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Sapphire Energy Inks Deal to Supply ‘Green Crude’ to Major Oil Refiner

Carlin Rosengarten and Jeff Benzak 3 comments

 At its algae farm in the high desert of southwest New Mexico, San Diego-based Sapphire Energy is helping to change the way America’s fuels are produced. And recently, one of the largest petroleum companies in the world signed on as its first commercial customer.


Sapphire’s Columbus, N.M., integrated algal biorefinery, dubbed the “Green Crude Farm,” consists of neat rows of one- and two-acre acre ponds, as well as algae harvesting and extraction equipment. Sapphire cultivates algae in the ponds, collects the prolific plants, and then extracts “green crude” oil from the organic matter.

Refiners can then take this crude, blend it with traditional crude oil, and produce fuel.

In March 2013, a subsidiary of the oil refining and retailing giant Tesoro signed a deal with Sapphire to purchase an undisclosed amount of “green crude” oil for refining into fuel. In a statement, Sapphire CEO Cynthia Warner underscored the significance of the deal.

“In less than one year, Sapphire Energy has started up its commercial demonstration to grow algae; has produced crude oil from our farm; and now, with Tesoro as our first commercial customer, we’re providing barrels of our oil to be refined for market use,” Warner said. “This moment is enormously important for the industry as it validates the benefits and advantages of [our] crude, and confirms its place as a market-viable, refiner-ready, renewable crude oil solution.”

The partnership with Tesoro could potentially help supply clean energy to meet the demand created by new fuel standards, including California’s Low Carbon Fuel Standard (LCFS). The LCFS requires a 10 percent reduction in the carbon intensity of California’s transportation fuels by 2020.

“Tesoro is continuously looking at new technologies for producing renewable fuels,” Joel Larkins, Tesoro’s vice president of renewable development, said in a statement. “We are pleased to be a purchaser of Sapphire Energy’s Green Crude, which shows promise as an alternative fuel solution.”

Along with deals like the one with Tesoro, Sapphire has grown by leveraging its private funding with a $50 million grant from the U.S. Department of Energy and a $54.4 million bank loan guaranteed by the U.S. Department of Agriculture. Because of this public-private partnership, construction of Sapphire’s “Green Crude Farm” created more than 630 full-time construction jobs.

Later this year, Sapphire plans to expand the refinery’s production and extraction capacity. It expects to complete the expansion by 2014, with the production rate of its crude growing to 100 barrels per day.

“Without the government partnership, it’s hard to imagine that a project of this magnitude could move forward,” said Tim Zenk, Sapphire’s vice president of corporate affairs.

Currently, the company employs 150 people. When fully operational, Sapphire’s integrated algal biorefinery will employ 30 workers – including scientists, algae farm managers, and refinery technicians.

“Sapphire Energy is well on its way to making algae crude oil a viable alternative fuel solution for our nation, and now with Tesoro on board, which as far as we know is a first between a refiner and algae producer, we’re one step closer,” Zenk said. “Moving forward, our focus is on refining our technology and increasing yield as we bring algae production to commercial scale.”

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Reader Comments



From: AUSTUNE CHUKWUKA, 09/23/13 07:15 AM

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i am a supplier of crude oil.

From: bestman c.fortune , 06/07/13 03:05 AM

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use as base oil in Drilling fluids

From: Raymond Bienvenu/ EnerSciences, 05/10/13 10:05 AM

I am with a small company out of Austin Tx, EnerSciences, and work with the Rapid Drilling business side. Rapid Drlg wants to position ourselves as providing the "greenest" Water Base Mud System for drilling unconventional shales, that has a drilling performance comparable to an Oil base drilling fluid. See our Quantum EF mud system on the webpage to get an indication.
We have a good mud system, but still nothing drills like an Oil Base mud system relative to Rates of Penetration, Inhibition, tolerance to contaminants, and lubricity.
Formations simply hate fresh water contact, regardless of degree of inhibition additives, plus water base muds are not as lubricious as oil muds.

Can your product be a "Green Oil Base Mud System" with the inherent drilling benefits of the standard Oil Base mud systems currently used?
We have several PHD chemist on board, and we are always looking for an environmentally competitive advantage to drill with.

Current Oil Base Mud systems have diesel oil as its base oil component.
While Synthetic Oil Base Mud has a synthetic base, and is more environmentally friendly, but all waste generated cannot be placed on the ground and buried on location. Also very expensive at $250/bbl

One well uses approximately 2,000 bbl of oil to build the OIl Base mud system, plus maintain rig tank volumes while drilling and mud losses over rig shakers, and natural downhole formation losses.
A drilling mud system is normally an 80% oil, and 20% water mixture.
Emulsifiers, and wetting agents are used to emulsify phases.
Other additives for water loss, alkalinity, ect are also added during the coarse of drilling a well.

Once an oil base mud system is built for a well, it is used over and over again being continually treated and conditioned to remove drill solids, and replenish lost oil mud volumes.
Availability of product volume may be an initial hurdle.
Any idea on price per gallon?????

Give me a shout to discuss.
Raymond Bienvenu
(303) 345-7342

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