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NEW YORK (Reuters) - Private company Sapphire Energy, which aims to squeeze "green" crude oil from blooms of one of the planet's oldest life forms, said on Wednesday it has raised over $100 million from investors.
The San Diego-based company hopes to make commercial amounts of the fuel in three to five years for a cost of $50 to $80 per barrel. Sapphire selects and genetically modifies algae to maximize their internal production of lipids, or fats and then squeezes that from algae. It says the oil can be used in refineries like normal crude.
"The goal of Sapphire is to produce a crude product that can be introduced into the existing crude stream for production costs that are similar to other new opportunities like oil shales, oil sands, and even deep, deep water drilling," Jason Pyle, Sapphire's chief executive said in an interview.
The money more than doubles initial investor of about $50 million the company got in June. New investors include Cascade Investment, LLC, an investment company owned by Bill Gates.
Amid lofty prices for crude oil and rising concerns about global warming, companies are racing to make algal fats into oils that can be turned into fuels.
Algae absorb the main greenhouse gas carbon dioxide as they grow, so the net effect on global warming of the fuel is considered to be neutral.
The burning of traditional fossil fuels, on the other hand, releases carbon dioxide that has been stored for eons underground.
There are challenges in making fuel from slime that have dogged scientists for decades. One problem has been "layering" or the tendency of algae to slow down their process of making lipids once they multiply quickly in a pond, or in specially-made containers.
Pyle said Sapphire modifies algae and processes it in a way that avoids that problem.
Another company, Solazyme, Inc, hopes to get around the problem by feeding algae with renewable resources, such as waste sugars and starches, so they can make oil without sunlight and no matter where they are in a container. Solazyme recently got $45 million from venture capital firms.
Sapphire anticipates relying on its existing investors to achieve initial commercial production of 10,000 barrels per day of the crude. That is equal to the amount of fuel from one large ethanol plant and tiny fraction of U.S. oil demand of about 20 million barrels per day.
Pyle was confident that oil prices would remain high enough to support the business, despite falling from a record $147 a barrel in July to about $91 on Tuesday.
"I don't think the current trend bothers us one bit," Pyle said. He said the business could be very competitive even if oil fell to $80 a barrel.