Exxon Mobil Corp. (XOM)’s $600 million foray into creating motor fuels from algae may not succeed for at least another 25 years because of technical hurdles, Chairman and Chief Executive Officer Rex Tillerson said.
So far, scientists haven’t been able to develop a strain of algae that reproduces quickly enough and behaves in a manner that would produce enough raw material to supply a refinery, Tillerson said in an interview that aired yesterday on PBS television’s “Charlie Rose” show.
“We’ve come to understand some limits of that technology, or limits as we understand it today, which doesn’t mean it’s limited forever,” Tillerson said. The venture is “probably further” than 25 years away from successfully developing fuels.
Exxon, the world’s biggest maker of gasoline and diesel, has been studying the potential for algae-based fuels for 3 1/2 years in a joint venture with J. Craig Venter’s Synthetic Genomics Inc. When the project was announced in July 2009, Exxon predicted it could produce fuels in five to 10 years.
Exxon gained 0.3 percent to $88.97 at the close in New York. The shares have increased 2.8 percent this year.
Exxon and Synthetic Genomics announced plans in 2009 to build a greenhouse near San Diego to test various algae strains. The goal was “to produce a new source of oil,” Emil Jacobs, Exxon’s vice president of research, said during a July 14, 2009, conference call.
Venter, best known for his role in the sequencing of the human genome in the 1990s and early 2000s, said during the same call that algae ponds would produce 10 times as much fuel as the ethanol fed by corn fields covering the same amount of space.
“What we’ve come to understand is the hurdle is pretty high and the hurdle seems to exist at the basic science level, which means it’s even more difficult to solve,” Tillerson said yesterday. “These are very challenging problems.”
The scientific barriers to cultivating the sort of “super algae” Exxon sought have induced the industry to focus on “robust, cheap local strains of algae that aren’t exotic,” said Riggs Eckelberry, chairman and CEO of OriginOil Inc. (OOIL), a Los Angeles-based algae-extraction company.
Algae may turn out to be better suited to use as a polymer precursor and a blending agent that will boost the energy content of fuels made from waste products such as sawdust, rather than as a replacement for crude, Eckelberry said in a telephone interview today.
OriginOil rose 4.5 percent to 55 cents. The stock lost 69 percent of its value in the past year.
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