Transesterification

The process of converting vegetable & plant oils into biodiesel fuel is called transesterification, and is fortunately much less complex than it sounds.
Transesterification refers to a reaction between an ester of one alcohol and a second alcohol to form an ester of the second alcohol and an alcohol from the original ester, as that of methyl acetate and ethyl alcohol to form ethyl acetate and methyl alcohol ( see also interesterification. Chemically, transesterification means taking a triglyceride molecule or a complex fatty acid, neutralizing the free fatty acids, removing the glycerin and creating an alcohol ester. This is accomplished by mixing methanol with sodium hydroxide to make sodium methoxide. This liquid is then mixed into vegetable oil. The entire mixture then settles. Glycerin is left on the bottom and methyl esters, or biodiesel, is left on top. The glycerin can be used to make soap (or any one of 1600 other products) and the methyl esters is washed and filtered.
Transesterification is not a new process. Scientists E. Duy and J. Patrick conducted it as early as 1853. One of the first uses of transesterified vegetable oil was powering heavy-duty vehicles in South Africa before World War II.

Transesterification of Algal Oil into Biodiesel

Transesterification of algal oil is normally done with Ethanol and sodium ethanolate serving as the catalyst. Sodium ethanolate can be produced by reacting ethanol with sodium.
Thus, with sodium ethanolate as the catalyst, ethanol is reacted with the algal oil ( the triglyceride) to produce bio-diesel & glycerol. The end products of this reaction are hence biodiesel, sodium ethanolate and glycerol.
This end-mixture is separated as follows: Ether and salt water are added to the mixture and mixed well. After sometime, the entire mixture would have separated into two layers, with the bottom layer containing a mixture of ether and biodiesel. This layer is separated.

source : http://www.oilgae.com/algae/oil/biod/tra/tra.html