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Arizona stands at the threshold of turning green slime to jet fuel

By Clayton R. Norman, Inside Tucson Business

In a laboratory in Gilbert they’re turning vats of green slime into jet fuel. And food additives and vitamins and animal feed.

These acts of alchemy are happening at a place called Heliae Development. Company CEO Dan Simon thinks algae growing and processing could mean big bucks for Arizona.

Simon doesn’t mince words about the potential of the algal biomass industry – an industry in which Heliae aims to become a key supplier and driver of technology.

“We truly have an opportunity to change the world,” he said.

Algae captures and stores energy from the sun, and just like with fossil fuels, that energy can be harnessed to power machines and economies.

The difference between algae and compressed dinosaur bones is time. Algae produces in a matter of days what it took heat, pressure and the carcasses of ancient animals millions of years to create.

All that stored energy comes from the sun, a renewable resource that Arizona has in abundance. Add to that numerous sources of non-potable water like salty aquifers and waste water effluent from sewage treatment facilities and dairies (for starters) in which algae thrive and it is easy to see why the state is poised to become a leading exporter of not only algae-based fuels and products, but also of the technological systems needed to grow the organisms and transform them into useful materials.

“I absolutely believe that Arizona can be a center of algae excellence, globally,” Simon said. “Arizona has the sun, the water, the know-how and entrepreneurial spirit.”

Natural resources and the efforts of companies like Heliae are what drew the Algal Biomass Organization to host its annual conference in Phoenix last year. Mary Rosenthal, executive director of the organization, said the potential for growth in the industry in the state is huge.

“I think the key is that you have the right environment,” she said. “You have the right components regarding your weather and your resources, plus you have excellent research resources. I’m sure you’re going to see good job growth, I’m sure you’re going to see production.”

At Heliae’s demonstration facility in a Gilbert business park the company is taking algae “end to end” says Simon.

They grow proprietary strains, extract the useful tidbits and hydro-process them into fuels and more at demonstration scale. It is the only facility in the country, possibly the world, consolidating all the processes on one site, and this is a key differentiator in being able to prove a commercial model to the industry and enable adoption of algae-based products on a large scale.

“Heliae is an algae technology company,” said Simon. “We want to be the world’s first choice in commercial-scale algae production solutions for any group interested in commercially producing algae-based food, feed, renewable chemical, and/or fuel products. We aim to be their one-stop-shop for the strains, growth system, and harvest or extraction technologies. One size does not fit all in algae production and we are the integrator that delivers a system tailored to our clients’ production objectives.”

Projects might include growing algae with high lipid contents to turn into jet fuel or bio-diesel, or growing the stuff for human foods, feed for animals, bio-plastics or ingredients in cosmetics. And the best part is that growing and processing algae for one product, say, fuels results in co-products to fill other markets.

One harvest, said Simon, might produce 55 percent fuel with the remaining 45 percent being other usable products in different markets.

Rosenthal and Simon both talk about the algae industry as being in a transition phase with algae-product companies taking their pilot programs to commercially viable scale-ups of their processes.

In June, Heliae announced a partnership with an aeronautics firm, Azmark, also based in Gilbert, to test algae-based jet fuel from Heliae’s demonstration facility in turbine engines made by Azmark. The turbine engines Azmark manufactures are mainly designed to power drones for military use.

The military is understandably interested in algae-based fuels, and the military market is vast. This year, for example, a California-based algae company Solazyme, produced about 75,000 gallons of algae-derived marine diesel fuel for the U.S. Navy under a contract that calls for the production of a total of about 145,000 gallons.

Simon said he expects that Heliae’s proprietary systems, which combine the environmental controls of closed-system photo-bioreactors with the cost structure of open-air algae-farming techniques to be capable of producing up to 12,000 gallons of algae-based fuels per acre per year by 2012. The industry standard today, says Simon, is between 3,000 and 4,000 gallons of fuel per acre per year.

But Heliae is not an algae-product company, and that is an important point. The company, said Simon, is focusing on the three main phases of algae growth and utilization: strain development, growth and extraction.

The company filed 21 patents this year and has more than 100 more in process. The patents cover proprietary strains of algae and the technological processes of growing them and extracting different components for various products.

“We not only want to sell our intellectual property,” Simon said. “But help in the integration of others technologies as well. There is an immense amount of innovation in our industry, the key is being able to package it and take it to market quickly.”

That means that by 2012 Heliae’s revenue stream will come from selling licenses to use integrated proprietary technology and algae strains, consulting with clients on their algae projects and designing, engineering and operating the algae facilities for and with their clients.

When talking about algae it isn’t uncommon to hear terms like “superfood” or “super-crop” but both Simon and Rosenthal are quick to point out that though the potential for algae to offset dependence of foreign oil and to supply food and other markets is huge, there is still plenty of work to be done.

And while incredibly useful, algae is no panacea for global energy woes. For one thing, scaling up the industry to be a major producer of fuels is going to be expensive. The expense, though, of the scale-up to fuel production can be offset by other algae-based products.

“What we’re seeing companies work on is a multi-market approach,” said Rosenthal. “Looking at animal feeds, looking at human nutrition, looking at nutraceuticals, looking at cosmetics and others to balance out the growth, but they all have a long-term orientation toward biofuels.”

Simon said Heliae’s goal is to eventually be able to produce fuel at a cost of $60 per barrel. He says that could happen in 3 to 7 years. Heliae has some wiggle room on that scale-up time frame perhaps unlike some other algae-tech companies because Heliae is privately backed by funding from members of the Mars family, famous for making M&Ms and other candies.

Without stockholders clamoring for a fast return on their investment, the company is able to focus on fine-tuning the technology that will make algae production and processing commercially scalable.


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