The High Priests of the Advanced Bioeconomy look upon the advocates of methane roughly the same way that Pope Leo X looked upon Martin Luther. It’s heresy, they say.
With the exception of the happy but limited tonnes of biogas coming from digesters and landfill, it’s not renewable, goeth the rap against methane. It’s a handy substitute for coal, theorizes the Obama Administration, which has found that cheap and abundant methane is a perfectly good way to lower carbon intensity in the power sector.
So as a society we’re at sixes and sevens over the powerful promise of methane, like left-leaning Democrats who grudgingly line up for Hillary Clinton because she’s better for them than Donald Trump, even though they might secretly long for Elizabeth Warren.
The pivot to methane in the advanced bioeconomy has three points of origin:
1. The stubborn difficulties that plague second-generation biofuels, from economics and logistics of new-fangled feedstock to the elongated shakedown cruises taken by technologies that are supposed to unlock the value therein.
2. The persistent de-coupling of US natural gas prices from oil prices — which have remained out of sync even with the crash of oil.
3. The arrival of new biotechnologies that have uncovered a means of using methane for applications more economically interesting than combustion for power.
A little science is in order on the third item, there. Methane conversion is the runaway train of science — using many pathways of traditional chemistry, the activation energy of the first step is greater than the rest, so that, once you’ve put enough energy into methane to get some kind of conversion going, the rest of the steps take place in blinding succession, as unstoppable as a collapsing set of dominoes until all that is left is carbon dioxide and a whole bunch of released energy. Hence, combustion.
The big exception has been steam reformation of methane to produce syngas (a combination of carbon monoxide and hydrogen), and the water-gas shift reaction can be used to convert syngas, firstly to pure hydrogen and lastly to ammonia by reacting hydrogen with nitrogen-filled air. Another exception is to catalytically convert methane to methanol, but the process efficiencies are low and the energy inputs are high.
So, what’s to be done with methane except to burn it, or make ammonia?
In recent years, scientists at Calysta and Intrexon have independently pioneered techniques for using methane as a pathway to single-celled protein or other chemicals (in the case of Calysta), or butanediol or isobutanol (in the case of Intrexon).
Fascinating in both cases because Intrexon SVP Bob Walsh and Calysta CEO Alan Shaw both tip these as first applications, that they’re building platforms not one-off technologies, and there’s going to be much more to come.
Now, fans of Alan Shaw and Bob Walsh will be the first to recognize a certain difference in personal style between the two. The former comes to the field with the baying intensity of horses, horns and hounds chasing a fox, while the latter is the quiet stalker high in the Highlands quietly cornering a 12 point buck.
But they appear both to have come back from the hunt replete with trophies.
More about Intrexon
For now, think methane to isobutanol, via an enhance microbial activity that’s been designed and plugged into bacteria. Feed the little critters and they send back isobutanol, at far cheaper rates than any other known method, says Intrexon.
Why isobutanol, we asked Walsh. “It’s a big market,” he tells us. “It’s well organized, we know isobutanol works as a fuel blendstock, and the economics are great. Why not do it?” Publicly, Intrexon has revealed that it can achieve a 50% margin making isobutanol at scale using its process. And, worry about low oil prices? Well, the lower oil goes, the lower gas goes — so the main cost, the methane feedstock is synchronized with market prices.
In the US, the economics of isobutanol get even better, when the impacts of low-carbon incentives are taken into account. Isobutanol benefits under the Renewable Fuel Standard, and also under the California Low Carbon Fuel Standard.
Why isobutanol as a fuel molecule?
And we’ve pointed out that isobutanol can be blended at up to 16 percent rates, compared to 10 percent for ethanol, in cars made between 1995 and 2011. For more recent models, while ethanol can go up to 15 percent, isobutanol could go as high as 24 percent although the EPA has yet to issue a waiver for those model years. And, each isobutanol gallon counts as 1.3 gallons under the RFS because of its higher energy density. Put all that together? If you can distribute 14 billion gallons of ethanol before reaching E10 saturation, the number goes up to 29 billion (ethanol equivalent gallons) with Bu16.
Three weeks ago, Intrexon announced the pilot plant for its proprietary gas-to-liquids bioconversion platform is operational. The plant is located in South San Francisco.
Last August, Intrexon announced that Intrexon Energy Partners (IEP), and Dominion Energy, a subsidiary of Dominion Resources, have entered into an agreement to explore the potential for commercial-scale biological conversion of natural gas to isobutanol, a drop-in fuel with numerous advantages over other clean burning gasoline blendstocks. Under the terms of the agreement, IEP will be required to meet specific development milestones prior to initiation of certain commercialization activities, which are subject to board approval by both parties. Dominion will be the exclusive partner to construct, own, operate, and maintain the production facilities in the Marcellus and Utica Shale Basins located in eastern North America via potential long-term services agreements with IEP. Within this geographic region, the collaboration plans to build natural gas bioconversion facilities leading to the creation of job opportunities and generation of local and state tax revenue.
Looking at higher-carbon compounds, there’s farnesene, which Intrexon has developed a process for. Nothing yet for C3s, but clearly a set of C4 molecules with isobutanol and BDO.
And, there may be other partners announced for the Eagle Ford, Bakken and Niobrara formations — although the dry gas of the Marcellus (that is, mostly methane, not so much ethane or propane) is well-suited to Intrexon’s bug.
How the deals work
Take Intrexon’s December announcement regarding 1,4-butanediol (BDO).
At the end of the year, Intrexon formed Intrexon Energy Partners II (IEP II), a joint venture with a select group of unnamed “external investors”, to produce 1,4-butanediol (BDO), a key chemical intermediate with a global market value exceeding $5 billion that is used to manufacture spandex, polyurethane, plastics, as well as polyester.
Through an Exclusive Channel Collaboration (ECC) agreement, Intrexon will receive a technology access fee of $18 million. IEP II will be responsible for all costs related to the development, manufacture, approval and commercialization of the product. Intrexon owns a 50% interest in the new venture.
Molecules a-plenty, we suspect, for those who engage with Intrexon. As the company’s 2014 Patent app, details:
 In certain other embodiments, the invention is directed to a method for producing fatty alcohols from a methane substrate… In certain other embodiments, the invention is directed to a method for producing a fatty alcohol… In another embodiment, the invention is directed to a method for producing a fatty acid ester… In certain other embodiments, the invention is directed to a method for producing 2,3-butanediol.
So, you get the idea. A rich array of targets under development at Intrexon.
Over at Calysta
The focus has been on the foundational market — single-cell protein.
Here’s the problem Calysta aims to solve: We’re running out of affordable conventional fishmeal, which is basically made for big fish by grinding up little fish. Our vast global human appetite for big fish, from our lofty position at the top of the food chain, is causing stress on the “little fish” population. And, unless we all want to adopt a vegetarian lifestyle, with the human population heading for 9 billion, we better figure out a better way to bulk-up the bigger fish than simply industrializing the capture of little fish.
Leaving aside “feed the world” imperatives, consider the cost implications. In recent years, while the soybean meal (fed to cattle) price has been relatively flat, the price of fishmeal has been skyrocketing, reaching $1500 per ton last year. More than twice the price of fuel, pound for pound.
As Cellana CEO Martin Sabarsky says, “we need to cut out the middle fish” — in Cellana’s case, by feeding algae directly to big fish by transforming algae into fish feed.
Last week, we reported that Calysta’s FeedKind protein “nearly eliminates the need for water and agricultural land for production of fish feed for the aquaculture industry”, according to a study from the Carbon Trust. The report provides a detailed analysis of FeedKind protein taking into account a variety of environmental sustainability criteria, and concludes that FeedKind protein offers significant advantages over current fish feed ingredients. FeedKind protein was shown to use 7798% less water than alternative ingredients including soy and wheat proteins. It also requires almost no agricultural land to produce, freeing that land for other food crops. One commercial-scale FeedKind protein plant, if used to replace soy products for fish feed, would free up enough land to feed as many as 250,000 people.
But Calysta has a different path. They’re using methane, which is abundant (check your local rig count for confirmation that we are struggling to find markets for all of it). Some methane is renewable, a lot of it is fossil-based — but activists are generally in less of a twist about extracting fossil fuels to make food than just about any other use case. And, studies have (so far) confirmed the nutritional value of the feed, based on criteria such as growth performance and animal health.
Now, it’s not exactly a no-brainer. Actually, the effort to make SCP from methane is the technology that sunk the Soviet Union (which you can read more about here), but Calysta has an impressive array of new IP around gas fermentation.
Scaling it up
Scale-up of something achievable in the lab into something at scale? That’s a daunting enterprise — but a good idea to advance the effort in the northern UK in Teesside, which is home to an entire flock of advanced chemical and industrial talent and conveniently close to the Norwegian salmon industry. If someone needs to pop over to raise some capital amongst those who know the fishmeal crisis all too well.
As CEO Alan Shaw put it, “gas fermentation is real,” citing a conditional award of up to £2.8 million Exceptional Regional Growth Fund (eRGF) grant subject to due diligence from the UK Government. This will contribute to a £30 million first phase investment over ten years by Calysta to develop a Market Introduction Facility to undertake R&D critical to commercialize FeedKind and develop the technology for other applications. At the Centre for Process Innovation in the Teesside area, Calysta expects to develop its production process.
But wait, there’s more from Calysta
Can they make propylene, one of the world’s major platform chemicals. Yes they can, as this patent app reveals.
What about plastics? Well, consider the activity with NatureWorks, detailed here. Last year, in support of NatureWorks and Calysta, the US DOE’s Bioenergy Technologies Office announced a grant of up to $2.5 million in support of an ongoing program that aims to sequester and use methane, a potent greenhouse gas, as a feedstock for the NatureWorks’ Ingeo biopolymers and intermediates.
The grant supports an ongoing multi-year joint development program between NatureWorks and Calysta, with the specific goal of transforming, via a fermentation process, renewable biomethane into lactic acid, the building block for Ingeo. Ingeo naturally advanced bioplastics and intermediates are used worldwide in a host of consumer and industrial products.
Isoprene? Try this patent app for size.
Longer-chain fatty alcohols or propanol? Here’s the skinny on that.
You asked about phospholipids, terpenes and PHA? That’s here.
Fatty acid derivatives? Try this one.
Calysta’s next steps
Cargill and others are investing, with passion, as we detailed here.
Next step? It’s single cell protein, for sure.
“Fish meal prices and natural gas prices have changed dramatically,” said Shaw, “and fish meal is expected to grow at a compounded 6.7 percent rate over the next 15 years. At the same time, natural gas discoveries are keeping the gas price below $3, although we can make money with gas below $10.”
It’s true. Natural gas prices are, famously, at extremely low levels and have been for a number of years. Meanwhile, a global shortage of fish meal has led to $1500 per ton prices, if you can hit the product spec. A number of algae companies are aimed at the same market. But, there’s the risk that they will end up with chicken-feed specs and chicken-feed prices, which are almost an order of magnitude lower.
“Companies have spent a tremendous effort raising organisms to make products that Nature never intended them too. The rewards can be fantastic, but the organism resists. There are real risks. So, it seemed to us, instead of training an organism to convert the energy in methane to make valuable liquid products, as we are — why not let it make what it really wants to make: more of itself; that is, protein?
“In our case, we bought the rights to a proven technology developed by DuPont and Statoil in a partnership in the 2000s. The technology was scaled-up; almost $400 million was invested. In all, 3000 tons of product was sold to EWOS, one of the largest salmon feed companies.”
“The economics were not right. Natural gas prices were high in Norway, where the technology was developed. And meal prices were much lower. In the end, the rights to the technology were assigned to three Norwegian academic institutions, before we acquired them.”
But gas prices are still high in Norway, we noted. “We’ll build the first plant where methane prices are low, as they are in the Middle East and the US.”
Prices are also low in Russia, but we don’t expect that Calysta will fall into partnership with Russian outfit guys. Expect a first deployment in the US.
Plant size? “40,000 metric tons per year,” said Shaw. “We expect to raise $50 million, on a 50/50 debt/equity basis for plant one.”
The Bottom Line
Though the Methane Reformation may not be your cup of tea, as Intrexon and Calysta nail their 95 theses to the church door on the shortcomings of sugar as a pathway to heaven. But though renewable it may not be, more renewable then the incumbent it certainly is, and half-steps are better than no steps. And for sure, these are technologies all about the power of biotechnology to unlock nature’s secrets to provide better products and better value. And that is sustainability in a nutshell, when you come to think of it.
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