Going to Graceland: Cargill, Calysta select Tennessee for methane-to-feed project

December 4, 2016 |

bd-ts-120516-calysta-cover-smIn Minnesota, Cargill and Calysta revealed that they will co-create the world’s largest gas fermentation facility in Memphis, Tennessee to produce Calysta’s FeedKind protein, a family of sustainable, traceable nutritional ingredients for fish, livestock and pets. Start-up is expected in late 2018.

So we’re going to Graceland. Memphis that is, home to Elvis.

What exactly is being fed, and why, we may never exactly know for sure. Feeding the world? Feeding Cargill’s next leap? Calysta’s IPO? A new tentacle for oil & gas to gain control over our lives? A breathtaking advance in the story of biotechnology? Good things for all, or good things for a few?  As Paul Simon once opined:

I’ve reason to believe
We both will be received
In Graceland.

For now, we know more about the data points than the storyline, so we’ll start there.

Scale? Think “big league” (as we begin to incorporate our Trumpisms into everyday life). 20,000 metric tons per year of FeedKind protein initially and expanding up to 200,000 metric tons per year when operating at full capacity.

Where? President’s Island, Tennessee — Cargill has a 69-acre property there, producing  corn oil and for storage and distribution of sweetener products. Upon completion of the plant, the new venture expects to hire 75 permanent employees and expand to 160 people when the plant is at full ramp-up.

What is it? FeedKind protein is billed as a “competitively priced, new feed ingredient initially targeted as an alternative to fishmeal for the aquaculture industry”. Cargill and Calysta jointly will be marketing FeedKind protein globally.

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Why” As we noted in January, “Soaring fish meal prices, a 9 billion human population on the way, and a world eating more protein per capita every day. A recipe for disaster? Along comes Calysta with a technology to turn abundant natural gas into food. And getting closer to industrialization.”

The 4 Must-Knows in this Storyline

One, here’s one of the major ag giants, the ABCDs, leaping in on a relatively new technology, no mandate, no tariff, no tax credit in hand. Compare this to the more tepid “sometimes we’re in, sometimes we’re out” reaction to getting into the energy business.

Two, here’s the reverse of food into fuel. This is fuel into food. Instead of developing new applications for a traditiional ag feedstock, here’s an existing application for a feedstock that is new to ag.

Three, here’s a feedstock that is expected to be cheap and abundant, and a market for fish protein that is expected to be tight and expensive for some time to come.

Four, this is very much the classic Alan Shaw playbook, which people really ought to take a page out of. When he was building up Codexis in the energy space, it was “Shell” and “sugar”. Here, it’s “Cargill” and “methane”. Shaw’s dictum: for success, have a transformative feedstock and a major, major, major backer. However, he’s been cured of the enthusiasm for using feedstocks like sugar, for energy, that relied on a stiff government backbone to provide the bankable crack spreads. Here, he’s retreated into the same territory that John D. Rockefeller once occupied – knocking over established markets with a cheap feedstock and whizzer tech.

A step forward for biotechnology, or a giant leap for oil & gas?

Probably both.

In the long run, if successful, it’s a feedstock story. Oil & gas moved into heating and lighting in the 19th century, then transportation in the 1900s, then liquid chemicals in the 1930s, then materials with the advances in polymer chemistry. Now, protein.

But — just as fluidized catalytic cracking or hydraulic fracturing became trusted techniques for extracting or refining petroleum, so might biotechnology become enbedded in the traditional oil & gas business, if there really are major fishmeal markets to be tapped with natural gas. We’ll have to see.

The Calysta backstory

In October, we reported on this story “Calysta’s FeedKind protein wins innovation award”, here.

For a broader, VistaVision look at the story, try “The Methane Reformation: Intrexon, Calysta chart new pathways to economic heaven”, here.

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For a more visual backdrop on the Cargill/Calysta story, try “Cargill and friends invest $30M in Calysta as the gas-to-protein chase heats up,” here.

The latest? In September 2016, Calysta opened an R&D and market introduction facility in the United Kingdom to produce samples of FeedKind protein that can be used in aquaculture, livestock and pet markets worldwide.

Reaction from the stakeholders

Noted Raymond James energy analyst Pavel Molchanov said, “While this project will not single-handedly end the oversupply in the North American gas market, it is one of the most creative, intriguing examples we’ve seen of how gas can be used in non-traditional ways.”

“Cargill has been a part of the Memphis community for 40 years. With the strong support of the state of Tennessee, Shelby County and City of Memphis, we are pleased that the venture chose to locate the facility in Memphis,” said Cargill’s Global Vice President of Bioindustrial, Brian Silvey. “The venture’s building of a state-of-the-art fermentation facility on the existing Cargill Memphis site reaffirms our commitment to the community and state and our pledge to strategically invest in aquaculture as an ever increasingly important source of protein.”

“With a proven and proprietary fermentation platform, Calysta is introducing a scalable and disruptive protein source critical to meeting the needs of a growing global population,” said Alan Shaw. “Partnering with Cargill, a leader in fermentation and protein production, and others to invest in the establishment of the venture as the first U.S. manufacturing plant to commercially produce FeedKind protein, significantly accelerates FeedKind protein’s launch in the aquaculture industry at commercial-scale.  This venture is an important first step to deploying this technology globally.”

 

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