Green oil? Phillips 66 strikes a deal to develop it

HOUSTON — A small San Diego company is teaming up with one of the nation’s largest oil refiners to bring an algae-based crude closer to market.

It’s called green crude — even though it’s not exactly green in color when it’s ready to hit the refineries. Sapphire Energy, the six-year-old company that makes the renewable crude, harvests algae biomass from photosynthetic microorganisms at a “crude farm” in New Mexico and turns it into oil.  The company wants to make 1 billion gallons of the stuff every year by 2025.

Sapphire said Tuesday it has signed a contract with Houston refining giant Phillips 66 to blend green crude with regular crude in products like gasoline, diesel and jet fuel.  They’re not going to sell it, yet. First, they’re going to study it further in a Phillips 66 lab in Oklahoma.

The two companies hope to get the crude certified under Environmental Protection Agency fuel standards next year, which would enable the crude to be churned at traditional refineries, said Tim Zenk, vice president of corporate affairs for Sapphire, in an interview Tuesday.

“We’re on our way,” he said. The company said it expects the green crude to be ready to hit the market in 2018.

There are other renewable crude oils made from algae heading toward commercialization, but Zenk said Sapphire’s could be the only one that harvests entire algae and cyanobacteria cells — several other companies only extract lipids in the microorganisms. As for its color, Sapphire’s green crude is usually black, but it can turn green before chlorophyll is removed from the oil.

Earlier this year, Sapphire struck a deal with San Antonio refiner Tesoro Corp. to turn the crude into diesel. The two major contracts show “increasing momentum for algae fuel as a viable crude oil alternative, and significant interest by refiners to have new and better options to meet” the federal Renewable Fuel Standard, said Cynthia Warner, chief executive at Sapphire, in a written statement.

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