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Tim ZenkVP of Corporate Affairs, Sapphire Energy Inc.
October 11, 2012
Algae is a superior renewable feedstock
Source: Cambridge Energy Research Associates
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90807570656055505 45403530252015
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Saudi
Arabia
Other Middle
East
Russian
Federation
China
Libya
Mexico
Other South
America, Europe,
Eurasia, and
Africa
UK North Sea
Other
North
America
Brazil Deep Water
Gulf of Mexico Deep Water
Angola Deep Water
Nigeria Deep Water
Canadian Oil Sands
Other South America and North America
Oil supply marginal cost curve for 2008 WTI equivalent
Co
st o
f p
rod
uct
ion
($ p
er b
arre
l)
Cumulative production (million barrels per day)
Sapphire algal oil production will increasingly compete with traditional oil as marginal costs continue to rise
• Scalable to millions of barrels per day
• Cost competitive with marginal crude oil production
• Completely fungible with infrastructure and fleet
• Favorable life cycle with respect to CO2
• Does not compete with agricultural products, land, or water
Superior attributes of algae
Algae fuel can be grown on marginal land with saline water
Petroleum-based diesel Sapphire algal diesel
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95-68%
Total emissions
Combustion
72
Production, refining, transport
30
CO2 uptake
-71
Total emissions
Combustion
74
Production, refining, transport
21
Grams CO2e per MJ
22
3
Recent forecasts indicate market demand will continue to drive oil prices above today’s level
Source: Energy Information Administration; Annual Energy Outlook 2012
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2012201020082006200420022000
Oil prices, historical and forecastedDollars per barrel (nominal)
2020201820162014
Historical oil price
EIA reference caseToday
When will oil prices return
back to ‘normal’?
Sapphire has the most experience with large-scale production of photosynthetic algae
Pilot technology facility Commercial demonstration facility
• 22-acre pilot facility operated since 2009
• Over 180,000 hours of large pond
cultivation piloting
• Sapphire is currently finishing construction of the world’s
first integrated algal-oil production facility
• Operations will begin in Q2/Q3 2012
• First Commercial design complete in 2015/ construction
begins 2016
4
I/4 mile
Extraction: concentrated algae is processed using proprietary technology to extract oil and nutrients
Sapphire uses a proprietary, innovative, solvent-based extraction system
Concentrated algae enters
the extractor as a slurry
Extraction process creates
refinable crude oil1. Heat and pressure: the slurry
is exposed to heat and
pressure, causing separation
of materials
2. Chemicals: solvents are
added to complete separation
process
Slurry undergoes chemical reactions
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Refinery Upgrading
Algae Oil Feed
The Boduszynski Plot: C# vs. AEBP
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Jet fuel
Sapphire’s oil is refinable into drop-in fuels using conventional refining technology, requiring no change in infrastructure
Two test flights: Continental Airlines 737-800
(Houston) and Japan Airlines 747-300 (Tokyo)
10-day cross-country tour of plug-in Toyota Prius
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Gasoline and diesel
Policy Priorities for the Algae Industry
• The Renewable Fuels Standards (RFS)- Algae is a qualifying biomass, with an established pathway, complete part 79 - 80 - Algae still requires parity in the RFS and the advanced biofuels industry as a whole must work
together to support the RFS
• Tax parity for algae with all other biofuel feedstocks- In August 2012, the Senate Finance Committee passed a bipartisan tax extenders bill that gives
algae-based fuels AND green crude parity with cellulosic biofuels
• Renewable fuels should be given the same incentives as the Oil and Gas industry
• Farm Bill- The USDA’s Farm Bill funds research on developing renewable biomass crops to supplant the RFS
requirements through BCAP and Loan Guarantees- Senate has passed a 5-year Farm Bill which includes an Energy Title with mandatory funding
• DOD Initiatives- February 2010—Quadrennial Defense Review Report identifies climate change and access to
reliable supplies of energy as threats to national security- The DoD has set ambitious goals to utilize biofuels to increase national security, it is the
responsibility of our nation and our government to ensure that the DoD has the tools to deploy national security initiatives
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