SM: To date the significant challenge with bio fuel refineries is that the feedstock has dried up. You are coming up with a solution that does not take away from an edible crop. There is plenty of uncultivated, open land in the US. Is that a fair summary of the issues?
GK: It is, and that is exactly why we are seeing so much interest in algae. Three years ago trying to get someone to invest a dollar was next to impossible. Now people are starting to pay attention. The sector as a whole had a bad taste in their mouths due to those issues, but perceptions are now changing. One company in Houston lost $750 million on biofuels.
SM: How close are you to working with a refinery like that?
GK: We need a little more time. We are making significant breakthroughs but everyone is in a big hurry. They want feedstock yesterday, but the reality is this is a brand new crop. Nobody has taken a hard look at this in a long time. We have not even spent one-thousandth of a percent of the money that has gone into understanding oilfield operations on algae research. We need time to mature, but the potential is definitely there.
SM: What is that timeframe? When do you start delivering feedstock?
GK: I still think we are 24-36 months away.
SM: How do you finance that gap?
GK: We are a publicly traded company. We try to do a round of funding based on milestones we want to reach. We go out to the market and raise funds.
SM: How much money do you need?
GK: I think we are going to need another $20-$30 million.
SM: What are the milestones you need to clear to be able to say you are on track?
GK: Our next big step is to build a 100-unit reactor. We need to finish that, run it, and study the data we obtain. We will then need to do some refinements, but we should then be in a position to build a multi-acre facility. Out of that we are going to get x amount of a product which should cost x amount to produce. We are after those hard numbers.
We need to scale up to the next step. I am the one that has been limiting the rapid movement. There are folks who have wanted to build up a couple of acres for a while now. I think we need to do it in small steps and not try to throw up a multi-acre facility when we do not know how. It will be cheaper in the long run to do a pilot first. We have done four steps and we are now ready for the fifth step.
SM: Aside from the mechanics, have you looked at different types of algae?
GK: We have looked at a number of species. We have found some that work and some that won’t. We have gone through a learning process selecting the algae. We have learned a lot about engineering the solution and being more efficient at moving the fluid. We have become more efficient and moving the gases that we use and have learned how to monitor better. We now monitor 13 real-time conditions inside the reactors. We have made a lot of breakthroughs.
SM: And your next step is to just build it larger?
GK: Yes. We need to build one that is 100 units, perhaps in a different configuration, that incorporates everything we have learned. After that I think we will have learned enough that we can then move to a multi-acre facility and be ready to go to a true pilot operation.