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Tesoro incorporates algae-derived oil into its business planning

There has recently been plenty of concern regarding the negative effects that drilling for oil has on the environment. Much of this has stemmed from the various large spills at oil drilling locations which have resulted in the pollution of the environment in Michigan and elsewhere. Some oil companies are looking for new ways to produce oil without having to drill. One company, Tesoro Corp., has decided to address this concern by adding algae-derived crude oil into its business planning .

Tesoro, which is the largest independent oil refiner on the West Coast, has recently decided to purchase algae-derived crude oil from Sapphire Energy Inc. The amount Tesoro has decided to buy from Sapphire has yet to be released to the public. However, Sapphire has made public statements which suggest that this is the beginning of a longer-term business relationship between the two companies.

The product being purchased was produced at Sapphire's demonstration plant which was partially funded by a $50 million grant via the U.S. Energy Department. The Department of Agriculture also provided a $54.4 million loan guarantee. By 2014, Sapphire plans to begin producing as much as 100 barrels per day.

Arguably, Tesoro may be on the cutting edge of energy technology by implementing this alternative source of crude oil into its business planning. However, in order to fully maximize profit potential while also avoiding possible losses will require a well-crafted business plan. Additionally, an effective business plan will ensure that all legal regulations in Michigan and elsewhere are being followed in order to avoid future fines or law suits.

Source: Bloomberg Businessweek, " Tesoro Is First Customer for Sapphire's Algae-Derived Crude Oil ," Andrew Herndon, March 20, 2013

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