NEW YORK (Reuters) - PetroAlgae Inc, a company that hopes to make oil from algae and other aquatic microorganisms, will see initial revenues later this year as a consortium of Chinese interests pays for the company's first license agreement, its director said.
"We expect that contract will soon start cash flow," PetroAlgae director and chairman John Scott said in an interview. The company expects to sign other license deals this year, he said.
PetroAlgae does not make fuel from algae, but sells licenses -- blueprints for how to make oil from algae, one of the oldest life forms on the planet. PetroAlgae says its process of maximizing the flow of light to organisms pushes algae to grow between two to three times faster than it would in its natural state.
The licenses also show buyers how to make protein from algae into animal feed or a human nutrition supplement. The company says selling the protein will offset infrastructure costs and help the fuel be competitive with the price of crude oil at current prices and even lower.
The company is in talks with several national oil companies, mostly from Latin America and Asia, some power generators and agricultural companies, Scott said.
PetroAlgae's stock price spiked from $8 to over $32 and down again recently after oil major Exxon Mobil signed a $600 million research and development deal with a competing algae company last month.
Companies are racing to make fuel from algae as the U.S. government threatens to crack down on carbon dioxide emissions blamed for global warming. While burning petroleum emits carbon that has been trapped underground for millions of years, biofuels emit carbon from plants that have recycled it from the air.
Few investors can take advantage of PetroAlgae's price swings because several funds owned by two brothers own a huge chunk of the company.
Scott said PetroAlgae hopes to broaden its share base, but not immediately. "Over the long haul we want to increase the float and broaden the share ownership in good time," he said. "We want to make sure when we do that, we've got the goods," he said.
The company has pilot plants in Florida, but its fuel is not in wide commercial production yet.
Scott said broadening ownership of the funds would make the company "look more like a normal, real functioning public company."
He declined to say how much PetroAlgae got for the license deal to the Chinese consortium.
That group plans to build 10 5,000-hectare sites to make the algae fuel, which could cost up to several hundred million dollars each to build, a source close to the company said.
Originally PetroAlgae started trying to make oil from only algae, but has recently worked with 150 species of aquatic microorganisms, including diatoms.
Scott said such "microcrops," which can be grown in water that can be recycled, can grow 15 times more biomass per acre than traditional sources of biofuels, such as corn.
(Reporting by Timothy Gardner; Editing by David Gregorio)