Aquaflow plays its bargaining chips smartly

By Peter Kerr 03/05/2012 2

One of the more interesting aspects of Aquaflow Bionomic Corporation’s deal with CRI Catalyst Company of the USA, is having bargaining chips or cards in your hand.

Last September Marlborough-based Aquaflow announced a partnership of its wild-algae biofuel generating technology project with Texas’ CRI.

The wild algae has a dual ability to clean water and produce a ‘green crude’ (like black but without the millions of years of heat and pressure). CRI has a catalyst and process to convert this green crude into hydrocarbon fuels and blend stocks in typically a few hours.

CRI calls this proprietary technology Integrated Hydropyrolysis and Hydroconversion (IH2) — which can also convert biomass directly into renewable gasoline, jetfuel and diesel. CRI is also a subsidiary of Shell Oil (who recently sold its NZ downstream assets from refining to retail to Z Energy).

Whether or not Aquaflow’s promotion and use of wild algae (localised to the region) will be the route to market for what is plethora of global algae-to-oil projects, is still to be determined. (See here for a small list of such projects).

Aquaflow director Nick Gerritsen says using algae that naturally exist in an area is much more cost-effective and water-cleansing that attempting to create mono-cultures of algae specifically for its lipid oil production.

There’s also the question of whether a globally scalable algae focused solution will be deemed riskier if genetically modified species are used.

But, presumably based on Aquaflow’s understanding of how to optimise algae growth, harvest and production of multi-components, (for everything from fertiliser to bioenergy feedstocks), Gerritsen’s obviously been able to have other ‘conversations’ with CRI.

That includes the introduction of CRI’s IH2 technology to New Zealand — just in time for the growing quantities of biomass we produce (think forestry, gorse, solid waste).

The ability (as stated by Aquaflow and CRI admittedly) to convert biomass into renewable transport fuels, at close to the current price of crude oil puts Aquaflow in an interesting position in the country’s energy security stakes.

Gerritsen’s after investment beyond the $8.5 million already ponyed up by Aquaflow’s investors over the past six years, to crank up the IH2 process (and refineries) in New Zealand.

The point is, without some cards in their hand (or a bit of IP), Aquaflow wouldn’t be in a position to leverage CRI’s technology into New Zealand.

Now Aquaflow’s a long way from getting any sort of IH2 process off the ground — but it is a heck of a lot closer than it would’ve been without its own smarts to bargain with in the first place.

A bit of a case of ‘what you know’ combining with ‘who you know’ to create a ‘do you know what we can do for you’.

2 Responses to “Aquaflow plays its bargaining chips smartly”

  • Maybe, but then CRI already has a similar deal with PetroAlgae in the USA, and possibly others. Two decades ago, biofuels were going to be competitive when crude hit US$40/bbl, it’s $105/bbl and they still aren’t. The main two factors against biofuels as transport fuels remain water and oxygen. They need to be removed to compete.

    NZ’s best option for transport fuels is to penalise large vehicles, implement tax policies to favour the modern high-efficiency 600-800kg vehicles coming out of Asia and Europe, rather than the current 1200-2000 kg vehicles we have.

    It’s still crazy to use a 1000 kg vehicle to transport a 100kg person.