Any matter that is not oil is a contaminant, some of which is sequestered CO2. What you propose would release the CO2 back into the environment during processing or during the combustion process thereby making the whole CO2 point moot.
It doesn't matter that the CO2 is released. It was sequestered as the algae grew. So, the process is carbon neutral. Grow --> Release --> Grow --> Release, etc etc. The CO2 is constantly being recycled.
The current problem we have with CO2 is that it took millions of years to sequester it in fossil fuels and we are releasing it in dozens of years.