by David Schwartz
any eyes are closely watching the development arc at Bioprocess Algae, in Shenandoah, Iowa, for signs that this might be the model for future farming.
An algae cultivator with “extreme” co-location advantages, Bioprocess Algae brings together a combination of ingredients that algae growers are increasingly seeking out for success and survival. A product of the entrepreneurial vision of Tim Burns and the scientific knowhow of John Haley, BioProcess Algae leverages the synergy of resources and expertise of four founding companies.
Tim Burns was also President, CEO and a co-founder of Bioprocess H2O, one of the four corporate partners, and the one that has shepherded Bioprocess Algae through its short but high profile early days. And while the operation may look like the beginning of the farm of the future, Burns is very clear on the business model he’s pursuing.
“If you looked at what we are about…we are about monetizing carbon. We provide a carbon-capture technology for production of a low cost, but high value, feedstock for feeds, food and fuel. That’s how we differentiate ourselves from the rest of the market.”
Mr. Burns, an alumnus of Providence College and Brown University, has over 25 years of experience in the development, treatment and filtration of industrial organic and inorganic wastewaters using advanced treatment technologies. He previously founded three successful wastewater companies, most recently BioProcessH2O.
Besides the entrepreneurial and scientific talent supplied by Burns’ Bioprocess H2O, the three other enabling organizations are Omaha, Nebraska-based corn ethanol producer, Green Plains Renewable Energy(GPRE); Dublin, Ireland-based investor in renewable energy and sustainable waste management businesses, NTR; and the multibillion dollar filter manufacturing corporation, Clarcor.
Of the four partner organizations one might wonder what each is bringing to the party. Says Burns, “I would describe technology development and advanced technologies as coming out of the Bioprocess H2O group’s ingenuity and innovation. And then we have GPRE, a company that understands scale, as well as first generation biofuels, and how to grow a platform.
“With Clarcor you have a hundred-year-old, very conservative, very well capitalized, manufacturing company at scale with a $2-3 Billion market cap. – with distribution, materials and equipment available for when BPA builds out the commercial farms. And then you have NTR, which has taken a green technology approach for commercialization, and brings project financing, commercialization, and expertise in renewables.
We spoke with Tim recently to find out about the directions things are taking at the company and his plans for the five-acre algae cultivation facility now in development, or as they refer to it: Phase 3.
Besides agreeing with your vision for this new company, what was the common denominator among the four partner groups that caused them to come together for this project?
All of our partners are grounded in one common goal: we have to have a path to profit. We are not interested in a “story.” We’re interested in a path to profit, and I use that saying because we always need to execute with that in mind. And we always have to improve the visibility on that profit path, as we have with every step we’ve made over these past three years.
In operating an integrated biofuels facility, what are some of the things that you have learned in balancing the operations of corn ethanol production, CO2 recycling and algae cultivation?
When looking at it from 30,000 feet, from GPRE’s perspective, we’ve got a third of our corn kernel that turns into ethanol, a third is for feed products (dry distillers’ grain) and a third that we haven’t monetized. So when we look at monetization of that last portion, that’s where our technology comes in. And whatever we add into our platform can’t disrupt the other two-thirds we already have going.
So we integrate that last third, and that’s where we’ve had success in our platform, where we are able to take that byproduct of the fermentation process – a very pure CO2 stream – and introduce it into what GPRE knows how to do, and that’s farming.
That’s how they are approaching it – the cost effective monetization of their carbon in order to produce feedstocks that are of interest. And then when you dial it back, at scale we know how to move all those things that the algae produce – feed, food and fuel. We’re in all those right now.
Do you scale the algae cultivation to the output of CO2…find a match between the two?
Absolutely. An ethanol facility like GPRE’s Shenandoah plant generates about 150,000 tons of CO2 per year. Realistically what happens is the first 10 to 30 percent of the CO2 in any emitter we match up with products we’re going to produce off of that, let’s say a feed product. We did our first feed study with chicks this past summer with a protein replacement – an enormous market. The gold standard we matched up against was soybean meal.
When you get into the insatiable markets of feed and fuel, which GPRE is already in, are we going to be able to compete and are we going to have materials to move to those, and the answer is yes.
As you ride down the ASP (average selling price) you are going to be able to enter into those large markets, and GPRE has already got infrastructure and scaled trading platforms – all the things that are in commodity-based markets. It helps that we don’t have to worry about that. We can stay grounded in being a lowest cost provider for a unit of biomass.
What are the goals for the five-acre algae cultivation facility you now have in development?
The goals for that are to have offtakes in place. We have an acre and a half facility in Iowa with outdoor reactors where we’ve been growing material for customers who will be entering into offtake agreements for products in different groups – nutraceuticals, feed, and high-value oils.
Do you intend to process the algae into fuel at the facility?
Depending on the customer, we’re going to bring it to the feedstock they need. We have no interest in taking it down to the product level. For instance if the customer wants a dry wholesale algae flake, paste or extracted oil we will bring it to that form. Our goal is to be the feedstock provider, and then they develop their own I.P., their own mix formulation, and their own beneficial uses of the product.
Describe the cultivation procedure you use.
What we’ve done is taken algae out of being in the liquid column and we grow them in a biofilm form. The industry bottleneck you have traditionally in open pond situations is that you’re restricted on site location. By cultivating in our attached growth system, we have a direct hit on productivity, and a direct hit on harvest densities, which directly translates into lower costs for dewatering. It’s a closed system and the gas transfers in the headspace, so we’re not trying to fight or diffuse CO2 into the liquid column. We’re debottlenecking each one of the cost factors within the production platform.
What is the next phase of development after the five-acre site has proved itself out?
We’re actually right now working with GPRE on the next 200 acres at the Shenandoah facility. Preliminary engineering is being done.
Do you have a licensing plan for this technology?
I think we will have a licensing plan long term. We look at Shenandoah as the initial co-location for a host of reasons. They understand co-products and scale, and they have a good platform to integrate within – the biorefinery platform.
We have a technology that is a carbon capture and reuse technology, and that can go across a whole host of industry groups.
How do you anticipate the need you will have for skilled labor as Bioprocess Algae’s operations develop, and what type of skill set do think will be most important to attract for your company’s intended growth track?
Basically, if you look at how ethanol evolved, that’s a good model and one we’ve looked at within these farms. You’ll have biologists at the farms, you’ll have some mechanical engineers, and you’ll have some operators and maintenance crews, what we call “modern day farmers.”
Is training going to be more happening onsite, or do you see more institutional education for this workforce?
We had a U.S. Senator tour though here recently. In this location we have about 35 folks, and he met a lot of the people on the plant side and in the engineering group. At the end of the tour he looked at me and said, “You know, I think the toughest question I’ve gotten from a constituent of mine was when he asked me where the new jobs were going to come from for the kids just coming out of school?”
And coming through here, he saw it. And he saw mechanical engineers from top universities, who could make more money elsewhere, but believe and see the future of this industry evolving, and see that they can make a difference.
In Iowa, for instance, we had a posting online, looking for a couple of our first hires. And wouldn’t you know it, I get a response from a mechanical engineer who grew up ten or twelve miles from Shenandoah, Iowa, who had been working on desulfurization projects, moving flue gas, and he wanted to move back to this area. So Seth came on board with us.
For the next hire we went on Iowajobs.com, and ten minutes after we posted the ad we got a resume from a masters candidate who had been working on growing algae in open ponds next to a coal fired powerplant for his masters’ thesis at the University of Georgia. He grew up in India.
So these are the jobs of the future and if you look at these land grant schools, like Iowa State, and the University in Lincoln, Nebraska, they have incredible resources built around the agricultural economy – which is truly, in our opinion, how this economic recovery begins and continues.
I think the new economy will be based more on stuff we need, not stuff we want. As we move forward we need to produce more with less – less arable land, less resources, but more people to feed. And that’s the story of algae.
Food and energy created close to home – where it all started.
Even though algae is new as a crop, the skills aren’t. The skills in wastewater, and food, and ag processing are here. We just have to get them plugged into the new industry grouping. When you look at the market size for feed and food, and the energy side of the equation; if the technology industry is a trillion dollar opportunity, this is a ten-times multiple of that.
How do you see public perception growing, especially in light of the recent attention to algae in the presidential campaign?
It certainly is growing. I think if you had asked people at major companies two years ago about their thoughts on algae, it was an “if” question. You go to people now, and it’s changed to a “when” question.
When you get into the different markets for algae, the high ASPs are happening now. So guess what’s going to happen? It’s going to be like the technology industry where you ride down size and productivity and yield. And if you look at our platform, it is a yield-based platform. We take yield and we magnify it, get a multiplier effect on yield. That drives the economics. So now you have the ability to scale the economics and sell into bigger markets with lower ASPs. We’ll have to be able to compete as a commodity, because we won’t be able to displace other markets unless we have a cost competitive advantage.
“Green” should be cheaper to produce, not more expensive, because you’re producing more with less.
Anything else you think is important for readers to know about the operations there, or algae biofuel development in general?
I wouldn’t say it’s algae biofuel development; I’d rather algae be a story that is equally balanced in feed, food and fuel. And we get to fuels by having a coproduct market, by having low value oils that are cost competitive, by having other products coming off of these farms. That is the way we are going to enter into the fuel market. It will happen if you allow that coproduct market to evolve and you balance the conversation around feed and food, and not just fuel. I think some in this industry have really done themselves a disservice by just living in the fuel side of the conversation. We are as much protein starved in this world, if not more, than we are energy starved.
If these companies are healthy selling coproducts, their innovation continues to evolve and they drive costs out of the production platforms. But when they are constrained to go from zero to the insatiable market, they put themselves in a chicken and egg situation.
Capital will aggregate with profitable platforms, and my belief is that we are bifurcating right now. Companies that are executing and producing are getting rewarded, and there are a few of those happening today. The ones that are more about stories, where you have to believe they’ll make money in 2015 or 2016, they’ll find it tough to aggregate capital to their platform.