Green crude oil — algae-based fuel — could be on the verge of taking a slice out of petroleum's market share…and sooner than you may think.
The big players are aware of this.
According to Bloomberg:
"Exxon Mobil is spending $600 million on a 10-year effort to turn algae into oil. And Royal Dutch Shell has invested billions of dollars in a Brazilian biofuels venture, buying up sugar cane mills, plantations and refineries to make ethanol."
But why is green crude worth talking about now?
Compare today's $96 with the oil price four years ago. It was up to $147 a barrel.
That's when many algae startups and research efforts sprouted. But when oil prices fell, those algae fuel startups died.
As you can imagine, it left a lot of people wondering whether algae-based fuel can compete with the cost of the usual petroleum.
But new research is making algae fuel production process much more cost-efficient.
Take the company Sapphire, the algae startup created in 2007.
If green crude is a pie-in-the-sky idea, then Bill Gates' investment holding company, Cascade Investment, has made a big mistake.
Add to that Venrock, the Rockefeller family's venture capital arm…
These are only two major league players backing Sapphire.
This past week, the company reported that the performance of its Green Crude Farm has surpassed their expectations.
That's why its algae raceway ponds in New Mexico are expanding from 26 to 300 acres.
With new cost-cutting techniques and an expanded plant, they're confident that green crude will match oil's current price.
The new fuel is especially worth keeping your eye on because new supplies of oil are keeping prices down at the pump.
When supplies dry up and the price of oil spikes, algae will gain more attention than it did four years ago.
Already, Brazil is poised to construct the world's first algae-based biofuel plant.
Austrian firm SAT aims to produce 2.2 million liters of algae-based biofuels per hectare each year.
Another benefit of using algae as a biofuel is that it doesn't tie energy prices to food prices.
The same benefit comes from using bio stock from trees…
Algae, however, is more efficient. Also, when the Amazon is your backyard, and carbon is a concern, algae looks even better.
The company has made it a priority.
Rafael Bianchini, head of SAT's Brazilian subsidiary, said to the press:
"For each ethanol liter produced, one kilogram of CO2 is released in the atmosphere. We are going to take this CO2 to feed our plant," he added. In early production, the algae-based biofuel facility will use just 5% of the emissions from the sugar cane ethanol process, but SAT expects this figure to increase over time.
They expect the figure to increase as plans unfold. If all goes well, the plant will go into production by late 2013.
So there you have it. Green crude is coming with the approaching future. The big companies have made long-term plans for it. And smaller companies are pioneering new methods to give them a competitive edge in the marketplace.
We'll keep our eyes peeled for you.
Josh Grasmick
Penny Sleuth
