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 |
| Algae | 5,000 | 10,000 |
| 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 |
| Algae | 10,000 |
| 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.
Addendum
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?
I wouldn’t laugh at the mistakes of venture capitalists – after all, they are not scientists or engineers and must look to others for knowledge about what is possible or feasible.
Nor do they invest their own money, only the money of others. Blimey, that sounds familiar.
Many of them are investing their own money.
The opportunistic scoundrels are the ones getting a fat payday from government grants, and then never producing a thing.
And these grants seem to have been, in the past anyway, apportioned based more on politics and the repaying of favors that on merit or promise of technological advancement.
@Menicholas
Corporate Venture capitalist’s like 3i who invest in schemes like this, never invest their own money.
Anyone calling themselves a venture capitalist investing their own money is just a private investor.
Trust me, I have been involved with private investors and at one time dreamed of the chance of venture capital, then a mate of mine was skinned alive by 3i. They took his business all his money, house, reputation the lot. They funded his management buyout of a business with a T/O of £20M or so when the owner retired about 20 years ago. The first problem the business hit, a matter of months into the buyout (which was no big deal, a client pulled out of a deal which hit the T/O projections but not profitability) they invoked a clause in the contract, shut the company down, sold the contracts, assets and property; made 50 or so staff redundant and walked away with a very healthy profit.
They will capitalise on government grants, but to be fair, who doesn’t? More fool the government for interfering in business, they should steer well clear because their influence upsets the entire business dynamic.
In 2008, I attended a conference on algae called the Carbon Recycling Forum in Scottsdale, AZ. All the big players in Algae were there and gave sufficient info to calculate a few interesting facts. The object was to take the CO2 from the Arizona power and light Apache power plant and convert it to fuel using algae. The plant produces 400 MW power emitting 3.7 million tons/year of CO2. I calculated that the algae field needed to capture the CO2 from the power plant would require 64 sq mi of land and cost $32B. If all the CO2 were converted into fuel, that would be 23,600 bbl/day of fuel, but algae only converts CO2 into biomass during high sun hours (say 10 to 4) or 8 hours/day and at best it is 40% oil. Thus the best you can expect is 1/3 that or maybe 3,200 bbl/day. Capital costs alone at $32B make algae fuel capital cost $512,000/bbl product.
No one at the conference wanted to point that out. Nor did they acknowledge that low angle sunlight cannot penetrate water to be useful for photosynthesis. Nor did the discuss that the electric power requirements were higher than the energy yield from fuel production just for filtration of the algae from the water, let alone drying and extracting the oil from the algae.
There are other concerns as well. Genetically altered algae are not native species, and open trough algae fields will revert to native species quickly. Also, no one accounted for dirt and sand accumulation in open fields of water and didn’t even mention evaporation losses which can amount to 10 vertical feet per yr in arid hot climates. The did mention using brine at one point, but what do you do with all the salt accumulation when water evaporates from brine?
The list of issues is so large that no engineer would ever consider building this type of facility. Yet people still think that algae fuel is the future. And to do that would essentially destroy the desert environment that normal people would want to preserve as best possible.
Most informative, Dr. Bob!
David Middleton – Better to address the direct energetics and economics like Dr. Bob.
I was just putting “an acre of algae could yield 5,000 to 10,000 gallons of oil a year” into a meaningful context.
A capex of $512,000/bbl isn’t even competitive with Green River Oil Shale.
I’ve got a 10,000 gallon lined koi pond and I can attest that getting algae to do what you want is far from trivial. If there were an efficient and economical way to get micro-cellular algae and cyano-bacteria out of water, there is a lucrative market for it.
a flocculant agent and a filter…
The surface footprint is a big issue when they are talking about 238 bbl/acre. Let’s put that land use into perspective. The U.S. produces about 5 million bbl crude per day — or it was at $80+ oil — which is 1.825 Bbbl/year. 1.825Bbbl/year/238bbl/acre/year=7.668MM acres, which is almost 12,000 square miles, or over 1,000 square miles more than all of New Jersey and Long Island combined.
Combustion of liquid fuels provides the best stored energy to weight ratio and so for transport purposes there really aren’t any other options (at least on the scale we need in a modern society). Fossil hydrocarbons seem to be much more prevalent than was thought even 10 years ago (let alone 20 or 30 years ago) so we really don’t seem to be in need of alternative sources for quiet a few years yet.
That said, our current theory of the genesis of underground hydrocarbons is one which for which the logical assumption is a decline in availability at some stage in the future. At that stage, it is sensible to presume that biofuels will have a role in replacing some of the demand currently filled by fossil fuels. The calculation of when (in the future) this point is reached is purely economic – i.e. when do fossil fuels become so expensive that biofuels can compete on price. Governments have been trying to game this market by various price-altering ways (mandates and subsidies), but in the end the market hasn’t really changed.
To be fair to the various governments, they did have a lot of people telling them that oil prices were only going in one direction when they put in place subsidies for research into biofuels – 20 years ago there were not too many people forecasting that we would have the kinds of production levels and proven reserves that we now have. However, subsidies have ended up (as they always seem to do) creating an alternative market, where farmers receive inflated prices for certain crops and whole industry sectors have grown up on the basis of continuing government mandates and subsisdies. Given the maxim that every change is for the worse (because the only people who complain are those who will lose out, however small a minority they are), getting rid of the subsidy/mandate market is politically impossible – look forward to many more years of it!
For reference, the Navy will only accept hydrocarbon renewable fuels. Biodiesel and ethanol are not ‘Drop-In” fuels for any DOD application. Biodiesel (Fatty Acid Methyl Ester–FAME) is not allowed for use in any deploy-able vehicle. So FAME must be hydroprocessed into “Green Diesel” or jet which does not contain any oxygenates. This fuel is stable and actually improves on the stability of conventional fuel. However, it takes a lot of hydrogen to convert the oxygenates in biodiesel into hydrocarbons and water. That is where the cost is, which must be added to the cost of the fatty oil feedstock. Currently soybean oil is $0.38/lb and it takes about 8 lbs of soybean oil to make a gallon of Green Diesel. Assume processing costs of near $1/gal, and you have $4.20/gal fuel. No wonder you need a subsidy like RINs and LCFS (Calif.) to make this work. Only California can afford to purchase Green Diesel (like Neste NextBTL) as they subsidize this significantly. No free market economy would support this activity.
Hi Bob,
It’s also sick that cumulative acreage of rain forests cleared for palm oil plantations is approaching the total surface area of California and environmentalists are OK with it. Neste says they only purchase sustainable palm oil.
https://www.neste.com/en/corporate-info/sustainability/sustainable-supply-chain/sustainably-produced-palm-oil
“However, it takes a lot of hydrogen to convert the oxygenates in biodiesel into hydrocarbons and water.”
The “consensus” understanding of where no-so-green Diesel or Jet A comes from is that lipid-rich algae in anoxic ponds or lakes of long ago formed sediments that turned into shale that became the source rock for petroleum trapped in those sedimentary basins.
How did the oxygenates in those lipids get turned into saturated (with hydrogen) straight-chain hydrocarbons. Not saying it didn’t happen, but does anyone have an explanation other than “Step 3, Profit!”?
J F Kenney complains that it is thermodynamically impossible under crustal temperatures and pressures (I guess he means in an equilibrium process) to turn plant matter such as cellulose into the straight-chain saturated hydrocarbons found in oil, and people have said, “Foolish person, coal comes from plant cellulose, oil comes from algal liquids.” OK then, where does the hydrogen come from to turn algal liquids into straight-chain saturated hydrocarbons as found in oil?
J F Kenny is wrong and fundamentally mconventional the conventional theory of hydrocarbon formation.
See this thread and the comments regarding Kenny’s straw man argument.
https://wattsupwiththat.com/2017/02/18/oil-where-did-it-come-from/
So after reading all of this, it’s a bust?
Not a particularly big surprise there.
Yup, just like everyone in 1902 telling the Wright Brothers that flying was a pipe dream. Even the US Navy didn’t take flying serious until 10 years later… Never listen to the status quo. Or an old washed up petroleum geologist. Kidding…
No Ron, maybe more like people telling us that fusion power is right around the corner.
“However, 1 acre of algae requires 1 acre of land.”
Not necessarily A hydroponic algae growing operation could be built vertically.
In stead of a flat acre of algae production, you could have a cubic acre.
The dimensions of a cubic acre are L^6.
Wow, that is seriously multi-dimensional.
Beats acre feet for certain.
@ur momisugly Philip Mulholland,
You are confused. An acre is a unit of area (flat, 2 dimensional). An acre foot is a unit of volume which is the amount of water that would cover 1 acre to a depth of 1 foot. A square with an area of 1 acre (the standard land plot acre is rectangular 660 feet x 66 feet) would be 208.71 feet x 208.71 feet. So a cubic acre would be 208..71 feet x 208.71 feet by 208.71 feet. .
So what are the dimensions of a cubic square?
MattS
It is you who is creating the confusion. The original definition of an acre is the amount of land that could be ploughed in a day by a yoke of oxen. It consists of a strip of land 1 chain (66 feet) wide by 10 chains (660 feet) long, which is one furlong. So an acre is a measurement of area of a particular shape used to measure ploughing. This is not very useful in science or mathematics.
You choose to redefine an acre as an exact square and then invent the spurious measurement of a cubic acre based on your redefinition of an acre.
I do not follow your logic and I certainly do not follow your mathematics. There is a very good reason why volumes of rock are measured in acre feet. There is no such measurement as a cubic acre except in a Donald Duck universe.
Algae biofuel is a method of capturing solar energy.
Making a pond as deep as it is wide would be incredibly expensive and not increase total amount of sunlight available for conversion via photosynthesis.
Building a structure which is transparent and strong enough to hold a cubic acre of water?
Good luck wit’ dat.
Anything with 40% lipid content is likely going to be floating…deeper will not help for that reason as well.
And if it did somehow fill the entire volume of the cube…there is the small problem of retrieving it.
I know!
The could make a one acre motorized sieve and store in on the bottom, and then just lift it up to strain the algae out.
Then you just need to climb up and get it.
Hmm…an autoscraper?
Where is Rube Goldberg when we really need him?
I’m talking about a singular pond of a cubic acre.
I saw an article once describing a plan for a vertical algae farm. The algae wes to be grown in a three dimensional structure made of clear acrylic piping. Vastly more surface area than a simple flat pond.
There are other ways to do it, spacing out many small grow ponds in a three dimensional arrangement.
Your entire objection is built on a failure of imagination.
MS I think the problem is not so much capturing the energy from the sunlight but having enough sunlight over the acre in the first place to capture.
The walls of a square piped structure would capture the light, but would overshadow the rest of the pipes.
Exactly Lewis.
I have imagination Matt, but also practical experience.
This is a method of capturing solar energy.
Diffuse light will not work…not enough energy to capture.
You need direct sky exposure.
I do not know what your imagination is telling you, but mine is telling me you are not paying attention to the details.
Maybe it would help to imagine instead trying to get more electricity from solar panels on a one acre plot by stacking them up in a one acre cube.
It does not matter how you arrange them…the amount of incoming solar energy available for capture is a function of the area covered, not of the volume of collectors.
BTW, Phillip is exactly right…a cubic acre is not a thing.
If and when you take any science classes, you will be well advised to learn early to pay attention to dimensional analysis. It will almost always tell you if you have set up your equation correctly…all the units must balance out.
There is no such thing as a cubic acre in three dimensional space.
Imagine that.
I think someone here is confused alright, Matt.
The volumetric expression is acre*feet.
MattS, it is you who are failing to understand reality. It doesn’t matter how fanciful your design is, if you can’t get the sunlight to the algae.
How do you plan on getting sunlight down to the bottom layer?
For the sake of argument, which has improved the comments so far…. LED Lighting. There are several commercial ventures now doing vertical hydroponics for everyday vegetables in multi level structures, sometimes up to 7-8 levels high. And planned higher. And they are commercial ventures not being subsidized by anyone. They wouldn’t be done if this if it wasn’t economic.
I get the concept of a ‘cubic’ acre foot. It is length x width x height. 43,560 sq feet per level is 1 acre. Go up 10 levels on 1 acre gives you 10 acres of flat acreage on the footprint of 1 acre. Maybe it isn’t a recognized unit of measurement, but we all know what is being implied. This is just volumetric arithmetic. Why make a fuss over something we all know what is being discussed.
If the lighting input was cost effective low power LED luminance, fed with CO2 from CCS capture from a coal plant, and add warm water from the coal plant cooling towers, then there will be a positive accounting of energy out in the form of bio oil from Algae. It also solves lots of problems like temperature for year round operation in cool climates, smell, collection of algae etc, so I think the concept has merit. Plus it solves the problem of having to axe the coal fired electricity plant, because now it is needed for the CCS CO2, the parasitic load for LED lighting, and the waste heat. Sounds like a win-win.
Would I invest in one? I don’t know yet, because it hasn’t really been done yet. But it does sound commercially viable to me when adding up all factors.
That is ridiculous Ron.
You are going to use electricity to make light, then use photosynthesis to capture some of that light and transform it into fuel to make energy?
Are you really thinking this through?
Or do you just not understand how inefficient this is?
One day but not yet. Many of us will remember the large shale oil project in the USA circa 1973. Politicians and economic development types will take capital for projects good or bad. They usually consider economic activity a positive regardless of cost.
Barrack Obama and Joe Biden went on an economic disaster tour of green projects early in their first term. If they visited your plant it was time to update your resume.
There should be a blog that dies nothing but track these disasters in detail.
A 10,000 ga/acre of oil has energy of around 4 Gj/m2 and annual average insolation is 5.4 Gj/m2.
Since photosynthesis is 3-6% efficient (solar reflections, respiration, cell division and maintenance), the algae can store at most 5.4*0.06= 0.3 Gj/m2.
Thus one acre algae can generate at most 10,000*0.3/4= 750 ga of oil, not 10,000.
I am surprised VCs did not notice this fallacy.
Particularly when 10,000 gal/ac/yr was already insignificant compared to crude oil.
[Gallon per ?? per year? (ac = acre ??) .mod]
Ac is the abbreviation for acre.
Gal/ac/yr = gallons per acre per year.
I should have expressed it as (gal/ac)/yr.
Three and a quarter years ago, on Jan. 5, 20014, Lesley Stahl hosted, on CBS’s “60 Minutes” program, an episode called “The Cleantech Bust.” Its subtitle was “Despite billions invested by the U.S. government in so-called “Cleantech” energy, Washington and Silicon Valley have little to show for it.”
Its transcript is at http://www.cbsnews.com/news/cleantech-crash-60-minutes/
Solazyme (SZYM) (now TerraVia (TVIA)) grew and grows algae in large fermentation silos in Brazil, using sterilized sugar cane and water, plus pumped-in filtered air, to grow algae to make oils for various purposes, currently for use as fish feed. Its “engineered” algae don’t require light to grow. However, it is much too costly to be used as biofuel. The company got out of biofuel-making ahead of others in the field. Its most notable success was in a rejuvenating skin cream cosmetic called algenist, which costs a pretty penny. (It’s been sold to another company.)
The company had an IPO around ten years ago over $22; currently it is at around 50 cents.
How do you sterilize sugar?
The tanks are heated to a high temperature and held for a good bit of time. This is standard fermentation tank technology, TerraVia says.
Bates College just started burning a proprietary biofuel, manufactured by Canada-based Ensyn Corp., in one of its three campus boilers…. Since Bates switched from natural gas to RFO for its primary heating fuel, on Jan. 10, those emissions have shrunk by roughly 83 percent.
Because RFO is not a fossil fuel, burning it does not release fossil carbon into the atmosphere. .. in a typical year, burning 70 percent RFO will cut the steam plant’s emission of carbon dioxide equivalents (CO2e) from about 3,080 metric tons to 532.
They replaced heating oil, not natural gas, with a synthetic fuel made from wood products…
https://www.bates.edu/news/2017/03/09/106262/
Wait…if they use 70% of this stuff, then their emissions decline by nearly 83%?
How does that work?
Would not the other 30% still create the same emissions as they always have?
That sounds like saying that if I use rainwater for 70% of my water needs, my water bill will go down by 83%
And BTW…what sort of fuel was used in the operation to cut the trees, transport them, convert them, and transport the fuel to the Bates site?
These sorts of calculations always sound like they use sketchy info and are largely hype and are, basically…not even close to the whole story.
IOW, BS.
The Bates story seems to be a measure of CO2 emissions from fossil fuels. Cost seems well down the list of measurement priority.
Yep. The only people dumber than liberal arts college students are liberal arts college administrators.
Algae ponds can go on the roofs of the buildings in our cities. That way, the inhabitants of these cities – who pass all the laws – will learn rather fast that there is no such thing as “Renewable Energy”
LMAO!
+ many
Essay Salvation by Swamp in ebook Blowing Smoke covers this nonsense succinctly. Just three problems, energy density, water, CO2.
Algal biofuels do have potential. The advantages over crop based biofuels is that you can build ponds in the sea that do not compete with food crops. The yields per acre are impressive if you have all the right inputs. These are lots of sun, political stability and a source of CO2 from say a power station. The costs are theoretically competitive with fossil fuels, but not yet practically competitive. The fact is that taking oil from the ground is extremely cheap. It is really hard to produce fuel as cheaply. We are talkng a few cents per kilogram. To keep costs to a minimum it is probably pointless to think of plastic tubes etc. The only viable option is probably open salt water ponds that are cheap to build. The contamination problem is then accute, so you can theroetically select or breed algae that can tolerate conditions that invaders find inhospitable. Harvesting can be energy intensive. Approaches such as centrifugation simply use too much energy for cost effectiveness. So you are lookng for less energy intesive methods of isolating the algae, such as ultrasonic focussing.
If succesful, algae offer the opportunity to produce significant amounts of transport fuel without reducing food production – something that plant based bio-fuels can not do.
It is all about marginal costs. If you can produce algal fuel at 20c /L, but petrodiesel is 15c/L you cannot survive. There are plenty of ways to shave off a few cents per litre in theory, so algal fuels may yet have a future.
One of the problems I mentioned above is political stability. Many of the otherwise ideal sites for such ponds are in politically unstable areas.
Algal biofuels absolutely do have tantalizing potential… hence the collapsed bubble of VC investment in algal biofuels.
DOE currently estimates that algal biofuel costs could be brought down to $10-14/gal to manufacture.
The retail price for diesel is about $1.86/gal here, excluding $0.44/gal State & Federal taxes.
When your manufacturing costs are 5-7 times the retail sales price of your competition, you are in the wrong business.
I’m a bit surprised no one mentioned biogas in the comments. ~200 million EGE (ethonal gallon equivalents) of biogas burned in trucks in the US in 2016. It isn’t as cheap as diesel/gasoline, but within spitting distance. ie. It is ~$3 / EGE today.
https://www.epa.gov/fuels-registration-reporting-and-compliance-help/2017-renewable-fuel-standard-data
A few months ago, I was at an angel investment meeting and a biofuel company came to pitch us. They said they got a $500,000,000 grant. they used up all that money. They said their valuation today was something like $10,000,000. No one wanted to invest even at that valuation. Another green dream waste of money.
Don