HOUSTON -- Exxon Mobil Corp. (XOM) and Synthetic Genomics Inc. are taking their algae biofuels program into the light, at a southern California greenhouse that will allow the companies to experiment with pond scum outside of a laboratory setting.
The move, announced Wednesday, is a small step in what promises to be at least a decade-long path to the full-scale deployment of algae-based gasoline or diesel. But it's a key sign that the world's largest publicly traded oil company still thinks that the humble aquatic micro-organism could fit within its massive array of oil platforms, refineries and pipelines--and that the experiment is going according to plan.
From a technical progress standpoint, "we're right on track," said Emil Jacobs, Exxon Mobil's vice president of research and development. To make algae fuel viable, the algae should yield at least 2,000 gallons of oil per acre annually, more than five times the yield of other biofuel crops such as corn. Jacobs said that some of the joint venture's strains are doing better than that.
If the program successfully runs its course, Exxon Mobil could end up investing more than $600 million in its venture with Synthetic Genomics, a closely held biotech company run by celebrity scientific entrepreneur J. Craig Venter. To take it to a commercial level the company would have to spend hundreds of millions more, Jacobs said in an interview with Dow Jones Newswires.
Venter, who pioneered the decoding of the human genome, said in an interview that the 8,500-square foot greenhouse in La Jolla, Calif., will act as a "halfway house for algae" where scientists will sift through thousands of algae strains and different methods to grow them before moving to an outdoor facility, a milestone that could be reached in 2011. The algae will be grown in photo-bioreactors as well as in open ponds that resemble bathtubs and closed ponds.
Although the choice of a production method is still far off, one thing is clear: Exxon and Synthetic Genomics will rely on sunlight, as opposed to the artificial light used by other researchers to prod the micro-organisms to grow for 24 hours, a sign that the companies are looking for cost-effectiveness from the get-go. "Sunlight is a lot cheaper," Venter said.
Exxon and SGI unveiled the algae research program a year ago, taking the clean technology world by surprise. Exxon, among the last of the global oil giants to acknowledge climate change theory, had resisted the lure of renewable energy, even as competitors such as Chevron Corp. (CVX) and BP PLC (BP, BP.LN) eagerly invested in cellulosic ethanol research and solar panels. Exxon made the move, which amounted to one of the largest early-stage investments in biofuel research, after a two-year investigation of all the available options. Now it has become one of Exxon's biggest technology programs, said Jacobs.
Algae, rich in fat that can be processed into fuel, grow faster than corn and other edible, land-hungry crops, all while living in brackish water. Algae also consume carbon dioxide, a greenhouse gas. Other major corporations, including Boeing Co. (BA) and Continental Airlines Inc. (CAL), were also looking seriously at the possibilities of algae fuel as a viable way to reduce greenhouse-gas emissions and reduce their dependence on fossil fuels.
Algae hydrocarbons also present another advantage for Exxon: They can theoretically be dropped into a traditional refinery, allowing the expensive infrastructure oil companies have built over more than a century to remain relevant in a world preoccupied with reducing its carbon emissions.
The road will be long--10 to 15 years, according to Venter--and the algae may require some high-tech prodding before they become robust fuel producers. While the joint venture is examining many strains of naturally occurring algae, Venter said that the winning candidates are likely to be genetically engineered.
"There's no question in my mind," Venter said. "We need to move forward evolution with our help."
© 2010 Dow Jones
