Aurora Biofuels: In Florida, the panther roars as a little-seen algae producer targets $1.30 algae fuel “at the gate”

aurorapilot1 One of these days, someone is going to do a Google Earth flyover of the Florida coast and find a 500 square meter micropond that’s growing algae the past 18 months. That’s Aurora Biofuels.

For now, it’s the Florida panther of algae biofuels: little seen, but capable of making a big mark and certainly, of late, issuing a big roar with completion of its 18-month pilot and confidence now high that they will be at demo-stage next year and on target for $1.30 algal fuel.

“I know, it’s like we’re in Roswell. We’re just not set up for visitors. It’s a classic startup,” commented Aurora Biofuels CEO Bob Walsh in a recent Biofuels Digest interview, apologizing for not disclosing the location, or having a complete web site, as we began to discuss Aurora’s business model and path towards algal fuel commercialization. The spartan offices, small staff and lack of a marketing machine at beck-and-call has not deterred Walsh or his compadres, but the 26-year veteran of Shell Oil probably experienced some prior decompression during his term as president of renewable drop-in fuel start-up LS9.

“What attracted me to Aurora? They get that cost matters in a commodity business. There’s boom and bust, you have to get the cost down,” Walsh said. Which explains why Aurora is going the open-pond route, because photobioreactors are cool, but they’re not yet cost effective for fuel production, being employed primarily at this stage for production of high-price nutraceuticals and for bioremediation.

The bottom line? Aurora is “highly confident” that it will reach targets of 6,000 gallon per acre yields and a cost of $1.30 per gallon” of algal fuel “at the gate”, in its second generation of evolution. The company recently completed an 18-month first generation trial of its open-pond system, and said that results were consistent with its second-generation goals.

“The cost of fuel is in the feedstock,” Walsh adds. “About 80 percent of it. That’s where you have to focus. With algae, you have to get a good dominant species, and no GMO,” and confirmed that Aurora has made breakthroughs in extracting oil from algae without passing through a drying stage, bypassing the most expensive and energy-intensive part of the algae production process.

Their cookie cutter facility is 50 acres, but are targeting “large sources” for CO2 – power plants, steel mills, and the cement industry. Walsh is bold on the subject of scaling, especially with respect to creating infrastructure: “At my last job at Shell, we had to move 100 million gallons a day. The scale of biofuels is much smaller: we can do this.”

The company is targeting biodiesel, seeing that the price differential between finished biodiesel and algal oil more than justifies the incremental step. Development will be in the US and overseas, with a “couple of sites” under investigation now, according to Walsh. For now, the company has raised $20 million which will carry it through the completion of a demo-scale 10-20 acre pond system by 2010.

Aurora plans to be cost competitive with fossil fuels. “$1 per gallon subsidies? We’ll take it if we can get it, but we’re not planning our model on it.”

Along with PetroAlgae, Aurora is the second company now active in Florida to complete the pilot stage confident that they have solved the open-pond contamination problems and have a product that will be cost-competitive with fossil fuels. We’ll know more about the long-term viability of the Aurora solution next year, when the pilot is complete, but for now we have more confirmation that the arrival of cost-competitive algal fuel is no longer measured in years, but months.

Famed venture capitalist John Doerr of Kleiner, Perkins recently opined in a widely-circulated Wall Street Journal article that he hasn’t invested in algae-based biofuels because the economic models are not compelling. Another sign that Kleiner, Perkins, which has in recent years signed up Colin Powell and Al Gore, has lost its edge. The firm has made 26 green investments worth $270 million since 2003 without an IPO in sight.

From somewhere in Florida, you can hear the panther roar. But also, if you listen carefully, you can just about hear the CO2 gurgling through the Aurora algae ponds, sending its own response back to Doerr and his Silicon Valley cohorts that, to date, have given algae a pass: Oops oops oops oops oops.

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Aurora Biofuels: In Florida, the panther roars as a little-seen algae producer targets $1.30 algae fuel “at the gate”

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