July 28, 2009

Council give OK to algae demo plant purchase

CARLSBAD — In a unanimous vote, the Carlsbad City Council approved the purchase of a demonstration plant totaling $625,000 for the extraction of oil from algae.

In March, the city entered into an agreement with Carlsbad-based Center for Excellence for Hazardous Materials Management (CEHMM) to serve as fiscal agent in the administration of a grant obtained from CEHMM from the New Mexico Energy Innovation Fund totaling $1.1 million.

Doug Lynn, CEHMM executive director, said that the city stepped up to the plate as the fiscal agent for the state funds without asking for overhead to manage the grant. He said two government entities — which he did not name — had offered to serve as fiscal agent but wanted 40 percent in overhead.

Lynn said CEHMM sought the services of vendors to provide the technologies and equipment necessary to extract oil from algae. He said eight vendors from around the world were contacted, but only one vendor, SRS Company, met the criteria and was able to demonstrate extraction of oil from algae, as well as make biodiesel from it.

"We sent algae oil samples to the Netherlands, Denmark, and all over our nation. It all came back to one company, SRS. The other companies told us that SRS exceeded what they could do, and we agreed," Lynn told city leaders.

The system to be built by SRS will be used to dewater and extract oil from algae at the CEHMM facility located at the New Mexico State University Agriculture Experimental Station located north of the city.

Greg Brown, CEHMM business manager, said without the demonstration plant, the city of Carlsbad and CEHMM would not be able to meet the requirements of the Energy Innovation Funds from the state. He added that the particular requirement is to produce 200 gallons of biodiesel.

"The requirement is that we have to have a vertically integrated bio refinery and we have to grow the algae, harvest it and extract it," Lynn explained.

Brown told the council that the system CEHMM is proposing to purchase is the only system that it has found to meet its oil extraction needs.

The algae CEHMM grows in its demonstration ponds at the agriculture experimental station is smaller than a human red blood cell and require special equipment for the oil extraction process.

Lynn assured city leaders that CEHMM will continue to be based in Carlsbad and that algae to oil production, when it is commercialized, will remain a part of Carlsbad's business climate.

"We believe the bi-products from oil could be even bigger than the oil for fuel," Lynn said. "Our goal is to maximize everything we can to try to bring more jobs to Carlsbad. We don't plan to leave Carlsbad. All 22 of our current employees are from Carlsbad."

Lynn said he hopes to have the demonstration plant equipment on site by the first week in September and extracting oil from algae shortly thereafter.

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