Intrexon: Will Its GTL Business Arrive in 2018?
by Jim Lane (Biofuels Digest) The indictment was handed down this week in The Motley Fool, which averred: While investors have been told to expect the natural gas-to-fuels platform to be commercialized by 2018, real-world indicators essentially guarantee that won’t be the case — and hint that it won’t even be close…
1. Intrexon says it will go from proof of concept to commercial sales in as little as six years, or from pilot operations to commercial sales in as little as 33 months.
2. There are major regulatory obstacles that are unlikely to be resolved by 2018. The company’s fuel likely won’t qualify for subsidies under the Renewable Fuel Standard because the ultimate feedstock is a fossil fuel. That puts a significant amount of pressure on a never-before-attempted process to reach optimal performance in a record amount of time…
3. But the biggest obstacle isn’t theoretical economics; it’s thermodynamics…the solubility of methane in water, or the amount of methane you can cram into a given volume of water…Compared to methane, sugar — the carbon source used by most industrial biotech platforms — is roughly 88,000 times more soluble in water. That’s enough to wreck just about any other advantage that methane may have over more traditional feedstocks. [It’s] a very inefficient process — if it works at all.
The US regulatory obstacles that face isobutanol as a transport fuel at a federal level only matter so long as they are unresolved by 2018, they are needed to make the fuel economical, and the US Renewable Fuel Standard is the only regulatory pathway that makes sense. After all, fossil gasoline isn’t qualified under the RFS, and sales are just fine.
So let’s look at those factors.
First, timelines. We have something like 30 months until 2018 is history, and though isobutanol has to go through Tier 1 and Tier 2 testing to qualify under the Clean Air Act — Tier 1 vehicle emissions testing is already underway. Then the production facility and pathway would have to be registered under the Low Carbon Fuel Standard. There aren’t any timeline issues here. I mean, really.
Second, are mandates needed? According to Intrexon, based on current natgas and gasoline prices and the expected economics of the system, there’s a 50% margin for the fuel right now, without carbon credits. It will come down to whether costs are stable and the system performs — right now, no need for mandates or subsidies.
Third, what about the RFS? We expect that it would all be swallowed up into the California market, where natgas-based fuels are fine and jim-dandy under the Low Carbon Fuel Standard. California could care less about the feedstock, they care about the reduction in carbon compared to fossil gasoline, and according to Argonne National Lab, “natural gas emits approximately 6%-11% lower levels of GHGs than gasoline throughout the fuel life cycle.”
Bottom line, regulatory obstacles are only obstacles if Intrexon doesn’t take care of the “business as usual” aspects of registering a new fuel.
However, I think we have enough information on the overall efficiency of the system from the published claim of Intrexon that they’ll generate 14 million gallons of isobutanol from 3.5 billion cubic feet of gas.
It comes down to reactor design and limits in reactor capacity. But it’s not settled science. As you can see from this report on syngas and ethanol fermentation, a group from Iowa State led by Robert Brown improved bioreactor productivity rates 53% in 2014. A group from South Korea generated a 67% gain in cell growth rate for the methanotroph Methylosinus trichosporium using a new reactor design. In 2014, Calysta reported an 8X improvement in “performance over traditional fermentation technologies in a high mass transfer bioreactor.”
Bottom line, we can expect dramatic improvements in mass transfer rates, and we should. Reactor designs are improving all the time. We might expect Intrexon to take advantage of these real-world improvements, by and by. READ MORE / MORE