Sapphire Energy Inc. has entered into a commercial agreement with Tesoro Refining and Marketing Co. LLC, a subsidiary of Tesoro Corp. Under the agreement, Tesoro will purchase crude oil from Sapphire Energy’s Green Crude Farm in Columbus, N.M., which recently reached a new milestone: continuous cultivation and crude oil production. This begins the first step of a commercial relationship to process green crude oil from Sapphire’s future commercial facilities.

“In less than one year, Sapphire Energy has started up its commercial demonstration to grow algae; has produced crude oil from our farm; and now with Tesoro as our first commercial customer, we’re providing barrels of our oil to be refined for market use,” said Cynthia “CJ” Warner, CEO and chairman of Sapphire Energy. “This moment is enormously important for the industry as it validates the benefits and advantages of green crude, and confirms its place as a market-viable, refiner-ready, renewable crude oil solution.”

Sapphire Energy is now producing crude oil daily from algae biomass cultivated and harvested at the company’s Green Crude Farm in Columbus, N.M. Oil extraction is conducted through a patented method for converting wet algae to crude oil, which enables algae to be processed without the need for a timely and costly drying step. Wet extraction technology for algae-based crude oil has been considered one of the biggest challenges to commercialization. With this process, which is the result of more than four years of research, development and field trials, the entire algae cell is now used in oil production, greatly improving yield. Furthermore, the process is scalable, and has proven to be effective with a wide range of algae strains.

In initial testing by Sapphire Energy, green crude oil was refined into on-spec ASTM 975 diesel fuel, proving its compatibility with the existing network of pipelines, refineries and transport systems. Moving forward, the company plans to grow production significantly to further expand its commercial demonstration and begin the transition towards commercial-scale production.

“Tesoro is continuously looking at new technologies for producing renewable fuels,” said Joel Larkins, vice president of renewable development at Tesoro. “We are pleased to become a purchaser of Sapphire Energy’s green crude, which shows promise as an alternative fuel solution.”