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Rip Up the Mortgage: Sapphire Energy Pays Off USDA Loan Guarantee in Full

In California, Sapphire Energy announced it has paid off the loan guarantee awarded to the company by the U.S. Department of Agriculture. In Dec. 2009, the company was awarded a $54.5 million loan guarantee through the Biorefinery Assistance Program, administered by the USDA Rural Development-Cooperative Service, to build a fully integrated, algae-to-crude oil commercial demonstration facility in Columbus, New Mexico.

Reached by telephone, Sapphire’s VP for Corporate Affairs, Tim Zenk, confirmed that the company raised an additional round of equity from its current investment group to pay off the loan. “It just makes sense to pay it off, if you have the ability to do so, and save on the interest and debt expense,” he commented. The project continues on track towards producing 100 barrels of crude oil per day in 2015, and at commercial-scale production in 2018.

Key to reaching the company’s goals is the project with Linde to develop, at scale, a new industrial-scale conversion technology needed to upgrade algae biomass into crude oil. Linde has made the decision to invest the engineering time, and in return the two companies will co-market the new technology globally, as well as employing it at the Green Crude Farm.

In partnership with the USDA and the U.S. Department of Energy, Sapphire Energy developed and implemented its facility, known as the Green Crude Farm, on time and on budget. Today, the Farm is operational and producing renewable crude oil on a continuous basis.

As a result of the USDA’s loan guarantee and USDOE’s support, Sapphire Energy is now producing the world’s first renewable crude oil, and is in the process of scaling up the technology.  The operational crude oil farm has led to additional investment in the company and commercial partnerships.   The company repaid the remaining loan balance in full after receiving additional equity from private investors, making the loan no longer necessary to complete the next, planned phase of development. The early repayment of this loan and on-target development roadmap for Sapphire Energy’s algae crude oil technologies further solidifies the USDA’s role in catalyzing new energy technologies in rural communities, increasing domestic energy production, and creating new jobs.  The USDA’s investment has advanced the use of algae as a feedstock to produce crude oil and as a viable new crop to produce homegrown energy while creating valuable rural economies.

“The investments being made in low-carbon biofuel production are paying off and moving technologies forward, which will produce savings at the pump for consumers, and spur sustainable, new-wealth creation here in the United States, and make our land more productive,” said Doug O’Brien, Acting Under Secretary for Rural Development.

“Sapphire Energy is very grateful to the USDA for supporting algae crude oil as an alternative source of energy as well as our vision to make this industry a reality,” said Cynthia ‘CJ’ Warner, CEO and chairman of Sapphire Energy.  “With their backing, we did exactly what we set out to do.  We grew our company, advanced our algae technologies, and built, on time and on budget, the first, fully operational, commercial demonstration, algae-to-energy facility that delivers a proven process for producing refinery-ready Green Crude oil.  We could not have built this first of a kind facility without the support of the USDA. Moving forward, our focus is on commercializing our technology and expanding operations to bring crude oil production to commercial demonstration scale as planned.”

This article was originally published on Biofuels Digest and was republished with permission.

Read more bioenergy news here.

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