The first-ever commercial production facility for algae-based biofuels is slated for Maui under plans announced yesterday by a trio of Hawai'i companies.

HR BioPetroleum Inc., Alexander & Baldwin Inc. and Hawaiian Electric Co. said yesterday that they have signed a memorandum of agreement to build a production facility near Maui's Ma'alaea power plant that would convert algae into biodiesel and other products.

While the details about the size, cost and production levels won't be worked out for some time, the companies said they hoped to get the new facility running as early as 2011, pending regulatory and other approvals.

The pact underscores Gov. Linda Lingle's long-term goal of making Hawai'i less dependent on foreign oil and more reliant on clean-energy sources. About 90 percent of the state's energy needs are fueled by imported oil, making Hawai'i the most oil-dependent state in the country.

"This innovative partnership can help move Hawai'i one step closer to securing energy independence and achieve our goal of having 70 percent of Hawai'i's energy come from clean sources by 2030," Lingle said in a news release.

Founded in 2004, HR BioPetroleum is a Hawai'i-based renewable energy technology and research company. In December, the company and oil giant Royal Dutch Shell PLC formed a joint venture to develop algae-based biofuels on 6 acres of land on the Big Island.

While the technology to create fuel from algae has been around for years, no one has been able to produce it commercially due to costs.

Of the 20 companies around the world that are looking into ways to convert algae into biodiesel, only two besides HR BioPetroleum have pilot facilities, said Ed Shonsey, HR BioPetroleum's chief executive officer.

Shonsey believes that his company can be profitable in its first year.

Shonsey said HR BioPetroleum will be able to produce about 10,000 gallons of fuel per acre a year.

By contrast, growers of palm oil can only extract 600 gallons per acre a year from their crops. Palm oil will be used at HECO's new $164 million, 110-megawatt plant at Campbell Industrial Park.

The yield on soybeans, which is grown on the Mainland to produce biodiesel, is about 48 gallons per acre a year, Shonsey said.

"We believe that biodiesel from algae is a promising solution for our need for liquid fuels," said Jeff Mikulina, director of Sierra Club Hawaii. "It's exciting that these companies are going to be early adopters of this promising new technology."

In its initial phase, HR BioPetroleum will build dozens of 30-foot-wide ponds on 300 to 600 acres of land leased from A&B, which is currently used by A&B's Hawaiian Commercial & Sugar Co. to grow sugar.

The algae would be grown in the ponds and will be harvested every 24 hours. From there, it will be dried, extracted and sent to a processing facility to be converted into biodiesel and other products.

HECO's sister company, Maui Electric Co., will divert some of the emissions from the Ma'alaea plant to provide carbon dioxide for the algae, which is essential for their growth.

HECO and MECO also are potential buyers of the biodiesel, which can be used to power their generators.

Besides the new Campbell Industrial Plant, MECO's 210-megawatt Ma'alaea plant, which supplies more than 80 percent of the electricity needs on Maui, can run on biodiesel fuel.

"As we move toward sitting an algae facility next to Maui Electric's power plant, we will meet more of our energy needs at home and also reduce our carbon footprint," said Karl Stahlkopf, HECO's senior vice president for energy solutions and chief technology officer.