A few weeks ago we discussed the very real possibility of using algae to produce biodiesel.

Sure, it’s still in its earliest stages, but the fact is, algae is not a food crop and it delivers the highest yields for biodiesel production.

On a commercial scale, the economic production of biodiesel using algae is simply a no-brainer.

And there are a few companies trying to get a lead on this.

In Argentina, a company called Oil Fox SA--backed by German capital--has announced that it’s now cultivating enough algae to produce 57.5 million gallons of biodiesel annually.

This, by the way, was just one of a flurry of announcements made after Argentina passed landmark biofuel legislation in February.

Another company I’ve been following, PetroSun Inc. (PSUD.PK), has also been hot on the trail of pervasive biodiesel production from algae. In early February the company announced the completion of test phases and began contemplating locations for constructing initial production facilities.

By March, management decided on Alabama, and even moved their regional headquarters to Louisiana to be closer to the action, forming a new subsidiary, AL-G-BAMA. Cute, right?

And just this month, PetroSun has:

• Issued its technology to an Australian affiliate, with a test facility already in the works.
• Gained exclusive rights to BIOCO Inc.’s ultrasonic oil-extraction technology in ten states, Puerto Rico, Australia, and Mexico--with first dibs on all other states and countries excluding Canada, India and the Philippines.

Plus, just today the company announced that its Alabama pilot facility will be operational in four to six weeks, and will employ the BIOCO technology.

Some companies are also using algae for purposes other than biofuel production.

For example, NRG Energy Inc. (NRG:NYSE) is already using algae to cloister emissions from some of the company’s coal-fired generators. Of course, this algae can also be harvested daily and converted into a broad range of biofuels or high-value animal feed supplements.

Now, like I said, it’s still early. But there are new developments popping up in this sector nearly every single day. And I’m definitely getting a good vibe here.

So keep your eyes peeled. Because there’s definitely more to come.

Nick