Daily Telegraph: Shell plans to produce fuel from algae

By Russell Hotten, Industry Editor
Last Updated: 12:36am GMT 12/12/2007

Energy giant Royal Dutch Shell is to invest in a new plant in Hawaii to grow marine algae that can be turned into biofuel.

Europe’s largest oil company believes it can start producing commercial quantities of the fuel after about two years, and sees EU countries as a key market.

The pilot project, announced yesterday, continues Shell’s efforts to develop new-generation fuels, although sceptics point out that other companies and government-funded groups have tried and failed to use algae in the past.

Shell, which has taken a majority stake in a joint venture with HR Biopetroleum, says that the economics and technology of turning algae into fuel have changed. “This demonstration will be an important test of the technology and, critically, of commercial viability,” said Graeme Sweeney, Shell’s executive vice president of future fuels.

The companies’ joint venture, Cellana, will build a facility off the Hawaii Island coast that will cultivate ponds of algae in seawater. The vegetable oil will then be converted into a diesel-type fuel which Mr Sweeney said would be “of high quality”.

The thick green algae can double their mass several times a day and produce at least 15 times more oil per hectare than alternatives such as palm soya or jatropha.

Mr Sweeney said that, if the pilot project goes to plan the 2.5-hectare facility will be expanded to a 1,000-hectare facility and then a “full-scale commercial,” 20,000-hectare plant. Shell would not disclose the cost of the investment.

The EU is committed to a big expansion of biofuel use. The 27-nation bloc wants biofuels to make up an average 5.75pc of transport fuels by 2010 and 10pc by 2020. Biofuels account for about 1pc of EU fuel consumption.

Mr Sweeney said Cellana “offers the opportunity in due course to meet the volume required in Europe”.

He said that algae can produce on average about 60 tons of oil per hectare, against about 4 tons of oil per hectare for jatropha.

In the late 1980s the US government funded research into producing biodiesel from algae. But in the mid 1990s, the Department of Energy cut funding for the research, choosing to focus resources on researching production of ethanol, which is produced from sugars in crops such as corn or cane.

However, in October America’s state-funded National Renewable Energy Laboratory said it was to collaborate with oil company Chevron on research into producing road fuel from algae.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/12/cnshell112.xml

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