The Navy Will Go Green

When the price of crude oil goes up $10, it costs the DoD about $1.3 billion dollars. That is roughly equal to the procurement budget of the Marine Corps. Energy is big business in the Department of the Navy. Securing alternative energy sources is a good thing for any military, but the financial reason to have access to inexpensive energy makes energy investment important for the DoD in peacetime. The DoD uses 1% of all energy consumed in the US. That is more energy than several countries.

From the Green Light blog.

The Department of Defense has ordered over 20,000 gallons of algae fuel from Solazyme to see if algae fuel can replace F-76 Naval Distillate, the primary shipboard fuel used by the Navy. The contract calls for Solazyme to deliver the fuel over the next year.

In the overall fuel market, 20,000 gallons in a drop in the bucket. The U.S. consumes 20 million barrels of oil a day, and a barrel contains 42 gallons. But 20,000 gallons in the algae world is like the Atlantic Ocean. Most companies have only produced token amounts of oil and even early leaders like Solazyme (which has actually produced quite a bit of oil) have not moved into commercial production yet.

I only know about two types of energy. Nuclear power and Algae energy. Yes, algae. It is a long story, but it comes down to thousands of hours wasted researching the various companies and the various methods. On my list, Solazyme ranks #2 in the market. The Green Light blog author goes on to make the point 20,000 gallons of algae fuel is a lot. It is for most algae companies, but not really for the top two.

Solazyme

From what I have seen, Solazyme's technology looks like it will work. The Solazyme process grows algae in the dark using sugar as a concentrated energy substitute for sunlight. Actually they cook it. This method costs more because they have higher infrastructure and material costs than some of the alternatives, but the process itself looks solid and they have produced a lot of oil proving the technology. The challenge for Solazyme will be bringing the cost down. The method used by Solazyme should allow them to get between 15,000 and 20,000 per acre foot, per year. Their cubic capacity gives them an advantage over most algae producers.

So you green folks are wondering who I think is #1? The answer is not obvious, and I encourage skeptical experts to make an appointment with these folks and go see what they are doing. For reasons I care not to share on the blog, I know a lot about this company, more than most green experts.

SunEco Energy of Imperial Valley, CA is the clear #1 in algae energy, and has the best shot of all green energy companies of being the first household name brand in green energy. I am not sure, but I think the reason they have not been bought out already is because their asking price is higher than anyone is willing to spend on green energy at this time. That would include the huge bucks folks like Exxon Mobile is spending, who already has investments over $600 million in algae energy this year alone.

SunEco Energy

Southwest airlines is respected throughout the transportation industry for their aggressive and proactive policy in keeping energy costs lower than everyone else. It is why they can offer deals to Vegas, for example, for less than everyone else and from anywhere in the country. Back in July, when J. B. Hunt announced they signed a partnership with SunEco Energy, it got my attention. J. B. Hunt is one of the biggest transportation companies in the country. They depend on diesel fuel. What do they know that no one else knows that would have them partner up with some small unknown algae energy company in California?

SunEco Energy is the only algae energy company that has cleared the big technical hurdles with algae energy. There are five stages in the algae production process; cultivation, harvesting, dewatering, separation, and processing; and SunEco Energy is the only algae company I am aware of that is ready to go commercial with their proprietary technology at each stage of production. Because their algae technology leverages a digestive method and a photo-reactor technology, they are able to cultivate algae by metrics of cubic feet per acre instead of just square ft per acre, which allows them to produce considerably more algae per acre than most pond growers.

SunEco Energy's facility out in Imperial Valley is surrounded by 1.5 million cattle. That matters, because SunEco Energy produces two products from an acre of algae: Straight Vegetable Oil (SVO, sometimes called bio-crude) and Livestock Feed Supplement (LFS).

You see, Algae energy companies like Solazyme are trying to produce bio-crude that can be processed into any number of fuels. The reason most algae experts don't really know much about SunEco Energy is because bio-crude isn't really their primary business model. The demand for Livestock Feed Supplement (LFS) in the Imperial Valley area by the farmers with 1.5 million cattle is so high that by the time SunEco Energy can meet that demand, they will be the largest producer of SVO in the United States... by enormous margins. Their business model isn't really structured around bio-diesel, its structured around the local Livestock Feed Supplement (LFS) demand.

SunEco Energy's pilot stage is 2 years old and ~20 cycles experienced, this gig is going commercial. SunEco Energy doesn't even bother bragging about their gallons of SVO/biocrude per acre foot, per year in public anymore, the internet green energy guy who knows everything doesn't believe them anyway; well except of course J. B. Hunt, one of the largest ground transportation companies in the world. Then again, none of the green community experts have tried to make an appointment and examined SunEco's activities themselves. By 2010, less than 4 months from now, I'll provide more details about SunEco Energy and add context why they are quietly already the world leader in green energy.

Congrats to Solazyme for getting the Navy contract. Very well deserved btw, I think your technology is solid but has a lot of hurdles to overcome to make your process work cost effectively. Whoever the Navy guy is who is pushing green energy, you rock, but you also need to get your butt out to Imperial Valley, CA before the end of the year and see what SunEco Energy is doing. It will be well worth your time.