The Gas Rush: Calysta Energy aims for high-value markets via unconventional natural gas

October 22, 2012 |

Calysta Energy emerges from stealth — with new, biobased technologies to unlock high-value fuels, chemicals markets for stranded, unconventional natural gas

The synthesis of biobased technologies and abundant supplies of natural gas took a major step forward today with the emergence from stealth of Calysta Energy. The new company is a spinout of DNA 2.0, the largest US-based provider of synthetic genes for industrial and academic use. It has been established to use natural gas, as an advantaged feedstock for liquid transportation fuels and high value chemicals that are cost-competitive, scalable and reduce environmental impact.

Calysta’s proprietary biological gas-to-liquids (BioGTL) platform uses methane as a new biological feedstock, which to date for mid-sized and small gas fields has been untapped as an energy source outside of heating and electricity generation.

Former Codexis CEO Alan Shaw is leading Calysta as chairman and CEO, and co-founder Josh Silverman is CSO – Silverman established and led R&D partnerships and product development collaborations for five biotechnology companies, including Avidia through acquisition by Amgen. The company also announced an advisory board including former Shell managing engineer Howard Fong, former Sapphire Energy VP Technology Michael Mendez, Codexis CSO emeritus John Grate and DNA2.0 president Jeremy Minshull.

Biomass feedstocks vs natural gas: a changing landscape

Calysta's take on the methane opportunity, compared to biomass sugars and CO2

“There are obvious issues in biomass feedstocks,” said Dr. Shaw in an interview with the Digest. “You can see it when companies like Amyris wobble, that it is time to move on from strictly a biomass fermentation approach. They are disadvantaged for making hydrocarbons at this time. The biology is working, but we have to look at other feedstocks.”

The methane opportunity and challenge

“In the case of methane,” Shaw noted, “we have a lot of advantages. It already is a hydrocarbon; it is cheap, and it will be cheap for a long time. Shell, Exxon, Dow, Dupont — they are all looking at stranded gas, and the flaring that is going on. And clean coal-to-liquids is very capital intensive, the payback is stretched to as much as 20-30 years.

“The challenge is that it is very expensive to transport natural gas through compression or liquefaction. The scale for conventional F-T technologies hasn’t really changed, and the oil majors won’t use conventional technologies to liquefy the medium-sized fields — the investments are huge, and the payback is 5 years even for major fields like the Shell GTL project in Qatar.

“But the opportunity they have had, to date, using conventional technologies and looking at production [in places like the Bakken field], has been to compress or liquefy and ship overseas.

“Meanwhile, to use one example — methane to methanol, the biology is ready now. The conditioning requirements are less sensitive than conventional processes. It’s a big play, to convert alkanes to alcohols so they can be transported.”

Products and slices

The company has developed a bioengineering-to-industrial path that can “slice” natural gas into a series of products, tuned according to customer needs — including olefins (ethylene, propylene, butylene) alcohols (methanol), other alkane fuels, diesel fuel — or, conversion of olefins (a/k/a/ alkenes) to oxides (for example, propylene oxide, a popular intermediate chemical with 15 billion pounds of global demand in 2010).

Advantaged economics

Calysta points to conventional processes for producing propylene oxide (PO) from propylene. “Using the conventional method, two to five styrene oxide molecules are made for each propylene oxide molecule – yet, styrene prices are declining. “In the case of Calysta’s technology, we operate at 50C instead of 300-500C,” CSO Josh Silverman told the Digest, “and there are major savings in the cost of engineering when you bring down the temperature — for example, the costs associated with safety. The cost of propylene is still the major factor but the cost on top is 5 times less.”

Diesel? “The cost is much, much less than algae, to use an example,” Shaw noted. “We looked at the DOE’s work on algae or sugar-based economics. You can make diesel from methane for half the price as other biological methods, allowing direct competition with petroleum-based fuels. That’s today, and even better with process improvement. And, a methane molecule is 20 times more intensive in terms of the greenhouse effect than a CO2 molecule.”

The business model

The company is focused on co-developing its technology for specific applications, primarily with owners of medium-sized gas fields. The focus? Biobased processes that will operate more cheaply and efficiently than chemical processes, providing both cost and environmental advantages for domestic fuel production.

A word on the science

The engineering technology developed by Calysta is based on mathematical nonlinear systems modeling and optimization algorithms routinely used in such diverse areas as small molecule QSAR, process control design for manufacturing, website optimization, and logistics. They’ve dubbed this the GPS Bioengineering platform.

These problems all require methods that can analyze systems with high complexity and large numbers of independent variables. Over the past seventy years, mathematicians and engineers have developed algorithms for identifying optimal solutions from data sets that are very small relative to the total space being explored.

Today, these principles are used in many of the things surrounding us that we take for granted, from the design of jet engines to gasoline formulations to credit card fraud detection.

What Calysta is doing, at the front end of its system, is modifying the standard algorithms for engineering complex systems to work with biological systems. They combine these algorithms with an integrated query and ranking mechanism to identify appropriate sequence substitutions.

More on the technology, here.

Natural gas supplies

US natural gas reserves rose by 12% to 318 trillion cubic feet in 2010, according the US Department of Energy.

The bottom line

It’s early days for this technology. Seasoned observers will look to see how quickly the company reels in an announced partner, or multiple partners, among the owners of unconventional gas fields.

From there, we’ll look for a timeline from company formation to at-scale deployment o technology. The mid-sized gas fields will continue to be there – but we expect this space to be highly competitive — the low-cost of natural gas in North America being something less than an Eyes Only Top Secret at the moment. To lock down dance partners will require an industrial pathway with attractive ROIs.

You’d have placed a winning bet if you formed the expectation that Calysta, however, will be less tightly locked to a single oil & gas major than Codexis was historically tied to Shell.

Finally, we’ll be interested to see how these technologies work with biomethane.

We’ll also look to understand the extent to which the company is based in fermentation or biocatalysis. We suspect that the long-term direction of Calysta will focus on biocatalysis – but there are numerous references to fermentation in the company website, so we’ll watch to see how that develops. What’s the difference between biocatalyst and fermentation processes, and why does it matter? See our Top Story from last week, “I just want to say one word to you. Just one word. Are you listening? Biocatalysts

See Alan Shaw and Calysta at Advanced Biofuels Markets.

Dr. Shaw will make the debut presentation of the new company and technology at Advanced Biofuels Markets in San Francisco. More information on ABM, here.

More on the company

More on Calysta, here.

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