ls9.jpgLS9, a San Carlos, Calif. company, says it has developed a petroleum-like fuel made out of renewable sugars, pointing the way to a potentially more efficient type of clean alternative to dirty crude oil.

Executives of the Silicon Valley company tell the Wall Street Journal they have produced hydrocarbon from sugar by mixing it with a microbe they’ve developed.

Unlike ethanol or biodiesel products being developed by a growing roster of other companies, this substance is a “biocrude” that lacks oxygen, like petroleum, they say. The molecular similarities mean the liquid could be pumped into the existing refining system and processed into gasoline, which LS9 officials see as the primary advantage of their approach. Ethanol, by contrast, requires separate facilities.

The process still must withstand external scrutiny, but will outlined today by Stephen del Cardayre, LS9’s head of research and development, in a talk before a Denver conference on industrial microbiology today.

The company is backed by at least $5 million in backing from Khosla Ventures, among other investors. Vinod Khosla, leader of that firm, has invested in a array of ethanol companies, and has come to see the huge challenges of creating alternative distribution system for fuel. This is one more way for him to hedge his bets.