BP, Martek collaborate on advanced biodiesel project

London-based oil giant BP (NYSE:BP) and Columbia, Md.-based Martek Biosciences (Nasdaq:MATK) said today they are planning to advance microbial oils to make biofuel.

BP is contributing $10 million to the initial phase of a multi-year joint development agreement expected to improve converting sugars to biodiesel. Martek develops and produces high-value oils from algae and other microbial sources, while BP has experience commercializing biofuels, distributing more than 1 billion U.S. gallons of ethanol in 2008.

Martek and BP Alternative Energy plan to establish proof of concept for large-scale, cost effective microbial biodiesel production through fermentation, using Martek’s algae-based technologies and intellectual property.

Martek said the technology has been demonstrated in the field, but the challenge comes with adapting it to the needs of the biofuel market.

"As an alternative to conventional vegetable oils, we believe sugar-to-diesel technology has the potential to deliver economic, sustainable and scalable biodiesel supplies,” said BP Biofuels CEO Philip New, in a news release.

The sugar-to-biodiesel process coverts sugars from biomass into lipids using fermentation micro-organisms. The lipids are then converted into fuel molecules through chemical or thermocatalytic processes, according to the release.

The resulting product has the potential to reduce greenhouse gas emissions by 80 percent to 90 percent, compared to traditional fossil fuels.

Other companies pursuing commercializing advanced renewable fuels from sugarcane include Emeryville, Calif.-based Amyris Biotechnologies and Brazilian ethanol distributor Crystalsev (see Amyris, Crystalsev in sugarcane biodiesel venture).

ExxonMobil said last month it's working with La Jolla, Calif.-based biotech firm Synthetic Genomics to develop algae-based fuels compatible with gasoline and diesel (see ExxonMobil devotes $600M to algal biofuel project with Synthetic Genomics).

IP owned before today's agreement is expected to be retained by each respective company, while IP developed during the agreement would be owned by BP with an exclusive license to Martek for certain applications.

Since 2006, BP has announced investments of more than $1.5 billion in biofuels research, development and operations, investing in production facilities in Europe, Brazil and the United States (see BP taking stake in Brazil biofuel, BP, Verenium to tackle next-gen biofuels and BP joins Arizona biofuel research initiative). This includes $500 million over 10 years in Berkeley, Calif.-based Energy Biosciences Institute, where researchers are investigating applying biotechnology to energy (see BP funds biofuel research with $500M and Energy Biosciences Institute funds first round of projects).

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