AIM Interview: OriginOil’s Riggs Eckelberry Interview (Part 1)

If there is a poster boy for algae’s fabulous future, it’s currently Riggs Eckelberry. Coming from a strong executive background guiding dotcoms through the early internet years, Riggs established OriginOil in June of 2007 with the goal of creating breakthrough technology to enable the production of renewable fuels from algae. Concentrating on the weak links in the process, Riggs and the staff of OriginOil have devoted a passionate effort to building efficient system models that can be scaled to produce fuel that can compete with the economics of petroleum.

We spoke with Riggs recently in his Central LA offices about a wide range of topics, from how OriginOil got started, to the breakthrough technologies of the moment, to where things are headed from here and how we’ll get there. In fact, there was so much good stuff we talked about, we’ve decided to run the complete interview in three parts. Here’s where we’ll start:

Q: You have said that where we are in the algae industry at the moment is approximately where we were in the development of the Internet around 1992. Can you clarify that a bit?
A: What we had in 1992 were a lot of archaic pre-Internet protocols. And then by 1994 a lot of significant things happened to enable the Internet, such as the browser from Netscape, and of course the invention of the World Wide Web itself, and it resulted in this explosion.

Today we think of all energy as being big box energy, and for algae, that’s a fallacy. If we accept that algae is sort of the end game in biofuels, which it seems to be, then we’ve got to look at what the structure’s going to be.

A sample of the SSE process—full separation of oil and biomass.

Q: One of the critical links in the algae biofuels chain involves CO2 — as a nutrient, an environmental opportunity, and a hot political issue. Where do you see CO2 fitting in to the mix?
A: If you’re looking at making industrial output of algae, you need lots of CO2.

Essentially CO2 is a feedstock. It is a fuel. Now it’s a very low-grade fuel and needs lots of energy to turn it into usable fuel, but it is the most plentiful carbon available to us. So nobody is going to pipe the CO2 to one place, it’s too cheap. The answer is obviously to put the production facilities at all the CO2 emission points, which means a highly distributed industry from Day 1. We’re saying every single cement plant, brewer, power plant, factory of any kind, feed lot, all these places are going to have to have their own algae box, be it micro or macro or anything in between. But now those people are not in the business of making algae, so there will have to be system operators that will operate virtual networks of energy facilities. So this is a whole new paradigm that hasn’t even happened, which is people operating highly distributed energy sites, and so what do we need for that? We need to stimulate the creation of a whole new industry.

Now there are OEMs, such as the ones we’re working with, who are going to have increasing importance because they’re already out there building biodiesel refineries or whatever. There’s also going to be a network of geographic distributors of these solutions. We anticipate having an OriginOil Japan, OriginOil Thailand, etc. And we wouldn’t restrict these people to OriginOil only. They’d be able to leverage the best of breed technologies to deliver algae production. In addition we’re looking at service networks, so there’d be Schlumberger-type service networks out there that would have to be empowered to operate these sites worldwide. And, of course, there’d be the specific application guys who know all about waste water, or ethanol and so forth, who would engage specific vertical expertise. I mean, this is the Internet all over again. And so this whole matrix of industry does not exist today, and will have to come about.

Q: Do you see this service matrix being built from petroleum service providers swinging over to the renewable fuel world, or more pure startups growing out of this need?
A: A combination of both. The most aggressive people from oil will want to jump in, though most people will want to protect their existing revenue lines and they’ll be focused on what they do best. Then we’ll see emerging operators coming out that have been doing ethanol, biodiesel and so forth, who are already tooled up. And then there’ll be completely fresh operators. The challenge for them is that they’re not tooled up, they need financing, and today we see an algae financing gap where established companies are getting financing and the low level startups are not rising to the level of suspending disbelief enough for the financiers. So today I think we really need to mature this over the next 12-18 months from a financing point of view to where companies can actually catch up.

We were fortunate that we went public before the crash, so we will maintain our financing. But a lot of people got cut short by the whole credit crunch. We’re going to see hopefully an improvement in that so that these newcomers can get boosted, because they’re the real energy guys. They get it, and they really want to get going.

Dr. Dheeban Kannan discusses Single-Step Extraction

Q: As the financing people look more at the cream of the crop first, what are the value elements that mean the most to them, the IP? Patents? Teams? What do you think is going to draw the money?
A: I think at this point people have started to look at genuine product. You know, all kinds of people have technology, as we do, and that’s a great thing because that’s going to be the basis. But I think people now need to see rubber hitting the road. It’s products. Take the cell phone. It’s backed by a lot of technology, but at the end of the day you want to be able to use your cell phone. And I think that’s what people are now saying, let’s get that first generation of activity going of what it’s supposed to be, industrialized algae production that’s rationally making bunches of algae oil.

Q: So is the first generation proving you can do it, second generation proving scale?
A: I think that’s absolutely right. Scale of course depends on time to build, and brick and mortar projects certainly take time to build. We’ve talked to very large industrials and they say they’re running a demo plant for two or three years. They have to do it that way, so I think today there’s a lot of proof of concept work at the demo level, and we have a small scale lab pilot end-to-end system premiering. It’s very exciting. And so the whole industry is looking forward to having these working complete systems that go ca-chunk, ca-chunk at a reasonable scale, not scale-scale, but demonstration scale, so that we can start working these technologies. And the more we work these technologies, we’re going to start, I believe, mixing technologies. And that’s where pure technology companies are going to start really doing well.

The company that’s saying they’re going to take their secret sauce and use it to be the largest producer in the world is actually going to be at a disadvantage, because it’s unlikely that all of what they do is the best, just as it’s unlikely that all of what we do is necessarily the best.

Q: So this is the shake-out phase?
A: Absolutely. There are going to be many shake outs. If algae is the endgame, it’s going to attract larger and larger players. We haven’t even seen the big agribusiness players show up — ADM, ConAgra, Cargill and so forth. They’re watching it. This is agro-industrial I believe. If you’re doing an open pond approach, that is very land intensive. You have to think of it as both agricultural and industrial productivity.

Q: Where do you put your money — open pond or closed system?
A: We’re agnostic. We offer a closed system because we consider open pond to be fairly mature, so we didn’t have anything fresh to bring to it. But definitely closed systems needed a good optimized technology and we came out with that. But, the bookends on both of those is the feeding and the harvesting, which are just as needed for open pond – how to feed in the nutrients and CO2 and how to extract very efficiently. And lately what’s really become our strongest suit has been the extraction game, because it’s a problem everybody has.

Co-founder Nicholas Eckelberry demonstrates the oil extraction process.

Q: Give us a summary of your single step extraction process.
A: What we call the single-step is a highly optimized step of applying two major elements: cavitation, which means breaking everything up with an optimized turbulence effect, and that process is combined in the same device with a very specific electro-magnetic pulsing. Now you can apply a lot of electricity to algae and blow it up and it will result in oil, but that’s a lot of energy usage and it’s damaging to the biomass. So what our technology does is take that weakened cell structure from the flow turbulence and applies a very targeted program pulse to cause the oil to be liberated and not be bound to the mass. The oil then floats to the top and the biomass to the bottom. The basic process was discovered in December 2008 and since then we’ve been refining this process and adding key elements that we’re still filing continuation patents for. So we now have a process that very efficiently separates the oil, the biomass, and the water in a very economical energy process and then allows those elements all to be used.

Q: How much can that process be scaled up. Is there a limitation?
A: We have not found limitations. We’ve worked to put together a small-scale demonstration commercial pilot system that companies will be able to use. It’s highly scalable. There are no moving parts in it. It’s high flow rates. In fact it needs to flow quickly in order to optimize it. I think that it’s a candidate for being best of breed for daily harvest extraction.

The other side of the game is there’s the ongoing milking, or what we call live extraction or live harvest that is, on an ongoing basis, sweating the oil out of the algae without killing it. And we believe that the two processes can work either separately or in sync. The reasons why somebody might only do milking would be, for example, if you are doing very high grade oil work because it generates an instantly clean golden oil without requiring a lot of cleanup. The daily harvest is more like taking the cattle to slaughter.

Q: What does the “daily harvest constant” refer to?
A: We made that a rather cryptic announcement because there’s a lot of knowledge that we are finalizing for proper technical publication. Essentially we learned some important factors from testing very low concentrations, 80 mg/liter all the way up to 9 grams, which is as high as anybody rationally gets, and we tried to do a daily harvest on all those concentrations. For the daily harvest, the algae has to recover to the previous day’s concentration. And what we found was that as the algae doubles, doubles, doubles, it gets to a steady state where it can be harvested everyday. Once that state is reached, which is about a gram of dry weight per liter, all the way up from there you will only get the same amount of algae out every single day, no matter what the concentration is.

The basic discovery of the daily harvest constant tends to simplify things in an industrial process, so now we can go for the lowest possible concentration that gets us that constant, because that’s the minimum energy requirement. As algae grows, it gets more turbid, it gets darker, harder to light. The energy needed to get the photons, whether you’re using sunlight or internal lights…the darker it is, the harder it is to grow. And so you’re using more and more energy the more it turns into pea soup, because you’ve got to get the photons going to all of them. If you can break off at a certain point and know that after that point it’s no good, that’s a big win because then you just try to keep it at the lowest possible level and still get that constant. It’s a different game than going for the maximum concentration thinking you are going to get more every day. You don’t. That’s our basic message.

Q: Can harvesting be a continuous process?
A:Yes, because especially in an internal environment where you are not bound by the sun, you’re able to run a continuous harvest where each batch is getting its own 24-hour cycle, and our extraction system works much faster than the growth, so you could be working extraction around the clock as each of these batches becomes mature.

Q: Is your business model that this is going to be licensed technology, technology for sale, or are you looking to become a production center?
A: We don’t plan to be a production center. At the same time, licensing itself is late stage, meaning that you have to actively sell your technology into the marketplace in order to later get your mailbox money. You can’t just say it’s available for licensing, especially in an early-stage industry like this. You have to create the systems it’s going to go in. On that wall (he points) there’s a blueprint that imbeds our extraction technology on a skid-mounted 10-gallon per minute commercial pilot system. How we’ll be sold is not through a “license” but rather as a discrete black box that will be slid into that unit and everything else gets built around it. And we will actively support that. This is where we’ll go through a period of being a device manufacturer, of black boxes. Late stage it will get embedded. It’s like you have various technologies that over time went from being in a remote to being embedded in a tv. You first start with a device and then later it becomes part of the whole system, like Dolby or whatever. —A.I.M.