ABO Blog

Perhaps the most fascinating new technology in late development today in Iowa is the BioProcess Algae project, co-located at the Green Plains Renewable Energy plant in Shenandoah, in the far southwest corner of the state.

The company is now in the process of upgrading to a 5-acre demonstration of its modular technology – which is expected to be the final step before active commercialization at Shenandoah and other sites.

Three things are especially notable about the project. First, it’s proven that it can successfully utilize excess CO2 and process heat from the Shenandoah ethanol plant to produce microalgae.

Second, it has proven (at pilot scale) that its unique growth media can work – and this is an important breakthrough, because the company is growing microalgae out of solution, using a biofilm. The thesis is that this approach will offer a high surface area to enhance light penetration, productivity, harvest density and gas transfer. Once the algae have reached critical density, they are srayed off the biofilm into a shallow bed of water, 2-3 inches deep, hugely reducing the amount of water that has to be moved in order to harvest algae.

Third, Green Plains is still supporting the project. Even in the “a penny really matters” world of corn ethanol, GPRE is well-known for a relentless focus on viability and profitability – and they have been adamant that the BioProcess Algae project is not a science project – but a focused exploration of value-add opportunities for their ethanol fleet – and that as soon as the project shows that it is not meeting GPRE’s tough success criteria, it will be shut down. Well, its not shut down.

And, as CEO Tim Burns notes, “you have to aim for the lowest cost production. That’s the winner.”

Meanwhile, the company is already taking orders. In June, BioProcess Algae and KD-Pharma Bexbach announced that they have entered a commercial supply agreement for the production of EPA-rich Omega-3 oils for use in concentrated EPA products for nutritional and/or pharmaceutical applications. Under the agreement, BioProcess Algae will supply microalgal oils which will be refined by KD-Pharma’s proprietary Supercritical Fluid Technology to produce highly-concentrated vegetable sourced EPA oils.

We’ll be profiling BioProcess Algae in more detail in September.

Avista Corp. (AVA), a U.S. energy holding company, provided backing to help Matrix Genetics LLC complete its spinoff from the biotechnology company Targeted Growth Inc.

Targeted Growth, which also created the biofuel companies AltAir Fuels LLC and Sustainable Oils Inc., is refocusing on its core agricultural business, and “the spinout of Matrix is
part of that strategy,” Matrix spokesmanJohn Williams said today by e-mail.

Matrix, based in Seattle, is developing renewable fuels and chemicals from blue-green algae, and Avista’s funding will also support research into new strains that will be easier to cultivate and boost output, according to a statement today that didn’t say how much Avista invested.

Blue-green algae, or cyanobacteria, are “the most abundant, diverse and robust micro-algae on Earth,” according to the statement. Matrix is modifying its genes to create proprietary strains that yield larger quantities of oil or have other optimal traits for fuels or chemical production.

Seattle-based Matrix Genetics is spinning out of Targeted Growth and launching its business of developing biofuels made from algae.

By: Karl Baker
Seattle Times business reporter

Roger Woodworth is confident in his company’s investment in Seattle biotech firm Matrix Genetics.

Woodworth, chief strategy officer at Spokane-based Avista, said the venture-capital arm of his energy company financed Matrix Genetics because it had an established list of patents and a reputable research team, one that is developing new strains of blue-green algae for use as a substitute to fossil fuels and petrochemicals.

“As much of a longshot as many think it is, there is some merit,” said Woodworth.

Although the companies declined to disclose the amount of the investment, which they will announce Wednesday, Matrix Chief Executive Margaret McCormick said it would allow her company to spin out from agricultural biotech firm Targeted Growth and continue research well into the next year.

“It gives us plenty of time to develop our story, to get the collaborations in place, to raise a large amount of financing in probably the next 12 to 18 months,” she said.

Although now a separate company, Targeted Growth is still the majority owner of Matrix Genetics, which has five employees and plans to add 10 more with these new funds.

Avista will earn a positive return on investment if Matrix Genetics can find enough customers to use algae derived using the patents it owns. This will happen as the industry develops, said McCormick.

“It’s a play on intellectual property,” said Woodworth.

The prospect of algae as a biofuel is gaining popularity because it is relatively simple to grow and, unlike corn and soy-based fuels, it doesn’t compete with consumer usage in the food market.

Robert Hebner, director of the Center for Electromechanics at the University of Texas, researches algae as a fuel source. He says the microorganism can produce 2,000 to 3,000 gallons of oil per acre per year. Corn, in contrast, produces approximately 400 to 450 gallons per acre per year.

Additionally, a report from the Pacific Northwest National Laboratory last year said algae has the potential to replace 17 percent of the oil the U.S. imports, if grown in the hot humid climates of the Southeast and the Great Lakes region.

Matrix technology is trying to do even better. Senior director Mike Carleton said the company’s research involves manipulating algae genes in order to increase oil content. One way Carleton’s team does this is by replacing a sugar-producing gene with one that makes lipids.

McCormick said Matrix’s research is essentially reproducing what happens under the Earth’s surface in the creation of crude oil.

“We’re like a synthetic diamond,” she said.

Despite the large oil-output levels of algae, a major challenge is the cost of large-scale production. While the sector has grown sharply in the past five years to approximately 200 algae companies in the U.S., economic viability remains elusive.

“The challenge is to find a cost-effective way to find key elements and a cost-effective way to find water,” said Hebner. Expensive ingredients like phosphorus and nitrogen drive up the costs of production, he said.

To help this cost equation, McCormick said Congress should put algae production on a level playing field with cellulosic biofuels created from inedible plant materials. Producers of those fuels are eligible for a tax incentive of up to $1.01 per gallon, according to the Department of Energy.

The Senate Finance Committee this month approved a bill to extend this credit to algae fuels.

The algae industry has one particularly influential supporter promoting its cause: Boeing.

The company is “helping set the policy stage to make the case for these types of renewable feedstocks,” McCormick said. “They’ve put in place different aviation fuel users groups.”

Boeing officials are expected at Wednesday’s announcement to convey its interest in this type of fuel.

“What’s great about the biofuel industry is that you’ve got the customer base that’s helping to push the development of these technologies,” McCormick said.

Matrix Genetics is pursuing the dream of turning algae into the workhorses of oil production, and now it has gotten some financing to go after it.

The Seattle-based startup, led by Margaret McCormick, said today it has secured an investment from Avista Development, the venture arm of Spokane, WA-based energy company Avista (NYSE: AVA). The amount of the investment isn’t being disclosed, but it’s enough for Matrix to spin out of its parent company, Targeted Growth, and to find new labs in South Lake Union with room for about 15 employees. Seattle-based Targeted Growth remains the majority owner of Matrix Genetics, although it is in discussions about that stake with strategic partners and investors, says John Williams, a spokesman for Matrix.

Matrix, which I first profiled here in May 2011, had a goal at that time of raising $10 million to $15 million, according to McCormick. The company is focusing on cyanobacteria, a simple and abundant form of algae that can use energy from the sun to turn carbon dioxide into oils. The hope is that fast-dividing algae like these will make for a more efficient source of fuel than corn-based ethanol or other plant-based raw materials. This quest puts Matrix in competition with some well-financed competitors like Synthetic Genomics and Sapphire Energy.

“We appreciate the need to find alternatives to petroleum for a sustainable future, and we are excited by the progress and the promise of Matrix’s approach,” said Roger Woodworth, vice president and chief strategy officer at Avista, in a statement.

For more on the company, see a story in today’s Seattle Times.