LS9 Inc. working on "renewable petroleum"

Greg Pal, a former software executive, is a senior director of LS9, one of several companies in the Silicon Valley area that have spurned traditional high-tech activities such as software and networking and embarked instead on an extraordinary race to make $140-a-barrel oil from foreign nations obsolete. While Bushies and other conservatives push for environmentally destructive domestic drilling, and many others work to re-engineer the problem via conversion to hydrogen and other fuel sources, Pal and his peers are working on a product that is fully interchangeable with oil, yet is renewable and even carbon negative.

“Ten years ago I could never have imagined I’d be doing this,” says Pal, as he squints into the late afternoon Californian sun. “I mean, this is essentially agriculture, right? But the people I talk to – especially the ones coming out of business school – this is the one hot area everyone wants to get into.”

The man is talking about bugs. More precisely, the genetic alteration of bugs – microscopic ones – so that when they feed on agricultural waste such as woodchips or wheat straw, they do something extraordinary. They excrete crude oil. Perhaps someone somewhere, commenting on the dwindling amount of natural crude oil, was told "What would you like me to do, shit you some"? Probably not, but somehow, more likely through some serious scientific research and experimentation, that exact scenario has come to pass.

In an interview earlier this month, Pal held up a small beaker of bug excretion that could, theoretically, be poured into the tank of your car right now. Not that Mr Pal is willing to risk it just yet. He gives it a month before the first vehicle is filled up on what he calls “renewable petroleum”. "After that", he grinned, “it’s a brave new world”.

Even the oil industry has taken notice. LS9's president, Bob Walsh, left a 26-year career at Shell to head the company's operations. If an old-time oil man like Walsh drops out of the game to work in a glorified cubicle in a San Francisco industrial park for a company that describes itself as being “pre-revenue”, there must be something to this whole thing. In another sign of the seriousness of this venture, a portion of the $20 million of start-up capital from investors includes Vinod Khosla, the Indian-American entrepreneur who co-founded Sun Micro-systems.

Mr Pal explains the process:

"LS9’s bugs are single-cell organisms, each a fraction of a billionth the size of an ant. They start out as industrial yeast or nonpathogenic strains of E. coli, but LS9 modifies them by custom-de-signing their DNA. Five to seven years ago, that process would have taken months and cost hundreds of thousands of dollars,” he says. “Now it can take weeks and cost maybe $20,000.”

Because crude oil is only a few molecular stages removed from the fatty acids normally excreted by yeast or E. coli during fermentation, it doesn't take much fiddling to get the desired result.All that's required for fermentation to take place is raw material, or feedstock, as it is known in the bio-fuels industry. Anything will do as long as it can be broken down into sugars, with the byproduct ideally burnt to produce electricity to run the plant.

LS9 is avoiding using corn as feedstock, given the much-publicised problems created by using food crops for fuel. Instead, the company will use different types of agricultural waste based upon whatever makes sense for the local climate and economy: wheat straw in California, for example, or wood chips in the South. Using the genetically modified bugs for fermentation is essentially the same as using natural bacteria to produce ethanol, although the energy-intensive final process of distillation is virtually eliminated because the bugs excrete a substance that is almost pump-ready.

The problem at this juncture remains as one of volume - thus far LS9 has only produced quantities vie a 1,000-litre fermenting machine, which produces the equivalent of one barrel a week and takes up 40 square feet of floor space.To meet America's weekly oil consumption of 143 million barrels, a facility covering 205 square miles, an area roughly the size of Chicago, would be required. Pal plans to have a demonstration-scale plant operational by 2010 and a commercial-scale facility by the following year. He notes that if LS9 used Brazilian sugar cane as its feedstock, its fuel would probably cost about $50 a barrel. I can live with that. How 'bout you?