Wellington, July 24 NZPA - Two South Island companies seeking to turn algae -- grown in sewage and other polluted water -- into fuel are combining their efforts.

Solray Energy and Aquaflow Bionomic Corporation are expected to try to tap dual revenue streams -- from not only their capability to clean polluted water using algae, but from the provision of the algae as feedstock for the next-generation biofuel.

Marlborough-based Aquaflow has developed low cost, low energy, commercial technologies to harvest and store significant daily tonnages of micro algae, and in addition a wide variety of uses for such algae.

But Solray has separately developed a reactor and extraction process to detoxify algae and deliver a crude oil and other co-products, with the oil capable of being refined as biofuel.

Their work will target global demand for clean water, reduction of nitrogen and phosphates which have seriously degraded aquatic ecosystems, and renewable biofuels from waste.

Aquaflow -- which envisages growing algae in open ponds using the effluent in wastewater from sources like sewage plants, food processing facilities and dairy farms -- has a relationship with Honeywell company UOP to work on biofuel for jet planes.

In March last year Aquaflow said it was successfully harvesting algae and planned to commission a prototype biorefinery to turn the algae into fuel, and it has not yet specified whether it is carrying on with that biorefinery work or relying on Solray's system.

Solray has said its technology can convert all of the algae -- not just the fatty acids -- into a crude oil that can be refined into petrol, LPG or kerosene and aviation fuel.

It is a joint venture of New Zealand companies Solvent Rescue, which reconstitutes used solvents, and Rayners, which makes high-pressure vessels and heating equipment.

According to Solray director Chris Bathurst, at present, about a third of the processed algae becomes crude oil "but we know we can do much better than that".

NZPA