Sapphire Energy

{"summary_one_liner":"San Diego company that developed algae-derived \"Green Crude\" renewable crude oil and drop-in transportation fuels.","detailed_description":"Sapphire Energy, Inc. was a privately held San Diego, California energy company founded in May 2007 that aimed to produce crude oil from algae. Its core product, marketed as \"Green Crude,\" was a low-carbon crude oil intended to contain many of the properties of fossil crude oil and to be refined and distributed through existing petroleum infrastructure without modification. The company said gasoline produced from Green Crude achieved a 91 octane rating while meeting fuel quality standards, and it also described 89 cetane diesel and jet fuel among its outputs, all made from algae, sunlight and carbon dioxide.\n\nBeyond its San Diego headquarters, Sapphire operated an engineering office in Orange County, California, a research and development facility in Las Cruces, New Mexico, and a commercial demonstration algae-to-energy facility known as the Green Crude Farm (also called the Integrated Algal BioRefinery, or IABR) in Luna County near Columbus, New Mexico. Construction of the Green Crude Farm began in June 2011 and the facility was announced as up and running in August 2012. The site integrated cultivation, harvest and conversion into ready-to-refine Green Crude.\n\nSources disagree on the company's present state and financials. Wikipedia describes the company in the past tense and records the 2019 sale of the Luna County biorefinery to Green Stream Farms, which grows algae for nutritional products and livestock feed; one aggregator lists the company as \"Closed\" while another lists it as \"active.\" Reported cumulative funding also varies widely across aggregators ($226.0M vs. $85.0M), and round labels and amounts are inconsistent between sources."},"founding_story":"Sapphire Energy was founded in San Diego, California in May 2007. Wikipedia lists eight founders: Steve Briggs, Kristina Burow, Nathaniel David, Stephen Mayfield, Michael Mendez, Bryan O'Neill, Yan Poon and Jason Pyle. One aggregator profile names Steve Briggs, a biotechnology entrepreneur, and Kristina Burow, a life sciences venture capitalist, as co-founders acting on the premise that microalgae could serve as an efficient renewable crude oil feedstock. A company-authored contributor bio describes the origin as a debate among friends in early 2007 about how to create an ideal biofuel by applying industrial biotechnology principles, and identifies entrepreneur and scientist Jason Pyle as leading the founding group. Seed financing to launch the company in 2007 came from ARCH Venture Partners and Larry Bock.","company_history":"Founded May 2007 in San Diego with seed financing from ARCH Venture Partners and Larry Bock. In 2008 the company announced a Series B round of more than $100 million including ARCH Venture Partners, Wellcome Trust, Venrock and Cascade Investment. In December 2009 it was awarded a $54.5 million USDA loan guarantee under the Biorefinery Assistance Program and a $50 million U.S. Department of Energy grant under the American Recovery and Reinvestment Act, used toward an integrated algae-to-crude commercial demonstration facility at Columbus, New Mexico. Construction of that facility, the Green Crude Farm, began in June 2011, and the company announced it was operating in August 2012. Partnerships followed with Monsanto (March 2011), The Linde Group (May 2011, expanded July 2013), Earthrise Nutritionals (February 2012), the Institute for Systems Biology (November 2012), Tesoro Refining and Marketing (March 2013) and Phillips 66 (December 2013). In April 2012 the company announced $144 million in Series C funding. Sapphire sold the Integrated Algal BioRefinery in Luna County in 2019 to Green Stream Farms; as of August 2021 the site was still operating and being expanded, though refinery operations appear discontinued.","technology":"The company applied industrial biotechnology to cultivate microalgae and cyanobacteria in open ponds using sunlight and CO2, converting algal biomass into a ready-to-refine crude oil. Algae were grown in salty, non-potable water on land not suitable for agriculture, which the company said avoided impacts on agricultural crops, land or water. The Green Crude Farm integrated the full value chain from cultivation through harvest to conversion. With The Linde Group, Sapphire worked on a low-cost system for delivering CO2 to commercial-scale open-pond cultivation and, from July 2013, on an industrial-scale hydrothermal treatment technology to upgrade algae biomass to crude oil, intended for licensing to algae, municipal solid waste and farm waste applications. The company also expanded its strain inventory, adding Earthrise Nutritionals' spirulina strain in 2012. One aggregator reports 13 patents assigned.","business_model":"Sapphire Energy positioned itself as a producer of algae-derived crude oil (Green Crude) intended to be sold into and refined by existing petroleum refining and distribution infrastructure, complemented by government loan guarantees and grants that financed its demonstration facility and by technology co-development and licensing arrangements, such as the planned licensing and marketing of hydrothermal biomass-upgrading technology with The Linde Group.","revenue_model":"Sale of ready-to-refine Green Crude oil to refiners, as evidenced by the March 2013 commercial agreement under which Tesoro Refining and Marketing agreed to purchase crude oil from the Green Crude Farm for processing into fuel at its West Coast refineries; planned licensing of jointly developed hydrothermal upgrading technology to other industries. One aggregator estimates revenue at $15M–$40M, though the basis is a model rather than reported figures.","go_to_market":"The company pursued commercial agreements and technology partnerships with established oil and gas refiners and industrial gas companies (Tesoro, Phillips 66, The Linde Group), agricultural and biotech partners (Monsanto, Earthrise Nutritionals) and research institutions (Institute for Systems Biology), and used public demonstrations to show that its fuels were drop-in compatible. Demonstrations included supplying 50 gallons of algae-derived gasoline for the Algaeus plug-in hybrid Toyota Prius cross-country drive in September 2009, a Continental Airlines test of a green crude blend in 2009, jet fuel refined by UOP for Continental Airlines 737-800 and Japan Airlines 747-300 test flights, and Green Crude diesel for the Below the Surface \"Driving Innovation\" racing team's algae-fueled diesel motorcycle speed records in 2012.","target_customers":"Petroleum refiners and the traditional energy sector, plus transportation fuel end markets including automotive gasoline and diesel and commercial aviation jet fuel; the company also targeted industrial partners for licensing biomass-to-crude conversion technology.","market_position":"Sapphire described itself as leading a new industrial category of Green Crude production and built what Wikipedia calls the world's first commercial demonstration algae-to-energy facility. It attracted institutional venture backing (ARCH Venture Partners, Venrock, Wellcome Trust, Cascade Investment, Arrowpoint Partners, Monsanto) and substantial U.S. federal support, but ultimately divested its flagship New Mexico biorefinery in 2019.","differentiation":"The company emphasized that Green Crude was a drop-in, fungible replacement for fossil crude — compatible with existing refining, distribution and retail infrastructure and with unmodified vehicles and aircraft — with a lower carbon footprint, and that its algae feedstock required only sunlight and CO2 and was grown in salty, non-potable water on non-agricultural land, avoiding competition with food crops.","geographic_footprint":"Headquarters in San Diego, California, with an engineering office in Orange County, California, a research and development facility in Las Cruces, New Mexico, and the Green Crude Farm demonstration facility in Luna County near Columbus, New Mexico.","traction":"Wikipedia reports more than 150 employees; aggregators list 11-50 and 126. The Green Crude Farm was reported as completed on time and on budget and operating from August 2012. Commercial validation included the Tesoro crude purchase agreement (2013), the Phillips 66 refining evaluation (2013) and multiple public fuel demonstrations in road, motorcycle and aviation applications from 2009 onward. One aggregator credits the company with 13 assigned patents.","latest_developments":"The most recent company-specific development in the sources is the 2019 sale of the Integrated Algal BioRefinery in Luna County, New Mexico to Green Stream Farms, which uses the site to grow algae for nutritional products and livestock feed; as of August 2021 the site remained in operation and was being expanded, while refinery operations appear to have been discontinued.","risks_controversies":"Sources conflict materially on the company's status (\"Closed\" versus \"active\"), on total funding raised ($226.0M versus $85.0M), on headcount (11-50, 126, or 150+) and on round labels and amounts (for example, a 2008 round described both as a $50M Series B/Series C and as \"more than $100 million\" Series B; a 2012 round reported at $140M and at $144M). The business depended on substantial government support ($54.5M USDA loan guarantee and a $50M DOE grant) and the eventual divestiture of the flagship demonstration facility in 2019 indicates the algae-to-crude operations were not sustained. Two fetched sources concern unrelated companies (Sapphire Technologies and Sapphire Gas Solutions) and were excluded."}