Part of Sapphire’s mini-pond test array and seasonal greenhouses.

Part of Sapphire’s mini-pond test array and seasonal greenhouses.

In January of this year, after six months of plummeting oil prices, Sapphire Energy CEO James E. Levine announced that the company – with eight years and $300+ million of investment into drop-in algal biofuels – “is moving forward with its vision of commercializing its technology through several end markets.” The new near-term focus became applying its renewable algae-based technology to address a growing need for reliable sources of human nutraceuticals, animal/aquaculture feed, and more.

Sapphire’s technology platform – using non-potable water and non-arable land to grow algae that captures CO2 in open ponds ­– repositioned for “a new agricultural revolution.” This algae biomass “is a sustainable, renewable, and scalable source of high value omega-3 oils, high value aquaculture and animal feed ingredients and renewable fuels,” said the company’s press release.

Repositioning a company as large as Sapphire Energy is a bit like a battleship taking a sharp left turn – it takes time and an uber-strategic kind of operations management. Bryn Davis has “run the floor” at Sapphire Energy, in Las Cruces, New Mexico, since its early days when the race was exclusively toward drop-in algal biofuels. Much of this operational turnaround is falling into his domain, as he manages the day-to-day operations of Sapphire’s large-scale pond system, a key component of the company’s research and development.

As Sapphire’s New Mexico Operations Manager, Mr. Davis is responsible for all aspects of starting up (and constructing) Sapphire’s field operations site, including regulatory and permitting, land negotiations and acquisition, site development, infrastructure, and local staff recruitment. Mr. Davis has strong ties to the local region and the state, which helps facilitate development of Sapphire’s facilities.

Prior to joining Sapphire, Mr. Davis was Vice President of Las Cruces Machine, Manufacturing and Engineering, a large-scale machining and production facility with clients throughout North America. He has also built, developed, and operated manufacturing facilities in the magnet wire and injection molding fields, as well as consult in other industrial developments.

Mr. Davis, who holds a BS degree in Mechanical Engineering from Pennsylvania State University, was also involved in environmental technologies associated with closed loop processes and the elimination of discharge streams for assorted operations. His background includes work in the DOD arena developing unique technology systems and facilities around nuclear effects testing, electromagnetic pulsing, advanced weapon systems, high energy lasers, and related infrastructure.

Recently AIM visited with Bryn at Sapphire’s Las Cruces industrial complex to see what changes are in the wind and on the ground at one of the algae industry’s most important and high profile companies.

How did you get involved with Sapphire in the first place?

I had been chair of MVEDA (the local economic development commission in Las Cruces) and actually worked closely to encourage Sapphire to setup their research operations in New Mexico. As was fate, I had just finished my chairmanship and had made arrangements to depart my other job at Las Cruces Machine. I was taking some time off and was tiling my house when Mike Menendez literally showed up at my door and said, “We’d like you to come talk to us because we need to set up this operation and you are very knowledgeable in New Mexico about how to get things done and built.”

Had you known Mike prior to that?

Only from the recruiting activities to encourage Sapphire to come to New Mexico, though Mike is from New Mexico and turns out I am some kind of relative of his. So I went to San Diego, where the beginnings of Sapphire were downstairs in a corner lab with three offices and two lab benches. It was quite small.

I met with some of the founders and talked about what they wanted to do and had lunch with (then CEO) Jason Pyle. Jason and I talked about what it would take to build a facility, what issues there would be, and he said, “Why don’t you come work for us?” I was intrigued with the process and totally on board with the commitment of all their players who were completely bought in to the concept, and who wanted to change the world by solving a big problem.

This was in 2008 and I was in the first group of folks who made up the original New Mexico operation. Sapphire’s address at the time was typically my house. It’s kind of funny because every now and then someone shows up at my house, thinking it’s the Sapphire offices. We actually built one of the early prototype ponds in my front yard – just kind of a conceptual layout of what we wanted to do.

What was going on at the San Diego headquarters at that time?

San Diego was really starting early stages of development of multiple processes – drying, extraction, cultivation, medium development, all the kind of real ground level work for the site, including sketching of the site. We started talking about what to do in one acre and by the time I left San Diego it was two to five acres, and by the time I landed in El Paso it was up to ten.

So why did they want the site in New Mexico, rather than consolidating the operations in San Diego?

There were a couple of driving reasons. One was just plain real estate realities. If you wanted to establish this kind of a site on the California coast, or in San Diego, real estate is too difficult and there are lots of regulatory issues associated with starting up in California, some real, some perceived, and then there are the water issues.

The decision was to come some place, oddly enough remote from water, because there were so many unknowns and you wanted to be somewhere that, if you had a discharge or problem, you weren’t doing it in some river structure, you weren’t doing it in the bay. You really wanted to be a bit isolated. And then you wanted to be where there was a lot of sunlight. This was always intended as an R&D location. Even our Columbus (New Mexico) facility was really oriented around a commercial demonstration facility, not the end game for places where you could do those things securely and safely. So it was risk mitigation, as well as a conscientious cost use choice.

How did the local community accept what Sapphire was proposing?

We already had an economic development agreement in place with the city of Las Cruces. I had spent a lot of time on that prior to getting involved with the company. Sapphire is actually the first real estate-based economic development incentive that Las Cruces has successful implemented. So, that was in place but it had not finished its way through council and the approvals and all that.

A Sapphire-developed large volume PBR operating in one of four permanent greenhouses.

A Sapphire-developed large volume PBR operating in one of four permanent greenhouses.

And it was open ponds from the beginning?

We were open ponds with inoculant in a bag. Miguel Olaizola, who was a key player for us at that point, had come from Hawaii and brought us these very long thin bags. So we actually accommodated what we called PBRs even then, but we called it a “grow mound, where we were going to have bags and then transition into open ponds. The scheme that we follow now is very much the same ideology we started with – we have been an open pond company from Day 1.

Where did the early pond designs originate?

Sapphire has always had an active relationship with other people in the industry, so we looked at Carbon Capture’s activities in Imperial Valley. They have Oswald-like ponds and my job was to design and build the sites. So, most of this configuration here represents what we needed to do to take a concept from a sketchpad and put it into the ground as something real.

So we spent time with Carbon Capture, and then visited Doug Lynn at CEHMM (Center of Excellence for Hazardous Materials Management), who was as generous as could be. He shared with me what he knew about the industry and all the concepts for growing algae.

One thing we considered when we started was, if we could do it differently than what we’d seen, what would we do? What don’t we like? What are the problems? So, we tried to take a lot the lessons learned from those in business and build on them. The ponds are our designs, with many influences. My facility guy Jeff Hughes and I determined that we would use Oswald-based raceways. We used a lot of Rastra blocks. We went to Albuquerque – where Rastra blocks were made – and brought some back and put a pond together in my yard just to see it.

We bought our first paddle wheels commercially, just as a time saver. They lasted about a year. Once we had the breathing room to figure that out and design it ourselves, we made it more durable and easy to operate. That was critical and is still how we approach everything in the site.

Was contamination a major issue at the beginning?

It was a major concern, though I would say it turned out to not be a major issue. There are still issues of contamination that persist to this day that are certainly a nuisance for us, but you need to live in the world and if you live in a bubble you will go out of business. And in the world it’s going to rain, dust is going to blow.

And if we see something going wrong in the pond in the morning…if we don’t do something by lunch time, it’s going to be dead by the end of the day. That’s the algae business. The beauty of algae is the rapid growth, rapid production. It’s a bit like the stock market, though – things can go up fast and down fast. A lot of our on-site skill set is to be able to account for that, and to forecast problems.

As we got better we learned how to preview what tomorrow is going to look like, what a pond would look like in three days or a week from now. It was preventative healthcare – even a medical process – to keep a pond well, looking at what it is susceptible to and what things we can do about it. We became algae health nuts in that process and combined these efforts with a comprehensive crop protection strategy to ensure success.

We are getting very good at scaling up and we know that while we are trying very hard to maintain a strain, crop protection, yield protection, and all, Mother Nature is developing her arsenal of attacks. Our activity is a marathon, not a 100-yard dash.

How have strains evolved over the years at Sapphire?

The original strains were developed in San Diego, and then brought out here to New Mexico. Correspondingly, we went all over New Mexico, gathered local strains and we tried to gather local threats as well. There is a lot of back and forth with San Diego in the strain selection process.

And now with the shift to omega oils, that requires different strains picked for their crop characteristics, performance, environment and ability to resist attack. We are always looking at the next strain even when we have our prime candidates. We never pass up an opportunity – looking for that strain that’s better than what we have.

Were you all as blind-sided as others by the plunge in the price of petroleum, or did you see it coming?

I don’t think we were much different than anybody else. If we had seen it coming, we would have done something different sooner. When we really knew last year that the ball game was changing, our board of directors, and leadership team, tried to understand what the opportunity was, what the market was.

I think in the long haul, there will be an energy market for algae, we just don’t know when. It’s certainly not in the foreseeable investible future to do that, so you have to look at what products can come out of this platform that hold the most opportunity.

Like the algae, we have to adapt and move on, but all the hard earned knowledge is still valuable. As an industry we have to be economically viable, both from an operating standpoint, from an investor standpoint, and from a government regulatory standpoint. The government knows that they’ve got to think out 10-12 years and they can’t afford just to walk away from supporting alternative energy. You fix problems by being ready for them, and certainly people like DOE have an understanding and they still have that long-term approach dealing with energy issues.

So was pivoting to omega-3s the company’s best option, and creating the biomass here in New Mexico?

We have a growing platform and we have the ability to take any strain through development, to do yield protection, to run that process. In order to get oil, or get omega-3, or animal feed or whatever you want to do, you still have to grow the algae. You still have to have a platform to get to this biomass. That whole front-end process really doesn’t change, with the exception that we may pick different strains with key characteristics.

Omega-3 is just a subset of oils in the whole hydrocarbon collection that’s coming out of algae. Those processes – growing algae and harvesting, separating algae from the water – those things don’t change. Extracting for fuel is a process and whatever you have extracted, you have leftover biomass. So you might have another product there, something digestible maybe. As a business we’re like the pig farmers — we’ll sell everything but the oink.

Historically, Sapphire was looking at 10,000+ acre sites for commercial scale algae production for fuels. Has that site plan changed?

We were able to identify that switching to a higher value omega-3 product actually is something that can make a viable facility on a smaller scale. So that opportunity actually gets better from the standpoint of number and size of locations. I think the big thing that we see in North America is that at large scale you tend to want to be in coastal locations simply because of access to waters that are brackish, and other advantages. As we move into those other applications they tend to be much more salt water oriented.

What does Sapphire do better than anyone else out there in your opinion?

Getting from a strain to large-scale biomass production – we have that down, and doing that in a crop protective way is absolutely our forte. We have a lot of good knowledge beyond that of what things need to be done to extract or get a product out of that and then recycle, make use of any of the byproduct strains. Where we lack skill is as you start getting into some of these alternative processes, like selective extraction, it makes more sense to work with a partner. There is someone that’s done that research, so we shouldn’t be reinventing the wheel.

Has New Mexico proven to be a good choice for Sapphire’s production operations?

People often say you can’t come to a place like New Mexico because it’s barren. I tell people New Mexico is like a small town with very long streets. The environment has been navigable here, and I think that’s a big plus. Early on, people like Mike Mendez and Jason Pyle instinctively recognized that this was a place to be able to do those things simply because the hurdles were less than in other places. We have had regulatory obstacles in other areas and found ourselves spending way too much time just trying to get through that process. You can get much further down the road, much faster, here in New Mexico.