ExxonMobil Grows Organically… Literally

Could it really be possible to grow the fuel we put in our cars? If ExxonMobil (NYSE: XOM  ) has its way, it will be. The company showed off its latest investment in algae-based biofuels, the same technology touted in their television commercials. This is the first real step in a $300 million partnership with Synthetic Genomics announced a year ago to develop technology for next-generation biofuels.

Synthetic Genomics, founded by a who’s-who of scientists including J. Craig Venter, Ph.D., and Nobel Laureate Hamilton O. Smith, M.D., is trying to use the photosynthesis in algae to make custom-designed biofuel as a byproduct. Sunlight and CO2 go in, and fuel comes out. The end product will not act much differently than biofuels and ethanol produced by Archer Daniels Midland (NYSE: ADM  ) or traditional gasoline.

BP (NYSE: BP  ) is also partnering with Synthetic Genomics to research microbial-enhanced solutions to increase hydrocarbon recovery. The test of this project is to get more natural gas out of coalbed methane seams by adding microbes to the mix.

ExxonMobil’s alliance is strictly for research and didn’t include an equity investment. If ExxonMobil is going to get anything out of this investment, it’s going to have to succeed in creating algae biofuels. BP, on the other hand, is a major investor in Synthetic Genomics, so they have a stake in the company’s success even if hydrocarbon recovery research doesn’t work out.

I’m always skeptical when I see big oil companies investing in alternative fuels. The stench of a PR campaign can be smelled from a mile away. But the more I hear about these algae-based products, the more excited I get about the opportunity. Spending $600 million on a PR campaign is a big investment, so they’re putting research money where their mouth is.

If ExxonMobil gets this right, it may not be long until you have the option to put algae fuel in your gas tank. Maybe they can even engineer an exhaust that smells good.

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Foolish contributor Travis Hoium has no position in any of the companies mentioned here. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


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