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Come take a look at the first phase of Sapphire Energy’s algae farm in New Mexico. When eventually built out it will produce 100 barrels of algae biofuel a day, and currently the five-year-old startup is making algae fuel on ponds across about 100 acres.

Updated: Is algae biofuel finally getting ready for primetime? Algae energy startup Sapphire Energy says the first phase of its first planned massive commercial-scale farm in Luna County, New Mexico is up and running.

The first phase of the farm now has algae ponds and processing equipment spread across about 100 acres about 1/8 of a mile — that includes sizes of 1.1-acre pond and a 2.2-acre pond. Eventually the entire farm is supposed to spread across 300 acres and make 1.5 million gallons of the algae biofuel per year. Five-year-old Sapphire says it’s already harvested 21 million gallons of algae through the farm and the facility is supposed to be done and producing 100 barrels of algae biofuel a day by the end of 2014.

This first portion of the farm took a year to build, used 634 full time construction workers, and required $85 million from Sapphire, backed by a USDA loan guarantee, as well as a $50 million grant from the Department of Energy.

The rest of the farm will require a lot more money. Sapphire is raising another $144 million from investors, including agriculture company Monsanto. Sapphire has already raised $300 million from investors including Bill Gates’ investment firm Cascade Investment as well as the public funds.

Sapphire has had a relationship with Monsanto for at least a year. Monsanto wants access to Sapphire’s genetic research technology to use it for its own agricultural development. Using Sapphire’s genetic technology, Monsanto says it can isolate traits in algae (like high yields and stress traits) that could be used to tweak its other crops. Monsanto’s CTO Robb Fraley said in a release last year that algae is an “excellent discovery tool,” for agricultural genetic research.

Because the New Mexico farm is outside, and exposed to the environment, in a couple months Sapphire will move into using a variety of algae that will respond and perform as well during the winter months. In contrast other companies like Solazyme use closed tanks to grow algae so the algae is not effected by the environment.

Solazyme has also recently been moving aggressively into the biofuel market, after making specialty chemicals, personal care products and food for years.