Sapphire Energy: Biofuels Digest’s 2014 5-Minute Guide

February 12, 2014 |

Company description:

San Diego-based Sapphire Energy is pioneering an entirely new industry – Green Crude Production – with the potential to profoundly change America’s energy and petrochemical landscape for the better. Sapphire’s products and processes in this category differ significantly from other forms of biofuel because they are made solely from photosynthetic microorganisms (algae), using sunlight and CO2 as their feedstock; are not dependent on food crops or valuable farmland; do not use potable water; do not result in biodiesel or ethanol; enhance and replace petroleum-based products; and are low carbon. Green Crude can be refined into the three most important liquid fuels used by our society: gasoline, diesel and jet fuel. The fuels meet ASTM standards and are compatible with the existing petroleum infrastructure, from refinement through distribution and the retail supply chain.


Landed #4 in the 50 Hottest Companies in Bioenergy

Biofuels Digest Awards

2012: New Feedstock (Demonstration) Award: Sapphire Energy’s Green Crude Farm, Columbus, NM

2013: Debt Deal of the Year, (USDA); New Partnership of the year (Sapphire, Phillips 66)

Featured in: Sapphire Energy, Institute of Systems Biology partner for algae R&D

Featured in: The Age of Upstream

Featured in : Change the World: Sapphire Energy’s Green Crude Farm, illustrated

Major Investors

Sapphire Energy is supported by a world-class syndicate of investors led by co-founder ARCH Venture Partners; along with The Wellcome Trust; Cascade Investment, LLC; and Venrock. Monsanto has also been investing.

Type of Technology

Green Crude, a renewable biofuel made solely from photosynthetic microorganisms (algae), using sunlight and CO2 as their feedstock. It can be refined directly into drop-in replacements for gasoline, diesel and jet fuel, using the existing petroleum refinery infrastructure.


Sapphire Energy’s algae have been bred to tolerate high PH conditions and salty water, and require only sunlight, C02 and some nutrients as feedstocks.


Green Crude, an algae-based renewable oil developed as drop-in replacement for petroleum. It can be refined into gasoline, diesel fuel and aviation fuel in existing refineries for use in existing engines.

In addition, Sapphire and Linde will commercialize a new industrial scale conversion technology needed to upgrade algae biomass into crude oil. Together, the companies will refine the hydrothermal treatment process developed and operated today by Sapphire Energy at pilot-scale. In addition, they will jointly license and market the technology into an expanded list of industries, including algae, municipal solid waste, and farm waste, in order to upgrade other biomass sources into energy. The agreement spans a minimum of five years through the development of Sapphire Energy’s first commercial scale, algae-to-energy production facility.

Product Cost

When Sapphire reach commercial readiness, its plan is to be price competitive with traditional crude. Current industry estimates are for algae-based green crude production to result in a $75 and $85/barrel cost at commercial scale.

Top  Milestones 2009-2013

• Sapphire Energy partnered with The Linde Group, the leading merchant CO2 supplier in the U.S., to reduce the costs associated with the delivery of anthropogenic CO2 for commercial-scale open pond algae cultivation. In addition, Linde will supply all of the CO2 to Sapphire`s commercial demonstration facility in Columbus, New Mexico.

• Sapphire Energy, Inc. and Monsanto Company announced an agreement to enter a multi-year collaboration that will leverage Sapphire’s algae based research platform to discover genes that could be applied to agriculture, particularly in the field of yield and stress.

• In 2010, Sapphire Energy began construction for our Integrated Algal Bio-Refinery in Southern New Mexico, a project that was awarded more than $100 million in federal grant money from the American Reinvestment and Recovery Act through the U.S. Department of Energy and a loan guarantee from the U.S. Department of Agriculture Bio-refinery Assistance Program.

* Completed phase 1 of Green Crude Farm.

* Completion and operation of phase 1 2 of the IABR. 2013.

* Retirement of USDA loan guarantee. In July 2013 , Sapphire Energy announced it has paid off the loan guarantee awarded to the company by the U.S. Department of Agriculture.  In Dec. 2009, the company was awarded a $54.5 million loan guarantee through the Biorefinery Assistance Program, administered by the USDA Rural Development-Cooperative Service, to build a fully integrated, algae-to-crude oil commercial demonstration facility in Columbus, New Mexico.

* In November 2013, Sapphire Energy and Phillips 66 announced a strategic joint development agreement to work together to collect and analyze data from co-processing of algae and conventional crude oil into fuels, and to complete fuel certifications to ready Sapphire Energy’s renewable crude oil for wide-scale oil refining.

Remarkable because of the consistency of Sapphire’s fuel-centric approach, in contrast to so many algae companies that have downshifted into smaller volume markets. Remarkable also to have snagged the interest at Phillips 66, which has not to date shown an enormous interest in biofuels on a level comparable to, say, Total, BP or Shell. Though they ahve been active in algae research.

In initial testing by Sapphire Energy, Green Crude oil was upgraded into on-spec ASTM 975 diesel fuel, proving its compatibility with the existing network of pipelines, refineries and transport systems.  The company expects to be at commercial demonstration scale in 2015, commercial scale in 2018, and is eventually projected to produce 1 billion gallons per year by 2025.

Top Future Milestones 2014-15

* Construction and operation of all IABR phases united in 2014.

* Public policy, algae tax parity and a more technology neutral RFS.

* Expanded partnerships.

Business Model: Owner-operator.

Competitive Edge

Scale to Growing Demand: Sapphire Energy’s algae based green crude can scale to meet our domestic demand for transportation fuels. Today, the debate is not about who can make algae-based fuel, it is about who can scale as the demand grows. This is Sapphire’s strength.

The Only Truly Scalable Option: Sapphire Energy continues to lead the space as the industries’ only pure algae play. All other technology solutions require carbohydrates and sugar in their process, which cannot scale to truly replace petroleum.

Phased Drop-In Replacement: Another of the many beauties of Sapphire’s “green crude” is that it can drop directly in where petroleum currently is used without any changes to the infrastructure in vehicles, aircraft and more.

Value to the Value Chain: Sapphire Energy’s intellectual property position in the space gives the company freedom to operate with over 244 active patent cases with 45% of all patents in algae tied to Sapphire. It spans the full spectrum of algae fuel and products, providing multiple layers of competitive advantage across the entire value chain from platform technologies, traits and organisms, production systems, refining methods and products.

Grants and Government Partnerships: In December 2009, Sapphire was awarded $104.5 million in federal funds to build and operate a first-in-kind commercial demonstration scale algal biorefinery, integrating the entire value chain of algae-based fuel, from cultivation to extraction to refining. This award exemplifies the value the Administration sees in weaning dependency off petroleum as the sole option and transitioning to a purposeful and valid form of new energy. The funds are in addition to significant private investment and will ensure we can accelerate commercialization of algae-based fuels, which will fundamentally change our nation’s energy future, help address climate change, and stimulate green collar job growth.

In Top 10 Clean Tech Companies Most Likely to Succeed: Sapphire Energy was chosen as one of the top 10 venture-backed, clean tech companies of 2011 by the Wall Street Journal during the WSJ ECO:nomics Conference. Unveiling its second annual “Next Big Thing,” the Wall Street Journal chose Sapphire for its experience, capital, and potential for producing green crude from algae as a method to wean consumption off foreign oil and onto a home-grown proven fuel alternative.

In September 2013, algae biofuels tested as very close to petroleum in energy efficient-production, according to a University of Virginia study. The study, performed at Sapphire’s demonstration plant in New Mexico, demonstrated that carbon emissions of algae biofuels come in at 50-70% lower than that of petroleum. The study evaluated EROI, Energy Return on Investment, or the amount of energy needed to produce energy in various forms, including petroleum, biofuels, wind, solar and other renewable sources.

Research, or Manufacturing Partnerships or Alliances.

As part of the American Recovery and Reinvestment Act and through the biorefinery assistance program in the 2008 Farm Bill, Sapphire has partnered with both the USDOE and the USDA to build a next-generation algal biorefinery, funded by $104 million in grants and loan guarantees. Sapphire is also collaborating with leading scientists from the Department of Energy’s Joint Genome Institute; University of California, San Diego; The Scripps Research Institute; University of Tulsa; and San Diego Center for Algal Biotechnology. Sapphire Energy has also established partnerships with Linde Corp, to obtain a low cost, long-term supply of C02, and Monsanto, for collaboration in algae research to improve yield.

In August 2013, US Secretary of Energy Ernest Moniz announced $16.5 million in grants to four projects in California, Hawaii and New Mexico aimed at breaking down technical barriers and accelerating the development of sustainable, affordable algae biofuels. Sapphire Energy picked up $5 million to develop a new process to produce algae-based fuel that is compatible with existing refineries. The project will also work on improving algae strains and increasing yield through cultivation improvements.


Sapphire is in the commercial demonstration phase, and has a test and demonstration site in Las Cruces, NM. The company is in the process of demonstrating what is needed to scale to commercial volumes. Its Green Crude Farm is operational now and is expected and produce 1 million gallons of biofuel per year by 2014. The purpose of that is to demonstrate how algal oil can be refined into Jet-fuel, diesel and gasoline on a continuous commercial scale.

More on the company

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