BP's New Design

BP (NYSE:BP) announced yesterday that it had invested an undisclosed amount in Synthetic Genomics -- a private start-up company seeking to design, synthesize and assemble cell-level bio-factories to perform very specific tasks. In other words, the company is attempting to create "designer microbes."

The deal is significant for a couple of reasons. For starters, Synthetic Genomics isn't just some run-of-the-mill biotech start-up. It was founded by Craig Venter, the founder and former president of Celera Genomics (NYSE:CRA). He is one of the world's leading scientists and is well recognized for his valuable contributions to sequencing and analyzing the human genome.

More important, Synthetic Genomics is already reported to be investigating the creation of a "designer bacteria" for two bio-energy applications -- the production of ethanol and hydrogen. If the technology works, it could, quite literally, spark a biological industrial revolution by using living organisms to break down corn or some other agricultural feedstock into ethanol, hydrogen, or some other biofuel in one simple step.

At a minimum, the efficient production of ethanol by "designer bacteria" could force a number of ethanol companies, including Archer Daniels Midland (NYSE:ADM), Verasun (NYSE:VSE), U.S. BioEnergy (NASDAQ:USBE), Pacific Ethanol (NASDAQ:PEIX), and Aventine Renewable Energy (NYSE:AVR) to reconsider their long-term plans with regard to how they intend to produce ethanol in the future.

The potential of these designer bacteria does not stop there, however. Theoretically, such organisms could be used for environmental remediation or, possibly, even to remove carbon dioxide from the environment.

The technology is not without some risks. For example, if the new organisms are unleashed into the environment, they could result in some dangerous unintended consequences. For this reason, Synthetic Genomics and BP can expect to receive a great deal of negative publicity from environmental organizations opposed to the technology.

Without wanting to minimize this danger, my personal perspective is that synthetic biology offers more promise than peril, and that BP is wise to make an investment in Synthetic Genomics. It is possible that the deal may not bear fruit for some time, but given the near-exponential advances the world is experiencing in genomics, microbiology, bioinformatics, DNA sequencing, and synthetic biology, it is just as likely that the company will develop a better, faster, cheaper, and ultimately more sustainable method of producing biofuels sooner rather than later.

If so, it will help move BP along its long-term stated goal of moving "beyond petroleum."

Interested in other ethanol-related Foolishness? Check out these articles:

• Ethanol's Production Problem
• Cobs Clobber Verasun's Profits
• Fueling the Debate: Ethanol vs. Biodiesel

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Fool contributor Jack Uldrich doesn't own stock in any of the companies mentioned in this article. The Fool has a strict disclosure policy.