Algae Business Discussion

Ben Cloud, President & COO

It is all about risk management. For those who want a fully tested and optimized algae production technology with a track record of profitable performance, it is still too early. For entreprenuers who are willing to accept a reasonable degree of operating risk, now is the time.

From a technology perspective, we are ready to scale our production system into commercial scale 40 acre fields with farm sizes ideally in the 160 acre to 640 acre range. However, developing an algae enterprise is more than just the production system. In today's financial world, the business begins with an offtake agreement. Who is going to buy the oils and meals that you produce? And at what price?

• Focus on Risk Management
• Is Production Technology Ready to Scale?
• Who is going to Buy?
• Management Skill Required
• So where are we?

With the substantial investment of venture capital funds, grants and loan guarantees, many companies are focusing on biofuels as this financing requires. Also, there is a ready market for oils. However, the algae meal co-product represents a significant portion of revenue generation, so who is buying the meal?

Do we sell the algae meal as biomass for thermal processes like pyrolysis or gasification, proteins for feeds, or sugars for ethanol? I suggest the better opportunity is for the high value nutrients many algae varieties contain like Omega 3 Fatty Acids. If you can sell for $0.50 /lb as a supplemental feed with a high Omega 3 content rather than $.20 /lb for biofuels or biomass, the lower the pressure on achieving high yields and greater the opportunity for profit.

For those looking to develop algae projects, managing an algae production enterprise takes skill that will take time to develop. Aqueous crops require biology skills to monitor and manage the variables that exist in water based systems. Operationally, it takes time to develop management competencies for the necessary skills to produce high average yields. Developing soilid management - direct or supportive - is our objective.

So where are we? We are working with strategic project developers focused on algae biomass production to demonstrate economical concepts and evolve production technologies. The momentum is stronger than ever and commercial production will certainly emerge in the coming months. It is an exciting time. How can we be of service to you?