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The U.S. Navy plans to fly fighter jets and run ship engines powered by "biofuels" made from algae and oilseeds - part of a fledgling effort to reduce the military's dependence on imported fossil fuels.

For the last several years, the military has conducted test flights using synthetic jet fuels derived from coal and natural gas.

Now the effort is being expanded to include fuels from algae and the oilseed crop camelina, which is grown primarily in arid parts of Montana.

Military biofuels contracts worth more than $11 million were awarded recently to Solazyme of San Francisco and Sustainable Oils of Bozeman, Mont.

Solazyme will produce 20,000 gallons of ship fuel made from algae and Sustainable Oils will produce 40,000 gallons of camelina-based jet fuel.

"These are probably the tip of the iceberg in terms of future procurements," said Frank Pane, director of energy plans and programs at the Defense Energy Support Center at Fort Belvoir, Va. "There's great interest within the (Defense) Department in alternative fuels and renewable energy."

The potential of the military market is huge: Last year, Pane's agency bought 95 million barrels of jet fuel and more than 23 million barrels of fuel for ships.

Tests to see if the biofuels perform on par with conventional fuels will be conducted at Patuxent River Naval Air Station in Maryland, said station spokesman Billy Ray Brown.

Interest in algae-based fuels has boomed in the last several years, with tens of millions of dollars already sunk into research dedicated to perfecting the conversion of the material to fuel.

Startup companies and researchers are developing ways to maximize growth and reduce costs - including growing it in the dark, increasing the amount of sunlight that reaches the organisms and experimenting with oil-rich strains.

The growth of the camelina industry stalled over the last couple of years, as farmers in arid regions conducive to the oilseed's growth hesitated to switch over from crops like wheat.

Sustainable Oils president Scott Johnson said the contract with the military could prove a breakthrough. The contract includes an option for the military to purchase an additional 150,000 gallons of camelina-based fuel.

Sustainable Oils this year had contracts with growers for about 8,000 acres of camelina. The crop is sent to a refinery in Texas for conversion into fuel.

"We've proven we can grow it and deliver it," Johnson said. "For our company, this is the beginning of the real sustained effort to increase the acreage. I expect next year we'll have at least five times the acres we have this year in Montana."