Sapphire Energy leads the way for algae crude
In an earlier article we discussed the merits of Solazyme, a company with technology to turn algae into tailor made oils, consumable proteins, and algae crude. While Solazyme is more focused on a number of different commercial applications of their technology, Sapphire Energy is only focused on one; the production of algae crude. While Solazyme produces their crude in large fermentation tanks, Sapphire grows their algae in large outdoor ponds.
Founded in 2007 and based out of San Diego California, Sapphire Energy produces algae based crude oil. According to this article in BioFuelsDigest, “Sapphire Energy’s intellectual property position in the space gives the company freedom to operate with over 244 active patent cases with 45% of all patents in algae tied to Sapphire“. The company has approximately 150 employees presently.
In August 2012, Sapphire closed one of the largest clean-tech venture capital deals of 2012 raising 144 million from the likes of Venrock Capital, Arrowpoint, Monsanto, and Bill Gates’s Cascade Ventures. According to an article in the Wall Street Journal, Venrock commented on their participation in this funding round by stating “renewable liquid fuels is one of the biggest business opportunities that ever existed”. Total funding following the 2012 round now exceeds 300 million. In Dec. 2009, the company was awarded a $54.5 million loan guarantee by the U.S. Department of Agriculture which just last week they paid off fully.
Sapphire has the world’s first commercial demonstration scale 2,200 acre algae-to-energy facility in New Mexico which is currently producing algae crude and is working towards 10,000 barrels of algae crude production per day by 2018.
By 2014 Sapphire expects to be able to make 4100 gallons of algae crude per day. Upon completion, the algae farm will consume approximately 56 metric tons of CO2 per day.
CO2 is need to produce algae into biofuels. In 2011, Sapphire announced a partnership with The Linde Group, the leading merchant CO2 supplier in the U.S, for Linde to supply all of the CO2 to Sapphire’s New Mexico farm. In July of 2013, Linde and Sapphire announced a 5-year agreement to commercialize a new industrial scale conversion technology needed to upgrade algae biomass into crude oil. In March of 2013, Sapphire also entered into an agreement with Tesoro to purchase currently produced algae crude from their New Mexico farm.
While Sapphire’s progress is promising, the economic viability of algae crude depends on the price of fossil based crude. With industry estimates given of $75-$80 per barrel to produce algae crude, the margins can quickly diminish with today’s price of $105 per barrel for WTI crude. Sapphire does seem to be making great progress and should the price of crude stay the same or increase, the company merits watching.