Aurora Algae's demonstration opens for business in Algstralia

Where are all the algae gallons, you ask? Ah, grasshopper, look to Outback Australia, where Aurora Algae is basking in the southern light.

In Australia, Aurora Algae opened its demonstration facility in Karratha, Western Australia, where the Company’s algae-based biomass is being harvested for products in the nutraceutical, pharmaceutical, aquaculture and renewable energy markets.

“This would not have been possible with a U.S.-based production facility,” said Greg Bafalis, CEO of Aurora Algae, “where we believe the climatic conditions are not economically viable to produce large-scale, cost-competitive algae products.” The company’s open-pond production method, and proprietary pale green cultivar algae strains, utilize dry, arid climates with large amounts of CO2 and seawater as feed stocks.

The first commercial project

The company has also secured an option agreement on over 1,500 acres of land located near its demonstration facility, which will allow it to begin the process of constructing a full-scale commercial facility equipped to manufacture thousands of tons of algae-based biomass annually.

“Securing the land rights was major,” remarked Aurora Algae CFO Scott McDonald in a Digest interview. “This was land that was available, but flat, unused land, close to a CO2 source and salt water. It was an area that had been expected to be developed, so much of the land rights work with the Indigenous Australian tribes had already been accomplished.”

The CO2 connection: pipeline or liquefaction?

The first commercial location is ten miles from the current Aurora demonstration, and will be connected to a CO2 source either by a concentrated CO2 pipeline, or via a CO2 liquefaction facility that will enable transport of CO2 via road.

“With the available land in the area, we can expand to as much 10 or 15,000 acres. In the CO2 contract we have, we have secure enough for the first 5000 acres,” said McDonald.

The Aurora process is expected to produce 15 tonnes of biomass per month in the demonstration plant from 6 one-acre ponds, suggesting that volumes could increase to 37,500 tonnes of algal biomass per month at a maxed-out commercial facility. At 25 percent oil content, that could provide up to 33 million gallons of algal oil in addition protein and feed biomass. By contrast, 15,000 acres of soybeans would generally provide less than 1 million gallons of vegetable oil.

Harvest and Extraction technology

Earlier this year, we learned a little more about Aurora’s dehydration and lipid extraction system, when they received US patent 7,868,195 for “Systems and Methods for Extracting Lipids from and Dehydrating Wet Algal Biomass”.

In traditional approaches, operators have attempted to dehydrate the algae, then separate lipids from the protein. In Aurora’s approach, they take the view that the goal should not be to get the algae out of the water, or the water out of the algae, but separate the protein and carbs from the water and lipid soup.

Got a tough lipid you need to extract? Moms use Tide.

Not to oversimplify, but amphyphillic solvents that attract both water and lipids can do this work – its one of the principles behind your friend, the soap bar.

Aurora, according to their patent, propose to strain or centrifuge the algae to reach a 10-40 percent concentration, then use a solvent such as acetone, methanol, ethanol, isopropanol, butanone, dimethyl ether, or propionaldehyde to separate out the proteins and carbs from the lipids. After recovering the solvent, water and lipids are separated out as easily as, well, oil and water.

Time lines and product lines

The company expects to operating the demo facility and bringing it up to consistent monthly production throughout 2011, with a goal of funding a first commercial facility and groundbreaking no sooner than the second half of 2012.  The company will finalize its optimal commercial design based on demonstration project results. For sure, the company is expected to increase pond size from the one-acre variety that is in place at Karratha today – construction of a five-acre model is said to be in the works for mid-year.

The demonstration facility is expected to produce sample quantities of three of the four Aurora Algae product lines – A2Omega oil, A2Feed, and A2Fuel. A2Protein, which is an extension of the A2Feed product, will come along later.

Financing?

“We are always looking for additional investors,” McDonald commented, “and we always talking to strategics, investors and customers on offtake. In all categories we are talking to different customers, all in parallel.

Equity or debt? “For a new technology, like commercial algae facilities at this scale, it is really difficult get debt for first-of-kind,” McDonald said, “so we will probably utilize all-equity, and as viability proven, bring in project financing.”

The Digest’s Take

As it begins the ramp-up towards a big equity raise for the make-or-break move to commercial scale, Aurora is shedding some of the secrecy within which it has been shrouded under new CEO Greg Bafalis, who has been in the vanguard of the new wave of biofuels CEOs who have opted for a “walk the walk, then talk the talk” communications policy.

Question marks remain: will the larger pond models work as well as the one-acre variety, what CO2 delivery technology will be feasible at scale, and what exactly is the cost of Aurora’s harvest technology? We’ll know the answers to all by 2012, it appears, which is shaping up to be a mighty year for microalgae.

More on Aurora Algae.