Under the agreement the companies will expand Sapphire Energy’s current testing programs to further validate that Green Crude can be refined in traditional refineries and meet all of the Environmental Protection Agency’s (EPA) certification requirements under the Clean Air Act.

This includes determining the optimal operating conditions for processing algae crude oil into American Society for Testing and Materials (ASTM)-certified diesel, gasoline and jet fuel. Once the study is finished, the companies will work together to complete the EPA certification process to register a new fuel product entering the market.

In under a year, Sapphire Energy has entered into contracts with two major companies in the oil and gas industry, showing that there is increasing momentum for algae fuel as a viable crude oil alternative, and significant interest by refiners to have new and better options to meet the California Low Carbon Fuel Standard (LCFS) and the federal Renewable Fuel Standard (RFS).

We’re looking forward to building a strong relationship with Phillips 66, an established leader in research and development for next generation fuels, who understands the opportunity our Green Crude oil holds as a feasible and sustainable crude oil choice for refiners.

—Cynthia ‘CJ’ Warner, CEO and chairman of Sapphire Energy

Combining Phillips 66’s experience in algae research and technical expertise in hydroprocessing and fuels upgrading with Sapphire Energy’s algae cultivation knowledge could yield promising results, the two suggested.

This new relationship with Sapphire Energy complements other Phillips 66 renewable fuels collaborations in academia and other sectors to convert a range of sustainable feedstocks into transportation fuels. The company’s biofuels platform is one piece of a technology strategy that also includes research and development of fuel cells and solar cells.

Sapphire Energy is now producing crude oil daily from algae biomass cultivated and harvested at the company’s Green Crude Farm, located in Columbus, New Mexico. The farm is the first algae-to-energy facility that demonstrates the entire value chain of algae-based crude oil production, from cultivation, to harvest, to the conversion of biomass into ready-to-refine crude oil.

In 2008, the Company successfully produced 91-octane gasoline from algae that fully conformed to ASTM standards. In 2009, Sapphire Energy participated in Continental Airlines Boeing 737 and JAL Boeing 747 test flights providing algae-based jet fuel. That same year, the Company provided fuel for the world’s first cross-country tour of a gasoline vehicle powered by a drop-in replacement fuel from algae-based Green Crude. In 2013, Sapphire signed its first commercial customer, Tesoro.

The company expects to be at commercial demonstration scale in 2015, commercial scale in 2018, and is eventually projected to produce 1 billion gallons per year by 2025.