OriginOil’s New Year’s Resolution

If you haven’t heard of OriginOil by now, you probably haven’t been paying too much attention to the algae biofuel industry. That, in itself, is a mistake given that the algae industry has been growing by leaps and bounds over the past couple years.

OriginOil is one company in the algae industry that has done extremely well on both the technological and commercial side of things. On the technology side, OriginOil has been successful in developing products like the Single Step Extraction process that essentially extracts the oil from algae while still suspended in water, thus cutting down on time and energy traditional extraction methods require.

Additionally, they have developed a process that could lead to the “holy grail” of hydrogen production. These successes on the technology side of the business have led to successes in the commercial side as well, with OriginOil teaming up with Australia’s MBD Energy to build algae pilot projects at coal power plants.

While all that happened last year, OriginOil has kicked off this year by making three big announcements that continue to highlight their leadership in the field. They started by announcing that they have adopted a operating plan that focuses on the commercialization of their Single Step Extraction process, a process that is already being tested with MBD’s partnership. This focus will help place them as a leader in a crucial bottleneck between algae growers and refiners.

The second announcement refocused their business goals strictly on the technology side of things. While OriginOil has always been about providing the technology rather than producing algae, they originally considered manufacturing their products themselves. Now that they have reconsidered this strategy, they will instead rely on manufacturers already in place.

Riggs Eckelberry, CEO of OriginOil explained how this approach differs from many other algae companies currently in the industry.

“Other algae companies have the tendency to say, ‘We’re going to do it all.’ Our sense is that they are trying to do too much. [That approach] is more of a vertically integrated model more appropriate for conventional energy companies.”

“We think [the algae industry] is more like the hi-tech industry where companies can closely collaborate and have their own specialty compared to a company owning everything from the wellhead to the pump as Rockefeller did so long ago.”

Eckelberry believes that in an industry like algae, a very narrow focus will help a company survive and thrive. Judging by their recent successes – especially the next one – I tend to agree with him.

Their third, and most recent announcement, was probably one the most significant for the company and possibly the industry. They announced that they had received their first commercial order for a Single Step Extraction unit for an algal pilot plant MBD will be operating in Australia.

This order runs very closely with Eckelberry’s belief about what will bring about commercialization in the algae industry.

“At this moment, it is only the physical job of building out sites [that is holding the industry back from commercialization]. It just takes time. They know how to do it, they have proven it at various smaller scales, now it is an engineering job.”

The commercial purchase of technology in the algae field is a very important milestone, especially since I do not know of any other company that has done it. It is very similar in importance to algae fermentation company Solazyme selling their algae oil to the military. Recent successes like these have given Eckelberry a very optimistic outlook for the overall algae industry.

“I don’t believe that there are significant life or death technology issues anymore. I would say that there are numerous efficiency issues and scaling up issues, but core technologies seem to be floating around enough that companies can get going.”

From this, it would seem that successful commercialization all boils down to having funding to start building pilot plants (which not everyone has) and willingness on the various companies’ part to use their peers’ technologies if they work better than theirs (which many won’t be willing to do). As time continues to tick by, it will be interesting to see if other companies start following OriginOil’s hi-tech model or if they will continue the all-in-one model of traditional energy companies.

In any way, OriginOil has had a great start to the year and it will be exciting to see what they have in store for the remaining 11 months of 2011.

Article by Jonathan Williams, appearing courtesy Celsias.