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Exxon Takes Algae Fuel Back to the Drawing Board

A $300 million project seems to have failed to produce a cheap way to make fuel from algae.

In 2009, ExxonMobil announced that it would pay Craig Venter’s Synthetic Genomics up to $300 million to develop algae-based fuels.

How did the project go? Not too well, to judge from that latest press release from Synthetic Genomics.

Algae is a promising source of biofuel because it naturally produces large amounts of oil and can be grown in brackish water that’s not useful for conventional farming. But algae-based fuels, so far, are too expensive to compete with fossil fuels (see “Big Oil Turns to Algae” and “Audi Backs a Biofuels Startup”).

The idea behind the Exxon-Synthetic Genomics project was to sort through large numbers of algae strains, looking for ones that might produce fuel economically—or that could be easily modified to so so with “conventional” approaches, such as making a few changes to algae’s genetic material. A year into the program, the companies announced that they had opened a big greenhouse for testing the algae at a relatively large scale.

Those efforts don’t seem to have cracked the code for cheap algae fuels. In a new agreement between the companies, Exxon is sending Synthetic Genomics back to the lab to do more basic science. It will focus now on its namesake technology–synthetic genomics, a relatively new science that involves making large changes to genomes, even to the point of building whole new ones. The goal remains the same: “to develop strains which reproduce quickly, produce a high proportion of lipids and effectively withstand environmental and operational conditions.”

It should be said that while the Exxon project may be taking a step back, going from production in greenhouses to bench-top research, Synthetic Genomics says it intends to keep pushing forward with its greenhouse work on its own. It isn’t saying how much of the original $300 million it actually received from Exxon—the payments depended on hitting certain milestones. It also isn’t talking about the value of the new project with Exxon.

According to the new press release, the original project did have some value: “Over the nearly four years working together the companies gained considerable knowledge about the challenges in developing economical and scalable algae biofuels. SGI also made significant strides in understanding algae genetics, growth characteristics, and enhancements to algae to improve algal biomass and lipid productivities.” It did not, apparently, figure out how to make cheap fuel.

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