Royal Dutch Shell's Alternative Fuel Investment: Algae-Based Biofuel Refinery

Algae is promising as a biofuel and therefore draws attention from major oil companies, such as Royal Dutch Shell, BP British Petroleum, etc. Besides being rich in vegetable oil, algae grows quickly and can be cultivated in sea water reducing the use of land and fresh water.

By collaborating with HR Biopetroleum, a small government-funded start-up on the Hawaiian island of Kona, Royal Dutch Shell has formed a new company Cellana to grow algae that can be converted into biodiesel fuel. Cellana will build a facility to demonstrate the technical and commercial viability of algae as a source of biodiesel. Scientists from universities will also participate in the joint venture.

A 2.5-hectare algae farm and laboratory that will produce vegetable oil that can be converted to biofuel. The new Shell-HR Biopetroleum joint venture will operate on about 6 acres of land and sea leased from the National Energy Laboratory of Hawaii Authority. The demonstration facility is capable of assessing different natural microalgae species and determining which produce the highest yields.

The Shell project will use bottled carbon dioxide to assess the potential for using algae farms to capture carbon dioxide from industrial facilities.

On a separate front, Royal Dutch Shell will begin the construction of another 1,000-hectare site to evaluate whether algae is economic when scaled up to a commercial level. If all goes well, the next step would be to build a 20,000-hectare site.

"Algae have great potential as a sustainable feedstock for production of diesel-type fuels with a very small CO2 footprint," said Graeme Sweeney, Shell executive vice president of future fuels and CO2. "This demonstration will be an important test of the technology and, critically, of commercial viability."

Shell claims algae have potential as a source of biofuel because algae can double their mass several times a day and produce at least 15 times more oil per hectare than other alternatives such as rape, palm soya or jatropha. Advocates also argue that algae-based biofuels avoid many of the environmental problems associated with conventional biofuels because the algae can be grown in sea water ponds and not use up agricultural land and fresh water.

Concerns about the use of algae for generating biofuels focus on the environmental impact commercially cultivated algae could have on marine ecosystems. But, Shell maintained protection of the marine ecosystem will be key to the facility design. Shell also revealed it will grow only non-modified, marine microalgae species that are indigenous to Hawaii or approved by the Hawaii Department of Agriculture.

Algae is seen as one of the least-proven technologies. “Algae is at the far end of biodiesel. It is one of the ‘out there’ concepts,” said Matthew Partridge, the head of global biofuels study at Wood Mackenzie, the research organisation. “But if biodiesel is going to become a reality in the long term, we are going to have to move up the technology curve. Someone has got to make the investment to do that.”

Shell has been working on renewable energy projects for some time and has invested $1 billion in such projects in the last five years alone. The goal is for Shell to create a profitable business from renewables by 2015.

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