ExxonMobil Corp. took a sharp strategic turn toward renewable energy research last week, announcing an alliance with Synthetic Genomics Inc. (SGI) to research and develop next-generation biofuels from photosynthetic algae.

The Irving, TX-based supermajor plans to spend more than $600 million on the algae project over the next five to six years, which would make the project the largest of its kind in the world. ExxonMobil’s initial internal costs are estimated at around $300 million, and SGI, which is privately held, could receive up to $300 million more.

Achieving a commercially viable biofuel made from algae is many years away and could cost billions, said Emil Jacobs, vice president for research and development at ExxonMobil Research & Engineering. He spoke with reporters during a conference call last Tuesday.

“We need to be realistic,” said Jacobs. “This is not going to be easy, and there are no guarantees of success.” However, creating biofuels from algae may be a “meaningful part of the solution in the future if our efforts result in an economically viable, low-net-carbon-emission transportation fuel.”

ExxonMobil CEO Rex Tillerson told shareholders in May that natural gas, oil and coal could not be replaced until 2030 “and beyond,” but he also signaled the company’s commitment to renewables investments (see NGI, June 1).

SGI wants to develop the “best systems for large-scale cultivation” of algae to convert it into a useful biofuel, said founder Craig Venter. The “real challenge…is to create a next-generation biofuel,” and that will require “significant advances in science and engineering,” which ExxonMobil could supply. Venter was credited with helping to map the human genome in the 1990s. In June 2005 he cofounded SGI to use modified microorganisms to produce clean fuels and biochemicals.

All types of biofuels and potential biofuels were reviewed by ExxonMobil’s research team before it chose to pursue algae research, said Jacobs. Producing biofuel from algae has a key advantage over existing biofuels, he said, because algae is created in tanks of water, and unlike corn, it would not compete with food crops for land nor cause food costs to increase.

As a first step, SGI and ExxonMobil plan to build a research facility in San Diego. To make the algae biofuel, sunlight and carbon dioxide (CO2) are required. ExxonMobil could supply CO2 from power plants, refineries and its production, Jacobs said. Photosynthetic algae would use the energy from sunlight to convert CO2 into cellular oils or a “long-chain” hydrocarbon that could be processed into fuels or chemicals.

“While significant work and years of research and development still must be completed, if successful, algae-based fuels could help meet the world’s growing demand for transportation fuel while reducing greenhouse gas emissions,” said ExxonMobil’s Michael Dolan, a senior vice president. “Our new algae biofuels program complements ExxonMobil’s ongoing efforts to reduce emissions in our operations and by consumers of our products, through both efficiency improvements and technology breakthroughs.”

The alliance between ExxonMobil and SGI is not alone in its quest to produce a useable biofuel from algae. Dow Chemical Co. and Algenol Biofuels late last month partnered on a project to use algae to turn carbon dioxide into ethanol (see NGI, July 6). If their project is successful, Dow hopes to reduce the amount of natural gas it now uses to make plastics.

Chevron Corp. and Weyerhaeuser Co.’s joint venture, Catchlight Energy LLC, announced in early 2008 it would research ways to convert cellulose-based biomass into low-carbon biofuels. Royal Dutch Shell plc and HR Biopetroleum in December said they plan to build an algae plant in Hawaii to produce vegetable oil for biofuels. And BP plc said it would spend about $500 million over the next 10 years on biofuels research. BP plans to conduct biofuels research with U.S. universities that include, among others, the University of California, Berkeley.

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