Sapphire Achieves Major Milestone with Continuous Green Crude Oil Production

SAN DIEGO, March 20, 2013 – Sapphire Energy, Inc., a leader in algae-based Green Crude oil production, today announced it has entered into a commercial agreement with Tesoro Refining and Marketing Company, LLC, a subsidiary of Tesoro Corporation. Under the agreement, Tesoro will purchase crude oil from Sapphire Energy's Green Crude Farm in Columbus, New Mexico, which recently reached a new milestone: continuous cultivation and crude oil production. This begins the first step of a commercial relationship to process Green Crude oil from Sapphire's future commercial facilities.

"In less than one year, Sapphire Energy has started up its commercial demonstration to grow algae; has produced crude oil from our farm; and now with Tesoro as our first commercial customer, we're providing barrels of our oil to be refined for market use," said Cynthia ‘CJ' Warner, CEO and chairman of Sapphire Energy. "This moment is enormously important for the industry as it validates the benefits and advantages of Green Crude, and confirms its place as a market-viable, refiner-ready, renewable crude oil solution."

Sapphire Energy is now producing crude oil daily from algae biomass cultivated and harvested at the company's Green Crude Farm in Columbus, NM. Oil extraction is conducted through a patented method for converting wet algae to crude oil, which enables algae to be processed without the need for a timely and costly drying step. Wet extraction technology for algae-based crude oil has been considered one of the biggest challenges to commercialization. With this process, which is the result of more than four years of research, development and field trials, the entire algae cell is now used in oil production, greatly improving yield. Furthermore, the process is scalable, and has proven to be effective with a wide range of algae strains.

In initial testing by Sapphire Energy, Green Crude oil was refined into on-spec ASTM 975 diesel fuel, proving its compatibility with the existing network of pipelines, refineries and transport systems. Moving forward, the company plans to grow production significantly to further expand its commercial demonstration and begin the transition towards commercial-scale production.

"Tesoro is continuously looking at new technologies for producing renewable fuels. We are pleased to become a purchaser of Sapphire Energy's Green Crude, which shows promise as an alternative fuel solution," said Joel Larkins, vice president of Renewable Development at Tesoro.

About Sapphire Energy

San Diego-based Sapphire Energy is pioneering an entirely new industry – Green Crude production – with the potential to profoundly change America's energy and petrochemical landscape for the better. Sapphire's products and processes in this category differ significantly from other forms of biofuel because they are made solely from photosynthetic microorganisms (algae and cyanobacteria), using sunlight and CO2 as their feedstock; are not dependent on food crops or valuable farmland; do not use potable water; do not result in biodiesel or ethanol; enhance and replace petroleum-based products; are compatible with existing infrastructure; and are low carbon, renewable and scalable. Sapphire has an R&D facility in Las Cruces, New Mexico, and is currently operating the first Integrated Algal BioRefinery (Green Crude Farm) in Columbus, New Mexico. For more information, visit www.sapphireenergy.com

About Tesoro

Tesoro Corporation, a Fortune 150 company, is an independent refiner and marketer of petroleum products. Tesoro, through its subsidiaries, operates seven refineries in the western United States with a combined capacity of approximately 675,000 barrels per day. Tesoro's retail-marketing system includes over 1,400 branded retail stations, of which 595 are company operated under the Tesoro®, Shell® and USA Gasoline(TM) brands. For more information, visit www.tsocorp.com.