In May, Dow Chemical said it would tap a strain of Solazyme algal oil for use in electrical transformer insulating fluids.

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Whether grown in bioreactors or in desert ponds, algal oil mostly sidesteps the food and land conflicts that potentially can limit other biofuels.

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Solazyme is building two production facilities in the United States and one in Brazil that will have a capacity to produce 450, 000 metric tons of algal oil.

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It is possible that the designer method can overcome some of the drawbacks involved with making fuel from algae, namely robustness and competitiveness of particular strains over other organisms, enhanced growth rate and yields of algal oil.

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The next trick, which Exxon's money will help pay for, is to tweak the biochemical pathway that makes the algal oil (which is known, technically, as a triglyceride, and has oxygen atoms in it as well as carbon and hydrogen) so that the oxygen-containing parts of the molecules are snipped off and a pure hydrocarbon is left.

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High oil-yielding strains of algae can be grown and dried and the oil extracted from the dry algal mass, before being similarly converted to biodiesel in a process called transesterification.

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