An L.A. startup developing a way to extract oil from algae has found its first paying customer.

OriginOil Inc. recently announced a strategic partnership agreement with MBD Energy Ltd., an Australian technology company that helps clients reduce pollution by recycling carbon dioxide.

Under a memorandum of understanding signed by the two companies last month, OriginOil will install algae production systems aimed at absorbing carbon dioxide from the emissions of coal-fired power plants. The carbon dioxide will then be used to produce algae, which can eventually be converted to petroleum-based fuels capable of powering cars, industrial machinery and jets.

“There is a lot of talk in the algae industry but not a lot of rubber meeting the road,” said OriginOil Chief Executive Riggs Eckelberry. “This is a real company rolling out algae for real customers. It puts us in the column of not talking about algae, but making algae. We’re moving into a real-world application.”

Eckelberry said his company will receive about $100,000 for an initial research phase during which it will create a testing facility in the Australian province of Queensland. If all goes well, the deal could eventually be worth “tens of million of dollars” to OriginOil over the next several years.

“This is a way to demonstrate that the technology works and get paid for it, too,” he said. “Our goal is not just to make lots of money from MBD but to prove our technology at full scale so we can license it to equipment manufacturers worldwide.”

OriginOil’s process for extracting oil from algae involves a 40-foot-long bioreactor module that can hold up to 10,000 gallons of water. After growing algae in the tanks, the company uses a sophisticated technology to break the organism’s cell walls and extract its oil.

Founded in 2007, OriginOil has said that it expects to show some revenues sometime next year. The company, which trades over the counter, reported a net loss of $815,000 for the quarter ended June 30. Its stock closed Nov. 4 at 12 cents a share, down slightly from its price over the summer.

More Algae

One of OriginOil’s potential competitors – Advanced Algae Inc. – has become the second tenant at PortTech LA, a non-profit formed last year to incubate new technologies in clean energy, transportation logistics and homeland security.

Funded by the Port of Los Angeles in partnership with the San Pedro Peninsula and Wilmington chambers of commerce, the San Pedro center welcomed its first tenant – Marine Oil Technology – earlier this year.

“I think this is especially appropriate because the technology appears to work,” said PortTech Executive Director Jeff Milanette.

Advanced Algae Chief Executive Dale Hinkens said he formed the company three months ago as a spinoff of another company he heads, American International Remediation Corp., a port-based company that cleans soil.

Advanced Algae, which has received $1 million in funding from American International and outside investors, already operates a testing facility in Albuquerque, N.M., and is looking for production space at the port. Advanced Algae and OrginOil uses different proprietary technologies.

Hinkens said the company is finalizing an agreement with a Modesto dairy farmer to install a 2.5-acre system that captures the nitrogen and carbon dioxide that are emitted, along with methane, by cows. The gases would then be used to produce algae and eventually oil that would help power the farm.

“This is our first project that’s shovel ready,” he said. “We’ve found a really nice pocket of opportunity in dairies.”

Bouncing Back

The latest satellite manufactured by Boeing Co. at its Space & Intelligence Division in El Segundo is set to be launched this week.

The SkyTerra 1, which weighs about 7,000 pounds in orbit, will go up from a base in Kazakhstan. The satellite, equipped with a large reflector, will be used to provide cell phone service throughout the United States for a Reston, Va., company called LightSquared that is building a nationwide wireless broadband network.

The satellite, which cost roughly $300 million to build and launch, represents another step in the slow return of the aerospace giant’s space division to more active production.

At its height in the late 1990s, the division was manufacturing about a dozen satellites a year. That number dropped to just two by 2008, said spokeswoman Diana Ball. This launch brings Boeing’s total this year to five satellites.

“A lot of commercial operators are evolving and adjusting their business plans, where in a weaker economy that wasn’t prudent,” she said. “The projections now are that over the next decade the industry will order 20 satellites a year.”

Staff reporter David Haldane can be reached at dhaldane@labusinessjournal.com or at 323-549-5225, ext. 225.

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