State of the Algae Industry: 10 Top-Level commercial leaders look at the path to scale

October 1, 2014 |

ABO-2014b10 leaders, 10 enterprises, 10 paths to scale — what’s really key to making algae a commercial crop for feed, fuel and pharma, soon?

This week at the Algae Biomass Summit, a pair of key sessions featured 10 of the leading companies in the algae sector:

Paul Woods, CEO, Algenol
Jason Kolb, VP, Algix
Tim Burns, CEO, BioProcess Algae
Martin Sabarsky, CEO, Cellana
Amha Belay, CTO, Earthrise Nutritionals
Fred Tennant, VP, Heliae
Margaret McCormick, CEO, Matrix Genetics
David Lewis, CEO, Muradel
James Levine, CEO, Sapphire Energy
Jim Flatt, CTO, Synthetic Genomics

Their comments on the progress of their companies, their interaction with the Algae Biomass Summit delegates in the Q&A, and their projected key milestones over the next 12 months, provide as good a summary of the state of the algae industry as The Digest can assemble.


Highlights from the opening remarks: state of the companies

woodsPaul Woods, CEO, Algenol

• This time represents an important transition time for the industry, an important inflection point
• Algenol is using special modified algae with high rates of production with a $1.30 production cost goal – we produce ethanol and biocrude.
• Project in Florida is up to 14,000 acres, and involves dealing with 3 major landholders
• It’s a very cautious conservative environment and we have 3 regulatory agencies that have oversight over us in Florida alone.
• Algenol is working on a project in India now.
• One of the key strengths of the company is the people, who together have assembled 8 years of overcoming real important challenges

kolbJason Kolb, VP, Algix

• We make algae plastics out of algae, biodegradable, with 4 or 5 compostable resins
• The factory is in Mississippi, where we are manufacturing bioplastic
• Greatest challenge for us is adequate supply of algae of biomass
• We have an algae supply chain for harvesting and drying
• One of our sources of biomass are wastewater treatment facilities in California
• We also have a great biomass supply relationship with Algal Scientific
• We are searching the globe for algae, for example working in China, and also in Jamaica where we are looking for a water wastewater treatment facility
• We are looking for companies they can work with.

burnsTim Burns, CEO, BioProcess Algae

• BioProcess Algaedesigns, builds, and operates commercial scale Grower Harvester bioreactors that enable efficient conversion of light and CO2 into high value microbial feedstock.
• Transitioning to commercial right now is key – we are working with partners to succeed
• We are co-partnered with Green Plains, co-located at their Shenandoah, IA corn ethanol facility where we obtain CO2. Green Plains’ goal is CO2 monetization.
• We are solely focused on a path of profit and not on revenues

sabarskyMartin Sabarsky, CEO, Cellana

• Last 15 years there has been a combination of $100 million in private investment and public funding from government sources, labs to bring this technology to commercial scale, highlighted by a new grant from DOE in the last few weeks.
• The DOE is gone very far and been instrumental in supporting the industry
• Signature off-take agreement with Neste Oil, signed last year.
• We produce multiple products, primarily by volume fuel grade oils and feed – multiple products improve the economics.
• Our demonstration facility is in Kona, Hawaiii
• Our vision of Cellana’s expansion involves a multi phase approach
• Yield is coming up and costs going down with scale

belayAmha Belay, CTO, Earthrise Nutritionals

• We have a comparatively large commercial-scale facility and have been in existence for 35 years
• In 1995 we doubled production to 30 acres
• A 3 acre pond was modified to experiment about the advantages
• We produce 500 tons of dry spirulina powder
• We also do tablets, capsules and also formulate our products with other products
• Future looks bright
• Food coloring approved in the US recently
• We also going to make use of the residual biomass, and in fact have started some talks with Algix about that.

tennantFred Tennant, VP, Heliae

• The Mars corporation owns several food companies with long vision, 150 years in existence
• Very concerned with the energy and water issue in order to sustain their business long term, that’s why they started Heliae in 2008.
• Facility is producing products that would sustain the company in the short term but with a long-term vision.
• Demo facility in Gilbert, Arizona features the “Volaris” production system
• Different strains and products are being produced with this platform
• Acquired another 20 acres across the street that primarily produces a nutraceutical product derived from Algae
• Second facility by 2016 for either Algae products in personal care and therapeutics
• Fist international expansion in Japan starting next year in 2015.

mccormickMargaret McCormick, CEO, Matrix Genetics

• Company started out of cancer research
• Our focus is in developing strains to increase yield
• In 2006 -2007, Targeted Growth started to focus on products to “energize the world” including camelina — Matrix Genetics is a spinout company.
• So, we are biologists trying to make a difference in energy
• We have collaboration with 2013 about 20 scientists
• We have the potential to grow in areas other than fuel. Scientist have been hired at the beginning of the year to make a difference in this area,

lewisDavid Lewis, CEO, Muradel

• Muradel is a biomass and biofuels company established in 2010 in conjunction with the University of Adelaide and Murdoch University.
• We are in technology development and licensing, with a long-term vision of becoming a producer
• We have developed continuous growth technology, conversion technology, phosphorus recovery and more.
• Our system is called “MDP Technology”
• Most of their development has been done in 200 square meter ponds, we have expanded and commissioned a facility at Whyallia, South Australia in 2014. Now main production is in one acre ponds
• We convert biomass into SCWR, extract green crude from kerogen, and fractionate the green crude to produce drop-in fuels
• Our primary focus and challenge is to bring down the energy costs
• Our next step is a 1,000 hectare plant to produce algae for biofuels

levineJames Levine, CEO, Sapphire Energy

• I am new to Sapphire, arriving two months ago, but not new to the sector or the challenges
• Although Sapphire Energy is very established in the industry, with partnership with the USDA and DOE that has led to the construction and operation of the Green Crude Farm in Columbus, NM.
• Our goal is to grow inexpensive biomass and convert into green crude.
• Our philosophy is to not only look at the technology and see what it does, but to see where we go from here and the customers that we can focus on
• Green crude is an important factor of Sapphire Energy and we expect to develop additional products based on the technology that we are bringing forward.

flattJim Flatt, CTO, Synthetic Genomics

• Our company was established in 2005, and we produce a diverse range of products from vaccines, to algae oil research with Exxon Mobil. We serve the medical, nutritional, oil and fuels industries..
• We are best known in the sector for a $100 million dollar investment mostly from Exxon Mobil and ourselves to develop algae biofuels.
• We concluded that biofuels was not going to be commercially viable in the short term based on the 2000 marine drive strains with major classes of algae that we investigated. So our focus with ExxonMobil is on improving the strains.
• Our research focus is understanding the genomes of these different strains: a focus on biology to make it commercially viable
• In other areas, we signed a commercial agreement with ADM this year with a nutritional product will provide the starting foundation towards commercialization. We see products like astaxanthin being a path forward.
• We have a 5 acre facility here in California’s Imperial Valley.


We asked each company where they would like to be in terms of new achievements by the time the Algae Summit 2015 comes along.

Paul Woods, CEO, Algenol: Multiple 5 acres modules and have a whole lot of regulatory support to be on board with Algenol will be critical.

Jason Kolb, VP, Algix: 1 million pounds a month in commercial production

Tim Burns, CEO, BioProcess Algae: More customers, more off take.

Martin Sabarsky, CEO, Cellana: Completion of off take agreements, announcement of our first commercial facility

Amha Belay, CTO, Earthrise Nutritionals: Research facility will also be completed

Fred Tennant, VP, Heliae: Products to market in 2015 and the assets to enhance production.

David Lewis, CEO, Muradel: Working with other companies towards commercial scale.

James Levine, CEO, Sapphire Energy: Progress on green crude and one additional product

Jim Flatt, CTO, Synthetic Genomics: two successful commercial product launches for our first algal-derived nutritional ingredients; further advance algal biofuel strain development demonstrating step-change improvement in performance.

Margaret McCormick, CEO, Matrix Genetics: Expanded our non fuel projects and entered into additional collaboration(s) with production/commercialization partner(s).


Choosing targets

The Digest: Jason Kolb, at Algix, what’s the criteria for selecting out sectors and custoemr groups to focus on. You mentioned in your opening remarks that there are always more targets than assets for new companies that are growing fast.

JK: With customers we want it to be a win, and we want to meet the demands of our customers. So in many cases, that means taking on a smaller project now, and holding off on the bigger opportunities for later, when we have the capacity to meet the larger customer opportunities.


The Digest: Amha Belay, at Earthrise you’ve seen it all over 35 years, including the “summer of algae” when everyone is knocking at your door with a million opportunities. Yet, Earthrise has stayed focused on exploring and optimizing its niche products, such as spirulina. Will that remain the focus — how do you think through other opportunities without giving away the focus that has brought you hard-won commercial success?

AB: You’re right, we have succeeded because of a focus on one product. But perhaps now the company has been focused on one product for too long. The vision was not there in the past, but a lot of research has been done lately. For example, we grow algae for only 7 months a year but we are looking at extending the season, and we are looking now at the value of all the components we produce. For example, looking at protein. The vision of the company is not as limited as in the past, and we are now interacting with people, and are open for the type of collaboration seen in the industry.


Audience question. When do you protect intellectual property and why? What about a more open source approach as we’ve seen recently with Elon Musk and Tesla?

David Lewis, Muradel: IP is a difficult one to address, We try to publish of all of the data as much as we can but there are times when we have to patent.

Jim Flatt, Synthetic Genomics: Much of this industry is based in many ways on the pharmaceutical model where patens and intellectual property are the source of key competitive advantage. Patents are also a really important source of a company’s value, especially for investors. Silicon Valley, by contrast, has done a lot with the open source model. Somewhere in between is the right answer — for example, there are opportunities for research collaboration with universities and so on that bring a lot of value and do not necessarily result in patents. But also keep in mind that there is licensing — that brings the protection to the technology developer while moving the technology to a broader development community.


The Digest: Martin Sabarsky, at Cellana how do you manage a roster of many collaborators, as a small company. When do you say “we have enough, we can’t manage any more?”

MS: We never say never. It’s case-by-case. In some cases, it comes down to who is in the driver seat. There are “earners and burners” and often it is the earner that has the capital to call the shots in the collaboration and define it, so as a “burner” we don;t always have complete control. For example, in our Shell collaboration, Shell was in the driver’s seat. Where we like to focus, whether we are in the front seat or the backseat, is where we preserve the ability to manage the technology assets.

Pace to commercialization

Audience question: Commercialization; when are we getting the first million ton from algae?

David Lewis
• A million tons is at least half a million dollars.
• Reducing the risk is key. According to David Lewis
• Investors do not want to take that risk

Jim Flatt
• Stepping stone approach
• We are still in grade school. we are not ready to do that
• Gain experience and produce products that gain profits is the most important factor before anything else
• Be realistic and thoughtful in creating the stepping stone path
• Commercialize the technology to make money is a process.
• This is going to take time

Amha Belay
• Investor impatience is because of the hype that has been created.
• But reality has been sunk in now so it is not happening as much anymore
• It will not happen in the time period it was expected before.
• A lot of hype has been gone
• Learn how to draw algae before commercialization
• A lot has happened since the beginning and acknowledging that is not easy is a start up to success

Martin Sabarsky
• Some companies do not want to be first
• Too much fear and not enough greed
• Adapt to the new capital integration
• Expand by modular additions
• Benefits of algae over other is that the minimum size can be relatively done in a smaller scale
• Commercialization is going to happen but it is going to happen slowly due to the capital investment.

Managing change

The Digest: Paul Woods, with Algenol, you made a significant change in your technical design with a switch from horizontal to vertical reactors. Can you walk us through the thinking – how did you conclude that this was the right way?

PW: 6000 gallons per acre per year was a challenge. We saw a massive difference with what we had in the labs versus on the commercial 5-acre scale. The Horizontal reactor dissipates heat differently, and water and gas transfer is better. With that vertical they were really able to break to high productivity levels he did not think we could achieve otherwise.

Of our 8,000 gallons, 15 to 20 % is bio crude and the rest is ethanol. Up to 10,000 gallons is possible but can only be done in a vertical culture.

Speed to market

The Digest: Tim Burns of BioProcess Algae, you have a strong strategic partner in Green Plains, but internal rate of return is a must. How do you manage a transformative technology on a strict timeline.

TB: Every progression in the technology is driven around costs and profitability. Empirical data is looked at intensely, and you learn quickly that you can’t be everything to everyone. But the expectations put discipline into companies.

The IPO market

Audience question: What about the IPO market?

James Levine, Sapphire Energy: There are very good reasons to stay private, and IPO should not always be the goal.

Paul Woods, Algenol: The VC timeframes have no place in this industry, in my view. Besides, the experiences with KIOR and others have tarnished the industry — they went IPO too early when the technologies were at their infancy. This has really negatively impacted us, and the industry.

Collaboration with academics

Audience question: What is the best way for universities to support the industry? What are the areas you want help in.

Paul Woods, Algenol: CO2 very important to this room and to the industry. The intake into Algae is critical. There’s a lot of opportunity with universities in the CO2 arena.

Price on carbon

Audience question: If you had a price on carbon emissions how would this change anything?

Paul Woods, Algenol: It’s incredibly important and helpful. The algae community has a massive advantage as we can actually purchase it and monetize it. You don’t pay for underground storage amongst other things.

Tim Burns, BioProcess Algae: If you can monetize it, green carbon is the way to go.

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