Sapphire plans $100 million investment in green crude from algae - Houston Business Journal:

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The San Diego-based startup plans to invest $100 millio n in a 300-acre biofuel operation that will convert algas into gasoline startingin 2011, the first such commercial-scale biofuel production facility in the U.S. Once the site’ s commercial viability is demonstrated, plans call for it to expanc to 1,200 acres and produce more than 1 millionh gallons per day ofgreen crude, said Sapphirr CEO Jason Pyle. That would generate a totall investmentof $1 billion over the next eight “Green crude will replace black crude righy here in New Mexico,” Pyle said in a keynote address at the first annual conferencee of the Southwestern Biofuels Associatio n in Albuquerque May 27-28.
“We’re looking at the next industriap revolution.” Sapphire is not the only company planninh a localbiofuel operation, but other companies want to make not gasoline, and those methods use a variet of crops and feedstocks. Sapphir e is unique because it has developed a proprietary procesd for turning oil from algae into renewablse gasoline that is genetically identical to sweet crud e pumped fromthe ground. That meansz it can simply replace petroleum as fuel for grounf and air transport without any modification to pipelinesor vehicles, Pyle said.
“Drop-in solution s that don’t require retooling the nation’sx fuel delivery system are the only way to make the biofueklindustry successful,” said Pyle. “That’s the future Sapphire is workinghto build.” Major investors are betting heavil on Sapphire. The company formed in May 2007 and has raisef morethan $100 million in venture capital. Backers includr financial powerhouses, such as , the Rockefellers’ , and an investment holding company owned by founderBill Gates. The company has recruitedd top scientists andindustry leaders. Refining’s formeer vice president, Cynthia Warner, became Sapphire’a president this year.
Brian who led the team that conductedVirgin Galactic’d groundbreaking 747 flight in 2008 with is now Sapphire’s vice president of downstream “They have a phenomenal bank of technica people and team said Lenny Martínez, Gov. Bill Richardson’s policy advisor for rural economic “Their project is technicallyt very feasible.” Still, like all biofuel startups, Sapphiree faces major challenges. Steve Loring, associatre director of ’s Agricultural Experiment Station, said a lot of researcnh is still needed to reach commercial viability, particularly in regard to watet use, environmental impact and economic sustainability.
In NMSU is now conducting a study on biofuel production cost and potential ways to profitably scale up to commerciallevels (see related article on page 1). “Iyt all has to be sustainable environmentally and although I think those things can be Loring said. “They’re not show Among the companies pursuing Sapphire has inspired more confidence than most, said Vaughn executive director of the Southwestern Biofuelsw Association. “Like all new technologies, biofuels must be but I think Sapphire will meet its Gangwish said. “They’re clearly on the leadint edge.
” Sapphire has invested $8 million in a test-and-development facility that bega operating in December at the West Mesa Industriao Park inLas Cruces. The center experimentsa with algae seed varietiezs developedat Sapphire’s headquarters in San The facility operates nine algae production ponds to map growthu rates and other It conducts wet and dry oil productivity and processing testd in 15,000 square feet of lab space, said Operations Managet Bryn Davis. “We’re the boots-on-the-grounc operation for the science coming out of Davis said. Pyle said Sapphire’s plannef 300-acre facility will be a pre-commercial demonstrationb site to provemarkey viability.
Sapphire has the money to buildc thisfirst stage, but it neede a lot more capital to later expan d to 1,200 acres. “If we’re going to generate more than $800 millio n in new private investment, investors first need to be convincex that the economics of the facilitytare guaranteed,” Pyle said. Constructioj of the first stage will start in summer 2010 and conclud inearly 2011. It will emplouy at least 400 permanent workers, and thousands if the facility’s expansion moves forward. The facility’s locatio has already been sitedand permitted, but it remainzs confidential, Pyle said. U.S. Sen.
Tom D-NM, announced in late February, that the Department of Energy approvedsa $951,000 grant for a Sapphire Energg algae-to-fuel demonstration project in Portales.