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PetroAlgae signs deal with Indian Oil

Another Big Oil company looks to build large-scale production facilities for generating biofuel from algae.

Micro-crops of algae grown in man-made open-air ponds. PetroAlgae

PetroAlgae has signed a memorandum of understanding to license its proprietary technology for producing and harvesting algae for fuel to Indian Oil, the company announced this week.

The Melbourne, Fla.-based company has developed bioreactors and harvesting methods for converting algae grown in open-pond freshwater farms into biodiesel.

The first phase of its partnership with Indian Oil will involve building a test facility to see whether PetroAlgae's production method is scalable. Once that has proven to be successful, Indian Oil plans to build a commercial production facility that could produce 200,000 tpa (tonnes per annum) of biodiesel. That facility would also produce a protein byproduct from the process that could be sold for use in making animal feedstock.

The Indian Oil-PetroAlgae deal lends further support to the notion that India's ambition is to rival Brazil as the world's largest exporter of biofuel in the coming years. Global biofuel use is expected to double by 2015, according to a recent report by Hart Energy Consulting, and many Big Oil players have been focusing efforts on getting a footing in that arena.

Until recently, most of the Big Oil interest in algae biofuel has been in the form of investments thrown at pilot projects, start-up companies, and research institutions. But the past few months have seen prominent partnerships with more clearly laid-out commercial ambitions.

In July it was announced that Exxon Mobil is investing over $600 million to produce biofuel made from photosynthetic algae in conjunction with the Calif.-based biotech firm Synthetic Genomics (SGI). Martek Bioscience, which initially was selling itsfermented algae as a baby food additive, announced in August that it had signed a deal with BP on microbial biodiesel production from algae fermentation.

While algae start-ups seem to have weathered the economic investment drought, as PetroAlgae's own board head John Scott predicted in May, it remains to be seen which method for growing algae will win out.

There is an ongoing debate over whether it's more cost-effective to grow algae by fermentation or photosynthesis. The PetroAlgae deal with Indian Oil puts another mark in the photosynthesis column.