There’s been some talk around for a while about turning algae into biodiesel (remember Oilgae.com?).

The latest story comes from the Green Options blog:

Researchers at Utah State University say that farming algae, with reported oil yields of 10,000 gallons per acre, could become an economically feasible biodiesel feedstock by the end of the decade.

This is the Holy Grail of biodiesel: an oil source that could make a serious dent in our fossil fuel consumption. Our most productive feedstock today, the oil palm, doesn’t even come close with yields of 635 gallons/acre, and is followed distantly by the U.S. standard, soy, at 48 gallons of oil/acre.

And officials point out that algae can be grown just about anywhere… in extremely hot weather or even salty sea water.

Utah State researchers are producing their algae in a grid of indoor bioreactors. The light is captured by parabolic dishes on the roof and fed inside using fiber-optic cables. They’re stringing together several thousand to make an algae farm. And they received $6 million in a grant from the Utah Science and Technology Research Initiative,. The first commercial plant in Utah is in the works, and researchers say algae-biodiesel could become economically feasible by 2009.