July 13, 2009
By JAD MOUAWAD
The oil giant Exxon Mobil, whose
chief executive once mocked alternative energy by referring to ethanol as
“moonshine,” is about to venture into biofuels.On Tuesday, Exxon plans to
announce an investment of $600 million in producing liquid transportation fuels
from algae — organisms in water that range from pond scum to seaweed. The
biofuel effort involves a partnership with Synthetic Genomics, a biotechnology
company founded by the genomics pioneer J. Craig Venter.
The agreement could plug a major gap in the strategy of Exxon, the
world’s largest and richest publicly traded oil company, which has been
criticized by environmental groups for dismissing concerns about global warming
in the past and its reluctance to develop renewable fuels.
Despite the widely publicized “moonshine” remark a few years ago by
Exxon’s chairman and chief executive, Rex W. Tillerson,
the company has spent several years exploring various fuel alternatives,
according to one of its top research officials. “We literally looked at every
option we could think of, with several key parameters in mind,” said Emil
Jacobs, vice president for research and development at Exxon’s research and
engineering unit. “Scale was the first. For transportation fuels, if you can’t
see whether you can scale a technology up, then you have to question whether
you need to be involved at all.”He added, “I am not going to sugarcoat this —
this is not going to be easy.” Any large-scale commercial plants to produce
algae-based fuels are at least 5 to 10 years away, Dr. Jacobs said.
Exxon’s sincerity and commitment will almost certainly be questioned by
its most galvanized environmentalist critics, especially when compared with the
company’s extraordinary profits from petroleum in recent years. “Research is
great, but we need to see new products in the market,” Kert Davies, the
research director at Greenpeace, said. “We’ve always said that
major oil companies have to be involved. But the question is whether companies
are simply paying lip service to something or whether they are putting their
weight and power behind it.”But if it proves a bona fide effort, Exxon’s move
into biofuels, long the preserve of venture capital firms and biotech
start-ups, could provide a big push to the Obama administration’s policy of
encouraging more renewable energy.
Currently, about 9 percent of the nation’s liquid fuel supply comes from
biofuels — most of it corn-based ethanol. And by 2022, Congress has mandated
that biofuel levels reach 36 billion gallons. But developing biofuels has been
tricky, and Mr. Tillerson has not been alone in his skepticism. Many
environmental groups and energy experts have been critical of corn-derived
ethanol, because of its lower energy content and questionable environmental
record.
According to Exxon, algae could yield more than 2,000 gallons of fuel
per acre of production each year, compared with 650 gallons for palm trees and
450 gallons for sugar canes. Corn yields just 250 gallons per acre a year. Exxon’s
partnership with Synthetic Genomics is also a vote of confidence in the work of
Dr. Venter, a maverick scientist best known for decoding the human genome in
the 1990s. In recent years, he has
focused his attention on a search for micro-organisms that could be turned into
fuel. “Algae is the ultimate biological system using sunlight to capture and
convert carbon dioxide into fuel,” Dr. Venter said.
Algal biofuel, sometimes nicknamed oilgae by environmentalists, is a
promising technology. Fuels derived from algae have molecular structures that
are similar to petroleum products, including gasoline, diesel and jet fuel, and
would be compatible with the existing transportation infrastructure, according
to Exxon. Continental Airlines,
for example, has demonstrated the fuel’s viability in a test flight of an airplane
powered in part by algae-based fuel.
The Pentagon has also been looking at alternative fuels, including
algae, to reduce the military’s dependence on oil. And while cost-effective
mass production of algae has eluded researchers so far, it holds potential
advantages over other sources of biofuels. Algae can be grown in areas not
suited for food crops, using pools of brackish water or even farming them in
seawater.
Algae also has another benefit, which could eventually help cut
greenhouse gas emissions that cause global warming. Like any plant, it needs
carbon dioxide to grow. But Exxon and Synthetic Genomics hope to genetically
engineer new strains of algae that can absorb huge amounts of carbon dioxide —
like that emitted by power plants, for example. Exxon’s investment includes
$300 million for in-house studies and “potentially more” than $300 million to
Synthetic Genomics “if research and development milestones are successfully
met,” Exxon said. Those are relatively small numbers for Exxon, which last year
earned $45.22 billion on the strength of record-high oil prices. But the
companies referred to their partnership as a long-term research and development
effort, saying future investments could amount to billions of dollars.
Photosynthetic algae are very efficient at using sunlight energy to
convert carbon dioxide into cellular oils, or lipids. These can be processed
into fuels and industrial chemicals using existing refining techniques. Synthetic
Genomics said its scientists have been working for years to develop an
efficient way to harvest these oils. “Traditionally algae have been treated
like a crop to be grown and harvested in a process that can be expensive and
time-consuming,” Dr. Venter said. His company has engineered algae that produce
oils in a continuous process. “I came up with a notion to trick algae into
pumping more lipids out,” he said.
Both companies said they still had a range of problems to solve that
include determining what types of algae to use and whether it is more efficient
to grow them in open ponds or in closed containers called bioreactors. They
also emphasized the vast scale required for making a meaningful biofuels
contribution in the United States market, which consumes nine million barrels
of gasoline each day — or roughly 138 billion gallons each year. “For most
scientists, scalability means going from a test tube to a beaker,” Dr. Venter
said. “We have to go from a test tube to millions of gallons.”
The rest of the petroleum industry has been slowly shedding its
reluctance toward biofuels, under pressure from government mandates that
require increasing use of ethanol in the country’s energy supplies over the
next decades. So far, many of the
pioneering partnerships between big oil and biotech companies have involved
European oil companies, including BP and Royal Dutch Shell.
American companies have only slowly been following suit. The Valero Energy Corporation,
the country’s largest refiner, has acquired seven corn ethanol plants from
VeraSun Energy, which went bankrupt last year. Chevron has formed a joint venture with Weyerhaeuser to
develop biofuels from wood waste.
Dr. Venter said Exxon’s involvement in developing biofuels was a
critical component to bringing large-scale alternative fuels. “These changes
can’t take place without the leader in the fuel industry,” he said.
Source: http://www.nytimes.com/2009/07/14/business/energy-environment/14fuel.html?pagewanted=1&_r=3&partner=rss&emc=rss