PHOENIX -- PetroSun Inc. subsidiary Algae BioFuels will start the field testing stage of the cultivation of algae for biodiesel production during the first quarter of 2007 at a test site in Arizona.

Algae BioFuels will install a biodiesel refinery in Arizona upon the successful completion of the field cultivation trials. The initial phase of the refining process will produce up to 10 million gallons per year. The refining capacity will be increased after the initial phase of production and refining has been evaluated.

Algae BioFuels is also conducting a feasibility study of production and refinery sites in Australia and New Zealand to complement future PetroSun operations in those regions.

Extensive research has been conducted to determine the utilization of microalgae as an energy source, with applications being developed for biodiesel, ethanol, methanol, methane and even hydrogen. Independent studies have demonstrated that algae is capable of producing in excess of 30 times more oil per acre than the current crops now used for the production of biofuels such as corn and soybeans. Biodiesel produced from algae contains no sulfur and is non-toxic and highly biodegradable.

The Office of Fuels Development, a division of the Department of Energy, funded a program from 1978 through 1996 under the National Renewable Energy Laboratory known as the "Aquatic Species Program." The focus of this program was to investigate high-oil algae that could be grown specifically for the purpose of wide scale biodiesel production.

Some species of algae are ideally suited for biodiesel production due to their high oil content, in excess of 50 percent, and extremely rapid growth rates.

PetroSun's current operations are concentrated in the Ark-La-Tex region with plans to expand into New Mexico, Arizona, Utah and Australia in 2006. PetroSun provides a comprehensive array of products and services to the oil industry. Algae BioFuels, a wholly owned subsidiary of PetroSun, is an emerging producer of biodiesel derived from the cultivation of algae. PetroSun is headquartered in Phoenix.

SOURCE: PetroSun Inc. via Market Wire.