Exxon makes first big investment in biofuels
Source: Copyright 2009, Associated Press
Date: July 14, 2009
Byline: John Porretto
Exxon Mobil Corp. said Tuesday it will make its first major investment in greenhouse-gas reducing biofuels in a $600 million partnership with biotech company Synthetic Genomics Inc. to develop transportation fuels from algae.
Despite record-breaking profits in recent years, the oil and gas giant has been criticized by environmental groups, members of Congress and even shareholders for not spending enough to explore alternative energy options.
One of the company's requirements was finding a biofuel source that could be produced on a large scale. It says photosynthetic algae appears to be a viable, long-term candidate. If the alliance is successful, pumping algae-based gasoline at Exxon service stations is still several years away and will mean additional, multibillion-dollar investments for mass production.
"This is not going to be easy, and there are no guarantees of success," Emil Jacobs, a vice president at Exxon Mobil Research and Engineering Co., said in an interview with The Associated Press. "But we're combining Exxon Mobil's technical and financial strength with a leader in bioscientific genomics."
Jacobs said the project involves three critical steps: identifying algae strains that can produce suitable types of oil quickly and at low costs, determining the best way to grow the algae and developing systems to harvest enough for commercial purposes.
Besides the potential for large-scale production, algae has other benefits, Jacobs said. It can be grown using land and water unsuitable for other crop and food production; it consumes carbon dioxide, the greenhouse gas blamed for climate change; and it can produce an oil with molecular structures similar to the petroleum products -- gasoline, diesel, jet fuel -- Exxon already makes.
That means the Irving, Texas-based company will be able to convert the bio-oil into fuels at its own refineries and use existing pipelines and tanker trucks to get it to consumers.
The $600 million price tag includes $300 million for Exxon's internal costs and $300 million or more to La Jolla, Calif.-based Synthetic Genomics -- if research and development milestones are successfully met.
"Even though this is a multiyear program, we both still consider it a very aggressive timetable, and it involves a lot of basic research," said J. Craig Venter, founder and CEO of the privately held company. "As a result, you don't know the answers until you've done these tests and experiments."
Algae is considered a sustainable source for second-generation biofuels, which go beyond corn-based ethanol into nonfood sources such as switchgrass and wood chips.
Royal Dutch Shell PLC said earlier this year it would scale back large investments in wind and solar in favor of next-generation biofuels. The European oil giant is working with Canadian company Iogen Corp. on a method to produce ethanol from wheat straw, and partnering with Germany-based Choren Industries to develop a synthetic biofuel from wood residue.
Another oil major, BP PLC, plans to team up with Verenium Corp. to build a $300 million cellulosic ethanol plant in Highlands County, Fla.
For Exxon Mobil, the world's largest publicly traded oil company, the biofuels investment is tiny compared with its spending to find new supplies of crude and natural gas.
CEO Rex Tillerson said earlier this year Exxon's 2009 spending on capital and exploration projects is expected to reach $29 billion, up from the $26.1 billion it spent in 2008. The company said those levels are likely to remain in the $25 billion to $30 billion range through 2013.
Gene scientist to create algae biofuel with Exxon Mobil
New biofuel requires no car or plane engine modification
Alok Jha, The Guardian - Published under license by, BusinessGreen, 15 Jul 2009
Gene scientist Craig Venter has announced plans to develop next-generation biofuels from algae in a $600m partnership with oil giant Exxon Mobil.
His company, Synthetic Genomics Incorporated (SGI), will develop fuels that can be used by cars or aeroplanes without the need for any modification of their engines. Exxon Mobil will provide $600m over five years with half going to SGI.
"Meeting the world's growing energy demands will require a multitude of technologies and energy sources," said Emil Jacobs, vice president of research and development at ExxonMobil. "We believe that biofuel produced by algae could be a meaningful part of the solution in the future if our efforts result in an economically viable, low-net carbon emission transportation fuel."
Transport accounts for one-quarter of the UK's carbon emissions and is the fastest growing sector. Finding carbon-neutral fuels will be crucial to the government meeting its target to reduce overall emissions by 80 per cent by 2050.
Algae are an attractive way to harvest solar energy because they reproduce themselves, they can live in areas not useful for producing food and they do not need clean or even fresh water. In addition, they use far less space to grow than traditional biofuel crops such as corn or palm oil.
"Algae consumes carbon dioxide and sunlight in the presence of water, to make a kind of oil that has similar molecular structures to petroleum products we produce today," said Jacobs. "That means it could be possible to convert it into gasoline and diesel in existing refineries, transport it through existing pipelines, and sell it to consumers from existing service stations."
The Carbon Trust, a government-backed agency that promotes low-carbon technologies, has forecast that algae-based biofuels could replace more than 70bn litres of fossil fuels used every year around the world in road transport and aviation by 2030, equivalent to 12 per cent of annual global jet fuel consumption or six per cent of road transport diesel. In carbon terms, this equates to an annual saving of more than 160m tonnes of CO2 globally with a market value of more than £15bn.
Ben Graziano, research and development manager at the Carbon Trust, said that algae-based biofuels offered the potential for "major carbon savings". "Exxon Mobil is estimating that algae could yield just over 20,000 litres of fuel per hectare each year, which is in line with our own forecasts," he said. "However, producing biofuel from algae on such a massive commercial scale is a major challenge, which will require many years of research and development."
Venter, who is best known for his role in sequencing the human genome, said the new partnership was the largest single investment in trying to produce biofuels from algae but said the challenge to creating a viable next-generation fuel was the ability to produce it in large volumes. "This would not happen without the oil industry stepping up and taking part," he said. "The challenges are not minor for any of us but we have the combined teams and scientific and engineering talents to give this the best chance of success."
The research programme will begin with the construction of a new test facility in San Diego, where Venter says different techniques to grow and optimise algae will be tested. These will include open ponds as well as bioreactors, where the algae are grown in sealed tubes. "We will be trying out these different approaches … using newly-discovered natural algae to test the best approaches we can come up with to go into a scale-up mode."
Venter has spent several years trawling the world's oceans in search of environmentally-friendly microbes that could be used, in one way or another, to bring down the world's carbon emissions. The organisms he has found include those that can turn CO2 into methane, which could be used to make fuels from the exhaust gases of power stations, and another that turns coal into natural gas, speeding up a natural process and reducing both the energy needed to extract the fossil fuel and the amount of pollution caused when it is burned.