It's make-or-break time for algae-biofuel company in Daphne

[USA] A year after announcing the success of its pilot biofuel plant in Daphne, Algae Systems has halted operations on Mobile Bay as it courts more investors.

The company’s process — developed, in part, by NASA – uses disinfected wastewater as a nutrient for algae that’s eventually converted into biofuel through a high-heating, “hydrothermal liquefaction” system. In its Daphne project, the company has been growing algae in large floating bags that take up about a half-acre of bay waters.

Algae Systems research and production facility is shown on Monday, June 29, 2015, in Daphne, Alabama. (Marc D. Anderson/manderson@al.com)
Algae Systems research and production facility is shown on Monday, June 29, 2015, in Daphne, Alabama. (Marc D. Anderson/[email protected])

“Algae Systems, like most other technology companies, needs to raise new funds to expand from demonstration to commercial. And it is an expensive proposition,” said Matt Atwood, president and CEO of the Nevada-based start-up.

In late June, the company laid off most of its Daphne staff, dropping from about 45 employees to a skeleton crew, some of whom work from home.

Algae Systems research and production facility's pier is shown on Monday, June 29, 2015, from Bayfront Park in Daphne, Alabama. (Marc D. Anderson/manderson@al.com)
Algae Systems research and production facility’s pier is shown on Monday, June 29, 2015, from Bayfront Park in Daphne, Alabama. (Marc D. Anderson/[email protected])
Algae Systems' growing and harvesting facility is shown on August 21, 2014, on Mobile Bay in Daphne, Alabama. (Dennis Pillion | dpillion@al.com)
Algae Systems’ growing and harvesting facility is shown on August 21, 2014, on Mobile Bay in Daphne, Alabama. (Dennis Pillion | [email protected])

“We’re just minimizing what we’re doing,” said Vice President of Operations Rob McElroy. “We’re not processing wastewater. We’re not making fuel. We’re just kind of circling the wagon, building capital reserves for a next step.”

Algae Systems has touted itself as the first to generate energy from wastewater with green, clean technologies.

Algae Systems research and production facility is shown on Monday, June 29, 2015, in Daphne, Alabama. (Marc D. Anderson/manderson@al.com)
Algae Systems research and production facility is shown on Monday, June 29, 2015, in Daphne, Alabama. (Marc D. Anderson/[email protected])

Since late 2012, the company has leased property near Daphne’s Bayfront Park from Daphne Utilities. Its project worked like this: Durable plastic bags, corralled in a floating dock, held a mix of wastewater and algae. Subjected to sunlight and pulsing waves, the algae was allowed to grow for four to six days before being pumped to shore. Eventually, the mix was primed for processing into fuel, potable water and fertilizer.

The company described the plastic bags as membrane photobioreactors.

The Daphne operation used about 40,000 gallons of wastewater a day. With the shutdown, McElroy said, all of the bags were emptied, then filled with fresh water and disinfectant.

Algae Systems uses these large Baker tanks to allow algal water to settle for several days before the solid algae is collected off the bottom to be converted into diesel fuel at the company's Daphne, Alabama operation. (Dennis Pillion | dpillion@al.com)
Algae Systems uses these large Baker tanks to allow algal water to settle for several days before the solid algae is collected off the bottom to be converted into diesel fuel at the company’s Daphne, Alabama operation. (Dennis Pillion | [email protected])

Atwood heralded the results of the Daphne project as “exemplary.”

“Over the past year and a half, the pilot plant produced the necessary data to validate both the technology and the economics, and that our process is superior to other methods for treating wastewater and producing fuels from algae,” Atwood said.

The Daphne project received heavy investment from Japanese conglomerate IHI and seed money from billionaire Edgar Bronfman Jr., according to industry reports. The company’s vice president of corporate relations is John Perry Barlow, a Grateful Dead lyricist and co-founder of the Electronic Frontier Foundation, a nonprofit that advocates for individual rights and freedoms in the digital world.

Algae Systems research and production facility is described on an information sign on Monday, June 29, 2015, at the Bayfront Park pier in Daphne, Alabama. (Marc D. Anderson/manderson@al.com)
Algae Systems research and production facility is described on an information sign on Monday, June 29, 2015, at the Bayfront Park pier in Daphne, Alabama. (Marc D. Anderson/[email protected])

Last year, Algae Systems’ work caught the attention of the U.S. Department of Energy, which hopes that biofuel can become a competitor with petroleum. The department has set a target of making biofuel available for less than $5 by 2019 and $3 a gallon by 2030.

Algae System has received a $3.2 million DOE grant in partnership with SRI International, a California research and innovation center, and Atwood said he is applying for other grants.

Algae Systems vice president of operations and market development Rob McElroy shows a test tube full of bio-crude derived from algae grown at the group's facility in Daphne, Alabama, on August 21, 2014. (Dennis Pillion | dpillion@al.com)
Algae Systems vice president of operations and market development Rob McElroy shows a test tube full of bio-crude derived from algae grown at the group’s facility in Daphne, Alabama, on August 21, 2014. (Dennis Pillion | [email protected])

Said McElroy: “Everyone knows this is a tough industry … If it was easy, everyone would be doing it. They aren’t, obviously, and that leaves us as one of the few companies that has actually delivered on our early promise. The problems we are solving are not simple, yet our technology has proven sound, our economics solid and our processes capable of making a real difference.”

Inside a testing laboratory in August 2014 at the Algae Systems operation in Daphne, Alabama, where treated wastewater is used to grow algae, which is converted into fuel. (Dennis Pillion | dpillion@al.com)
Inside a testing laboratory in August 2014 at the Algae Systems operation in Daphne, Alabama, where treated wastewater is used to grow algae, which is converted into fuel. (Dennis Pillion | [email protected])

In its next phase, the company plans to establish a commercial-scale biofuel plant. McElroy said that the company is considering multiple possible locations, but, for now, he could reveal only one: Jamaica.

During the pilot project, Algae Systems has injected more than $9 million into the Daphne-area economy. And McElroy, who is the former general manager of Daphne Utilities, emphasized that the company has no plans to pull out.

Inside a testing laboratory in August 2014 at the Algae Systems operation in Daphne, Alabama, where treated wastewater is used to grow algae, which is converted into fuel. (Dennis Pillion | dpillion@al.com)
Inside a testing laboratory in August 2014 at the Algae Systems operation in Daphne, Alabama, where treated wastewater is used to grow algae, which is converted into fuel. (Dennis Pillion | [email protected])

“We may have temporarily suspended our research efforts here in Daphne as we transition to commercial deployments rather than pure R&D,” McElroy said, “but our long-term goal is to continue algal and biofuel research here in Daphne for quite a while — sometimes at a fast pace and sometimes pausing to assess our findings and incorporate them into our larger goals. This is our home and we have a remarkable team established here.”

 

Photo: Algae Systems research and production facility is described on an information sign on Monday, June 29, 2015, at the Bayfront Park pier in Daphne, Alabama. (Marc D. Anderson/[email protected])

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