|J. Craig Venter, top, a maverick scientist best known for decoding the human genome, is working with Rex Tillerson of Exxon. (Jamie Rector/Bloomberg News; Mike Stone/Associated Press)|
The oil giant Exxon Mobil, whose chief executive once mocked alternative energy by referring to ethanol as "moonshine," is about to venture into biofuels.
On Tuesday, Exxon plans to announce an investment of $600 million in producing liquid transportation fuels from algae - organisms in water that range from pond scum to seaweed. The biofuel effort involves a partnership with Synthetic Genomics, a biotechnology company founded by the genomics pioneer J. Craig Venter.
The agreement could plug a major gap in the strategy of Exxon, the world's largest and richest publicly traded oil company, which has been criticized by environmental groups for dismissing concerns about global warming in the past and its reluctance to develop renewable fuels.
Despite the widely publicized "moonshine" remark a few years ago by Exxon's chairman and chief executive, Rex W. Tillerson, the company has spent several years exploring various fuel alternatives, according to one of its top research officials.
"We literally looked at every option we could think of, with several key parameters in mind," said Emil Jacobs, vice president for research and development at Exxon's research and engineering unit. "Scale was the first. For transportation fuels, if you can't see whether you can scale a technology up, then you have to question whether you need to be involved at all."
He added, "I am not going to sugarcoat this - this is not going to be easy." Any large-scale commercial plants to produce algae-based fuels are at least 5 to 10 years away, Dr. Jacobs said.
Exxon's sincerity and commitment will almost certainly be questioned by its most galvanized environmentalist critics, especially when compared with the company's extraordinary profits from petroleum in recent years.
"Research is great, but we need to see new products in the market," Kert Davies, the research director at Greenpeace, said. "We've always said that major oil companies have to be involved. But the question is whether companies are simply paying lip service to something or whether they are putting their weight and power behind it."
But if it proves a bona fide effort, Exxon's move into biofuels, long the preserve of venture capital firms and biotech start-ups, could provide a big push to the Obama administration's policy of encouraging more renewable energy.
Currently, about 9 percent of the nation's liquid fuel supply comes from biofuels - most of it corn-based ethanol. And by 2022, Congress has mandated that biofuel levels reach 36 billion gallons.
But developing biofuels has been tricky, and Mr. Tillerson has not been alone in his skepticism. Many environmental groups and energy experts have been critical of corn-derived ethanol, because of its lower energy content and questionable environmental record.
According to Exxon, algae could yield more than 2,000 gallons of fuel per acre of production each year, compared with 650 gallons for palm trees and 450 gallons for sugar canes. Corn yields just 250 gallons per acre a year.
Exxon's partnership with Synthetic Genomics is also a vote of confidence in the work of Dr. Venter, a maverick scientist best known for decoding the human genome in the 1990s. In recent years, he has focused his attention on a search for micro-organisms that could be turned into fuel.
"Algae is the ultimate biological system using sunlight to capture and convert carbon dioxide into fuel," Dr. Venter said.
Algal biofuel, sometimes nicknamed oilgae by environmentalists, is a promising technology. Fuels derived from algae have molecular structures that are similar to petroleum products, including gasoline, diesel and jet fuel, and would be compatible with the existing transportation infrastructure, according to Exxon.
Continental Airlines, for example, has demonstrated the fuel's viability in a test flight of an airplane powered in part by algae-based fuel.
The Pentagon has also been looking at alternative fuels, including algae, to reduce the military's dependence on oil.
And while cost-effective mass production of algae has eluded researchers so far, it holds potential advantages over other sources of biofuels. Algae can be grown in areas not suited for food crops, using pools of brackish water or even farming them in seawater.
Algae also has another benefit, which could eventually help cut greenhouse gas emissions that cause global warming. Like any plant, it needs carbon dioxide to grow. But Exxon and Synthetic Genomics hope to genetically engineer new strains of algae that can absorb huge amounts of carbon dioxide - like that emitted by power plants, for example.
Exxon's investment includes $300 million for in-house studies and "potentially more" than $300 million to Synthetic Genomics "if research and development milestones are successfully met," Exxon said.
Those are relatively small numbers for Exxon, which last year earned $45.22 billion on the strength of record-high oil prices. But the companies referred to their partnership as a long-term research and development effort, saying future investments could amount to billions of dollars.
Photosynthetic algae are very efficient at using sunlight energy to convert carbon dioxide into cellular oils, or lipids. These can be processed into fuels and industrial chemicals using existing refining techniques.
Synthetic Genomics said its scientists have been working for years to develop an efficient way to harvest these oils.
"Traditionally algae have been treated like a crop to be grown and harvested in a process that can be expensive and time-consuming," Dr. Venter said.
His company has engineered algae that produce oils in a continuous process. "I came up with a notion to trick algae into pumping more lipids out," he said.
Both companies said they still had a range of problems to solve that include determining what types of algae to use and whether it is more efficient to grow them in open ponds or in closed containers called bioreactors.
They also emphasized the vast scale required for making a meaningful biofuels contribution in the United States market, which consumes nine million barrels of gasoline each day - or roughly 138 billion gallons each year.
"For most scientists, scalability means going from a test tube to a beaker," Dr. Venter said. "We have to go from a test tube to millions of gallons."
The rest of the petroleum industry has been slowly shedding its reluctance toward biofuels, under pressure from government mandates that require increasing use of ethanol in the country's energy supplies over the next decades.
So far, many of the pioneering partnerships between big oil and biotech companies have involved European oil companies, including BP and Royal Dutch Shell.
American companies have only slowly been following suit. The Valero Energy Corporation, the country's largest refiner, has acquired seven corn ethanol plants from VeraSun Energy, which went bankrupt last year. Chevron has formed a joint venture with Weyerhaeuser to develop biofuels from wood waste.
Dr. Venter said Exxon's involvement in developing biofuels was a critical component to bringing large-scale alternative fuels. "These changes can't take place without the leader in the fuel industry," he said.