Fishy business: BP invests in breakthrough feedstock tech

BP has hooked up with technology company Calysta that makes fish food from natural gas. Here, senior principal for BP Ventures in the US, David Hayes, explains why the $30million deal is the catch of the day with potential for massive scale 🐟

Key points:

• Calysta aims to make its Feedkind® protein animal feeds on an industrial scale. 
• Demand for protein-based animal feed is expected to rise by up to 70% by 2050.
• The technology converts natural gas into food for fish.
• It has no impact on agricultural land and uses little water.
• Calysta will use BP’s natural gas to feed bacteria which creates the feed protein.
• As part of the deal, David Hayes will have a seat on the board of Calysta. 

What made you think BP should invest in this company?

When Calysta first presented to us, it immediately reminded me of a book I read when I first joined BP on the history of BP 1950-75 that talked about a business we had called BP Nutrition. I not only found that book, but also pulled out sections that talked about how a company like BP can be involved in helping to find solutions to huge societal issues like hunger.

That concept was introduced by this scientist who worked for us in France in the sixties. A lot of what he said about the world moving to a place where there is a challenge around protein and feeding people holds true today, especially when you think about a growing population where there’s expected to be 2.8 billion more of us by 2050 and the carbon intensity of the agricultural practices used to feed us. I really fought for this project because I remembered that concept.

Why would BP return to nutrition?

The organizational memory seemed to be that BP Nutrition was a bad business, but I did some more digging and, based on the financials, it looked like it was a pretty good business. It was generating $5 billion in revenue in the nineties.

An energy company getting involved in the feed chain sounds unusual and there was quite a steep learning curve for us to understand how fish ends up on our plates. Farmed fish is often what we eat, and wild-caught fish is fed to those fish, which is just not sustainable. Fishmeal is at capacity, and there is a limit on how much fish can be caught to feed to fish. To combat that, the world is replacing fish with soya bean protein and other plant-based proteins. But that’s not sustainable when you consider the land and water required to grow them.

The Calysta technology uses somewhere between 70% less water than alternative ingredients, including soy and wheat proteins. 

Why did Calysta choose BP?

Because of our history in nutrition, and obviously, BP’s scale and geographic reach; we can help grow this company. I think they are particularly interested in Oman as a region to build a plant to produce the fish food and we are active there.

So, there are nice synergies between the market of fish food and where we have operations. But, it comes down to relationships and we showed that we’re very excited about the opportunity and they were excited to have somebody who could sell them gas.

How does this fit with BP’s gas strategy?

It presents a good demand side hedge for us as we can unlock stranded gas in certain regions. Feedkind® is a light, inert powder pellet that can be shipped anywhere.

So, that’s one part of it. In terms of scale, it’s TBD. But if you were to replace all proteins out of the fish feed market, you’d need 127% of the gas that BP produced in 2017. I’m not saying you can feed a fish a 100% Calysta Feedkind diet®, you can't, but it gives an idea of scale because it can be fed to pets, to livestock and, potentially, refined even further for a protein isolate for human consumption. 

I think gas-to-products is also where we need to head. We’ll be using gas for electricity and transportation, but as you see fleets becoming more homogenized and more autonomized, this protects our core product of gas for the future, I believe.

In terms of the size of the deal, how big is this for BP Ventures?

$30 million is a reasonable deal size. I don’t think that’s all we are going to invest. To build a commercial-scale plant costs about $400 million, so when you consider the protein market for fish is expected to grow from 45 million to 60 million tonnes by 2025, that would need a number of these plants to meet the potential demand. Calysta has a plan of producing 100 million tonnes, which will cost around $4-5 billion of capital.

There is no reason why our relationship with Calysta has to begin and end with gas supply. We're hopeful we can explore other opportunities through our relationship. 

What’s next?

I think there are other aspects of gas or methane to food to energy for people, but I think it’s broader than that. There are companies that we’re looking at that use gas to methane to make clothing that’s then recyclable. With different sources of gas demand, we can protect our business going forward, but then maybe we aren’t 100% an energy company in the future.

Look at some of the other technologies we have invested in at BP, such as building materials through Tricoya and Solidia. We’re talking about food and sustenance with Calysta and all of these are sitting alongside our core business of supplying heat, light and mobility to the world. It seems to me like there’s more we can do as a company in supplying the world with its basic needs.