USDA has issued a loan guarantee that will allow a biofuels firm to construct a facility in New Mexico that will produce "green crude" oil from algae which can be refined into transportation fuel. The loan recipient, Sapphire Energy, Inc., intends to design, build and operate a $135 million integrated algal biorefinery in Columbus, New Mexico, for the production of advanced biofuel that is a "drop-in" replacement for petroleum derived diesel and jet fuel.

In making the announcement Agriculture Secretary Tom Vilsack saidthis project represents another step in the effort to assist the nation's advanced biofuel industry produce energy in commercial quantities from sustainable rural resources. The project will also increase energy security and reduce dependence on foreign oil. Funding for the loan guarantee is being provided through USDA's Biorefinery Assistance Program.

The project is intended to advance American efforts to provide renewable commercial-scale biofuels, increasing energy security and reducing dependence on foreign oil and is expected to create 60 jobs in the community of Columbus, N.M.

The IABR will be capable of producing 100 barrels of refined algal oil per day, equivalent to at least one million gallons per year. The oil will be shipped to the United States Gulf Coast to be refined by Sapphire's refinery partner, Dynamic Fuels, located in Geismar, La.

Producing fuel from algae is seen as one way to provide for domestically produced fuel for commercial and military use. USDA is partnering with the Department of the Navy as it embraces a biofuel future. USDA has also signed a Memorandum of Understanding with the Federal Aviation Administration to help the commercial airline utilize biofuels as jet fuel. Under the MOU, the USDA and FAA are working together with the airline industry to develop appropriate feed stocks that can be most efficiently processed into jet fuel. Doing so will decrease the industry's current dependence on foreign oil and help stabilize fuel costs in the long run.