As it gets harder to pull petroleum out of the ground, some oil companies are turning to a simple rootless plant in the hope of bolstering their supplies.
In October, Chevron Corp. said it would work with the U.S. National Renewable Energy Laboratory to identify and improve upon algae strains used for liquid energy like jet fuel and biodiesel (see Finding a Better Strain of Slime).
The joint venture, called Cellana, is starting construction on a demonstration plant in Hawaii.
Although financial details surrounding the newly minted company are sparse, Shell (NYSE: RDS-B) said it would hold the majority share.
Researchers and companies have been eyeing algae as a potential feedstock for biofuels because certain species contain high amounts of lipids (read: oil) that can be extracted, processed and refined into fuel.
Cellana said it plans to use a nonmodified marine microalgae species. One advantage of using a saltwater breed of algae is that it minimizes the use of fresh water.
The company said it will draw on HR Biopetroleum's technology, which maintains a culture of the algae and then puts a portion of the algae in a seawater pond where "it grows like mad for a day or so and then is harvested," said Barry Raleigh, president of Hawaii-based HR Biopetroleum.
Once Cellana's facility is built, it will grow small amounts of the algae for testing. Scientists from the universities of Hawaii, Southern Mississippi and Dalhousie have been recruited to screen the algae to determine which ones produce the most oil.
The University of Hawaii also owns an undisclosed share of HR Biopetroleum. The company, which was founded in 2004, has snagged about $2.5 million from the likes of National Defense Center of Excellence for Research in Ocean Sciences and the U.S. Department of Energy.
Cellana isn't the only one looking to bring algae for biofuels to the mass market. Companies such as GreenFuel Technologies, which uses algae to convert smokestack emissions into biofuels, and LiveFuels, which turns algae into biocrude, also are working to make it happen.
Part of the reason for all the interest is that "algae has been seen as the savior of biodiesel," said Will Thurmond, president of the research firm Emerging Markets Online.
Algae holds the ability to double its mass several times a day, producing 15 times more oil per hectare than palm and soy plants, according to Shell.
And biodiesel producers have been on the hunt for alternative feed stocks as they lose margins to rising prices for vegetable-oil sources such as soybeans.
But big hurdles still lie in the way. There are companies that can make algae-derived biofuel on a demonstration level, but it remains to be seen whether it can be mass produced, Thurmond said.
That's because the technology is too expensive so far.
For now, Thurmond still sees the ability to make mass volumes of algae-derived biofuel as being years away.
However, the fact that Chevron, Shell and their bankrolls are involved "tells us the algae market is going to accelerate faster than previously expected," he said.