Researchers have taken industrial yeast strains and E. coli bacteria and altered their DNA to transform them into minature petroleum plants.

These bacteria can be given common forms of industrial waste such as wood chips or wheat straw to feed on -- they will then excrete crude oil.

“Ten years ago I could never have imagined I’d be doing this,” says Greg Pal, a senior director of LS9 and a former software executive.

“I mean, this is essentially agriculture, right?"

"But the people I talk to –- especially the ones coming out of business school -– this is the one hot area everyone wants to get into.”

As well as offering a renewable source of energy, Pal thinks that if he uses Brazilian sugar cane as a feedstock for the bacteria, he can sell that oil for US$50 (£25) a barrel.

That promise is attracted seasoned veterans from the oil industry -- after a 26-year career at Shell, Bob Walsh now serves as LS9's president.

“How many times in your life do you get the opportunity to grow a multi-billion-dollar company?” he said.

But the technique is a long way from mass production -- the current prototype plant produces the equivalent of one barrel a week and takes up 40 square feet of floor space.

To satisfy America’s weekly oil consumption of 143 million barrels, a facility that covered an area roughly the size of Chicago (205 square miles) would be needed.

“Our plan is to have a demonstration-scale plant operational by 2010 and, in parallel, we’ll be working on the design and construction of a commercial-scale facility to open in 2011,” said Pal.

Pal is confident that consumers will take to petroleum manufactured with genetically engineered organisms -- unlike their reaction to foods made with modified bacteria.

“It’s not the same as with food,” he said.

"We’re putting these bacteria in a very isolated container -- their entire universe is in that tank."

"When we’re done with them, they’re destroyed.”