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2012 Could Determine Future Of Algae As Fuel

If it's proven economically viable, this promising biofuel could bring jobs and money to San Diego in the future.

If it's proven economically viable, this promising biofuel could bring jobs and money to San Diego in the future.

Soaring oil prices and more than a billion dollars in public and private money put algae biofuels on the map in San Diego two years ago. The possibility that diesel fuel could be grown ignited a race among several local companies. Next year will be critical for a fledgling industry hoping to create a "Green Bullet."

The lab at U.C. San Diego is typical: small, cramped, and full of equipment. The work here could transform the energy landscape, since oil generated from algae has the same molecular structure as oil from fossil fuels.

That makes the biofuel and the fossil fuel interchangeable, allowing them to be blended, exchanged and shipped the same way.

Scientist Steven Mayfield runs the San Diego Center for Algae Biotechnology at U.C. San Diego. He said different strains of algae are cultured in his lab.

Mayfield said researchers have made huge advances, perfecting strains of algae that produce the most lipids, a.k.a. oil. And the work isn't limited to the lab: At a nearby greenhouse algae is grown in ponds and bags.

"We're seeing the sunlight change during the day, we're seeing the temperature change at night, predators can land in here and eat our guys," Mayfield said. "So this is much more real world, and part of this is to see if what we're doing in the lab has any chance to survive in the real world."

Working out the problems is the key to making the product economically viable. Oil from algae has already powered a jet and destroyer*, but it has to make sense financially.

The technology got a lot of attention when more than a billion dollars in funding - half of which came from the U.S. Department of Energy - was given to local companies.

"Expectations were significant, because remember, the price of oil was way up," said Marney Cox, chief economist with the San Diego Association of Governments. "It peaked at about $147 per barrel. Gas prices were going up. People were looking for ways to cut down on their energy consumption and expenses."

San Diego companies Synthetic Genomics, Sapphire Energy and a division of General Atomics are among those racing to move the idea out of the lab. The concentration of local firms has created 500 local jobs, but that's only a small fraction of the local clean-tech industry.

"They know the technology needs to be brought along. It needs to be able to produce a consumer product at a price level competitive with other energy sources," Cox said.

That means building a full-size algae farm and harvesting large volumes of oil.

Sapphire Energy Vice President Tim Zenk says the San Diego startup is one of several local firms hoping to turn the fuel into money. The idea took root and grew even as the recession hammered the rest of the economy.

"We've gone from four or five guys in the back of Scripps Laboratory thinking about this idea, doing some investigations, and locking up some patents - to now 150 people strong," Zenk said. "A quarter of those people have advanced degrees, Ph.D.s."

Zenk said their 300-acre demonstration facility in New Mexico will churn out one million gallons of oil a day.

"We need salty, briny, water; they have billions of acre feet," he said. "We need very intense sunlight for this phase of the project, that will change over time. They have an abundance of very intense sunlight. And they have an abundance of deserts."

A large-scale farm is critical: Zenk said biologists and engineers need to work out the best ways to grow, harvest and transport their algae-based fuel. And they need to bring down the cost of production. Zenk says algae has the potential to become the nation's most productive crop. He compared it to the most valuable crop on the market today.

"It's strawberries. It's about $400 per acre, a farmer could make on strawberries. If you look at algae, it's about $19,000 per acre."

And that high figure is on land not suitable for farming. If the New Mexico facility works, more could be built in places like the Imperial Valley. Economists say farms there would fit nicely with San Diego's concentrated research and development facilities.

UCSD's Mayfield said a successful demonstration project could fuel more funding from both private and public sources.

"Doing a computer-generated diagram is one thing. Getting out in the field, walking it and seeing it, and seeing the production that comes out of it and seeing the oil flowing out of it, that's the game changer," said Mayfield. "That's a mind changer for everybody in this country."

The Department of Defense has expressed interest in developing biofuels as an alternative energy source for the nation's military machines. A steady source of funding could hasten development of the technology - and that could enhance the industry's economic footprint in San Diego.

*Correction: A previous version of the story listed the biodiesel-powered ship as a battleship. It was a destroyer.

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