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Revealing the Fool’s “Silicon Valley Oil Superstar: 1 Company Pulling Profits Out of Thin Air”

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I spent the weekend in New York enjoying the overwrought holiday scene with my family, and I must admit to being delighted to catch a Broadway show and see the Radio City Music Hall Christmas Spectacular for the first time, but though I’m now fully immersed in holiday merriment I must confess that nothing quite warms the heart like sleuthing out a “top secret” stock pick for you.

So let’s get to another one, shall we? This time it’s a pitch from the Motley Fool’s Hidden Gems newsletter, which has been sort of a quiet underachiever in recent years — this is the Fool’s small cap “value” newsletter that used to be run by Fool founding brother Tom Gardner, but it has been through a series of editors since he refocused on other things. In the early 2000s the letter was a solid market-beater much of the time, with picks like Middleby (MIDD) and Chipotle (CMG) doing spectacularly well, but according to Hulbert they had a few weak years following the market crash — until this year, when they have again been beating the market average.

This teaser pitch was written by one of their analysts, a biotech guy named Dr. Max Macaluso, which is pretty typical — recently the Fool has started using teaser pitches signed by folks other than the newsletter editors and stock pickers, I don’t know why … other than that it helps to further differentiate the hype-filled promise of the ad from the real and hopefully more sober analysis published in the actual newsletter. Here’s how Dr. Macaluso gets us interested:

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“Imagine how much money you’d stand to make if you found a way to pull…

“Endless oil straight ‘Out of Thin Air’ …

“Sound impossible? I thought so too until I heard this…

“It’s more than 10 times cleaner than petroleum oil, works in exactly the same way, and its production (which takes only a couple days) is virtually unlimited. No wonder industry insiders are calling it ‘The New Petroleum.

“Billionaire entrepreneur Richard Branson of Virgin Group leaped at the chance to make a recent investment, proclaiming this radical new oil “Will play an important role in our future.”

“Continental Airlines just used it to fly a jet airliner from Houston to Chicago… and its parent company United was so thrilled they immediately locked in a contract for further delivery of 20 million gallons of fuel per year.”

So what’s the idea? Well, there’s a long presentation going into all of the reasons why this upstart will turn the massive energy business upside down, how it has the upside of “four Microsofts put together” and about how the process can create oil in just a few days, here’s a bit more for a taste:

“… it has industry experts saying this radical oil could help put the world on a cleaner, more energy-efficient road to the future.

“In fact, independent energy research firm Life Cycle Associates found it can reduce greenhouse emissions by a mind-bending 93%.

“OriginOil simply calls it ‘The ideal replacement for petroleum.’

“To put it in context, this is such a large-scale phenomenon that entire generations could go through life without witnessing something comparable…

“And as you can probably imagine, whatever ends up replacing petroleum as the world’s primary source of fuel would almost certainly make early investors tens of thousands of dollars with relative ease.

“Possibly even hundreds of thousands. Maybe even more…

“To put it in perspective, MarketResearch.com — the watchdog of emerging markets sectors — sees the potential for a multi-hundred billion-dollar market opportunity within the next few years alone.”

The Fool even pulls in Clown Prince Jim Cramer for an endorsement:

“… this astounding technique was actually developed by a publicly traded company.

“A tiny Silicon Valley company that’s already erected a Fort Knox-like 300-patent fortress around their ‘oil out of thin air.’

“To put it in perspective, they have more patents than employees.

“So it’s no wonder Jim Cramer ran a special segment on his TV show Mad Money to specifically call attention to their ‘Competitive advantage with many layers of patents and trade secrets.’”

There’s more, of course — lots more. But that’s plenty for us to throw into our Mighty, Mighty Thinkolator — and once it churns and chews a bit we learn that our answer is: Solazyme (SZYM — free trend analysis here)

And yes, it was covered by Jim Cramer as a “speculative” stock that his viewers had asked about, but the coverage on Mad Money was in March, 2012, less than a year after Solazyme went public in the Summer of 2011. You can see his coverage here if you’re curious. Back then the stock was around $12 and his attention helped to drive it up to about $15 as he called it a “terrific speculation,” but it’s been mostly downhill from there with the stock dipping to $7 or so, bouncing back up to $12, and then falling back down to where it is now between $9-10.

We can certainly agree that Solazyme is speculative — this is a company with a cool technology in their ability to create biodiesel by harvesting it from giant tanks full of sugar-consuming algae, and they have (or have had) lots of primo partners in Bunge, the US government, Chevron and others. But it generates very little revenue so far, and is probably quite far from ever generating a profit.

Solazyme’s unique proposition, as I understand it, is that they don’t produce oil using photosynthesis like the land-intensive algae pond operators do, they couldn’t make that work in volume. They produce oil in dark tanks using sugar, so they have heavy input costs in the form of tonnes of sugar (there’s an interesting piece from SeekingAlpha on that here, I haven’t checked his facts), but it seems that the immediate hopes for Solazyme rest far more with high value-added oils for food products and cosmetics that earn a much higher price — they can create fuel oils, but it’s hard to see how they could do so and be competitive with $100/barrel crude oil unless they have heavy government incentives. People will likely pay more for biodiesel that’s derived from alga, because premium “green” products can always garner a higher price, but that’s a strategy for a segment of the market, not a strategy for really upsetting a trillion-dollar market.

This is a key period of time for Solazyme, their big commercial plant openings (one in Brazil colocated with Bunge at a sugar plant, one at an Archer Daniels Midland facility in Iowa) are a bit delayed but are now supposed to come online in the first quarter of next year, so there will undoubtedly be substantial news out of the company in their quarterly announcements over the next six months or so … but it will still be speculative.

That doesn’t mean there’s anything particularly wrong with Solazyme, I don’t know the company well, it just means that they’re dependent on a process that’s inherently high-cost and difficult to scale — the only way to really quickly turn them profitable would be to license their technology to someone who wants to invest billions of dollars into massive algae plants. These new plants of theirs seem wise to me, they’re locating their production in areas where they can take advantage of cheap energy and proximity to feedstocks and a strong infrastructure run by their partner, and it makes sense that they’re targeting specialty markets for their expensive fuels since they can get multiples of the crude oil price for nutritional or industrial oils, but I have no idea if or when Solazyme will ever become a profit-making enterprise.

They’ve got enough cash to keep going for a while thanks to a substantial debt offering this year, they will see additional cash flow as their facilities come online in the coming months, and they have solid management and a cool technology and lots of patents, but I don’t know them well enough to predict when or if they’ll start to make investors happy again. Analysts are predicting that revenues will quadruple next year, but that the company will still be losing a dollar a share.

Oh, and yes, several investors have noted that there’s a long stretch to go before profitability — SZYM has a pretty hefty short interest of about 17% of its shares, so that could help pop the stock up if they get surprisingly good news and those short sellers have to cover … but that also means a lot of folks are betting pretty heavily on SZYM being a bad investment. If you’re interested in Solazyme and have an opinion to share, feel free to shout it out with a comment below.

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72 Responses to Revealing the Fool’s “Silicon Valley Oil Superstar: 1 Company Pulling Profits Out of Thin Air”

  1. Solarzyme is not an oil company. Where did you get that from?

    Solarzyme is developing specialized bio-oils. Those oils are too expansive to be made by traditional oil refining. They are pricey, but still it is not a big market.
    The market for Solarzyme in in food! This is the company who struggled so far to produce large quantities. It was the motto in all their reports in the last 10 years. Always on the brink of increasing the size of their breeding tanks. The issue was a lack of orders, and a general disbelief from the industry at large.
    This is no more. They have signed a contract with Bunge – which is not an oil company, sorry for the dirty oil bugs.
    They are now stepping up their production line. In such a phase, I do not expect the share price to go up. But their deliveries start mid-14. Bunge is not known to being a risk taker. Do not even try to buy their shares, you would die of boredom. But they are the perfect foundation for Solarzyme.
    It is a sound biotech company on their ramp up. Their products can be a lot of things, including fueling cramer’s nonsense talks, but they found a practical fool proof market.
    For info, i have a small position in SZYM which I took after I read about the deal with Bunge. Not big enough a position though to try to pump and dump. I simply like those guys.

    • Francois, on their list of potential products was aviation fuel (http://solazyme.com/fuels). It looks like they can make just about any hydrocarbon they wish to. Still, the reliance on sugars (cane, corn, cellulose) as their source of energy and carbon might limit production of oils/fuel that are usually consumed in vast quantities. I wonder how far along they are in utilizing cellulose and growing plants that produce a clean supply of it.

      • There is a private startup called Proterro (with two Os) that has developed a “bug” of some sort that converts CO2 + water into sugar at one-third the price for sugar cane. The co-founder of Solazyme, a technical guy, has resigned to take a position at Proterro and join its Board. This could mean good things for both companies. Check Biofuels Digest, Oct. 14, 2013, “highlights from 2013 ablc next hot slides” page 6. Here’s a quote:

        “The system, which will be piloted in Florida, features a collapsible low-cost polyethylene cylinder where the patented cyanobacteria grow on panels, water and nutrients drain by gravity on panels, and CO2-augmented air, flue gas inflate the cylinder. Using off-the-shelf materials, the system is designed to produce sugars at the rate of 145 tons per acre per year–almost 30 times the rate of sugarcane–with no cellulose, hemicellulose, or lignin to remove.”

        Solazyme claims extraordinary breakthroughs in utilizing cellulose feedstocks in a report to the California Energy Commission. See energy.ca.gov/2013publications/CEC-500-2013-019/CEC-500-2013-019.pdf.

        • Thanks for this. Sounds great if the projected yield is in the ballpark. Work of this sort with hijacked cyanobacteria has been going on for a loooong time ( 2-3 decades); perhaps it is panning out at last. I sure hope so.

          “that converts CO2 + water into sugar”: Otherwise known as photosynthesis.

          • If there is any possibility that this new technology will do any damage to the sugar growers of Florida, then you can be sure that the local politicians will stomp the life from it as soon as it shows up here. The Big Sugar lobby is very strong in Florida.

        • Thank you for your interest in Proterro. But we just wanted to set the record straight re Solazyme cofounder and (former) CTO Dr. Harrison Dillon: While, yes, his relationship with Proterro is good for the company, he did not resign any post to join Proterro, and, in fact, did not “join” Proterro at any time. He is a member of Proterro’s advisory board, having become an adviser when he was still Solazyme’s president and chief technology officer. [Link to: http://proterro.com/pdf/Proterro_advisoryboard_websept13_2011.pdf It was just last September, two years later, when Solazyme announced his stepping down from his posts there, as well as from the Solazyme board, to assume a long-term consulting role with that company. .[Link to: http://solazyme.com/media/2013-09-05 For more information about Proterro visit http://www.proterro.com.

    • francois,
      When Solazyme initially announced the deal with Bunge, I contacted Bunge and asked what their risk was if the Solazyme process didn’t work out. Bunge said in essence that they had no risk, since they would simply switch the facility over to other standard uses.
      Solazyme has experienced high insider selling, management changes, and startup delays. They may still be successful, but the risk/reward imo is much less than for “a sound biotech company,” and imo not worth their present share price.

  2. I read a report a while ago showing that while you can make biodiesel, jet fuel, etc from algae, it’s cost prohibitive at under 200-300 usd a barrel. You can’t get enough energy out. It makes nice headlines,, but that’s all.
    The high value small market edible oils that may have up future. If this is what they are about, it may be interesting. 50-200 million usd markets where you have a 30% production cost advantage…make for good business…the rest…..

    • If I understand your meaning correctly, I don’t think this company is making the fuel FROM algae (that is, they are not growing algae in the sun and then using the algal cell walls as a source of cellulose to make fuel). Rather they are using using the algae as a fermentative bio-factory to convert carbohydrate (sugars from various sources) to lipids (various oils), somewhat like transgenic bacteria that can be made to spew out specific proteins for us that they do not ordinarily make.

      • Dave, either way, it makes no sense to do this for jetfuel or diesel. The true input costs of the carbohydrates are far to expensive versus the standard, in use, crude oils/natural gases.
        (Corn, sugar, etc, are all far too costly an input for the energy output provided…It does make sense, as I said, for other high value product where you may gain a competitive production advantage.

        • Yes, I agree about carb cost. There’s no way to compete with petro sources. Come to think of it, it might be cheaper to use nat-gas to make sugar!

  3. I like the Solyndra comment almost goes with SYNTROLEUM symbol (SYNM) who is a bio fuel in Okla. that formed a Penny Stock there partners are TYSON FOODS a BIL$ company and Mansfield a private Bil$ Company . So you have a penny stock and two other companies one private and one public, except they have Bil$ pockets , all three formed DYNAMIC FUELS, how about that. Dynamic Fuels sells fuel to the biggest fuel user in the world, the US NAVY ( has to buy) hundred of thousands of gallons from them, the Navy won’t pay there Patriotic Sailors barely enough to live on but they are forced by Obama to buy this bio fuel at about 3 times the price and Syntroleum the penny company with its Billion Dollar Partners which is DYNAMIC FUELS is just down the road where the Keystone Pipeline would have hooked in to the southern half of the Pipeline which is already done and the fuel would be a lot cheaper but Obama made the Navy buy from there SOLIYNDRA NO THE SYVTROLEUN THROUGH DYNAMIC FUELS, Sailors sweat and barely get by but DYNAMIC FUELS , OBAMA’S SIDESHOW GETS HIS BIO CHICKEN FUEL FOR THREE TIMES THE PRICE, THAT IS THIN AIR WITH A PRESIDENTS INK PEN SIGNATURE FOR VOTES. SYNM is still a penny stock even with there 10 to 1 reverse split I think they still are anyway. The Admirals in the Navy where not to happy they where gonna put chicken emblems fuel but Obama veto put a stop to that and there still is no Keystone Pipeline thats when Obama let Warren buy the rail road and made sure it passed not as a monopoly, Warren gets an extra 10$ a barrel to deliver oil to the refineries and Warren makes the rail road tanker cars to. But Buffet is the master of not paying taxes and blaming big oil who pay more in taxes than there profits , any other business would be out of business, so now the bio’s are waiting for the Farm Bill get some AMD calls for January 2014 yesterday they have a lot on the Farm Bill but you can keep your Doctor. True check it out with the freedom act for Obama Purchase orders, that website works.

    • Cathy, I admire you for how you can cover a lot of territory rhetorically and make sense at the same time. Take a look at ESPH and see if you can understand their possibilities. I gave up on Obama economics after he claimed his billions of our money would be “timely, targeted and temporary, I think that was in 2009 in January.

  4. Oxford Club,thorium! Their tease sounds like a bunch of Bull. Will thorium ever be a big play? If so,which Co’s? I’m still betting on uranium. Sounds like a good one for Myron. He probably gave a report on it and I missed it. Thanks &Happy Holidays

    • Gee Gogle thorium reactors before calling it bull. These reactors were already built and tested worked well and proved feasible back in the 60′s and into the 70′s at Oak Ridge. They would be all over the place today save for the cold war when the US needed as much plutonium as possible to build more nuclear bombs per day than the USSR could. So our government in 1978 shut down the thorium research and insisted all reactors be uranium reactors that create plutonium for bombs. Thorium reactors don’t produce anything remotely useful for bombs because the waste is such low level – and has no issue with disposal. Thanks to our military reactors around the world are dangerous and can melt down and do after say earthquakes. Just insane that we have not yet restarted the thorium research and built these reactors. Ample fuel, thorium is all over the place, literally dirt cheap, and just discarded as waste in mining operations. And safe – they don’t need constant cooling – you walk away and they shut down – you have to keep stoking the fire or it goes out – it is totally safe compared to light water uranium reactors that run away and melt down if not constantly controlled and cooled. And no high level waste. Energy without CO2 emissions. As to energy from sugar or corn – I personally believe using anything that could serve as food for fuel, or farm land that can grow food and use it to grow biomass for fuel, as outright unethical so long as humans in the world are starving. Please don’t buy ethanol in fuel. It is wrong. Using corn for fuel drives up the price of food worldwide. Just wrong when we have so many other options.

        • Well you likely can’t avoid it totally. But you can avoid the Flex fuel 85% ethanol, and in the Midwest, especially Iowa watch out for midgrade that sells for less than regular but has far more ethanol. The only real solution it to write you reps in DC and ask that ethanol in fuel be banned (or at the very least not mandated as some minimum % of regular fuel)

      • Both India and China have an aggressive Thorium strategy. Their plans call for at least 50 thorium reactors by 2015. However both countries have substantial Thorium reserves so you really can’t make much money on the raw material.

    • Good job on the thorium topic, John. This has bugged me for years (just retired from Oak Ridge where I was working on the nuclear cleanup for the past 20 years). The ONLY justification for the uranium cycle is the creation of weapons-grade material. The thorium cycle was rejected back in the 1940′s because it couldn’t be used for that purpose, and we were trying to build the first A-bombs. When you know the truth about this, it makes you wonder why the world is still following the uranium pathway to “peaceful uses for nuclear energy”. The answer, as always, is the industrial-military complex and BIG money. Thorium is far superior by any measure you want to discuss, initial cost, safety (DUH) and waste disposal (far less waste, and far easier to dispose). What if all the “third world” countries that want nuclear power were given assistance by the “haves” in the form of creating the reactors and power plants to use thorium? Why not Iran? Politics/politics/politics and BIG money. It is worse than pathetic. For any of you who “know it all” and think thorium is BS, I suggest you pull your head out (of the sand) and research the fact that because India was not allowed to become a nuclear bomb maker, they were forced (2009) to use thorium to generate electricity in their power plants, and they are well advanced now. “India has a flourishing and largely indigenous nuclear power program and expects to have 14,600 MWe nuclear capacity on line by 2020.” That’s ALL from thorium, folks!
      Tom C.

      • Interesting “google” search:
        Thorium and the dream of clean nuclear power
        By David Lague December 20, 2013 9:20 AM
        HONG KONG (Reuters) – China isn’t alone in turning to thorium as a potential source of power. Enthusiasm for exploiting this alternative to uranium is on the rise across the world, even as the cleanup continues from the Fukushima nuclear accident in Japan.

        A new generation of scientists and nuclear engineers argue that thorium could be the key to realizing a dream of safe, cheap and plentiful nuclear power for an energy hungry world.

        Thorium deposits, estimated to be about four times more abundant than uranium, are widely distributed: Substantial reserves have been found in China, Australia, the United States, Turkey, India, and Norway. About 6,600 metric tons (7.75.3 tons) of thorium used to power the most efficient proposed reactors would provide enough energy to replace all of the fossil fuels and nuclear energy consumed globally each year, proponents say.

        Uranium-poor India has a long-term research effort under way and has decided thorium will become the mainstay of its nuclear energy industry later this century. The French government has a research program. Companies in the United States, Australia, Norway and the Czech Republic are working on reactor designs or thorium fuel technology.

        Energy from thorium is not just scientific theory. On April 25, Thor Energy, a private Norwegian company, began producing power from thorium – named after the Norse god of thunder – at the Halden test reactor in Norway.

        “It is the fundamental first step in the thorium evolution,” says company CEO Oystein Asphjell. The tests are aimed at showing the fuel could be a valuable alternative to uranium for existing reactor operators. Nuclear giant Westinghouse, a unit of Toshiba Corp, is part of an international consortium that Thor Energy established to fund and manage the experiments.

        A Westinghouse spokesman said the company was “providing viewpoints” on the research.

        Asphjell says burning thorium in current pressurized water reactors could boost safety and provide greater fuel security, especially for countries with limited access to uranium. Eventually, proponents want to pair thorium with a new kind of reactor, cooled not by water but by molten salt. That, booster say, would realize thorium’s full potential as a fuel.

        Thorium is a shiny, slightly radioactive metal. In its natural form, thorium isn’t fissile – meaning that, in contrast to uranium, it can’t split to sustain a nuclear chain reaction.

        But if thorium is bombarded with neutrons from a small amount of fissile nuclear fuel acting as a starter, either uranium-235 or plutonium-239, it is converted to uranium-233 – a form of uranium that is a first-rate nuclear fuel. Once started in a reactor, the process is self-sustaining, with subsequent fissions of uranium-233 in turn converting more thorium to nuclear fuel.

        In the kind of molten-salt cooled reactor favored by many thorium proponents, the uranium-233 fuel would be dissolved in a coolant of liquid fluoride salts contained in a graphite core. Surrounding the core would be a blanket of thorium, also dissolved in liquid fluoride salts.

        When the fuel in the core fissions, it produces heat and a barrage of neutrons that pass through the graphite and convert some of the thorium in the blanket to uranium-233. This is then removed from the blanket and fed into the core, while fresh thorium is supplied to the blanket. The coolant and fuel mixture from the reactor core is circulated through a heat exchanger, so that the energy can be extracted to power a turbine and generate electricity.

        One advantage of this system is that the fluoride salt coolant has an extremely high boiling point of 1,400 degrees Celsius, far higher than the reactor’s operating temperature of about 750 degrees Celsius. That means the whole system can operate at close to normal atmospheric pressure.

        In a conventional water-cooled reactor, the cooling system must be designed to withstand high pressure. That means reactors also must have massive, heavily engineered and expensive containment structures to minimize the danger from leaks or pressure explosions.

        Because the core in a thorium molten-salt reactor is already liquid, it can’t melt down. The design calls for a plug of frozen salt at the bottom of the system. If the reactor overheats, the plug would melt and the fuel and coolant would drain into a containment vessel below, where it would rapidly solidify and could be recovered for future use, proponents say.

        These reactors could be much more efficient than most current nuclear plants, which extract between three and five percent of the energy in uranium fuel rods. In a molten salt reactor, almost all the fuel is consumed.

        One metric ton of thorium fuel would deliver the same amount of energy as 250 metric tons of uranium in a pressurized water reactor, according to a briefing paper published by the United Kingdom All Party Parliamentary Group on Thorium, a group of UK lawmakers who advocate adoption of the alternative fuel.

        Also, because most of the fuel is consumed, thorium yields little waste and is much less radioactive, proponents say. Most of the residue will become inert within 30 years, with about 17 per cent needing secure storage for about 300 years.

        The most dangerous waste from current generation reactors requires storage for 10,000 years.

        The molten-salt reactor may have one further benefit. Some advocates believe they can be used to burn off existing nuclear waste.

        A privately owned U.S. start-up, Transatomic Power of Cambridge, Massachusetts, says it plans to build molten salt cooled reactors to burn some of the 270,000 metric tons of nuclear waste accumulated worldwide. “There is enough waste just in the U.S. to power the country for a century,” says Russ Wilcox, company CEO and co-founder.

  5. noticed origin oil as a booster.weren’t they the co.that was supposed to produce an inexpensive and inexhaustible supply of oil.what happened to them?

  6. Speaking of biofuels – anybody have an opinion on bio fuel company GEVO? They did a secondary offering a few days ago at $1.35 and the stock currently trades at $1.20. At first look it looks like yet another cash burning, shareholder diluting “green” company with slim to no chances of earning a profit but according to some online posters the company has technology with a bright future.

  7. Hmm… any chance that the Fool is taking editorial license with the word ‘petroleum’; that they’re not really talking about oil? Think about it. Instead of petroleum, use the word ‘energy’: Pulling energy out of thin air…
    How about a hydrogen producer?

  8. Using any crops for fuel oils is just plain unethical, often wasteful of the best croplands, and unprofitable. There are already better ways.

    One company I’ve been following news on is Netherlands-based Joule Fuels [joulefuels.com] which is making fuel oils—ethanol and diesel for now—using nothing but genetically engineered cyanobacteria in a solution rich with industrial waste CO₂ pumped through solar panels. NO feed stock and NO processing or separating, it goes straight to fuel. Only requires a concentrated source of CO₂ (plenty of those around), sunlight, and those little buggers.

    Now I’m adamantly against genetic modification of food for a variety of good reasons so don’t get on my case. These bacteria are engineered to not reproduce which is the secret of this process: it directs their activity solely into making oil—lots of it. And no agricultural land is needed.

    Joule has their labs in Massachusetts and started producing at a full-scale pilot plant in New Mexico early this year. They calculate they can produce fuels in large scale at around $50/barrel. 15,000 gallons of diesel and 25,000 gal per acre annually. That blows away everyone else in the biofuel industry. Because it is easily scaleable and go anywhere there is CO₂ and sunlight this one COULD fuel the Navy and airlines competitively—without subsidies—and I wouldn’t be surprised if they are watching this company. Audi is already in a deal with them. Not sure how that helps Audi, though.

    OK, now the bad news: they are so awash in private funding that it will probably be awhile before going public, if ever. Why cash out if it’s going to produce fuels with such low cost? But it’s one to watch. BBC did a story on Joule last April:

    I once did a napkin calculation that figured this process alone could theoretically provide 100% of America’s current oil use with an array of panels taking up slightly less than the size of Ohio (not necessarily all of them in Ohio ;-). May sound a bit daunting, but if it could grow to satisfy even 10% of oil needs it would be HUGELY profitable.

    • About food crops for oil .. much, much more wastage of crops occurs because people eat meat derived from them. If everyone in the world was vegetarian you could feed at least five times the world’s population and still save agricultural resources. And make people a lot healthier to boot. Maybe even have land left over for fuel!

  9. I didn’t say thorium was bull. I want to know a good play on thorium.Thanks for the comment John. Thorium sounds great. Happy Holidays

  10. it would very nice to know who is the driller company in the Petroplex shale whose stock is valued below 8$ today, “that will help America reach energy independence” (from Angel Publishing, Oil and Gas Trader newsletter)

  11. Save your money folks. THERE IS NO REPLACEMENT FOR PETROLEUM.
    Petroleum and its carbon derivatives will always be the cheapest and the most efficient fuels available. Despite the rhetoric, environmental impact is INSIGNIFICANT.
    Before the shale oil discoveries, which will provide fuel for the next 300 years and beyond, methane calthrates were viewed as a possible long term replacement.
    Unfortunately trying to harvest these compounds from the ocean bottoms was difficult, but progress has been made and will be solved before their use will be needed.
    During WWII the Nazis were not self sufficient in petroleum but had significant coal reserves so they developed a coke oven feedstock process to make diesel fuel. The process is know as the Fischer-Tropsch. The gas feedstock was a by-product in the steel making process. Ingenious those Krauts.
    As a matter of interest that process is being employed by Shell/Aramco to convert the natural gas reserves in Saudi Arabia to diesel and other liquid fuels. This is a cost effective enterprise, not these other intellectual masturbation follies designed to bilk the taxpayers and line the pockets of crony capitalists.

  12. I too would like the lowdown on Keith Kohls $8.00 “Petroplex” pick. See Giovanni’s appeal above. Google brought me to this page, no luck logging in to Irregulars. What am I doing wrong?

    JD – Austin, TX

  13. I bought a small piece when the Fool’s introduced this stock. I’ll hold and see what happens. The Gardner’s haven’t let me down yet.

  14. In order for this system to work as reported, the amount of energy leaving would have to be greater than the energy going into it. It is quite UNlikely that anyone is going to come up with a process that violates the law of conservation of mass and energy and consequently these type of companies have to resort to smoke and mirrors to get science ignorant investors to fund their efforts “to improve the economics.”
    This is simply a scam for ignorant investors who can’t recognize a perpetual motion machine.
    An Engineer

    • Engineer, “as reported”, I saw no mention of the energy value of the produced oils being greater than (or even equal to) the energy value of the carbs going in. Of course there is an energy cost when converting from one source of energy to another. No violation of therm. laws here, and this is not a perpetual motion scam. Since fat has roughly 2.25x the energy density of carbohydrate, and considering the cost of conversion (dunno how efficient the algae are), it probably takes at least 3lbs of carb to make a pound of oil. IOW, they have to use a lotta lotta carbs to get a lotta oil out.

  15. No comment on this stock but for people that arent familiar with Motley Fool I would like to say this is a terrific service.I subscribe to MF Sock Advisors and MF Canada.For the small cost you get terrific results.Just throwing my experiance with MF out there.Happy holidays investors!

    • Is it energy savings they’re after, or is it CO2 recycling and production of oil from, in part, waste carbohydrate? They are not growing algae (as in your pond-scum piece) as a means of converting CO2 to carb in algal cell walls; they are using them as factories to convert existing carb (from cane, but also from a variety of other sources—the usual list of fast-growing grasses and wood-related waste materials). So it’s more of a CO2 recycling operation which happens to spew oils, and to that extent it’s “green”, seems to me. And I like the idea of using junk carb, or even cane sugar, to crank out omega-3 marine oils, for example, instead of sacrificing fisheries to meet the demand for supplements of these oils. More “green”, IMO. Whether their process could be scaled up sufficiently to make even a small dent in our overall energy needs, I don’t know (watch their vid where IIRC this is briefly addressed), but I don’t see anything “un-green” about using waste carbs that might otherwise end up in a landfill.

      • I don’t think you have looked at their website where it clearly states:
        “Our proprietary microalgae are heterotrophic, meaning they grow in the
        dark (in fermenters) by consuming sugars derived from plants that have
        already harnessed the sun’s energy.”
        The salient points are “consuming sugars” and algae.
        They also state that they are making “algal-derived marine diesel.”

        • Yes, I had read most of the website and watched the 4 vids which are quite interesting. They are making many oil-related products, including diesel. Again, they are mainly growing the algae for the various lipids that they have managed to get them to produce using carbs as the carbon source, although they will also sell the algal remains as a source of protein (see website–algal flour and other products) . But that’s a side-line that brings in some extra money; the main interest is in producing various oils.

          Perhaps I have misunderstood the point of your pond-scum piece, which seemed to me to say that growing algae in sunlight as a means of fixing carbon into fuel was too inefficient to bother with. But that is not what this company is doing.

  16. I hate to rain on anyone’s parade, but the infrastructure to make this process in the volume of distillates required is ginormous and not realistic.
    Dave are you a pumper and dumper?

    • CB, no, I do not own it and do not intend to buy it any time soon. I just like their technology and it seemed to me there was some confusion here about what they do.

  17. I just read an article on Gizmag about algae to crude oil – million year process takes minutes in the lab. There is no mention of sugar, but of using wet algae (no drying process) subjected to high pressure and temperatures. The company mentioned is Genifuel Corp. – the process was developed at the US Department of Energ’s Pacific Northwest National Laboratory. Read more here:

  18. @ Jens-Ancher Sonne says
    1. At a given air concentration of CO2, the amount of algae growing depends on the nutrient supply and the usable radiation energy received from the sun.
    2. While the process described in the link is quite conceivable, heating and pressurizing the whole slurry to 350ºC (662ºF) and 3,000 psi will consume a lot of energy.
    3. Then you still need refining, etc.
    Overall, no energy or cost savings to be had!

  19. Their so many great idea’s & inventions out their. This one being one of them of course. Their is one very big problem with this idea. The oil tycoons wont like the fact that their profit margains will start to shrink. But once these billionaires die they wont be takeing all that money with them. We should stop polluting this great planet we live in & save it for our future generations. Hydrogen was around since the 1900s. So why have we been useing gasoline all this time? GREED.

      • Hydrogen certainly is an energy source, just as much as oil or coal. Hydrogen burns releasing energy (heat) and water. Perhaps Nanoc is trying to say that it takes energy to make the hydrogen from water in the first place so that you don’t gain any energy (you actually lose some). But it still is a means to store energy that is no different than coal or oil that are storing sun energy and geo-pressure energy from centuries ago. The difference is that hydrogen is not laying in the ground under pressure like natural gas. But like natural gas and oil it can be compressed and carried in gas tanks to power cars and planes that just don’t go very far on electricity and take too long to recharge. The beauty of Hydrogen is that unlike electricity that must be sent over wires (or stored in very heavy batteries), you can use that electicity to make hydrogen that can be burned on the road in cars or planes or trains much like we currently use liquid fuels like gas and diesel. And if the electricity comes from a nuclear reactor that creates no CO2, well then you have a clean liquid fuel for our cars and trucks and planes that does not increase global CO2 or warming. It can be the future of clean fuel that can be refilled in your tank on the road in minutes rather than the hours to recharge batteries. Seems like a great energy source to me – once we build those thorium reactors all over the globe to power the conversion from water to hydrogen in the first place. It can do most everything oil and natural gas do now but without any CO2 emissions or the consequent global warming.

    • Nobody has mentioned the energy input into growing feedstock for this and other “green” processes. Most agriculture depends on chemical fertilizers derived from, drum roll please, petroleum. This is the folly of ethanol – - sure, you get some benefit from the sun helping to grow that corn, but the amounts they need are only made possible by chemicals. I also agree that using arable land and/or feedstock that could potentially be produced for human consumption is a far better use of the land. This reminds me of electric cars: sure there is no pollution at the “tailpipe” – - it has been exported back to the electricity-producing plants needed to keep the things running, and to the facilities that first produce the batteries, and those that deal with the chemical mess resulting from decommissioning them. All this makes thorium seem like a decent idea!

  20. I don’t understand how can they seriously claim these guys produce oil out of thin air when they have to consume tons of sugar to produce it? And how many acres of sugarcane would be needed to satisfy the world’s daily demand for oil? How many people believe this bullship?

  21. Does anyone here REALLY understand the complete technical process (product), partnerships and recent headway, and can intelligently comment on the value of szym as a stock? I’d appreciate that feedback minus the politics and the tangents please. Thanks.

  22. We have too many trouble shooters, need more solution takers. Thin Air Science and Technology is example because their mindset is not tainted like most professional subjective views from antiquated information. Old science can be fatal in many respect due to various mismatch in application. R&D is too old need even better than that, it is
    visionary idea which in the case of this new Thin Air stuff. This stuff is not in criminal court and the jury is still out.

  23. When did the Motley Fool switch from giving controversial if interesting advice to shady scams and misleading and interminable internet infomercials? What’s next for them? Snake oil sales? Full scammer mode?

  24. The Motley report talks about a technology that can make fuel out of thin air not through microbial decomposition of organic matter (sugar/algae) . A British company recently claimed of doing so by harvesting CO2 from air and combining it with hydrogen to form carbohydrates which is the building block for fuels.

  25. Bought Solazyme at 11 a month ago; today over 14
    If it’s a pump and dump, it’s one of the longer ones. I’m hanging in

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