow a fuel-producing algae using technology that genetically enhances algae, according to a news release from U.S. Sen. Tom Udall's office.
The senator said the project could create 100 new jobs.
Greg Fisher, director of the Roosevelt County Economic Development Corporation, said he thought the project was a great opportunity for Portales.
"We're discussing plans with the company now to see how we can...have Portales participate in algae fuel production in New Mexico," he said.
Fisher has no specific schedule for when the algae biofuel plant will be built. He said finding out how to use resources around the state and how to benefit Sapphire and New Mexico would take much more legwork.
"I wouldn't anticipate that little money will yield us 100 jobs," he said.
It's too early to tell how many jobs the plant will generate, Fisher said.
Even if the plant needed 100 workers, Fisher said, he wouldn't worry that Portales wouldn't be able to supply them. Areas see growth when a company wants to hire more than a dozen or two dozen people, he said.
In the release, Udall said alternative energy is one pillar of eastern New Mexico's economy.
"Economists and business leaders agree that the clean energy sector will produce the jobs of the future," Udall also said. "By investing in this kind of project today, we can ensure that those jobs will be created in Eastern New Mexico."
In the future, Fisher said, algae will be the way to produce biofuel because crude oil transportation and refining systems can handle the algae biofuel.
"Basically, algae creates a green crude oil that acts just like crude oil coming from the oil and gas industry," Fisher said.
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October 13, 2008 (From GreenTechMedia.com)
Sapphire Energy has been something of a mystery in the algae-fuel world. There are over 50 companies now touting that they will convert pond scum into liquid fuel (up from around four companies in 2006). Most of them, however, can't get funding and many seem to be plying "me too" ideas borrowed from early algae advocates like GreenFuel Technologies.
So when Sapphire announced it had landed over $100 million in funding from, among others, Cascade Investment (the venture firm founded by Bill Gates) it drew attention. Only a few other algae companies - GreenFuel, Solazyme - have raised the tens of millions needed to move toward prototype production. The attention further magnified the fact that Sapphire has been somewhat tight lipped on its technology.
Last week, Tim Zenk, vice president of corporate affairs for the company, filled in some of the details. I've also included comment and speculation from some competitors. As a prelude, I'd like to point out that algae companies like to snipe at each other, similar to the way CIGS companies or Intel and AMD like to point out each others'flaws. It will make a algae conference taking place next month in Seattle next month interesting.
Overall, Sapphire differs in that it plans to grow algae that will produce hydrocarbons - i.e., crude oils that can be somewhat quickly refined into liquid fuels, Zenk said. It believes it can produce crude algal oil, once in mass manufacturing, for $60 to $80 a barrel.
"We're very focused on fuels that are an exact replacement for gas, diesel and jet fuel," he said. "You will get an exact replica of light, sweet crude."
Most other algae companies are raising algae that will produce lipids, or naturally occurring fats. Lipids can be made up of carbon, hydrogen and oxygen. Hydrocarbons only include hydrogen and carbon. (Lipid defines a quality of dissolving in fat but not water while hydrocarbon is a chemical definition.) Converting a lipid into a gas replacement or other type of fuel can take additional processing. Still, the lipid algae companies say they can produce oil in at the same range.
How does Sapphire get algae to produce substances that are less natural for it to produce? Genetic engineering. The company comes out of research conducted at The Scripps Research Institute and the University of California San Diego by Stephen Mayfield and others. You can call UCSD Bacteria U. It has been a center of biotech research for years and now is spawning a number of biofuel and green chemistry companies all based around using microorganisms as chemical factories. Sapphire has already produces samples of a fuel equivalent to 91 octane gas.
Some sources have said that Arch Venture Partners commissioned the original research and then formed the company around that research. Arch partner Robert Nelsen has been involved in several early biotech startups. I still need to confirm this last point about Sapphire's birth.
Genetic engineering also influences how Sapphire will grow its algae. It wants to grow the algae in open, saline ponds, rather than sealed bioreactors, like Greenfuel. The company also says that it has minimized the danger of rogue algal blooms from its genetically enhanced algae ponds as well as the risk that natural strains will out-compete its algae or eliminate its special qualities through hybridization.
"We will optimize it to live only in certain conditions," Zenk said.
Algae execs at competitors tend to scoff at this notion. The challenges keeping wild species at bay, getting consistent results generation to generation represent massive problems. And one can only imagine the land-use hearings when Sapphire says it wants to build a pond to raise GMO algae. Again, it is their job to scoff, but they have a point.
Eliminating the salt water from the algae is a doable problem, added Zenk. Water extraction techniques from other industries will be borrowed. Again, many competitors (and scientists at NREL) have said that water extraction has been one of the lingering problems in algae fuel.
Money is not an issue, he added. The company has raised far in excess of $100 million. That figure has cause many to speculate if some of the funding is contingent. Typically, biotech companies only get a limited amount of money - $15 million or so - until the science has been proven. Then the big dollars flow in. If you look at the filings with the California Department of Corporations, it says that in August Sapphire sold $18.7 million worth of stock as part of a $11.7 million Series B round of fundraising. The California filings do not contain all of the contributions to the round. The SEC document, which you can get if you are in Washington, has more information. Either way, Zenk was fairly unambiguous about the company having the money.
In a swipe at competitor Solyazme, Zenk said that brewing algae fuel by feeding algae sugars won't be tenable at a large scale. "There isn't enough farm land in the world" to grow the sugar. In a video a few weeks ago, Solazyme said that growing algae in ponds wasn't tenable: The company tried it before switching to sugars.
Lastly, Sapphire says that it hopes to be able to prove its main concept - that genetically optimized algae grown in outdoor ponds that produce hydrocarbons on a large scale - within three to five years. Note, he didn't say they will produce oil in three to five years. He said they could prove the concept. Thus, when Sapphire can produce fuel is still a bit murky. If the concept can be proven, expect even a bigger flood of investors. Then again, other algae comapanies say they could well be in production by then, which could make it a real horse race.
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September 2008
NEW YORK (Reuters) - Private company Sapphire Energy, which aims to squeeze "green" crude oil from blooms of one of the planet's oldest life forms, said on Wednesday it has raised over $100 million from investors.
The San Diego-based company hopes to make commercial amounts of the fuel in three to five years for a cost of $50 to $80 per barrel. Sapphire selects and genetically modifies algae to maximize their internal production of lipids, or fats and then squeezes that from algae. It says the oil can be used in refineries like normal crude.
"The goal of Sapphire is to produce a crude product that can be introduced into the existing crude stream for production costs that are similar to other new opportunities like oil shales, oil sands, and even deep, deep water drilling," Jason Pyle, Sapphire's chief executive said in an interview.
The money more than doubles initial investor of about $50 million the company got in June. New investors include Cascade Investment, LLC, an investment company owned by Bill Gates.
Amid lofty prices for crude oil and rising concerns about global warming, companies are racing to make algal fats into oils that can be turned into fuels.
Algae absorb the main greenhouse gas carbon dioxide as they grow, so the net effect on global warming of the fuel is considered to be neutral.
The burning of traditional fossil fuels, on the other hand, releases carbon dioxide that has been stored for eons underground.
There are challenges in making fuel from slime that have dogged scientists for decades. One problem has been "layering" or the tendency of algae to slow down their process of making lipids once they multiply quickly in a pond, or in specially-made containers.
Pyle said Sapphire modifies algae and processes it in a way that avoids that problem.
Another company, Solazyme, Inc, hopes to get around the problem by feeding algae with renewable resources, such as waste sugars and starches, so they can make oil without sunlight and no matter where they are in a container. Solazyme recently got $45 million from venture capital firms.
Sapphire anticipates relying on its existing investors to achieve initial commercial production of 10,000 barrels per day of the crude. That is equal to the amount of fuel from one large ethanol plant and tiny fraction of U.S. oil demand of about 20 million barrels per day.
Pyle was confident that oil prices would remain high enough to support the business, despite falling from a record $147 a barrel in July to about $91 on Tuesday.
"I don't think the current trend bothers us one bit," Pyle said. He said the business could be very competitive even if oil fell to $80 a barrel.
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May 29th, 2008
Another algal biofuel company has emerged from stealth mode, and this one has the biggest story yet, at least according to the estimation of its investors.
Only a year old, Sapphire Energy is a San Diego startup that has lab-developed an algae that it says can create a substance akin to crude oil that can be processed by existing refineries, transported through existing infrastructure and burned without difficulty by today's vehicles.
Sapphire has raised over $50 million from three investors, including Arch Venture Partners, whose Kristina Burow helped co-found the company. Burow told me in an interview yesterday that Arch, along with Venrock and UK-based medical research charity The Wellcome Trust, has given Sapphire an "open checkbook" not based on the usual venture model of set rounds and valuations, from which the company can draw as much capital as necessary to commercialize the technology as rapidly as possible.
The excitement of Sapphire's investors and founders over its technology stems in part from the size of its plans. CEO Jason Pyle says that where other biofuels can only promise to replace a small fraction of the oil use in the United States, the algae that Sapphire is working on could replace all of it.
How is that possible? Well, where fuels like ethanol and biodiesel rely on grown feedstocks corn, sugar, switchgrass, trees Sapphire's algae requires no feedstock at all, just water and sunlight. Pyle claims that the requirement to grow without relying on a food crop was one of the company's founding principles.
The two other requirements, that the algae cultivation not take useful land or use fresh, potable water, should quell many environmental concerns. Instead, Sapphire plans to use non-potable water like agricultural runoff and salt water.
One of the distinguishing factors of algae startups is that they tend to dream, and talk, rather large, and Sapphire is no exception. Like other companies, its algae has yet to be proven at commercial scales a step that has foiled initial attempts by other companies, most famously Greenfuel Technologies, whose first large algae project grew so rapidly it choked itself out. But when I pointed that out to Pyle, both he and the two VCs I spoke to on a conference call (the other being Arch co-founder Robert Nelson) shrugged off the objection.
"The ability to produce this organism and use it is well understood at scale & the attempts of biofuel companies do not represent the best attempts at scaling these systems," Pyle said. And although Sapphire won't reveal where or how it intends to initially cultivate its algae, Pyle says it is specially developed to fit a particular niche in the ecosystem, which will both keep it from escaping into the wild, and keep wild algae from invading and damaging production, a significant problem for many algae startups.
However, despite the implicit criticism Sapphire has for its competitors, Pyle believes that there will be many winners in the algal biofuel space. "In a trillion dollar market, it's hard to believe in a winner take all strategy," he said.
While algae currently accounts for an almost negligible amount of the fuel market, in any country, it may take less time to commercialize than other technologies. Sapphire plans to move forward next with pilot testing, going from production of 100 barrels of "green crude" per day, to 1,000, all the way up to 10,000 per day.
If that model turns out to be the right one, the future of the biofuel industry looks fairly straightforward. Cultivation ponds drawing water from farms, waste-streams, tainted reservoirs, the ocean and other sources would be dotted thickly throughout the southern half of the United States, each producing three to four million gallons per year. To replace the entire crude oil usage of the country, it would take between two and three thousand of these ponds, according to my back-of-the-envelope calculations.
That scenario is a long way off, though: Sapphire plans to have its first commercial production plant in about three years, after which it would require billions of dollars in project financing to build up production. And how quickly that project financing comes through will depend almost entirely on the price of the finished product versus the crude oil prices at the time.
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