HR BioPetroleum to build algae facility on Maui

Hawaii's HR BioPetroleum announced that it plans to build a commercial-scale microalgae facility on Maui to produce lipid oil for conversion to biodiesel and other products, such as animal feed.

The company said it signed memoranda of understanding with Honolulu's Alexander & Baldwin (Nasdaq: ALEX), Hawaiian Electric, and Maui Electric to pursue the joint development of the project.

Hawaiian Electric and Maui Electric are subsidiaries of Hawaiian Electric Industries (NYSE: HE).

"This agreement is a welcome step in HR BioPetroleum's efforts to accelerate its proven technology toward commercial scale," said Ed Shonsey, CEO of HR BioPetroleum.

"HR BioPetroleum has developed techniques to scale production and achieve at least a 50 percent improvement over the price per barrel of fossil fuel today, while mitigating carbon dioxide release into the atmosphere."

Last December, HR BioPetroleum formed a similar joint venture with The Hague, Netherlands-based Royal Dutch Shell (NYSE: RDS.A) to build a facility on the Kona coast of Hawaii Island, also known as the Big Island. Shell said it holds a majority share in the new venture, called Cellana, but financial terms of that deal were not disclosed (see Shell to grow algae for biofuel).

Financial terms of the latest deal were also not disclosed, but HR BioPetroleum will be responsible for overall project management, including obtaining financing, and construction and operation of the microalgae facility.

Alexander & Baldwin will provide strategically located land, adjacent to Maui Electric's Ma'alaea Power Plant, and may provide equity capital for the project.

Hawaiian Electric and Maui Electric will lead in determining the permitting and construction needs for piping to carry stack gases containing carbon dioxide, which the algae consume, from the Ma'alaea plant to the adjacent algae facility.

The first phase of the microalgae facility, which will be HR BioPetroleum's first commercial facility, is expected to be in operation by 2011.