CARLSBAD—Brine water and abundant sunshine are producing a crop that could give the nation an alternative fuel that doesn't compete with food crops.

Scientists at the nonprofit Center of Excellence for Hazardous Material Management and their partners are working on marine micro algae, a photosynthetic plant two microns large, or 10,000 times smaller than the head of a pin.

The algae grown in plastic-lined demonstration ponds at New Mexico State University's Agricultural Science Center are providing answers for turning algae into biodiesel.

Doug Lynn, the center's interim director, said the organization and its partners are 12 to 16 months away from developing a five-acre commercial demonstration facility south of Carlsbad that would use the same process as a full-scale commercial facility.

"The full-scale commercial facility will simply require more process units," he said.

If the center successfully demonstrates it can commercially produce oil from the algae for biodiesel, one of its partners, defense contractor General Atomics, has pledged $91 million to build a facility south of Carlsbad where brine water is available.

Since the center was formed in 2004, it has pursued research projects with a nationwide impact and that are innovative, meaningful and practical, Lynn said.

Lynn, a biologist, said the center turned to NMSU when it needed a place to conduct experiments and grow the algae.

The project started out small in small-scale aquariums. Then the center began to grow algae in 1,100-gallon algae ponds which have expanded to today's 25,000-gallon ponds.

Oil was produced from the algae on a small scale, Lynn said, and the center and NMSU prepared to announce they were the first to do so. Twenty days before their planned announcement, researchers in New Zealand said they'd successfully produced oil from algae for biodiesel.

Commercial production of biodiesel would have a huge impact on the local and state economy, Lynn said.

"If all goes as we hope it will, the final step to creating this new industry will be the design, construction and operation of the first 2,000-acre algae biodiesel plant in New Mexico," he said.

Construction is projected for 2010 with operations to begin in 2011, Lynn said.

However, he said, technical challenges remain, including defining the optimal strains of algae for greatest production capability, developing a harvesting method and developing an efficient and economical oil-extraction process.

Using $1 million from the state's newly created Energy Innovation Fund, the center will expand its research and determine if large-scale production of biodiesel from algae in New Mexico can be economically competitive with fossil fuels, Lynn said.

"This is 100 percent money dedicated to the algae-to-biodiesel project. ... It's going to mean a lot more dedicated research to this project and hopefully accelerate us to the national forefront," he said.