HR BioPetroleum Inc. said yesterday it will buy out its partner in an experimental algae-to-energy venture in Kona as it moves closer to commercial production of biofuel.

HR BioPetroleum and Royal Dutch Shell PLC formed the joint venture called Cellana in 2007 to build and operate a demonstration facility to grow marine algae and produce vegetable oil for conversion into biofuel.

When the deal closes at the end of the month, HR BioPetroleum will become the sole owner of Cellana, including its 6-acre demonstration facility in Kona.

"The acquisition of Cellana represents a significant opportunity for HRBP and its corporate and project stakeholders," said Ed Shonsey, chief executive officer. "We will continue to operate Cellana’s Kona demonstration facility and to continuously improve the economics for growing marine algae using HRBP’s patented process."

Shell will provide short-term funding to HRBP as part of the transition.

Cellana’s first commercial project will be a biofuel plant that the company plans to build next to Maui Electric Co.’s Maalaea Power Plant. Biodiesel made from algae at the Cellana facility will be burned at the plant to generate electricity.

Shonsey said the company has received all the permits it needs to build the processing facility, and could begin producing algae-based biofuel in two to three years.

"We’ve been working with Shell for a while, and we’d like to thank the company for its participation over the last few years and its willingness to enable us to do this," Shonsey said.

Shell’s involvement in the joint venture was mainly in developing the technology used to extract the oil from the algae, he said.

HR BioPetroleum plans to build the Maalaea biodiesel facility in two or three phases, Shonsey said. When complete, it should be able to produce about half of the fuel burned at the 212-megawatt power plant, Maui’s largest.