When ARCH Venture Partners principal Kristina Burow says that Sapphire Energy produces green gasoline, she's not speaking metaphorically.

The crude oil derived from San Diego-based Sapphire's unique production process, which utilises chemically manipulated algae to make refinery-quality biofuel, is almost neon green in colour.

“The organisms produce something that we're calling green crude, and it's the same chemical composition as the gasoline you can get at the pump,” says Burow, who has a master's degree in chemistry from Columbia University and sits on Sapphire's board of directors.

Although at first glance the idea may seem more science fiction than science, Burow and her colleagues at ARCH are buying into it with vigour.

The Silicon Valley-based firm recently led a $50 million (€32 million) financing round for Sapphire in conjunction with venture firm Venrock and the Wellcome Trust, the massive UK charity traditionally associated with investments in medical research.

According to Burow, the origins of Sapphire trace back to a conversation she had two years ago with fellow future Sapphire execs Jason Pyle and Nathanial David, two renowned bioengineers and founders of highly successful biotech firms Epoc and Kythera, respectively.

The topic of discussion revolved around the inferiority of ethanol as a viable substitute for gasoline because of the strain the biofuel puts on farmland and freshwater.

Out of that conversation emerged the idea of producing crude oil from algae through a photosynthetic process that would absorb as much carbon as its gasoline would emit after being used in a car. With an undisclosed founding investment from ARCH, Burow helped assemble an impressive team of biotech and energy experts, as well as advisory support from the Department of Energy and the University of California at San Diego.

Burow admits that at the time of Sapphire's official launch in May last year, the level of scientific research into photosynthetic biofuels was in its infant stages, and that committing to such an effort so early was something of a gamble.

But she also maintains that Sapphire's founding fell perfectly in line with ARCH's aggressive investment approach.

“We've really looked for game-changing events, some things that seem a little bit unorthodox, a little bit out there,” she says, pointing out that the recent controversy over corn and sugar-based ethanol's role in rapidly escalating commodity prices has only confirmed the rationale behind Sapphire's founding.

Sapphire's founding. Although Sapphire is secretive about the technology it uses to actually create its green crude, the company is vocal about the product's potential benefits.

First and foremost, the final product is entirely compatible with current energy infrastructure including cars, refineries and pipelines.

Algae is also adaptable across several different climates, not requiring arable farm land or massive irrigation systems.

Burow said that the temperate climates of Arizona, New Mexico, Southern California and Texas could make for fertile US centres of algae-based crude production, adding that China, India and Mexico would also be good environments.

Most importantly, green crude is renewable and carbon-neutral.

“It has this feature of being an infinite oil supply that we control,” says Burow. “Until we remove the water source there's no risk of it going dry.”

Sapphire is currently working on scalability issues, and hopes to produce 10,000 barrels a day at a commercially viable price sometime in the next three to five years.