Melbourne, Fla.-based PetroAlgae says that it hopes to test a commercial system as early as next year.
The company licensed strains of freshwater algae bred by Arizona State University and is developing the bioreactors and harvesting methods to grow the algae at large scale, said Fred Tennant, PetroAlgae's vice president of business development.
There are several other companies pursuing a similar path to PetroAlgae.
GreenFuel Technologies ran a multi-year program with Arizona Public Service to grow algae and is said to be close to closing a large algae biodiesel production deal in Europe.
Solayzme is using fermentation, rather than photosynthesis, to grow algae oil that can be tuned for different purposes, such as jet fuel or edible oils.
Another company, LiveFuels has said that it has a target of producing 100 million gallons by 2010 using genetic manipulation.