Starvation is a big part of the business plan, says Aurora CEO Greg Bafalis.

Aurora grows algae and converts it to biodiesel, omega-3 oils for food producers and algae power that can be sold as pet food or protein. If you starve the algae, they produce more oil: roughly 30 percent of the mass turns into oil, he said. In non-starvation mode, only ten percent of the mass turns to oil. Thus, depending on demand, Aurora can tweak its ponds to achieve different outputs.

Whether and how the process works on a large scale will soon be seen. The company -- which to date has grown its algae mostly in swimming pools in Florida -- has erected six one-acre ponds in northwest Australia that can produce 15 tons of dry, ash-free biomass per month. Later this year, it will open a five-acre pond in or around July. The five-acre pond will then become a modular unit for larger algae farms.

"Biofuel, omega-3s, and biomass: we will always produce all three," he said.

Like a number of other biofuel and algae companies, Aurora may find 2011 to be a better time than the previous few years. After the financial debacle of 2008, oil prices plummeted and capital dried up for many in biofuels. A few very visible belly flops -- remember Imperium Renewables? -- in the segment didn't help either. To survive, Aurora swapped CEOs, went into silent mode, and transitioned from being a fuel producer to a company that produces food additives that also happens to have a fuel division. At least they didn't pretend too much that it was all part of a deliberate master plan.

Since then, new CAFE standards, rising oil prices and an improved economy have changed the outlook. Both Amyris and Gevo have held successful IPOs, and Solazyme, the largest algae startup, has filed the preliminary papers for an IPO.

Like Amryis and a few others, Aurora has walked away from its earlier, more grandiose claims. in 2009, former CEO Bob Walsh predicted that the company could have a 2,000-acre pond by 2011 (hey, that's this year!) or 2012 that could produce $2-a-gallon diesel. Now, Bafalis will only say that Aurora will be able to sell its products profitably.

Aurora's strategy has a few interesting twists. It grows algae in open ponds through photosynthesis, a process that is cheaper than bioreactors and fermentation kettles. It doesn't rely on genetically modified algae but rather on selectively bred algae -- again, this approach is cheaper than other options. But how you do keep invasive species out of the ponds? Bafalis says Australia's climate will be a big help.

"Northwest Australia gets two months of rain a year and then it's all blue skies and sunshine," he said.

The company has also developed pesticides that kill other species but doesn't harm theirs. Mechanical systems also keep out invaders.

To remove the algae from the water -- one of the more costly challenges in algae -- Aurora uses technology similar to the components used in wastewater treatment facilities. It also employs centrifuges. How much de-watering costs and how well it works will be one of the primary factors in determining if Aurora sinks or swims.

Aurora, Bafalis added, will likely produce fuel oil itself but sell algae oil to others, who will then process the raw material to produce a finished product.

"We will be an ingredient company," he said. "Biofuel will probably be the only thing that will be an end product."