Cellana: Biofuels Digest’s 2015 5-Minute Guide

March 25, 2015 |

5-Minute-Guide-logoCellana, a leading developer of algae-based bioproducts, uses the most productive plants on earth — marine microalgae — to photosynthetically produce its ReNew line of Omega-3 EPA and DHA oils, animal feed/food, and biofuel feedstocks. Cellana’s patented ALDUO system enables economic, sustainable, and consistent production of photosynthetic, non-GMO algae at industrial scale. Cellana intends to construct and operate commercial facilities to produce these products as integrated algae-based biorefineries. To date, over $100 million has been invested in developing Cellana’s algae strains, patented and proprietary production technologies, and its Kona Demonstration Facility.

Ranking

50 Hottest Companies in Bioenergy: 2013/14, #50

40 Hottest Small Companies in the Advanced Bioeconomy for 2014-15: #20

The Situation

Last summer, the US Department of Energy announced $3.5 million for a Cellana algae project aimed at accelerating the development of sustainable, affordable algal biofuels. Cellana was selected to develop a fully integrated, high-yield algae feedstock production system by integrating the most advanced strain improvement, cultivation, and processing technologies into their operations at their Kona Demonstration Facility.

Why significant? This is the first major grant award for algae to a multi-product biorefinery with Omega-3s as the high-value co-product.  (ATP3 maybe counts, but it wasn’t direct to Cellana.)  One observer noted, “DOE has come a long way in broadening their perspectives on how one can scale to achieve both commercial quantities of biofuels and profits simultaneously, rather than one at a time.

Top Past Milestones

In June 2013, Cellana announced that it had entered into a multi-year, non-exclusive, off-take agreement with Neste Oil for commercial-scale quantities of Cellana’s ReNew Fuel algae oil feedstocks for biofuel applications. Cellana expects to be able to produce algae oil on a commercial scale from late 2015 onwards.

The partners did not reveal specific pricing or volumes, except to say that the price of algal oil would be competitive with other biofuels raw materials used by Neste, and that annual volumes would be in the thousands or tens of thousands of tons — and given that Cellana’s commitment to develop “commercial algae facilities throughout the world with a total capacity of at least 100,000 metric tons of algae biomass per year” suggests that Neste will have the offtake options for Cellana’s algal fuel oil for some time to come.

The agreement is contingent on Cellana’s future production capacity and on compliance with future biofuel legislation in the EU and US, among other factors.

In May 2011, Cellana was awarded a three-year $5.5 million grant to develop a protein supplement from algae as a byproduct of algal biofuels production and to demonstrate its nutritional and economic value in livestock feeds. Funding is provided through the USDA/NIFA and DOE and will help increase the availability of alternative renewable fuels and biobased products to diversify the nation’s energy resources.  The award was made through a competitive selection process and is entitled “Developing a New Generation of Animal Feed Protein Supplements.”  Under this grant, Cornell University will be conducting large-scale animal feeding trials using Cellana’s ReNew Feed algae meal.

In January 2011, Cellana, Inc. (formerly known as HR BioPetroleum or HRBP) acquires 100% of Shell’s shareholding in Cellana LLC, a joint venture between Shell and HRBP, including its six-acre demonstration facility in Kona, Hawaii. One of the largest joint ventures ever formed in the algae biofuels industry, Cellana LLC was created in 2007 by HRBP and Royal Dutch Shell PLC to build and operate a demonstration facility to grow marine algae and produce (i) vegetable oil for conversion into biofuel and (ii) algae meal for aquaculture and animal feeds. To date, it is one of the most advanced operational demonstration facilities among algae-to-biofuel organizations and companies in the United States. To support the transition, Shell agreed to provide short-term funding to advance the development program.

Major Milestone Goals 

1. Completion of off-take agreements for ReNew Feed (animal feed / food applications) and ReNew Omega-3 (nutraceutical / pharmaceutical applications). Together with the off-take agreement signed in 2013 with Neste Oil for ReNew Fuel for biofuel applications, the three off-take agreements will form the foundation for project financing for Cellana’s First Commercial Facility in the United States.

2. Completion of minimum $30MM – $50MM financing to support construction of Cellana’s First Commercial Facility in the United States, either through private financing or via initial public offering.

3. Ground-breaking for Cellana’s First Commercial Facility in the United States.

Business Model:

Owner-operator business model, initially. Over time and/or in non-core geographies or for non-core applications, owner-operator business model to be supplemented by technology licensing, royalties, and management fees to accelerate commercial roll-out and revenue ramp.

Competitive Edge:

Cellana’s patented ALDUO system enables economic, sustainable and consistent production of photosynthetic, non-GMO algae at industrial scale. To date, over $100 million has been invested in developing Cellana’s algae strains, patented and proprietary production technologies, and its Kona Demonstration Facility. Cellana’s patented ALDUO system:

• Combines the low cost and high productivity of open ponds, which are operated in batch mode, with the protection of closed photobioreactors for inoculating the open ponds, which are operated in continuous mode;

• Enables contamination-minimized monocultures of the most economic algae to be grown; and

• Minimizes overall cost of production and maximizes consistency of production.

To date, over 20 metric tons of whole algae (dry weight) have been produced using Cellana’s ALDUO process with highly diverse strains, making ALDUO one of the most flexible, thoroughly tested, and validated outdoor algae production technologies in the world. In addition, Cellana’s multi-product business model, which initially is anchored by a high-value product, permits Cellana to supply commercial-scale quantities of crude oil and animal feed at a market-competitive price based on current production yields, current production costs, and current market prices of crude oil, animal feed, and algae-based Omega-3s. Other biofuel companies and business models are dependent either on prohibitively expensive sugar inputs (e.g., fermentation-based fuels) or on large price premiums (e.g., business models anchored by fuels or limited to fuel-only applications), or both.

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