Goodbye Fuel from Food, Hello Food From Fuel: Calysta’s Big Methane-to-Protein Play

May 20, 2014 |

fuel-is-for-food

Alan Shaw has a one-step solution for making the world food secure, and using up all that spare, cheap, greenhouse-nasty shale gas. Make proteins from methane.

Solving two big problems at once — and Alan & Co, ahem, just happen to have the technology in hand.

The Digest investigates.

When we last left Alan Shaw, Josh Silverman and the team at Calysta Energy, they were celebrating a signature deal for the methanotroph-based technology: a long-term development deal with NatureWorks to develop an alternative route to polylactic acid (PLA) via methane, as opposed to the corn sugar fermentation that NatureWorks pioneered some 10 years ago.

What was not public then, but can be revealed now, is that Calysta has acquired BioProtein A/S, based in Stavanger, Norway. The BioProtein technology is the only commercial scale process available to directly convert natural gas into biological products. BioProtein, the protein feed produced using BioProtein’s technology, is approved for sale and has been commercially marketed in the European Union. The combined company now has access to Calysta’s biotechnology platform and immediate access into the EU and the $370 billion global nutrition market.

“It’s a huge deal,” crowed Calysta chief Alan Shaw. “Huge for the industry, huge for Calysta, huge for the company we are acquiring. Just think of how many years and millions went into this platform. Statoil and DuPont spent 10 years and $350M to get here. There’s no one even remotely close, it’s a least a five-year advantage for our company in gaseous fermentation.”

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Combining its proprietary BioGPS technology platform with technology from BioProtein, Calysta intends to produce proteins and other key ingredients of high nutritional value through the fermentation of methane, the primary component of natural gas. These nutrients can be used to improve the quality and sustainability of commercial fish and animal feed. In particular, the high-quality protein generated by Calysta’s process can serve as a direct replacement for fish meal, a major component of many commercial livestock feeds. Fish meal is currently produced from wild, commercially caught fish, adding unsustainable pressure to ocean ecosystems.

Here’s how it works. Calysta develops non-GMO methanotrophs – these are little microscopic critters that eat methane as their energy source (just like we get carbon from eating the foods we eat). Like you, when they consumer energy and food, they grow — in this case, making lots and lots of newly divided out methanotrophs. The cells are 70-72% protein by weight. That protein is harvested, dried, powdered, and distributed by BioProtein as a substitute for fish meal.

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And here’s why the fish meal market is unsustainable. It’s in the simple math. Salmon, for example, need fish meal because they are carnivores — they can’t survive on a 100% vegetarian diet consisting of soybeans, to name another source for fish meal. But fish meal is made from fish, and it takes two pounds of fish meal to result in a pound of salmon. So, you do the math. It’s right up their with selling twenty-dollar bills for ten bucks — you make friends, but you don’t stick around.

Now, exactly why salmon, and not, say, livestock?

It’s an approved market, aquaculture is growing like a weed, and its an aggregated market where 50% of all salmon aquaculture is in Norway and 30% in Chile. Salmon consumption is up 3X since 1980. “It has moved from being a luxury item,” said Shaw, “to a principal source of protein that is huge in SE Asia. Emerging middle classes cannot get enough.”

Now, if fracking is hot, and food security is hot, gas fermentation is white-hot, too. That’s what LanzaTech does — and they’ve been propelled up to #2 in the Digest Hot 50 rankings, are raising big $$ in a tough market, and have an impressive roster of collaborators. Gas fermentation works well, in the economics. And in the case of methane — the price in the US has dropped to spectacular lows.

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“Gaseous fermentation is on everyone’s lips,” says Shaw, “and when people say that, they are saying ‘C1’, because that’s what it is, though in different forms. CO, syngas or methane. But only one of those three one makes any sense at scale, and despite all the BS from LanzaTech, it’s not syngas, it’s methane. People want to use methane; the major companies have already done their work on this. Methane trumps them by orders of magnitude on the basis of cost.”

“And Calysta, up until today,” said Shaw, “had a successful and growing program with NatureWorks, and multiple discussions with other companies in that business unit led by Bill Rothwell. The characteristics of that business meant, though, that it was a long time to market – five to seven years, because on any product you are essentially starting from scratch. But with nutrition, and this acquisition, we’ve brought that down to 3 or 4 years. It’s my magnum opus.

At this point, Shaw takes a breather while CTO and company founder Josh Silverman, takes up the dialogue. “Here’s how it works. It’s very similar to the process for making vegemite, except that is not made by feeding sugar to yeast. The cells grow on the carbon source and produce protein. When we feed methane into the reactor design we are using carbon is not part of human food chain. It’s sustainable, as opposed to soy, and its non-GMO, and its safe.

“Why ahead of the game? There’s no commercially viable production platform at scale anywhere else. What you have is a big black box standing between most people and this market.”

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Shaw jumps in again, when GMOs are mentioned. “I think GMO is a worthy cause, but I am not for taking on that fight. In my experience, you don’t build a business on what you think the government might do in five years.”

Next Steps

So, we’re excited. It’s hard not to get caught up in Alan’s latest adventures. He has some of the same reality distortion field that Steve Jobs used to carry around with him. And the other guy used to do pretty well.

But what’s next?

They need capital to build a plant. Not a trivial amount. Up to 100,000 tons, and the ticket will be in the low hundreds of millions. Er, what gets described at your local Lowe’s as among the “big ticket items”. Where will they build it? Next to a very cheap source of methane. Think: Brunei, the Emirates, Qatar, Saudi Arabia, or in a methane hot spot in the Bakken, Marcellus or Niobrara formations in the US or Canada.

Reaction from BioProtein

”We are excited to join forces with Calysta,” said Torkell Gjerstad, Managing Director at IRIS R&D Invest, BioProtein’s major shareholder. “The combined company will have the technology, team and market understanding to ensure the fullest attention to both the nutrition and chemicals business segments. BioProtein’s fermentor technology has been proven in full scale commercial operations, and its extension into the chemicals market will further strengthen the leading position of a sound, commercially attractive business case in a broad set of industry applications.”

One more thing

To reflect the new multi-industry focus, Calysta Energy, Inc. is changing its name to Calysta, Inc. The new company will have two primary business units. Calysta Energy will continue the current programs in development of its Biological Gas-to-Liquids and Biological Gas-to-Chemicals technologies using methane as a feedstock for the production of fuels and chemicals. Calysta Nutrition will focus on the development of a range of nutritional products from methane.

And one more thing: Deal terms were not disclosed. But clearly a back end proposition.

More about Calysta here.

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