Exxon Mobil Corp. (NYSE:XOM) launched a
biofuels program, planning to spend $600 million -- perhaps billions more -- in an alliance with La Jolla, Calif.'s Synthetic Genomics Inc. to research and develop next-generation biofuels from photosynthetic algae.
Entering the alliance with great hope, SGI knows there's tons of research to do to make its algae a viable commercial resource. Its CEO J. Craig Venter said, "The real challenge to creating a viable next-generation biofuel is the ability to produce it in large volumes, which will require significant advances in both science and engineering." Exxon SVP Michael Dolan notes it will take "significant work and years of research."
Behind the science and corporate strategy, Emil Jacobs, VP of research and development at ExxonMobil Research and Engineering Co., offers some interesting points. He notes that algae alone has greenhouse gas mitigation benefits. Basically that means it sucks up carbon dioxide.
And there is much controversy over corn-based fuels, which could end up raising food prices and could be bad for farmland. Jacobs points out that growing algae does not rely on fresh water and arable land otherwise used for food production. The strategic benefit for Exxon, he says, is that algae have the potential to produce large volumes of oils that can be processed in existing refineries to manufacture fuels that are compatible with existing transportation technology and infrastructure.
The $600 million includes $300 million for Exxon's internal costs and potentially more than $300 million to SGI if certain ambitious research and development milestones are met. If they're able to get this plan to work on a commercial scale, Exxon may shift some of the $30 billion it plans on using for exploration projects to biofuel production. Of course, that's a
difficult task.
Exxon isn't the only company interested in algae as an alternative fuel source. Here's a little algae investment roundup to get you caught up:
- Honeywell International Inc. (NYSE:HON), Airbus SAS, JetBlue Airways Corp. NASDAQ:JBLU) and IAE International Aero Engines AG teamed up to try and turn biofeedstocks into commercial aviation fuels;
- Aurora Biofuels Inc., which closed $20 million in Series B funding last year from Oak Investment Partners, Gabriel Venture Partners and Noventi, plans for its first commercial scale facility to be in operation in 2012;
- Solazyme Inc., which raised a $45.4 million third round from Braemar Energy Ventures and Lightspeed Venture Partners last year and also has a deal with the VC unit of Chevron Corp., recently surpassed $76 million in funding;
- Sapphire Energy got venture financing from Bill Gates' investment arm Cascade Investment and has raised more than $100 million. It also recently gave a timeline for algae-based fuel production;
- Dow Chemical Co. (NYSE:DOW) planning a pilot project with algae biofuel startup Algenol Biofuels Inc., which applied for a grant from the Department of Energy; and
- Seambiotic, which is transitioning from the pilot plant stage to large-scale industrial algae cultivation and production, created joint ventures with Inventure Chemical and the NASA Glenn Research Center.
The sector is coming alive, and Bizjournals.com noted that
cleantech investments rebounded in the second quarter. Cellulosic ethanol is another area that is receiving major investment from corporates, such as Royal Dutch Shell plc (NYSE:RDS.A).
Folks in cleantech are likely keeping their eyes on falling oil prices, but they will eventually rise, whether by general market stabilization or OPEC cuts. It's worth keeping an eye on the flurry of action near Brazil, which is
driving collateral M&A. -
Baz HiralalSee the ExxonMobil announcement
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