15 July 2009

Exxon thinks algae has biofuel future

Exxon Mobil Corp. wants to get into biofuels, as it will invest in a $600 million partnership with biotech company Synthetic Genomics Inc. to develop transportation fuels from algae.

What the company wants is to find a biofuel source that could produce fuel on a large scale. It said photosynthetic algae appear to be a viable, long-term candidate. Even if the alliance is successful, pumping algae-based gasoline is still a long way off. But this is a beginning.

“This is not going to be easy, and there are no guarantees of success,” said Emil Jacobs, a vice president at Exxon Mobil Research and Engineering Co. “But we’re combining Exxon Mobil’s technical and financial strength with a leader in bioscientific genomics.”

Jacobs said the project involves three critical steps: Identifying algae strains that can produce suitable types of oil quickly and at low costs, determining the best way to grow the algae, and developing systems to harvest enough for commercial purposes.

Besides the potential for large-scale production, algae have other benefits, Jacobs said. They can grow it using land and water unsuitable for other crop and food production; it consumes carbon dioxide, the greenhouse gas blamed for climate change; and it can produce an oil with molecular structures similar to the petroleum products—gasoline, diesel, jet fuel—Exxon already makes.

That means Exxon could convert the bio-oil into fuels at its own refineries and use existing pipelines and tanker trucks to get it to consumers.

The $600 million price tag includes $300 million for Exxon’s internal costs and $300 million or more to La Jolla, Calif.-based Synthetic Genomics, if they meet research and development milestones.

“Even though this is a multiyear program, we both still consider it a very aggressive timetable, and it involves a lot of basic research,” said J. Craig Venter, founder and chief executive of Synthetic Genomics. “As a result, you don’t know the answers until you’ve done these tests and experiments.”

Algae are a sustainable source for second-generation biofuels, which go beyond corn-based ethanol into nonfood sources such as switchgrass and wood chips.

Meanwhile, Exxon said as far as hunting down natural gas, they may have found a world-class discovery locked inside shale formations, in Canada.

Tim Cejka, Exxon’s head of global exploration, said the company has been bullish on shale-gas exploration since 2003, locating promising gas-bearing rock formations and snapping up leases on them.

Exxon is most encouraged by the exploration of 250,000 acres it has leased in the Horn River Basin, in northern British Columbia. Cejka said results from the first four wells led the company to conclude that each well will produce between 16 million and 18 million cubic feet of gas a day. That is five times the size of average wells in Texas’s Barnett shale and comparable to big wells in Louisiana’s Haynesville shale, two major shale-gas fields that already have moved the U.S. natural-gas market from scarcity to abundance.

Shale gas is an “unconventional” gas trapped in dense rocks, rather than in porous rocks that form underground reservoirs. To reach it, energy companies must crack the rocks open by injecting them with high-pressure liquids. Improvements over the past few years in the technology to fracture dense rocks and drill vertical wells that turn and run horizontally underground have made it possible to develop unconventional gas.

For related information, go to www.isa.org/environment.