Under the program, ExxonMobil expects to spend more than $US600 million ($A765m), which includes $US300 million in internal costs and potentially more than $US300 million to SGI.

"We believe that biofuel produced by algae could be a meaningful part of the solution in the future," said Emil Jacobs, vice president of research and development at ExxonMobil Research and Engineering Company, said.

Their efforts are aimed at an economically viable, low net carbon emission transportation fuel.

SGI is a privately held company focused on developing genomic-driven solutions and founded by genome pioneer, Dr J. Craig Venter.

"The real challenge to creating a viable next generation biofuel is the ability to produce it in large volumes which will require significant advances in both science and engineering," said Venter, CEO of SGI.

Added Jacobs: "After considerable study, we have determined that the potential advantages and benefits of biofuel from algae could be significant.

"Among other advantages, readily available sunlight and carbon dioxide used to grow the photosynthetic algae could provide greenhouse gas mitigation benefits.

"Growing algae does not rely on fresh water and arable land otherwise used for food production.

"And lastly, algae have the potential to produce large volumes of oils that can be processed in existing refineries to manufacture fuels that are compatible with existing transportation technology and infrastructure."