This Deal Matters: Sapphire Energy Partners with Phillips 66 to Commercialize Algae Biofuels
Sapphire Energy, the California-based developer of algae-based biocrude oil production technology, has formed a strategic joint development agreement with Phillips 66 towards the commercialization of algae crude oil. Specifically, the two companies will work together to analyze Sapphire Energy’s renewable crude oil, with the goal of completing fuel certifications for wide scale oil refining. Given the recent resistances from opposing interest groups, including the Oil & Gas sector, this collaboration between a biofuels company and an oil & gas major marks another exciting milestone on the development of renewable fuels.
The deal is also significant in its timing, as the U.S. Environmental Protection Agency (EPA) is actively proposing to lower the volumetric requirements for renewable fuels under the Renewable Fuel Standard (RFS) for 2014. Furthermore, it is also promising to see an oil major taking an active role in the commercialization efforts of renewable oils, especially given the oil industry groups’ recent petition to waive the RFS mandate. Despite the overall market opposition, Sapphire Energy has made several significant progresses in 2013, including the signing of a new commercial offtake agreement with Tesoro, in addition to paying off the $54.5 million government loan guarantee awarded by the U.S. Department of Agriculture.