November 8, 2011

Solazyme’s algae jet fuel powers United flight

Sometime shortly after 7 a.m. PST on Monday, execs at algae oil company Solazyme, members of the media and others will board a plane at Houston’s Bush Intercontinental Airport and take off on the first commercial U.S. domestic flight to use Solazyme’s algae-based jet fuel. United Airlines will operate the flight, which will land at Chicago O’Hare International Airport a couple of hours later and is set to carry 189 passengers.

The event is significant: While companies have spent years looking to scale next-generation biofuel products, few are producing fuels that can scale large enough to sell to the airline industry, let alone the auto industry. Solazyme’s jet fuel, dubbed Solajet, isn’t a widely commercialized product yet, but it has a few deals, including with the Navy and Australian carrier Quantas.

Solazyme produced 80,000 liters of both jet fuel and algae diesel for the Navy in 2010. Quantas plans to eventually purchase 200 to 400 million liters of jet fuel per year from Solazyme. Before focusing on jet fuel and biofuel for transportation, Solazyme created personal care products, replacements for industrial chemicals and pharmaceuticals.

The airplane that is using Solazyme’s algae fuel on Monday is a United Boeing 737-800, and the fuel is a blend of petroleum (60 percent) and algae (40 percent). Previously biofuels have been used for other flights but mostly in small blends.

Back in 2008 Virgin Atlantic flew what it called the first flight of a commercial aircraft with jet biofuel powering 5 percent of the total fuel mix (three of the plane’s four tanks were filled with standard jet fuel, while the last one contained 20 percent coconut oil and babassu nuts). Air New Zealand also flew a flight in 2008 using jatropha biofuel.

A year later, in 2009, two different airlines took algae biofuel test flights using algae oil from Solazyme competitor Sapphire Energy. Japan Airlines flew a plane partially powered by camelina, jatropha and a small percentage of algae-based biofuels, while Houston’s Continental Airlines used a blend of jatropha and algae.

Solazyme is announcing its third-quarter earnings late on Monday (not a coincidence that earnings are timed for this flight), and the company’s stock has dropped significantly over the year since its IPO, to $9.59 on Monday. Solazyme debuted at a price of $18 per share.

Solazyme’s second-quarter earnings, announced in August, were pretty modest: revenue of $7.4 million, up from $4.4 million in the same quarter a year ago. At the same time it lost $17 million for the quarter, which was higher than the $6.4 million loss from the same quarter a year earlier.

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