New Mexico Business Weekly, by Kevin Robinson-Avila, NMBW Senior Reporter

Date: Friday, January 13, 2012, 2:52pm MST

Algae ponds are starting to color New Mexico’s desert landscape green.

Sapphire Energy Inc., which uses a proprietary process to turn algae oil into renewable gasoline to replace fossil fuels at the pump, broke ground last June on a 300-acre commercial demonstration facility in Columbus.

In Hobbs, in the heart of southeast New Mexico’s oil patch, Massachusetts-based Joule Unlimited Inc. broke ground this fall on a five-acre site that will use concentrating-solar biorefineries to extract ethanol and diesel from bacteria in salt-water mixed with carbon dioxide.

For more on that project, see “Joule extracts fuels from bacteria.”

But while those two projects are under construction, a third company is already growing algae to produce oil and other products at a one-acre site in Jal, in Lea County.

Eldorado Biofuels LLC constructed four ponds, or raceways, where it grows algae with produced water from oil and gas production on land owned by Gregg Fulfer of the Fulfer Oil and Cattle Co. in Jal, said Eldorado President and CEO Paul Laur. Eldorado has developed a proprietary process to treat produced water for use in algae cultivation.

“We’ve been growing algae since June and harvesting it since July,” Laur said. “We’ve been stockpiling it to build up inventory and send samples to prospective companies who want to test their own technology to extract oil, and to refineries to turn it into fuels. We’re on track now to scale up and make some headway with sales and marketing.”

The company will add four more raceway ponds this month, building the project out to 1.5 acres.

“We’ll start selling product in the next week or so,” Laur told the Business Weekly on Jan. 6.

Eldorado will sell three products: algae paste for use by other companies to extract oil, as well as oil that Eldorado extracts itself and sends to refineries, and protein-rich, lipid-extracted algae as livestock feed.

In the future, the company will bill oil-and-gas firms to take produced water off their hands. That helps resolve the need for massive amounts of water to grow algae in the desert, while offsetting operational costs to lower the final price for fuels developed by Eldorado.

The company, which previously received a $500,000 grant from the U.S. Department of Energy, received another $100,000 grant from the New Mexico Small Business Assistance Program in September to work with people in the oil and cattle industries to explore setting up more algae facilities on their lands, Laur said.

Unlike Eldorado, Sapphire doesn’t use produced water for algae-to-gasoline operation. Rather, it has tapped underground brine aquifers that would be difficult to use in other crops, said Sapphire Vice President for Corporate Affairs Tim Zenk.

“This is not arable land,” Zenk said. “It’s a saline aquifer below land that hasn’t been able to be farmed for about 40 years because of the high salt content in the water. That’s the kind of land we want to produce on to not offset food farming when we move into large-scale production.”

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