Introduction

Diversified Energy Corporation (www.diversified-energy.com), a privately-held alternative and renewable energy company, and XL Renewables (www.xlrenewables.com), a biorefinery project developer, have developed and are commercializing an innovative algae production system. Aimed at addressing the shortage and rising prices of oils and carbohydrates for biofuels production, food versus fuel crop challenges, all coupled with accelerating environmental concerns from fossil fuel emissions, Simgae™ (for simple algae) offers a low cost and simple approach to growing algae at large scale. The focus on cost and simplicity addresses the major reason algae production has yet to materialize in any meaningful volumes. Diversified Energy® (DEC) and XL Renewables (XLR) are partnering to introduce the patent-pending Simgae™ technology.

Simgae™ Overview

Algae has received substantial attention as a high-promise source of biofuel oils to alleviate the supply shortages and high prices of traditional feedstock sources like soybean, palm, canola, animal fats, etc. Since the feedstock input can contribute roughly ¾ of the costs of biofuels production, keeping the feedstock affordable and readily available is paramount for continued growth of the biofuels industry. Algae has been shown to produce 40 – 200X more oil and require 1/100th the water to grow per surface area compared to other terrestrial crops like soybeans. In addition, the non-oil components (i.e., carbohydrates and proteins) left over after oil extraction can be used for a multitude of purposes – as inputs into animal feed, fish feed, fertilizers, dyes, etc. or used to produce fuels/energy through fermentation, gasification and anaerobic digestion, among a multitude of other uses. These additional applications greatly enhance the overall marketability and economics of producing algae. Algae consume inputs like sunlight, water, CO2 and nutrients, and can generally be cultivated on land not suitable for other purposes. Their ability to ingest CO2 and produce oxygen through photosynthesis is particularly attractive as a means to curtail carbon emissions.

Given all these benefits, algae production has yet to materialize in any meaningful volume. The reason for the lack of market adoption is centered upon the significant capital and operations and maintenance (O&M) costs to build and maintain the production and harvesting systems. Algae, being a biological organism, are easy to grow in small volumes (i.e. laboratory systems), but not easily extrapolated into large-scale architectures producing consistent algae yields over long periods of time. The resulting production costs have to date been the Achilles’ heel for investors and developers. Open architecture approaches (e.g., ponds or racetracks), while possibly the cheapest of all current techniques, suffer challenges with contamination, evaporation, temperature control, CO2 utilization, and general maintenance. The preferred alternative are closed approaches, generally known as “photobioreactors,” where the algae fluid remains in a closed environment to enable accelerated growth and better control over environmental conditions. These glass or plastic enclosures, often operated under modest pressure, can be mounted in a variety of horizontal or vertical configurations and can take many different shapes and sizes. The current generation of systems rely on rigid frameworks or structures to support the photobioreactor enclosures. As a consequence, the myriad customized photobioreactor components result in high installation, capital, and O&M costs for large-volume applications (i.e., 100 to 1000+ acres). The industry response to this challenge has been to add further “bells and whistles” to the photobioreactors and to search for optimal algae strains. In the end, performance and maintenance may have increased, but at the expense of even more cost and complexity.

The DEC-XLR Simgae™ system is an agriculture-based solution to large-scale algae production. Instead of creating elaborate and complex architectures designed to push yield to its maximum, the proposed system makes cost and simplicity the driving variables. The approach can basically be thought of as the “farmer’s solution” to algae production. Figure 1 depicts a notional small-scale Simgae™ implementation at a diary operation in Casa Grande, AZ. The system utilizes a series of clear, thin-walled polyethylene tubes, called Algae Biotape™. The proprietary biotape is similar to conventional drip irrigation tubes, but optimized for diameter and thickness, and treated with certain UV inhibitors, color schemes, and reflectivity. The Algae Biotape™ is laid out in parallel across a field. The land not only acts as the supporting structure for the system, but can also provide a degree of thermal management control dependent upon the implementation. Under slight pressure, fertility water containing the necessary nutrients (e.g. nitrogen, phosphorous, potassium and micronutrients) and a small portion of algae are slowly pumped into the biotape. As the flow moves along the biotape, CO2 is injected and oxygen is relieved through a proprietary injection system. The sources for CO2 could include power plants, ethanol facilities, breweries, food processing centers, and landfills, among others. After a period of time, the flow leaves the Algae Biotape™ with a markedly greater concentration of algae than was started. Scale-up is enabled by simply laying more fields of biotape.

The system provides a continuous flow of concentrated algae for harvesting (dewatering and oils separation). The DEC-XLR team are evaluating a number of candidate 3rd-party approaches to harvesting. These include approaches to remove water from the raw algae fluid (i.e. dewatering) and techniques to remove the oils from the algae (i.e. oils extraction), which in some cases can be combined into one apparatus. Most of the water is reused in the process for maximum system efficiency. Plastic mulch, common in the agriculture industry, can be laid below and on top (if needed in the winter) of the biotape bed for temperature, moisture, light exposure, and weed control. The width and design of each Simgae™ bed allows for standard tractors to prepare the fields and install the system.

Key Benefits

The DEC-XLR team has reinvented the status quo photobioreactor system by leveraging technologies and processes standard to the agriculture industry. The Algae Biotape™ component leverages a common drip irrigation tube design. In fact, the cost of the biotape cost has already been estimated from commercial vendors. The CO2 injection and O2 relief system is based on extensions of commercial products and advances in polyethylene extrusion. The remaining pieces (e.g., pumps, mulch, piping, etc.) are all derived from traditional agriculture products. By avoiding complex architectures with lots of custom designed components and rigid structures, Simgae™ can be installed and operated for substantially less cost than competing systems. The simplicity of the architecture also allows for widespread global adoption. It is not dependent upon any one source of CO2 or nutrients, and should provide the flexibility to adapt to a range of sunlight and temperature conditions. The ability of the system to handle saline water is also being explored. Preliminary estimates are that Simgae™ capital costs (including installation, but not including land, harvesting, and product storage) would be in the range of $25k – $35k per gross acre. Competing systems have publicly claimed ranges anywhere from $100k – $1M per acre. Simgae™ is therefore expected to deliver a roughly 4X – 30X reduction in capital costs. Simgae™ annual yield is expected to be on the order of 40 – 60 tons of dry algae mass per gross acre, with oil content anywhere from 10 – 40%. This yield and oil content range is dependent upon a number of conditions, including sunlight, temperature, sources of CO2 and nutrients, algae strain used, and emphasis on oil versus carbohydrate/protein production. The Simgae™ development team plans to focus on algae varieties that are balanced in oil, starch and proteins similar to common varieties – reducing the risk of contamination and providing for a multi-variety approach adaptable to seasonal changes. These yields are consistent with academic and industry experience in growing algae in open and closed architectures. The team is also exploring other advanced means of gaining additional yield, which may push the yields considerably higher.

The substantially lower Simgae™ capital costs, coupled with its competitive yields, ultimately translate into attractive project economics. Based on a discounted cash flow, net present value analyses the DEC-XLR team believes algae oils could be produced cheaper than current market prices of oils (like soybean and canola at $0.30+/pound). In addition, algae systems like Simgae™ offer a clear path to a stable, domestic, and secure source of renewable biomass for U.S. energy production, plus the advantage of not competing directly with the food supply.

A summary of the key Simgae™ benefits include:
          1) Simple, low risk architecture based on common agriculture components and processes
          2) Easy installation and operations and maintenance
          3) Substantial capital cost reductions, coupled with solid yield expectations, provide for projects that are economical and deliver competitively
              priced algae oils and solids
          4) Broad application due to the system not being reliant on any one source of CO2 or nutrients

Path Forward

DEC and XLR have completed preliminary engineering and modeling of the system. The team is currently conducting “concept” demonstrations of the technology at a laboratory in Gilbert, AZ and at a dairy farm in Casa Grande, AZ. Additional yield and capital/O&M data is expected from these demonstrations. These activities will be followed by larger-scale demonstrations, including harvesting approaches, during 2008. These tests will be used to finalize system design, optimize operating parameters, select strains of algae, and anchor the performance and economic models. Following completion of the demonstrations, the team anticipates making the system available on a worldwide basis for commercial implementation and licensing as appropriate. Strategic partners interested in participating in the development and commercialization of Simgae™ are encouraged to contact DEC. In parallel, DEC is exploring approaches to combine its Centia™ technology (a technology to make jet biofuel from any renewable oil) with Simgae™, thereby demonstrating an end-to-end crop to jet biofuel system.