Algae-based technology nets $3 million in funding


September 2, 2008

Arizona State University has entered into a groundbreaking research and commercialization collaboration with Heliae Development, LLC and Science Foundation Arizona (SFAz) to develop, produce and sell kerosene-based aviation fuel derived from algae.

Arizona Technology Enterprises (AzTE), the technology venturing arm of ASU, announced the initiative today.

This biofuel project will focus on the commercial production of kerosene from algae using patented technologies developed by Professors Qiang Hu and Milton Sommerfeld at ASU’s Laboratory for Algae Research & Biotechnology.

The research efforts of Hu and Sommerfeld in algal-based biofuels and biomaterials have already moved from the laboratory to field pilot-scale demonstration and production. Their pioneering discoveries have demonstrated significant cost-reduction benefits when compared with traditional methods of producing kerosene from petroleum.

Hu and Sommerfeld have identified specific algal strains that can convert a significant portion of their cellular mass into a type of oil that is a group of “medium-chain fatty acids”. The oil produced by these particular algae is high in concentration of medium-chain fatty acids, which, after deoxygenation treatment, closely mirrors the length of the hydrocarbon chains found in what is commonly called kerosene.

Kerosene, when mixed with minor amounts of fuel additives, is known as JP8 or Jet A, which is suitable for use in jet aviation applications. A competitive advantage of the medium-chain fatty acid-based kerosene production is elimination of an expensive chemical or thermal cracking process, which is otherwise necessary for long-chain fatty acids commonly found in animal fat, vegetable oils, and typical algae oils.

Heliae Development, LLC (Heliae) was recently formed by several out-of-state private equity investors (including individuals who are members of an extremely successful private family business with a long-standing commitment to the environment) for the purpose of licensing and developing these algal strains for jet fuel. The company will lease space at SkySong, the ASU Scottsdale Innovation Center.

Under the license agreement with Heliae, AzTE will receive an equity stake in the company along with other standard forms of consideration including licensing fees and a share of any commercialization income. In addition, Heliae will provide research funding of $1.5 million to ASU to support further development of the specific algal strains towards commercial production of jet fuel. The Heliae funding will be matched dollar for dollar by a Strategic Research Group award from SFAz, so that ASU will receive a total of $3 million for the project.

“The world needs sustainable alternative fuel sources, and most critically the airline industry,” said Frank Mars, coordinating investor in Heliae. “Each year, more than 600 million barrels of kerosene-based fuels are refined from petroleum for the U.S. military and commercial jet fleets. Our goal is to help ensure that ASU’s world leading research in this field gets developed to a point that algae is seen as a cost-effective, real-world alternative to our dependency on fossil fuel. Our willingness to partner with ASU on this important project was facilitated by its flexibility and innovativeness in structuring the kind of collaborative relationship necessary to look long term and to advance technologies into the marketplace.”

“The partnership with Heliae and SFAz reflects ASU’s leadership and research efforts to bring high-value renewable energy sources to the market in an expedient manner,” added ASU president Michael Crow. “We are supporting an innovative portfolio of multidisciplinary approaches for discovering alternative energy sources that are cost-effective and carbon-neutral. The jet fuel initiative is another example of the high-impact research being conducted by ASU researchers to find disruptive solutions to complex environmental and global problems.”

“We are pleased to support this cutting-edge collaboration between ASU and Heliae to develop aviation fuel from algae,” said William C. Harris, president and chief executive officer of SFAz. “At a time when significant policy issues are being raised about the sustained viability of using food stocks to produce biofuel, ASU researchers are at the forefront of renewable energy technologies that conserve high-value land.”

John Mars, an individual investor in Heliae, noted that “this jet fuel initiative with ASU comes at a critical point in the world’s search for alternative fuels that are truly sustainable over the long term. We welcome the opportunity to support this endeavor.”

According to Charlie Lewis, AzTE’s vice president for venture development, “ASU’s investments in photosynthesis and bioenergy research are starting to lead to commercial opportunities for investors and companies searching for green technologies. We already have spin-out companies and industrial collaborations in these areas.”

With numerous programs and projects to address global environmental issues and challenges, Arizona State University is among the world’s leading research universities in the area of sustainability. Home to the nation’s first School of Sustainability and the Global Institute of Sustainability (GIOS), ASU has research initiatives in solar energy, biofuels, and fuel cells. Its bioenergy portfolio (http://biofuels.asu.edu) includes the following areas: biofuels using algae and cyanobacteria as feedstocks; biomimetic photovoltaics & artificial photosynthesis; novel catalysts; biohydrogen from cyanobacteria; novel fuel cells; and methanogenesis and increased bioavailability.

Located at SkySong, Arizona Technology Enterprises was established in 2003 as an Arizona limited liability company whose sole member is Arizona State University Foundation. Staffed by professionals with extensive industry and university experience in intellectual property and related business development, AzTE operates as the exclusive IP management and technology transfer organization for ASU. For more information about AzTE, visit www.azte.com. />
SkySong, the ASU Scottsdale Innovation Center, is currently home to 35 enterprises from 11 countries, with clusters of companies in e-learning, information communications technologies, and sustainability. SkySong is an interactive business environment in which individual entrepreneurs, global enterprises, ASU researchers, and community members connect to bring new technologies to the marketplace and expand globally.

Sharon Keeler

associate director, Ira A. Fulton Schools of Engineering

480-727-5618