Tuesday, March 23, 2010

Mighty Microbes

The Department of Energy waved its wand over Solazyme a few months back, offering the private developer of renewable oil and bioproducts a $21.8 million grant to validate a commercial scale biorefinery. Solazyme must match the grant with $3.9 million from its own company pocket.

Solazyme claims to be “the only microbial biofuel company to produce an oil-based fuel.” Not a difficult claim to make considering the number of “microbial” biofuel companies can be counted on one hand. Solazyme has branded their particular brew as Soladiesel and two of the products have met ASTM International (formerly the American Society for Testing and Materials) standards for motor oil. The two fuels are compatible with existing distribution infrastructure and can be used with no modification in standard diesel engines.

Microalgae are put to work in Solazyme’s technology to convert biomass directly to oil through photosynthesis and standard fermentation processes. Solazyme adds sugar to its algae pond, which streamlines the oil extraction process. As we have noted in previous posts algae are among the most efficient in capturing energy from the sun in real time. This is after all what renewable fuel is all about - capturing the suns energy efficiently enough to replace the energy captured and compressed over the millennia in coal and oil.

In September 2009, the Department of Defense order 20,000 gallons of Solazyme’s fuel to replace shipboard fuels used by the Navy. Solazyme is delivering the fuel this year. The Navy will be testing the fuel along side fuels from other vendors.

A bet on algae-based fuel is tough to make since the technolgy is still largely at developmental stage and owned by privately held companies. Other algae-based fuel names to watch include UOP, LLC (subsidiary of Honeywell, HON: NSYE), Algenol Biofuels, Sapphire Energy, OriginOil (OOIL: OTC/BB) , Synthetic Genomics, Solix and Aurora Biofuels. Both Sapphire and Algenol have been profiled in previous posts in this renewable fuel series. Next week we look at how Honeywells’ subsidiary UOP is getting involved in the renewable fuel game.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

1 comment:

Anonymous said...

Thats a really clueless statement ("Not a difficult claim to make considering the number of “microbial” biofuel companies can be counted on one hand) Ummmm...not exactly. Every corn ethanol company, every cellulosic ethanol company, every algae company, every next generation biofuel company using yeast, E coli, clostridium for butanol- there are at least 500 such microbial biofuel companies out there. Hard to take this analyst seriously.