Guest post by David Middleton
From 2005 to 2012, dozens of companies managed to extract hundreds of millions in cash from VCs in hopes of ultimately extracting fuel oil from algae.
CEOs, entrepreneurs and investors were making huge claims about the promise of algae-based biofuels; the U.S. Department of Energy was also making big bets through its bioenergy technologies office; industry advocates claimed that commercial algae fuels were within near-term reach.
Jim Lane of Biofuels Digest authored what was possibly history’s least accurate market forecast, projecting that algal biofuel capacity would reach 1 billion gallons by 2014. In 2009, Solazyme promised competitively priced fuel from algae by 2012. Algenol planned to make 100 million gallons of ethanol annually in Mexico’s Sonoran Desert by the end of 2009 and 1 billion gallons by the end of 2012 at a production rate of 10,000 gallons per acre. PetroSun looked to develop an algae farm network of 1,100 acres of saltwater ponds that could produce 4.4 million gallons of algal oil and 110 million pounds of biomass per year.
Nothing close to 1 billion (or even 1 million) gallons has yet been achieved — nor has competitive pricing.
The promise of algae is tantalizing. Some algal species contain up to 40 percent lipids by weight, a figure that could be boosted further through selective breeding and genetic modification. That basic lipid can be converted into diesel, synthetic petroleum, butanol or industrial chemicals.
According to some sources, an acre of algae could yield 5,000 to 10,000 gallons of oil a year, making algae far more productive than soy (50 gallons per acre), rapeseed (110 to 145 gallons), jatropha (175 gallons), palm (650 gallons), or cellulosic ethanol from poplars (2,700 gallons).
“VC” refers to venture capitalists. I had to look it up because I didn’t think the Viet Cong were still in business.
The problem with algal biofuel is this:
According to some sources, an acre of algae could yield 5,000 to 10,000 gallons of oil a year, making algae far more productive than…
10,000 gallons is 238 barrels per acre. A typical oil well in the Gulf of Mexico yields 300-500 barrels per acre*foot and a typical reservoir is 50-100′ thick. This works out to 15,000 to 50,000 barrels per acre over the life of the well. Assuming the well produced for 10 years, this works out to 1,500 to 5,000 barrels per acre per year.
|Gallons of Oil per Acre per Year||Min||Max|
|Typical GOM Oil Field||63,000||210,000|
Granted, there are a lot of differences between crude oil and algal oil… And, hypothetically, the acre of algae is “renewable”… However, 1 acre of algae requires 1 acre of land. An oil well only requires the acreage that it’s production facility covers. Oil reservoirs can cover 100’s or 1,000’s of acres, can be well over 100′ thick and often occur in stacked sequences.
Shell’s Mars oil field (Mississippi Canyon 807) has produced about 1.3 billion barrels of oil and 1.7 trillion cubic feet of natural gas since 1996. This works out to about 1.6 billion barrels of oil equivalent (BOE). The “footprint” of the field (platform + outline of directional wells) covers about 11,000 acres. The field has averaged over 6,700 BOE (over 280,000 gallons) per acre per year from 1996-2016.
|Gallons of Oil per Acre per Year||Max|
|Mars Oil Field||281,400|
After 20 full years of production Mars is still going strong. In 2016, it produced over 6,000 BOE per acre.
It’s refreshing to see that some of the green energy herd is capable of learning lessons… But I doubt they learned this lesson.
After re-reading the GTM article, I think the author may have actually learned at least part of this lesson:
So is there some lesson here other than that disrupting the global fossil fuel market is not for the fainthearted and entrepreneurs are irrationally optimistic?