BP Ponies Up $10M For Algae Biofuels in Martek Deal

(MoneyWatch)  BP is ponying up $10 million for a partnership with Martek Biosciences to study the use of algae to convert sugar into biodiesel. BP isn't the only oil major -- or government agency -- to show an interest in the prospect of commercially viable algal-based fuels. Just last month ExxonMobil committed $600 million in a partnership with Synthetic Genomics to develop next-generation biofuels from algae. [For a complete list of algae deals check out Earth2Tech's nifty chart]

But this deal is different in one significant way: Martek uses fermentation technology, unlike other companies that use energy from sunlight to grow algae.

The investment numbers are small compared to the oil giant's overall capital expenditure budget. BP invested $1.4 billion in alternative energy in 2008 and as the Financial Times notes, that number has dropped to between $500 million and $1 billion this year.

But the partnership is compelling because BP obviously sees some potential in the concept of using fermentation, not sunlight, to produce algae. Greentech Media explains the sunlight versus fermentation algae process quite well.

[On a side note BP also has invested an undisclosed amount with Synthetic Genomics, led by human genome mapper Craig Venter, to find naturally occurring organisms that thrive in subsurface hydrocarbons like natural gas and petroleum. BNET Energy wrote about BP-SGI's coal-eating bacteria research back in June.]

Up until now, Martek has used its fermentation to grow algae for use in nutritional productsincluding baby food and formula. The partnership with BP hopes to find a large-scale and cost effective way to use algae to help convert sugars -- taken from biomass like sugar cane waste -- into biodiesel.

The hard part, of course, is finding a way to do it cheaply enough to make it commercially viable. Oh, and apparently Martek does not have a microbe that can turn biomass into biofuel. In an interview with Reuters, Martek's CEO Steve Dubin said one of the bigger challenges will be finding algae or related microbes that will convert biomass into fuel. If they found the right microbe, it could lower the normally expensive endeavor of converting biomass to fuel.

In short, there is a lot to accomplish.

Some other tidbits:

• The BP-Martek statement released Tuesday emphasizes the benefit of using non-food biomass like sugar cane, an area the British oil giant is already involved in. Last year, BP acquired a 50 percent interest in TropicalBioEnergia to produce bioethanol from sugarcane.
• Biodiesel from sustainable feedstock via fermentation will reduce greenhouse gas emissions up to 90 percent compared to fossil fuels, according to the BP-Martek statement