To many Southern Californians, algae are little more than a nuisance growing in their backyard swimming pools. But to Riggs Eckelberry, they are green gold.

Eckelberry, a techie by trade, recently helped start a company aiming to turn the simple organisms into biofuel that can power cars, jets and even industrial machinery.

Amid soaring oil prices and the widespread “green” movement, environmentally friendly biofuel has been gaining in popularity worldwide. According to Oakland-based research firm Clean Edge, biofuel sales are expected to more than triple in the next decade, to $81 billion by 2017.

But the industry is still young and many entrepreneurs searching for a viable alternative to petroleum are finding as many challenges as opportunities. As chief executive of OriginOil Inc., Eckelberry is hoping his company can be one of the few to break through in the already crowded field of biofuel startups.

While companies across the globe experiment with corn, sugar and other substances, Eckelberry said algae hold perhaps the most promise.

The stuff grows fast, is relatively cheap to harvest and provides abundant amounts of oil relative to its size, at least. For these reasons, Eckelberry envisions a full-blown “algae revolution” in the works.

“Algae has been spoken about for 25 years as being the fuel of the future,” he said. “And it’s still the fuel of the future. Somebody’s got to bring it into the present.”

However, the company is already finding that getting oil from algae is not a simple process.

OriginOil’s extraction process involves a 40-foot-long bioreactor module that can hold 10,000 gallons of water. The company grows microalgae in the tanks and uses sophisticated technology to break the organism’s cell walls and extract its oil. According to the company, as much as 60 percent of the dry weight of algae is oil, and as a bonus, a by-product of the process can be used for animal feed.

The company said it has proved the technology internally and will talk generally about it, but it does not plan to release its data until later this year.

OriginOil, however, is not looking to create biofuel for the masses. Instead, the company intends to prove the technology and then license it to others. OriginOil currently has several patents pending.

“We’re going to basically facilitate this algae revolution,” Eckelberry said. “One company is not going to make algae for everybody else. We decided to make systems and solutions that can be delivered widely in the industry.”

But bringing that promise to market is proving difficult for the young company.

Founded last year, the company has no customers. OriginOil’s 10 employees are still working to prove the technology and they hope to have their data ready for public consumption as soon as late this year.

In a recent regulatory filing, executives admitted that the company “does not generate significant revenue, and has negative cash flows from operations, which raise substantial doubt about the company’s ability to continue as a going concern.”

A tough road

Some experts believe it may be years before the company can make any real progress.

Marc Levinson, a biofuel analyst for JP Morgan Chase & Co., said few companies so far have been able to capitalize on the promise of biofuel.

“There are constant promises that there is about to be a breakthrough. People are promising ways to make biofuels more efficiently and at a lower cost,” he said. “So far, at least, that is all just talk. Maybe it will happen, but at this point in time, this stuff is being made five gallons at a time.”

Levinson said algae hold promise because, unlike corn- and sugar-based ethanol, algae do not require extensive farmland and are not affected by shifts in food prices. But algae-derived fuel has yet to be proven, he said, and with the extensive research and development still needed, algae may not be viable as a fuel source for some time.

“Maybe it will become important someday, but it’s not going to be next week or next year,” he said. “This is all really interesting, but it’s a long way from prime time.”

It is not just algae, he said. The whole biofuel industry is driven by government mandates and incentives, and is not yet economically viable on its own. Until it can compete with petroleum on a level playing field, biofuel of all types will struggle to catch fire.

In the meantime, OriginOil is working to get a leg up on its competitors. Executives are in talks with a number of different companies and universities about partnering resources. Eckelberry declined to say exactly whom they are talking to, but he said one university “has a very active algae program.”

OriginOil’s senior technical adviser, Paul Reep, is a longtime alternative energy researcher and member of the technology transfer program at USC.

Eckelberry, on the other hand, has little experience in the biofuel industry. He has spent the better part of the last three decades in the technology industry. And since the dot.com bubble burst, he has been helping struggling Internet companies turn around their businesses.

“I learned a huge amount from helping companies grow organically, rather than through hype,” he said.

Investment opportunities

Eckelberry has since used his business expertise to get OriginOil off the ground, and the company is attracting interest from investors. The company went through several rounds of funding that netted it about $2 million.

Neil Sullivan, a semiretired stock broker and investment banker, said he sees tremendous potential in the company. So, about a year ago, he invested $125,000 in the company out of his own pocket.

“It’s a great short- and long-term investment,” he said. “It’s innovative technology, it’s in the right sector and it’s got a tremendous CEO in Riggs Eckelberry and a proven veteran in the alternative energy field Paul Reep.”

The company began listing its stock in April on the Nasdaq over-the-counter Bulletin Board. Like many public companies in the biofuel space including Beverly Hills-based Pure Biofuels Corp. OriginOil is a penny stock. But for all the risk inherent in such volatile stocks, OriginOil has remained fairly consistent. After opening at 10 cents, the company’s stock rose to 20 cents by the end of its first day of trading. As of last week, shares were trading at 45 cents near its all-time high.

Sullivan said he expects big things from the company largely because the biofuel industry holds such potential.

“It’s an exciting field that’s going to be the field of the future,” he said.

OriginOil Inc.

Headquarters:

Los Angeles


CEO:

Riggs Eckelberry


Founded:

2007


Core Business:

Developing technology to extract oil from algae to make biofuel


Employees:

10