Biofuels Digest special report on PetroAlgae: Part II

Note: This is part 2 of a story on PetroAlgae, for part one, click here)

Post oil extraction

After oil extraction, the 65 percent average biomass content can be sold as high protein meal that is high in carbohydrates, while the oil is converted to biodiesel using a traditional transesterization process.

Petroalgae lab

There are other inputs required. Currently a micronutrient package includes phosphorus, iron and sulphur. Ultimately, new locations will have higher or lower needs for nitrogen, phosphates and other materials. Water remains an issue. Highly preferable is nitrate-rich waters such as the Mississippi River. The system is not water-wasteful, recovering 95 percent from each harvest, but 12,500 acres of algae in a scaled out model will require 37,000+ acre-feet of water excluding evaporation.

Ideal locations for open-pond algae cultivation

Louisiana and Texas, which have coal-fired power, nitrate-rich river water, and diesel industry distribution, would be considered ideal locations for algae to energy.

“Bad soil, good water, and CO2 you can get to,” said PetroAlgae business development manager Fred Tennant in describing the ideal land for algal fuel development. He said that, in the US, the ideal areas for open pond are “south of the Mason-Dixon line,” with the exception of deserts and mountains where cold winters or high evaporation rates make the project unviable, which also makes an argument for the US Southeast.

The company has been fairly swamped with calls, 80 percent from outside the country. The minimum land size to make the process viable is several hundred acres, but the company is modeling itself based on 12,500 acre parcels or groups that can assemble a parcel from individual interests. The company has been working with prospective clients for the past 18 months, including testing water samples, modeling sunlight installing its own weather location system to provide more accurate data on wind speed and solar intensity. PetroAlgae said that they expect to strike a licensing deal by the end of the first quarter. The model is fee + royalty, with payments graduated on the basis of productivity milestones.

Licensees – and the company expects to sign its first by the end of March – will be hiring a total of 500 employees per project, including native speakers, and technical, skilled and semi-skilled labor. PetroAlgae is guaranteeing productivity rates to attract capital and commercials, and said it is down to technical and financial concerns before it announces its initial country partner.

One added edge for PetroAlgae: its testing lab at NASA. The company’s Kennedy Space Center lab is a hangover from the Mission to Mars project some years ago. PA leased a room at KSC that allows the company to simulate any combination of atmosphere and temperature, which allows it to precisely project yields for partner companies.

For now, the company is finalizing permits for the demonstration scale project over a 5-6 month period. Management is reporting that permitting is less difficult than feared, with county officials requiring data on land use and tree removal rather than posing roadblocks for the team.

Not just another roadside attraction

In an industry filled with all too many roadside attractions, where the sizzle has been promoted too heavily and the steak has been all-too-absent, PetroAlgae (PALG.OB), which has a market capitalization today of $140 million, appears to be that rarest of rare birds in algal fuels: the real McCoy.

“There is no there, there” opined the writer Gertrude Stein, but not here. Here there is a there, and possibly a big there.

If you can only find Fellsmere.

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Biofuels Digest special report on PetroAlgae: Part II

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