MercoPress. South Atlantic News Agency

Exxon-Mobil partners with biotech company to develop fuels from algae

Funds will be used to identify algae strains and growth development to produce abundant fuels at low cost.

The world’s largest publicly traded oil company Exxon Mobil said Tuesday it will make its first major investment in greenhouse gas reducing bio-fuels in a 600 million US dollars partnership with biotech company Synthetic Genomics Inc. to develop fuels from algae. The US corporation will be joining other oil giants (Shell and BP) that have been investing in bio-fuels.

“The world faces a significant challenge to supply the energy required for economic development and improved standards of living while managing greenhouse gas emissions and the risks of climate change,” said Emil Jacobs, vice president of research and development at Exxon Mobil Research and Engineering Co.

“It's going to take integrated solutions and the development of all commercially viable energy sources, improved energy efficiency and effective steps to curb emissions. It is also going to include the development of new technology.”

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 bio-fuel source that could be produced on a large scale. It says photo-synthetic algae appear 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.

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 have 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.

The 600 million US dollars 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.”

“There are different approaches to what is truly economically scalable, so we're testing things and giving a new reality to the timelines and expectations of what it takes to have a global impact on fuel supply.”

Algae are considered a sustainable source for second-generation bio-fuels, which go beyond corn-based ethanol into non-food sources such as switch-grass and wood chips.

Royal Dutch Shell said earlier this year it would scale back large investments in wind and solar in favour of next-generation bio fuels. 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 bio-fuel from wood residue.

Oil major, BP, plans to team up with Verenium Corp. to build a 300 million US dollars cellulose ethanol plant in Florida.

For Exxon Mobil, the world's largest publicly traded oil company, the bio fuels 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.

Environmentalists were cautious in their appraisal of the Exxon Mobil-Synthetic Genomics plan.

“They've never done anything like this before -- invested real money in the renewable sector,” said Kert Davies, research director at Greenpeace. “We've always said the oil industry has to be part of the climate change solution. We can't solve anything without companies like Exxon helping”. However, “I'm guarding my optimism.”

Exxon Mobil's timing is noteworthy, Davies said, because of the ongoing energy and climate legislative fight. “It's interesting timing as the oil companies are struggling to find a place at the table,” Davies said.