Voltaire:

Froggy, 

The problem with that argument is that its ultimate conclusion is to never invest in new technologies since they haven't proven themselves.

How do you think new tachnologies are going to be developed if by your own statements only economics can spur new development yet no one should invest in anything unproven because it is poor economics?

Yes we should prune the obviously bad ideas and cons from consideration when investing.  Yes we should only invest where we feel comfotable with the risk and the ROI is worth the risk.

But the risks have to be taken in order to make progress. 

Voltaire, your not thinking like an investor. Didnt the dot.com bubble teach you anything? The best advice for an investor is to think like Warren Buffet...a sound business with a track record of making $.

Voltaire is also not thinking like a Venture Capitalist. And as anyone knows anything about VC's...they know they arnt called vulture capitalist for nuthing. You think Im critical? The reason I am so critical is because I have VC's that are a heck of alot more critical breathing down my back asking for their due diligence. The reason people dont get funded is because VC's vetted them and said 'come back when you have something real' then ignore their future phone calls. If you think Im harsh...you obviously havnt talked to REAL investors...im a polite treefrog vs VC's and other investors (except others that also lead with their emotions and not their pen and paper...those are called suckers). Third party verification of a scaled prototype is a start...without that...your research, period. The reason a VC gets into risky business is the tremendous reward for those technologies that actually do win. But even after their 1000's of questions and 100's of hours of due diligence...only 10% of the co's they fund actually become a real winner. Even after much much much harder questions and milestones met...90% of those companies that VC's invest in fail to reward (this is why VC's expect and need a return of 30x their investment). Who funds you? Heck if I know...who funded the Wright bro's? Who funded Einstein? Who funded cars or horse buggies or glass production or...   But certainly there is enough evidence that unless one wants to throw all caution to the wind, investing in these algoil companies that make claims are foolish at the present time. Buffet became one of the richest ppl in the world by NOT investing in startups and investing in well run business... Take his advice for what its worth.

Slippery (or others that work out of their garage) is different because he is an entrepeneur and doesnt think like an investor but like someone who dreams and tests those dreams. But frankly...less than 1% of those garage dreamers ever make anything useful...prolly more like .001%.

Lets make this simple...Microsoft had a real product in 1987 and dominated the marketplace. If someone would have done their due diligence and invested in this company in 1987...not as a start up in 1978 but as a functioning company that is solving real problems and is starting to actually have revenues in 1987...how much $ would you have now? You arnt a billionaire because you didnt 'start' the company (like Slippery Inc could be) but you become one of 10's of 1000's millionaires that made $ off the real and true business plan well after start-up mode.

ecogenics3:

I have seen little or no difference in growing high lipid content algae except for one... spirulina is a highly invasive algae ,extremely robust  and fast growing and standard practice has been to grow it in shallow raceways in large complexes such as cyanotechs,

 my personal experience is that" algae is algae"

So it seems that the yields that I posted for Cyanotech is being confirmed by Marc. Which begs the question...how can 3000g/a/year make anyone any $? You could feed it to cows and AD the manure and other process tailings and create e' but that is a far cry from massive biod. This is the real world production numbers...not imaginary theoretical possabilities.

By the way...the reason Chlorella is utilized is because the vast majority of research papers involves Chlorella. From early on in algal research, Chlorella was thought to be able to feed the world and its a widely distributed Spp. As it turns out...its not a very good food and needs to be processed, just as Spirulina. But because the years of models were created surrounding Chlorella...people continue to use it. As Marc said "algae is algae', once a way to grow more efficiently becomes available...other spp. should be able to quickly become adapted to replace Chlorella.

...and that post proves you literally do not know what you are talking about with regards to VC funding.

VCs fund 10's or even 100's or 1000's of companies =knowing that the vast majority will fail=.  The ones that succeed pay for the ones that fail.  You reduce your risk by being diversified.  Not by demanding a high EROI on a specific investment.

The high EROI that VC demand is more because a VC has to have a compelling reason to put money into a startup rather than any other financial instrument.  Unless a company can offer greater return than real estate or The Market, there is no financial incentive to invest in startups.

Go reread my post with the CDC example and think about the implications of your attitude.

froggy:

ecogenics3:

I have seen little or no difference in growing high lipid content algae except for one... spirulina is a highly invasive algae ,extremely robust  and fast growing and standard practice has been to grow it in shallow raceways in large complexes such as cyanotechs,

 my personal experience is that" algae is algae"

So it seems that the yields that I posted for Cyanotech is being confirmed by Marc. Which begs the question...how can 3000g/a/year make anyone any $? You could feed it to cows and AD the manure and other process tailings and create e' but that is a far cry from massive biod. This is the real world production numbers...not imaginary theoretical possabilities.

By the way...the reason Chlorella is utilized is because the vast majority of research papers involves Chlorella. From early on in algal research, Chlorella was thought to be able to feed the world and its a widely distributed Spp. As it turns out...its not a very good food and needs to be processed, just as Spirulina. But because the years of models were created surrounding Chlorella...people continue to use it. As Marc said "algae is algae', once a way to grow more efficiently becomes available...other spp. should be able to quickly become adapted to replace Chlorella.

If "algae was algae" Mother Nature would not need anywhere near as many species to fill environmental niches as there are.  "Algae is algae" is only true to a first order approximation.  Or would you like to try treating a bison or a buffalo like a cow based on such logic?

By your own admission, Chlorella is not being used because it is theoretically or provably superior for this application.  It's being used because we are familar with it.  That's clearly not going to lead to the best algal biodiesel production businesses.

...and the "how can 3000 g/a/yr make anyone any $" question is another Red Herring since we all know that we have to produce algoil much more efficiently than that in order to satisfy the actual RW production requirements in this domain.

I can just as easily ask "How can we not make money if we build a 20-40 story skyscrapper greenhouse that is augmented by a Nuclear power plant so that we can completely control the environment to produce algae at optimum levels 24x7x365 with projected yields of 5K-15K g/a/yr per floor?"  (That's 100K g/a/yr algoil =minimum= per acre of such buildings.  600K g/a/yr maximum.)

Now let's get back to realistic discussions. 

Voltaire:

    

If "algae was algae" Mother Nature would not need anywhere near as many species to fill environmental niches as there are.  "Algae is algae" is only true to a first order approximation.  Or would you like to try treating a bison or a buffalo like a cow based on such logic?

Bison,buffalo and cows do have many simular growth habits. Certainly they are more simular than oh lets say, computers and hair stylists or even trees and grasses. Having lived next to a Bison farm and having relatives breed them for years (one of the reasons I started in prairies), the analogy of algae 'r algae is very much correct IMO. Yes they have different desires and needs, as Marc said different alga do but the simularities far outweight the differences. My suspect is that Voltaire has neither lived on a farm, nor grown algae. By the way...I didnt say that quote, Marc did and now your calling Marc a first order thinker?

Voltaire:

     ...and the "how can 3000 g/a/yr make anyone any $" question is another Red Herring since we all know that we have to produce algoil much more efficiently than that in order to satisfy the actual RW production requirements in this domain.

That is the point. Its not a red herring...its the point of the discussion. The real world is 3-5000g/a/y tops. This is why I keep repeating my claims because the state of the art is ~5k... So until there is a real change...there is nothing to invest in...because the real world is under 5k and anything else is unfounded conjecture dreaming, ESPECIALLY to an investor. Your dreaming and Im telling you the facts on the ground. That is why Benemann wrote what he did. That is why the close out report wrote what they did. That's why AMiller said what he did. That's why Algae has gotten very little VC $.  The reason is the facts on the ground. That is why I can keep doing the math cuz there IS data. Until you give me a reason to change the data...your dreaming. The numbers are there for you to do yourself, do them and show me how Im wrong? A pen and paper is not nieve but the strongest tool an investor has.

im not confirming anything of yours... your anology of the nuclear powered twenty story building certainly isnt  an example of getting back to "reality" . when I mention chlorella it is because one type of chlorella is stated in the literature to contain 44.0% lipids and another is said to contain 14.0% it is not my algae of choice but it is the one we sell the most, however I have not determined which one in our type culture lab is best at this time, that is why I am testing twenty five algae that are reputed  to have high lipid content and since the literature varies from publication to publication we decided to run this regimen ourselves before comitting our pond system to any one algae( even though we made a paltry little bit of biodiesel from one) other than the one we grow now. because of its high value, and when we  do get those results that confirm or dispell the literature they will be privy only to those who have purchased our systems or have paid us as consultants because we dont count on venture capitalists and enterprenuers as they are akin to swimming in a sea of sharks.. so we are SELF FUNDED by the sale of our products, and services.. and an occasional grant although they are slow paying and  very tedious to work with..

 marc

Marc,

I have no problems with your posts in general.  I have many problems with froggy's.

Froggy is attempting to shoot down the entire algal biodiesel field based on a few inappropriate examples.  In formal logic, that's called "inappropriate generalization of the specific", and he's been doing it in huge amounts when it suits his prejudices in this discussion.

I do disagree with "algae is algae".  Particularly when we are talking about detailed examination of economic and operating specifics.

While cows have more in common with bison and buffalo than with just about any other animals on earth, anyone who has tried to raise both can definitely tell you that there are significant differences that will result in business failure or in injuries to livestock or personnel if not taken into account.

There is greater variation across algae species than there is between cows, bison, and buffalo.  Therefore it is likely that "algae is algae" is even less precise than "a cow is like a bison is like a buffalo".

As a specific example, we know that raising Spirulina for human consumption and raising algae for biodiesel can be provably shown to require different business plans.  (That froggy thinks there is no significantly different plan is a failure of his imagination.  Not a proof that no other, possible more successful, plan exists.).

Given the existence of at least one counter example which shows the statement "algae is algae" to not be precise enough, it would seem logical that the statement is discredited.

Now let's move on to more logical and hopefully more productive avenues of reasoning.  

I speak with the authority of experience, not conjecture or theory ...practice, not speculation,. in observing the behaviours of the algae in my type culture collection  and in my past experience on a much larger scale some time ago, I have observed first hand that when conditions are properly managed  with proper nutrients,under controlled circumstances in the proper system, each algae have the potential to perform as well as the other.we are also looking into genetic manipulations to see its potential to improve strains. soon we will replicate our observations in our closed loop ecosystem in a  rather extensive test protocall in which we will observe the behaviours of each algae on a larger scale one by one. then go from there

 I make it a practice never to talk about anything I havent done or experienced first hand. I see  the results of my endeavours everyday  and find algae to be more robust and user friendly than what is speculated by those of lesser experience or are used to culturing algae under axenic conditions.....we have deliberatly grown our  algae type cultures under conditions that we deem are realistic considering the objective of our excercise, which is to put this technology in the hands of farmers  and rather than just white coated technicians, and  to  de- mystify and spread this technology on the widest scale possible as cheaply as possible in as short a time as possible. when we take the leap from the laboratory to  our closed loop system and thence to the farms of america it will be once we have proven beyond a doubt that it is possible to do so. with a minimum of risk of failure 

that does not preclude that we will deal with industry and the academic community just as comfortably. on the contrary, we entertain all aspects of society as potential users of our technologies,reaching out even to the undeveloped countries with which we have dealings but when we put this into thier hands, it will be in a simple  and  naturally efficient manner with redundancies built into the scheme of things to assure success and profitability.

 we are now escalating the capacity of our  culture laboratory on an exponential scale in order to meet the increasing demand for larger quantities of algae cultures from clients all over the world as well as to fill our own needs in our larger scale efforts

it is a very exciting time for us as we embark on larger and larger projects ...not bad for a self financed  and modest little research and development organisation in the foothills of the great smoky mountainsof Tennessee

Voltaire:

While cows have more in common with bison and buffalo than with just about any other animals on earth, anyone who has tried to raise both can definitely tell you that there are significant differences that will result in business failure or in injuries to livestock or personnel if not taken into account.

http://www.biodieselnow.com/photos/pets/picture134293.aspx?CommentPosted=true

You can come look for yourself but the bison were definately in control of the pasture. First to come over...first to stand me down...and they were not the biggest animal on the lot but it looked to me like they were in control of the pasture.

Certainly there is optimization of each individual species...like maybe different shots and other clever little tricks that bison like and cow dont...but the point is...that generally, they eat, sleep, drink and live in the same general area under the same conditions.

Its called modeling. One species is optimized then another species is brought in and also optimized. Generally...they are close enough that if I were thinking about getting into the Bison business...I would start with Cattle #'s and concepts and optimize from there... And as Marc said...the same goes for algae. Its why he said algae r' algae.

froggy:

Hiya babymaus,

To best answer your question...you need to get out a piece of paper and pen and a calculator.

What is the output of a field of algae? = tops...15000 gal of algoil/acre/year. Lets use the 10$/gal just to be safe. = $150,000/year revenues.

What does it cost to produce the algae? = ~ 50% cost of production to collect/de-water/de-oil/etc...  So if we have $150,000 in revenues...we have only $75,000/acre/year net revenues after production costs.

What does it cost to build an algae farm? = 43560 sqft / acre. Lets say 20$/sq ft to build and maintain a greenhouse complex / year. = $871200/acre/year to build and maintain the greenhouses.

So lets add up the numbers... We will make $75,000/year and it will cost us $871,200/year to produce the algae.

As you can simply see...there is no way that algoil can ever make it...even at $10/gallon. Even @ $20/gal. Even at $100/gal...

Moral of the story?   pen and paper is always the best way to check up on internet stories.

 

 I've been lurking around here for a while, but haven't posted before. According to those numbers, over 90% of the costs are associated with the infrastructure of an algae farm/greenhouse. The extremely high material costs (and the periodic cost of replacing said materials) keep algoil from being a potentially profitable venture. In the past, posts similar to these (many by you) have convinced me that algoil wasn't a profitable venture... yet. Furthermore, this breakdown is important because it indicates that the breakthrough required to allow for profitability is not in the field of biology or organic chemistry... but in materials science or infrastructure efficiency. This is why the recent announcement by Diversified Energy has me more optimistic than I was before. This is the same announcement quoted by perotter on the last page. Their main breakthrough appears to be in a dramatic reduction in the infrastructure required to grow and harvest the algae. They're basically pumping the algae through tubes that are similar to those used for drip-irrigation that are clear instead of black, for obvious reasons. Its one of those simple, ingenious ideas that I think has a decent chance at succeeding - primarily because it addresses what you've shown is the biggest economic obstacle to profitable algoil production.

That all being said, to answer the original question on this thread: I wouldn't invest in any of these companies now, unless you could afford to lose all of it. If you're an average investor, wait until a large-scale proof of concept for this (or any other) algoil breakthrough. This probably increases the chance of success significantly, but things are still far from a guarantee.

-Brio


 

Hey Brio...welcome to the land of posters...jump in more eh?  

Brio Hondo:

    Furthermore, this breakdown is important because it indicates that the breakthrough required to allow for profitability is not in the field of biology or organic chemistry... but in materials science or infrastructure efficiency.

Absolutely. Benemann says the same thing. The NREL close out says the same thing. Our very own Mike Briggs says the same thing. The material costs FAR outstrips any biological improvement presently or future prospects, specifically for a PBR system. I think an argument can be made that an open air system doesnt have the same material science issues and that biological improvement could greatly influence yields and production...tho it still seems quite unlikely given the present cost spread.

Brio Hondo:

This is why the recent announcement by Diversified Energy has me more optimistic than I was before....... primarily because it addresses what you've shown is the biggest economic obstacle to profitable algoil production.

DE's PR doesnt impress me much tho there is some advantages to the system over other designs. There is another thread on this system.

Brio Hondo:

That all being said, to answer the original question on this thread: I wouldn't invest in any of these companies now, unless you could afford to lose all of it. If you're an average investor, wait until a large-scale proof of concept for this (or any other) algoil breakthrough. This probably increases the chance of success significantly, but things are still far from a guarantee.

IMO that is sound advice.

WHOA,

 the numbers quoted are mistaken, it says that the cost for the green house is so much a year that you quoted is incorrect.. that is a one time cost or the greenhouse structure  with thirty year life span for the structure. the  replacement cost of  the covers  occurrs once evry seven years (weve gone for tenyears with minimal degradation of solar insolation capability) and there are minor costs as to replacement of other components that may occurr evry five years on the average at least that is our experience we dont push pencils we work 24?7 at growing algae and working with our system. if your going to push numbers push the right ones and base  them on fact not sheer conjecture. our operating costs for this whole complex is$ 200 dollars a month that is lab, plant, pond and house. with lights 24/7 in the lab... this is a three and a half acre site...

 marc

 marc

 Marc

At cyanotech it cost $ 50K to carve one pond in the lava flow, they have fifty or more by now,. because of poor management lack of focus and production problems a shaky start at best, (they even got kicked off NASDAQ at one time )but according to the latest information ive read, the firm is back on NASDAQ and is "as hot as the lava that simmers beneath the big islands surface" stock holder equity in 96 was 17.9 million at that time they reported a record profit of 2.5 million

 you can read the article from the honolulu star bulletin for yourselves for this success story at http://starbulletin.com/96/05/03/business/story1.html. had it not been for investors would they have succeeded?.. no way.... I think it is irresponsible to condemn a whole new burgeoning industry with blanket statements based on wrong assumptions. by adding the cost of the greenhouse as a yearly cost rather than a one time cost your numbers were way off.. but I do agree growing algae exclusively as a stand alone product destined for biofuels  in a dicey proposition at this time  that is why we have repeated ly stated that in order to succeed, one must have an array of value added products that are in effect worth more than the biofuel segment of the operation.

 Cyanotech has a wide range of products such as phycobiliproteins and and astaxanthin, a coloring agent that occurrs naturally which is used to give fish a pink tint that is in great demand and I understand that it is worth somewhere in the range of $1200 an ounce,  any how  there are risks in an high tech venture and yes, at this time there are technical problems to be solved but to make blanket statements suggesting that people shouldnt invest is counter productive.. any investor worth his or her salt should conduct "due dillegence" for them selves, fortunatly most investors do that as a matter of course  and enter this new field with eyes wide open .sorry for all the typos in my previous post  it was late and my computer was acting up.

 Marc

 marc

Froggy,

Your greenhouse numbers may be correct based on use for hydroponics, but even differing hydroponics crops will give different results. Marc's post above gives a better picture of how different it might be for algae, and therein lies the problem.

At this point in time nobody can accurately predict the volume of algae that will be harvested from any commercial project and thus cannot give any potential investor a ROI number. To throw a set of numbers on the table and say that is what it is going to cost to produce x kgs of algae is misleading.

Conjecture and dreams abound in about the same numbers as scammers and fraudsters and the investor has to show extreme caution in accepting anything said in any companies PR.

I know I am one of those dreamers but I do expect to produce volumes of algae as soon as I get my PBR running and tuned to produce optimum levels of oil bearing algae. How much - who knows. Time will tell.

I could repeat the figures I have postulated in other threads but  it would really be meaningless without facts. So I am investing in my dream and pushing ahead to ensure I can bring facts to this table.

If you have any supportable facts that support your arguments as they directly apply to producing algae and algoil then lets hear them.

The question on the table is 'is it valuable to invest in algoil?' Explain to me how someone that does due diligence is going to invest in algoil companies? I agree that value added algal products could have a bright future...but that is not algoil...certainly there is a whole different set of economics of algoil @ even 10/gal vs $1200/oz pigment. A HUGE difference...how can you NOT see this?

ecogenics3:

At cyanotech it cost $ 50K to carve one pond in the lava flow, they have fifty or more by now,. because of poor management lack of focus and production problems a shaky start at best, (they even got kicked off NASDAQ at one time )but according to the latest information ive read, the firm is back on NASDAQ and is "as hot as the lava that simmers beneath the big islands surface" stock holder equity in 96 was 17.9 million at that time they reported a record profit of 2.5 million

http://finance.yahoo.com/q/bc?s=CYAN&t=my&l=on&z=m&q=l&c=     This is a 10year stock price chart for CYAN. As you can perfectly see...not only would the ave. investor lose money...but after their recent reverse stock split of 1:4...you would have lost virtually all your initial investment with virtually no way to recoup your investment...GREAT INVESTMENT CHOICE, THANKS MARC!

Not to be cruel but because you keep bring this up...let me ask Marc something. If someone would have invested in Ecogenics...how much would they have made over the last 30 year?

ecogenics3:

  Cyanotech has a wide range of products such as phycobiliproteins and and astaxanthin, a coloring agent that occurrs naturally which is used to give fish a pink tint that is in great demand and I understand that it is worth somewhere in the range of $1200 an ounce, 

So... the problem with this argument is that $1200/oz has a very hard time translating into $10/for 7lbs. That is like saying because I can jump 1 foot high, I can soon jump to the moon. I 100% agree that algal products can be a valuable as many companies have shown...but not algoil at the current state of the art for even as high as 10$/ for 7lbs. As anyone can plainly see, $1200/oz vs $.05/oz. is a WORLD of difference.

Slippery:

If you have any supportable facts that support your arguments as they directly apply to producing algae and algoil then lets hear them.

Show me 1 algoil company making $? That is all the proof an investor needs.

 the Ecogenics Center For the Study of Alternative Solutions is a  self supporting non profit research and development organisation.. whatever money  is generated  through the sale of its products supports  its many research projects in the renewable energy field not just biofuels from algae, as well as  supporting its educational  programs. whatever I posted about cyanotech was dated back in the 90's  and i made that clear in all my postings about them

 I have no connection whatsoever with cyanotech it was merely an example. Im sure the cause of thier demise( if that is the case) was primarily from managerial failures and the recent negative publicity generated about health food supplements. we grow a variety of algae cultures that we have chosen to investigate for thier potential lipid content and we offer them to other researchers and people interested in the algae field. I can bet that there is NO ONEmaking any money in the field of biofuels from algae yet....I have repeatedly stated that this  field is in its infancy, taking baby steps. as i said it is the responsibility of any investor with half a brain to conduct" due dillegence" before making any investment in the Biofuels industry let alone the algae based biofuels field which is in its infancy...

CAVEAT EMPTOR

 Marc

ecogenics3:

I can bet that there is NO ONEmaking any money in the field of biofuels from algae yet....I have repeatedly stated that this  field is in its infancy, taking baby steps. as i said it is the responsibility of any investor with half a brain to conduct" due dillegence" before making any investment in the Biofuels industry let alone the algae based biofuels field which is in its infancy...

So...you agree with me that it would be foolish to invest in algoil ?