Fossil fuel accounts the highest percent of primary energy consumption and used extensively for transport and other purposes since 1859. Continued use of fossil fuel are recognized as unsustainable because of depleting world reserves and the green house gas emissions associated with their use. Therefore, study on microalgal biofuel was performed to evaluate the potential of algal biomass as biofuel resources. Also, it is focused on current methods for culturing, harvesting and extracting technology of microalgal biomass and economic, energetic and environmental impact of biodiesel production. Calculation of total energy yield per hectare per year with oil content of 30% dry weight microalgae was calculated with the values obtained from literature. Also, production of biodiesel per hectare per year was calculated and compared with other studies. Results obtained in our study showed similar pattern with other study. From our study, we found that total oil yield from algal biomass is much higher than terrestrial plants and therefore, microalgae have the potential to completely replace transportation petrol fuel.