Is Exxon making a real, $600 million biofuel shift?
Money talks, but how can we know what it's saying? Exxon Mobil is investing $600 million into a 5- to 6-year algae biofuel project with biotech company Synthetic Genomics. The biofuel will be made from "sunlight, water and waste carbon dioxide by photosynthetic pond scum," writes the New York Times. After the first $600 million is used and if the technology appears to be working, billions more could follow in order to get the produciton process ready for commercial application. The goal is to produe liquid fuels that act "a lot like today's transportation fuels," Emil Jacobs, vice president of research and development at Exxon Mobil Research and Engineering Co., told the TImes.
$600 million followed by billions more? That's not chump change, even for Exxon, and it might be a big enough amount to convince some environmentalists that Exxon is finally moving to renewables. Kert Davies, a research director at Greenpeace, said, "I'm guarding my optimism." It's a confusing time for oil/energy giants and their non-oil divisions. Recently, BP reduced the size of its alternative energy division.
Craig Venter founded Synthetic Genomics in 2005 to produce energy sources from modified microorganisms and has dabbled in making hydrogen and ethanol from organisms. Venter is also interested in using DNA to make gasoline, as he once explained to Stephen Colbert.
[Source: New York Times]
Photo by Basically Still. Licensed under Creative Commons license 2.0.
Reader Comments (Page 1 of 1)
paulwesterberg 5:21PM (7/14/2009)
exxon annual profits:
2007: $40.6 Billion
2008: $45.22 Billion
Profit is not sales, profit is money left over after payment of operating expenses, advertising, executive salaries etc.
$600 million over 6 years is $100 million per year which is .22% of yearly profits, literally a drop in the bucket. exxon is hedging their bets in case bio fuels can be made profitable and to be able to talk about their "substantial" commitment to renewable energy in an attempt to delay the inevitable conversion to electrified transportation.
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GoodCheer 5:46PM (7/14/2009)
That's an important point... $100M/year for Exxon is about like someone who makes $40,000/yr putting $90/year into something.... or about $7.50 /month.
I'd hardly call that a commitment.
Exxon, we need to see more from you.
Chris M 6:02PM (7/14/2009)
Yet still somehow, they don't have the funds to install all that H2 infrastructure, instead they want the Government to pay for it.. Or maybe they realized that the H2 Hiway isn't going to happen as the costs are still too high and the EV revolution has started.
You can tell what they think is likely to happen by where they invest their dough. Batteries? check. Biofuels? check. Hydrogen? uh, only if Uncle Sam pays for it...
Throwback 8:31AM (7/15/2009)
"exxon is hedging their bets in case bio fuels can be made profitable"
Seems like a smart business practice to me.
DP 5:27PM (7/14/2009)
Okay, these will be renewable (we can make more) as opposed to fossil fuels... Good.
However, won't burning them result in some level of pollution or CO2 emissions? ... Not good, long run?
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Chris M 5:56PM (7/14/2009)
Well, if they can get the production up and running, and power it without using fossil fuels, then the algae will be absorbing as much CO2 from the air as it produces, making it carbon neutral. Of course, that is a big "IF", it means having zero CO2 sources of power for the refineries, plus fueling their delivery trucks with the biofuel as well.
Now, if they could just figure out how to eliminate the other pollutants produced by IC engines, and improve the efficiency... Maybe come up with a biofuel powered fuel cell?
bvz 5:59PM (7/14/2009)
That's actually the benefit of biofuels... no net gain in CO2.
Burning the biofuel produces CO2. Growing the plants to replace the fuel burned reabsorbs the CO2. So it is, in theory, a closed cycle.
In practice, we run into a sort of ironic conundrum. What happens if our energy needs decrease over time? This would mean that we actually have a net reduction in plants being grown to produce fuel and so we wind up with a net gain of CO2. In reality, however, this amount of CO2 would be fairly negligible and, on top of it, the chance of a net reduction in our fuel use is pretty much close to zero.
I also agree that this amount of money invested is merely exxon hedging their bets. Ideally, for them, no matter what fuel we use, we would be pumping it their stations.
mike 5:38PM (7/14/2009)
Seriously...
...this is chump change to them.
I have been speculating that they have spent the previous few months trying to figure out a way to just buy every auto maker in the country with the left over change from lunch at a corporate retreat.
If they could only get it past the public.
Then they could dictate the gas mileage and the prices going forward.
Of course.. the worry is we'll get low.
But I bet we've got another few trillions of dollars we can lay our hands on and another few decades going forward we can spend in oil wars.
- mike
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GoodCheer 5:51PM (7/14/2009)
Hey, now that's an idea... if the oil companies bought the car companies... we could then put them in charge of maintaining the roads, and in one move almost all the costs of oil would be internalized. They could even be like cell companies (and PBP) and give you a car for free, cause they know you'll need to buy their crack... I mean oil... 'til the day you die.
Of course they'd still have to comply with environmental regulations, to contend with the other (massive) costs of burning oil.
ray 5:45PM (7/14/2009)
Their not stupid are they? Lets start investing in this for a few reasons some mentioned by paulwesterberg above and the fact it is the control over supply.
Sorry we couldn't make more of this a hurricane hit and well we have to charge $4/gal. Or what ever other sorry excuse they come up with for short supply.
They are hedging there bets and they have the funds to do so.
Dp, I think the idea is it is carbon neutral as they are using waste carbon to produce it.
I like the idea of running on EV's off solar panels so I don't have to worry about the oil companies charging me more because supply became short for what ever reason.
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Tim 7:27PM (7/14/2009)
EXXON Biofuel Technology is as easy as 1,2,3…
(1) Capture it, (2) patent it, (3) leverage or shelve it just to keep it off the market as long as possible.
What would happen if EXXON stumbled on the perfect way to grow and process algae into biofuel just to keep it from the world in order to maximize their profits and political power?
What would happen if EXXON was using this “algae R&D” as a way to re-brand themselves as a "caring, green" company.
Kind of like the "new" Government (or Green) Motors.
Are they just hedging their bets? Maybe… maybe not!
Their history tells a darker story.
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Chris M 8:18PM (7/14/2009)
Well, if they find that the algae biofuels could be cheaper to produce than buying imported oil, thus potentially more profitable, they'd certainly jump on it and ramp it up. The oil companies are not going to supress anything that can increase their profits.
Besides, even if they patent one particular variety, there are others doing development...
Rocketboy 11:09AM (7/15/2009)
Shhh.. Chris, you're going to ruin the evil oil company meme.
gorr 7:43PM (7/14/2009)
Quote '' biotech company Synthetic Genomics ''. LOL, Madscientists trying to materialize their prayers of inventing a new life-form and a new civilisation for them while trying to suffocate actual biology including man. That was predited by nostradamus that was healing actual man. These folks were robots long long time ago and they are still trying to invent biology with their own laws that exclude actual mans. That's why they impede anything on earth and they try to buy anyone with taxmoney or to exclude any individuals that don't believe in their pure materialist dreams by taxing them to death.
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Yanquetino 9:21PM (7/14/2009)
Let's see now. Last year Exxon made the biggest profit in history, about $45.2 billion:
http://bit.ly/1p0F4V
Over this project's 5-year period, those earnings would amount to... $226 billion.
Well... that means that the $600 million invested is only .27% of those profits (yes, the decimal is not a typo). Pocket change!
And to think that our so-called "representatives" in government still want to give them our tax dollars to subsidize their R&D --not only for biofuels, but also hydrogen.
Unconcienable.
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montoym 2:59PM (7/15/2009)
Not to get into a big discussion about it, but I promise you that Exxon-Mobil(and any other oil company for that matter) won't be making profits that large for a while. Let's check back with each other at the end of this fiscal year and see who is more accurate.
Exxon-Mobil's 2009 Q1 profits fell dramatically to $4.5B from almost $11B a year ago. Here's a recent story that goes into more detail regarding the falling profits of oil companies, http://news.moneycentral.msn.com/ticker/article.aspx?symbol=US:XOM&feed=AP&date=20090714&id=10143360
Those large profit were driven primarily by high oil prices which are not the case currently(and haven't been for about a year now).
Not to mention that everyone who is doing these calculations in this thread always use only the original $600million investment(as well as the no longer accurate massive profits) for the calculations and completely ignore the next line,
- "After the first $600 million is used and if the technology appears to be working, billions more could follow in order to get the produciton process ready for commercial application." -
Nick 4:07PM (7/15/2009)
Craig Venter is a 100% crook. Look up his name, he claimed myriads of things with his numerous projects....in the end nothing came from it
He is a master of charming investors, he could charm birds off of trees.
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Marion 9:15AM (7/15/2009)
Many people here are missing the forest for the trees. Yes, $600 million is a drop in the ocean-sized bucket that is Exxon. But it's a drop they didn't have to drip, to extend the metaphor. If nothing else, I bet that $600 million is quite a bit to the research company getting it. Also, it does show that Exxon has some response to the whole 'green movement.' I don't see why people aren't pleased by this...
In regards to the whole carbon-capture-net-emissions thing, I'm not sure that this is the case for Synthetic Genomics in the specific, but many of these algae farms are located offsite power plants, and use those emissions as a sort of 'feed.' So, it's like a reverse long-tailpipe problem of locational emission -- carbon that would have been released in one place is shifted to another. Considering both the plant and the vehicle would've burnt fuel anyway, capturing the plant emissions to 'displace' the vehicle fuel emissions comes out to be an overall loss, wouldn't it? Shift the plant emissions to vehicle, which eliminates the need for gas.
Since CO2 is a GHG and not a criteria pollutant, location s'not a big deal. Like Chris M. said, the other IC pollutants are probably more worrisome.
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