Exxon Refocusing Algae Biofuels Program After $100 Million Spend

Exxon Mobil Corp. (XOM), which has invested more than $100 million to develop algae-derived biofuels, is refocusing its research with Synthetic Genomics Inc. after almost four years of work failed to produce economically viable results.

Exxon, the world’s biggest maker of gasoline and diesel, and Synthetic Genomics “have gained significant understanding of the challenges that must be overcome to deliver scalable algae-based biofuels,” Exxon spokesman Charles Engelmann said yesterday by e-mail. The company, based in Irving, Texas, began the program in 2009 and said it would invest $600 million to develop fuels within a decade. It has already spent more than $100 million, Engelmann said.

Exxon and Synthetic Genomics have been exploring algae as a source of oil that could be converted in existing refineries to conventional transportation fuels such as gasoline, diesel and jet fuel. Algae cells produce lipids, or oils, as they grow that can be harvested to make fuels. The companies have collected thousands of wild algae strains that thrive on sunlight and carbon dioxide and optimized them for oil production using biotechnology in the lab, though that work has had limitations, said Synthetic Genomics’ Chief Technology Officer James Flatt.

Results since 2009 have indicated that “simple modifications of natural algae would not provide a level of performance that we believed would be economical or viable for a commercial solution,” Flatt said yesterday by telephone.

The companies currently are placing greater emphasis on “basic science” to develop algae strains that can reproduce quickly, yield large concentrations of oils and survive in varying conditions, Synthetic Genomics said May 16. The next phase of research will include “more comprehensive changes to algae metabolism so that they can realize economical levels of oil production,” Flatt said.

‘Synthetic Cell’

Synthetic Genomics has narrowed down more than 20,000 algae strains in nature to less than 10 that “we think have the best potential,” and it will alter their genetic makeup using the discoveries of its pioneering co-founder, J. Craig Venter, he said. Venter’s nonprofit institute in May 2010 announced that it had copied a bacterium’s entire genome and transplanted it into a related organism, where it functioned normally, becoming the first life form created entirely with man-made DNA.

Synthetic Genomics can “apply much of what we’ve learned in developing the synthetic cell to making similar types of changes to algae,” Flatt said. That differs from changing only one or two genes at a time, and the “large pieces of DNA” that are added will program the cells to maximize oil production, he said. “The ultimate benefit of all that is to speed up the process.”

Exxon Chief Executive Officer Rex Tillerson said March 7 on PBS television’s “Charlie Rose” show that its investments in algae biofuels may not succeed for at least another 25 years. Engelmann reiterated similar expectations yesterday.

To contact the reporter on this story: Andrew Herndon in San Francisco at aherndon2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.