Big Oil is accustomed to a high return on investment (ROI). It makes some sense. After all, it costs millions to drill a conventional oil well and hundreds of millions to drill offshore, with no guarantees. With that in mind, it would be foolish to shoulder that amount of risk without commensurate reward potential.

That means the majors don’t invest a dime without the promise of $1, or even $10. And the fact that Big Oil is putting a serious chunk of its capital to work in alternative energy implies that major oil companies think they can get a similar rate of return with “green” energy as they do with good ol’ crude.

But let’s cut to brass tacks here and just ask the question: “Really?” Can the world’s leading petroleum companies honestly expect biofuel to mirror the same sorts of returns that a gusher can produce?

Exxon Mobil (NYSE: XOM) thinks it can.

The company bet $600 million on a form of biofuel that few people have even heard about. It’s not based on conventional agriculture such as corn, but on so-called “micro” crops, which is a nicer way of saying pond scum. That’s right, Exxon is betting big on nothing more than algae.

This Exxon business unit — run, incidentally, by one of the most recognized and influential scientists in the world — isn’t something ordinary investors like you and me could get a piece of. And that’s too bad, because I think, along with Exxon, algae could indeed morph into a multitrillion-dollar-a-year industry.

The good news is that Exxon isn’t the only company working on this technology. And now, one of the private companies I mentioned in my Feb. 22 issue of Game-Changing Stocks has announced plans to go public.

Super algae and a $3.1 trillion opportunity
Solazyme owns a unique process when it comes to producing biofuel. Instead of allowing the algae to make their own food through photosynthesis — that is, harnessing the power of the sun to turn CO2 from the ai into sugar to feed itself — Solazyme turns off the lights. So instead of expending energy making sugar from sunlight and CO2, Solazyme tricks the algae by growing them in total darkness. The algae eat sugar that other plants already have converted. All of the dark algae’s energy goes into growing — fast.

Shutting the lid has other effects, too. It allows Solazyme to put the algae to work in an enclosed and tightly-controlled environment, one that eliminates variables such as temperature, acidity and contamination that can reduce the plant’s productivity.

And what, exactly, is the plant producing? Simply put, Solazyme locks a special strain of algae into a drum, throws in biomass — that is, high-sugar plant matter — and closes the lid. Just a few days later, the algae have gobbled up the sugar and the resulting mass of algae can be dropped into a conventional refinery and processed into diesel or jet fuel.

The key here is that it doesn’t take a geologic age to produce this oil. It only takes a matter of hours. And the process can be carried out in standard fermentation equipment, commercial space that can be rented from lots of industrial manufacturing companies.

Best of all, Solazyme’s special genetically engineered super algae yields much more oil than plain old wild algae. This can be quantified. Wild algae will produce oil with a volume equal to 5% to 10% of the organism’s dry cell weight. But Solazyme’s super algae produce and accumulate oil that’s more than 80% of the dry cell weight. In other words, it’s eight times more productive.

The markets for oils Solazyme can make is an astonishingly gigantic $3.1 trillion industry annually. What’s more, algae-based oil can be created on an extremely large scale and at an extremely low cost.

Action to Take–> Don’t miss out on what I’m saying here: This is a legitimate contender in the race to replace conventional crude.

Another fact that will help erase your remaining skepticism: Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) are the lead underwriters on the deal. We all know they aren’t going to take a flyer on anything that’s not likely to make them gobs of money.

The biofuel revolution isn’t science fiction or just an interesting idea. It’s happening — now. And with this IPO, investors will finally have a chance to get a piece of the action.

Stay tuned for more details about when the initial public offering (IPO) will hit The Street.

P.S. — I’ve created a free webcast, 6 Financial Surprises That Will Create Huge Opportunities in 2011, that will give you more insight into the sectors — like biofuels — where we’re going to see massive investment shifts in the months to come. If you’re interested in discovering what these megatrends trends are and how to play them, click here.