Algae company pays off entire USDA loan

Source: Amanda Peterka, E&E reporter • Posted: Wednesday, July 31, 2013

Sapphire Energy Inc., a company operating the nation’s first demonstration-scale algae farm capable of producing crude oil, announced today that it has paid off an entire $54.5 million federal loan guarantee for the project.

Sapphire received the loan in December 2009 through the Agriculture Department’s Biorefinery Assistance Program, an initiative meant to help commercialize the next generation of fuels. The company said it was able to repay the remaining loan balance in full after receiving additional equity from private investors for the project, a 100-acre facility on a patch of desert outside Columbus, N.M.

“With their backing, we did exactly what we set out to do,” Sapphire CEO and Chairwoman Cynthia “CJ” Warner said. “We grew our company, advanced our algae technologies, and built, on time and on budget, the first, fully operational, commercial demonstration, algae-to-energy facility.”

Today, huge tanks filled with algae and cyanobacteria line the desert site year-round and are fed a diet of carbon dioxide, sunlight and nonpotable water. The oil produced by the microorganisms, termed “green crude,” is harvested after about two weeks and refined into jet fuel and diesel. The crude has the same characteristics as petroleum-based fuel and is compatible with today’s fueling infrastructure.

When the project is fully operational in 2015, the algae will consume an average 56 metric tons of carbon dioxide and produce 100 barrels of green crude oil per day. The total yearly capacity for the facility is 1 million gallons.

Sapphire was also awarded a $50 million grant from the Department of Energy for the project but said it could not have built the facility without the support from USDA.

“Moving forward, our focus is on commercializing our technology and expanding operations to bring crude oil production to commercial demonstration scale as planned,” Warner said.

Along with the federal awards, Sapphire has also recently landed some big-name partnerships. In March, Tesoro Corp. agreed to purchase the crude oil produced at the New Mexico farm. Earlier this month, the Linde Group agreed to expand its partnership with Sapphire and improve Sapphire’s pilot-scale hydrothermal treatment process and market the technology to more industries.

The Obama administration, which suffered a public relations blow when solar manufacturer Solyndra LLC declared bankruptcy in 2011 after receiving $535 million in federal loan guarantees, applauded the announcement today.

“The investments being made in low-carbon biofuel production are paying off and moving technologies forward, which will produce savings at the pump for consumers, and spur sustainable, new-wealth creation here in the United States, and make our land more productive,” said Doug O’Brien, USDA acting undersecretary for rural development, in a statement.