With a Push from Calysta, Biofuels Economy Tilts Toward Natural Gas

Natural gas is best known to most people as a fuel burned to heat homes or generate electricity. Josh Silverman, chief scientific officer and co-founder of the Menlo Park startup Calysta Energy, sees it as an untapped raw material that, like crude oil, could be converted into high-value products from transportation fuels to plastics.

“The major use of natural gas is to burn it, which seems like a waste,” Silverman says.

But Silverman is working on a solution: genetically engineered microbes. Calysta has bred bacteria that feed off methane, the main ingredient of natural gas. The microbes in turn form the fats and other biological molecules that make up their cells, and those compounds can be processed into diesel fuel and industrial chemicals used to make consumer goods, Silverman says.

Calysta, a 12-employee company, has been working in stealth mode since its founding last year. But the startup made a public debut this month with the announcement of its business plan and the recruitment of a high-profile CEO, industry veteran Alan Shaw (pictured above right).

Shaw, the former CEO of the global industrial biotechnology company Codexis of Redwood City, said he spotted an opportunity as natural gas production soared and its price dropped. The gaseous hydrocarbon is an energy-dense resource, but it’s hard to transport without building pipelines or converting it into a liquid through inefficient chemical processes, Shaw says. Much of the potential supply is “stranded’’ in small and medium-sized gas fields and other sites such as landfills, he says. Natural gas is most widely used for heating and for fueling power plants, but its full value as a manufacturing raw material hasn’t been realized, Shaw maintains. Calysta plans to pioneer the use of natural gas as a biological feedstock for producing transportation fuels and industrial chemicals.

Josh Silverman, Calysta Energy's co-founder and chief scientific officer

Josh Silverman, Calysta Energy's co-founder and chief scientific officer

Calysta is well-placed to develop biological methods to process natural gas, Shaw says. The privately held startup draws on the expertise of its parent company DNA 2.0, the biggest US-based supplier of synthetic genes to researchers. In the industrial realm, synthetic biologists modify the DNA of microorganisms to make them more efficient producers of marketable compounds that range from drugs to biofuels. Calysta has an exclusive license to use certain DNA 2.0 intellectual property, and can also consult with about 60 scientists at DNA 2.0, which shares its Menlo Park address with its spinoff.

“It really is a convergence of great technology at a time when the market is real,’‘ Shaw says.

Calysta takes advantage of the naturally occurring microbes found in places that would be inhospitable to most living things, such as underwater volcanoes spewing methane, the major constituent of natural gas. The microorganisms, by converting the gas into bio-molecules eaten by other creatures, introduce an energy source into the food chain.

Silverman’s scientific team is trying to tweak the genes of the methane-gobbling microbes to make them more efficient at producing raw materials that can be absorbed by the industrial chemical “food chain.’’ Calysta is also studying enzymes from the same microorganisms as possible biocatalysts in reactors that could churn out specific building blocks for the manufacture of high-value fuels and chemicals.

But the key value of all these processes is that they will cheaply transform natural gas into liquids or otherwise transportable raw materials, Shaw says.

“You can put them in a truck and drive them anywhere you want,’’ Shaw says.

Calysta does not see itself as a competitor with companies like petroleum giant Shell, which has spent decades improving its chemical process for gas-to-liquid conversion. In 2011, Shell began production at its massive Pearl facility in Qatar, which is slated to churn out enough diesel to fuel 160,000 cars a day, as well as compounds for jet fuel, lubricants, and plastics.

Shaw says Shell’s high-temperature process can only be cost-effective at huge plants such as Pearl, which receives natural gas from Qatar’s North Field, one of the largest reserves in the world. By contrast, Calysta’s biological process can operate at a much more modest scale, making possible a … Next Page »

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