I nudged the wonderful Jane Van Ryan at the API last week shortly after the press release came out about ExxonMobil and Craig Venter’s SGI setting out with $600 million to try to get algae sourced oils into the market.  Even at ExxonMobil, $600 million is a sizeable amount of money, with a certain amount of explaining to be done with the shareholders.  So to sharpen up the points I’ve been contacted by ExxonMobil to see what questions might get answered.  Not all of them to be sure, proprietary things are going to get in the way.

To start off I kept it real simple.  The press release was structured suggesting that about half of the estimated commitment of $600 million would go to ExxonMobil internally and the other to Venter’s SGI.  This is clarified now.

. . . the ExxonMobil Algae Biofuels Research and Development Program is a new long term investment focused on biofuel production from photosynthetic algae. ExxonMobil’s expected spend for this program, which includes a strategic alliance between ExxonMobil Research and Engineering Company (EMRE) and Synthetic Genomics, Inc. (SGI), is more than $600 million if research and development milestones are successfully met.

Make no mistake here; I think ExxonMobil means it when they say, “if research and development milestones are successfully met.”  And it’s also clear now that $600 million is not a certain cap or limit.  Results along the way are going to matter a lot.  One comes away realizing that ExxonMobil is serious.

One point – ExxonMobil is well regarded by the engineering side of the energy business.  Cold, abrupt and seemingly aloof, the company culture isn’t going to make societal points; they’re going to do the job, come what may.  That’s apt to cheer consumers, depress producers and drive the politically correct into a faster frenzy, if that’s possible.

EMRE and SGI will work together to develop solutions to four main challenges identified in the commercialization of biofuel from photosynthetic algae. These include:

• Identifying or developing algal strains that can achieve high bio-oil yields at lower cost.
• Determining the best production systems for growing algal strains – either in open (ponds) or closed (e.g. tubular) photobioreactors.
• Determining how to supply large amounts of carbon dioxide needed to grow
algae while also providing benefits for mitigating greenhouse gas emissions.
• Developing the large, integrated systems required for full scale, economic production, upgrading and commercialization of biofuels.

This is a very broad listing that reveals little about how well ExxonMobil understands the problems of the algae to fuel process.  While I suspect they have a firm idea, a little more information than discussed in the fourth item above follows:

We intend to advance the program through six phases, each representing an essential step in the production chain:

• Phase One – Algae development and growth
• Phase Two – Algae harvesting
• Phase Three – Recovery of bio-oil produced by algae
• Phase Four – Transport and storage of bio-oil
• Phase Five – Conversion of bio-oil to biofuel
• Phase Six – Production of commercial products

That’s not real strong, but factually, the gritty details aren’t much up for discussion now.  To be fair, a deep conservation outside of the company isn’t really likely, more likely is the personnel will go to great lengths to learn what others have already learned and perhaps those lessons may have already put some power into the greenlight for ExxonMobil to begin.

The division of responsibilities will be crossing a great deal between the new partners:

EMRE’s primary roles:
• Leadership role in engineering, process development and scale up
• Key role in determining which type of production systems to utilize to grow the algae – either in open (ponds) or closed (e.g. tubular) photobioreactors
• Key role in upgrading bio-oil produced by photosynthetic algae into finished products, and total process integration for development and commercial applications

SGI’s primary roles:
• Leadership role in biological research for algae strain development, growth and harvesting
• Key role in determining which type of production systems to use to grow the algae – either in open (ponds) or closed (e.g. tubular) photobioreactors
• Key role in bio-oil recovery research and development.

That’s what I was granted for an early question for which I am grateful and will show in those of you visiting the page.

I’d like to have everyone ask their questions in the comments from which I’m compose a follow-up.  ExxonMobil’s people have really been on the ball, generous and forthcoming.  It speaks well of the firm’s intent.  I expect they are rather proud of the decision, and justifiably so.  Yet questions remain, so ask away.  My own next question is in the area of what ExxonMobil is using for a target barrel price and the reasoning behind it.  Reserve replacement costs getting higher and perhaps the biofuel alternatives are looking useful.  The thinking on this at ExxonMobil is meaningful, better than any prognosticator, reporter, economist, or consultant.  They’re putting serious money behind their own skilled professionals and partnering with the one of the world’s perceived leaders.  This is a major shift of oil investment trends and when fully matured, a turning point.

Thanks ExxonMobil, many would say the company is coming late to the game, yet I suspect that their timing might be prescient.


12 Comments so far

  1. Jim Takchess on July 23, 2009 3:38 AM

    This article:

    Claimed this:
    By the barrel, algae fuel provides three to four units of energy for every unit used to make it–a ratio that approaches petroleum’s 5-to-1 level of efficiency

    Is this a EROEI figure that the partnership has announced or discussed? I am trying to determine the source or if it is conjecture.

    Jim Takchess

  2. Al Fin on July 23, 2009 8:25 AM

    Thanks for the update, Brian.

    It looks as if Exxon has begun to see the potential of biology.

    Investing over half a billion dollars is no trivial project even for Exxon.

    The potential is there, as you have pointed out in multiple postings. The problems that need to be solved are clear, and for the most part are engineering problems.

    The addition of Venter’s crew to the project provides the fastest route to developing optimal strains. Exxon’s engineers can take care of the rest, with appropriate out sourcing as needed.

    More and more of the big money oil, chemical, agriculturual, and biotech companies are jumping into bioenergy. They are not stupid.

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