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Monday, November 30, 2009

BIOFUELS FROM ALGAE (Part 2)

The November 5 posting of this blog published the first draft of my Part 1 and Part 2 versions of "Biofuels from Microalgae." As for some reason the Huffington Post has delayed publication of Part 2, I thought I would place this final edition of Part 2 here, again, although, slightly adjusted. This a continuation of my Part 1 HuffPo article of November 5.

Knowledgeable colleagues tell me that microalgal biofuels today would cost about $50/gallon to produce, while a current Department of Defense estimate shows a minimum figure of $20/gallon. Let us, then, look at a few possible biofuels from algae speculative future cost of production per gallon estimations:


per
gallon


$ 1.....A few entrepreneurs (of significant dubiousness)


$ 2.....Department of Energy (very unofficial, but murmured)




$ 4.....Noted scientific authority (someday if all goes right)




$10+...Noted industrial authority



My noted scientific authority (I can send you to real people for the science and industry individuals if you ask) said this is like comparing apples and asteroids. He is right, of course, for what do those above figures mean? Someday with major breakthroughs in genetic engineering? He provided a dozen more qualifiers. Well, for one, almost surely, these guesses represent the cost after a decade of development, not today. Even then, the Department of Energy projection must be more wishful than anything else. At least, though, that department is now treating this field with some urgency and has applied $50 million of stimulus funds toward this cause. DARPA, more so, is reported to have set aside $100 million for this adventure. But the Department of Defense is the single largest consumer of energy in the country and half of energy use in the military is for jet fuel, so they better be concerned. Ah, the private sector: Exxon Mobil is said to have dedicated $600 million, in partnership with the genome table co-champion, Craig Venter.


So to summarize, don't believe $1/gallon biofuel from algae, hope for $3/gallon someday, but for the next few years, don't be surprised if biofuels from algae only become competitive when oil reaches $200/barrel ($4.76/gallon). As mentioned in Part 1, linkage with pollution control or the co-product of animal feed can provide an added value factor, while generous tax incentives, as for example, presently available for ethanol, plus incorporation of life cycle costing and externalities, would work. For their $600 million investment, you can bet that Exxon Mobile is covering its future by setting the stage for their success through traditional Congressional and White House discussions.


The situation seems more difficult for jet fuel, as the current price is about $2/gallon, almost the cost of crude oil itself. It is more expensive to refine jet fuel than gasoline, yet, over time, the selling price of jet fuel has been cheaper than gasoline. The ratio for jet fuel has over the past few years been in the range of 1.25. How can this be? Well, bulk purchases, advanced commitments and lower taxes. In any case, a microalgal jet fuel producer, thus, will actually be faced with the same production cost to match crude oil, as one selling biogasoline, for the price to the consumer is, for the investor, almost irrelevant.


The State of Hawaii absolutely depends on DARPA succeeding beyond all expectations, for at those predicted astronomical future oil prices, which could come at any time, and certainly in five to ten years, airline fares will go sky high, tourists will stop coming to our state and we will enter into a prolonged great depression. Unless, of course, the Hawaiian Hydrogen Clipper, by some miracle, suddenly gains an Apollo-like following, with mushrooming wind farms, geothermal fields and OTEC plantships providing cost-effective hydrogen. Yes, dreaming...but not much more so than the reality of bio jet fuel from algae.

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The Dow Jones Industrials increased 37 to 10,347, with Europe mostly down and Asian stock exchanges up in the range of 3%. Gold added $3/toz to $1180 and crude oil is at $77/barrel.

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Former Super Typhoon Nida is now, at 105MPH, the equivalent of a Category 2 hurricane. More importantly, it has stalled, with a slight westward movement. Located midway between Guam and Japan, Nida should weaken over the next few days and dissipate. It is, though, producing challenging surfing waves.

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