* Calysta produces animal feed using natural gas
* Firm could become 'material outlet' for gas, BP says
By Ron Bousso
LONDON, June 27 (Reuters) - BP is returning to theanimal feed business a quarter of a century after exiting thesector.
The London-based oil and gas company said it is investing$30 million in Calysta Inc., which produces protein for fish,livestock and pet food.
Natural gas is pumped through a fermenter, and themicroorganisms, from naturally occurring microbes found in soil,metabolise the gas as their sole source of energy, producing ahigh-protein biomass.
While a relatively large investment for BP's venturedivision, which typically puts money into new technologiesfocused on the transition to low-carbon energy, it is small fryfor a company that announced a $2.4 billion profit for the firstquarter.
The oil giant, which has come under increasing pressure fromclimate activists, has been working with shareholders in recentyears to try to define a path towards meeting the goals of the2015 Paris climate agreement to limit global warming.
Calysta could, however, become an important buyer of gas forBP as demand for protein-based animal feed is expected to riseby 80% by 2050 as the world's population grows and diets change,BP's vice president for long-term planning Dominic Emery said.
"This could become a reasonably material part of our gassupply business over time," Emery told Reuters. The business isexpected to generate profits for BP in the next few years, headded.
The technology may help meet the growing demand for feed ina more sustainable way by using less water and agriculturalland.
California-based Calysta operates a production facility inTeesside in eastern England.
BP and peers including Royal Dutch Shell and Totalare betting on growing demand for natural gas, theleast polluting fossil fuel, as the world transitions to cleanerforms of energy.
While most of the gas is consumed for power and heating, thecompanies are also looking for other outlets such as truck andmarine transportation and industries.
BP built in the 1980s a sprawling nutrition business withproducts ranging from pet food to fish farms. It sold most ofthe struggling division by 1994 for over $1.5 billion in orderto focus on its oil and gas business.
BP Venture's senior principal David Hayes will take a seaton the board of Calysta, BP said.(Reporting by Ron Bousso, editing by Louise Heavens)
