Dec. 11 (Bloomberg) -- Royal Dutch Shell Plc, Europe's largest oil company, and HR Biopetroleum will build an algae- growing plant in Hawaii to produce vegetable oil for biofuels.
The two companies have set up a joint venture, Cellana, to develop the project and will start by constructing a pilot facility, Shell said today in a statement. The partners say algae will absorb carbon dioxide, a gas blamed for global warming.
Algae "can double their mass several times a day and produce at least 15 times more oil per hectare than alternatives such as rape, palm soya or jatropha," Shell said. It "can be cultivated in ponds of seawater, minimizing the use of fertile land and fresh water."
Shell said it may target the European Union market once production comes on stream in two years' time. The 27-nation bloc wants biofuels to make up an average 5.75 percent of transportation fuels by 2010 and 10 percent by 2020. Biofuels account for about 1 percent of EU fuel consumption today, according to Oxford, England-based charity Oxfam.
Algae can be used as a feedstock to make diesel-type fuels, Graeme Sweeney, Shell's executive vice president for future fuels, said. Transport-fuel demand will rise 45 percent from 2006 levels to more than 60 million barrels a day by 2030, with the share of biofuels expanding to 7 percent from 1 percent, according to the company.
Shell, based in The Hague, plans to expand the 2.5-hectare (269,000 square foot) pilot project to a 1,000-hectare facility after two years and later to a "full-scale commercial," 20,000- hectare plant, Sweeney said on a conference call with reporters. He declined to comment on planned investment.
Biodiesel constitutes 80 percent of EU biofuels, according to research company Frost & Sullivan Inc.
The algae project "offers the opportunity in due course to meet the volume required in Europe," Sweeney said.
The seaweed is expected to produce 60 tons of oil per hectare, a "conservative figure," according to Sweeney. That compares with an average of 4 tons of oil per hectare for jatropha.
Shell intends to produce "very high grade diesel" from the oil and is "looking for routes to reach the higher end of the quality spectrum," Sweeney said of the so-called cold filter plugging point. The CFP shows the temperature at which oil freezes, which can be as high as 11 degrees Celsius (52 Fahrenheit) for palm oil.