Dr. Venter’s company, Synthetic Genomics, is getting $300 million from Exxon Mobil to create fuel-producing algae, in part by using synthetic genes. When the two companies cut the ribbon on a new greenhouse here earlier this month, Dr. Venter assured local dignitaries in attendance that no algae would escape. “Nothing will go into the drains, Mr. Mayor,” Dr. Venter said, only half-jokingly. “San Diego is safe.”

In the long run, Dr. Venter said, the algae should be given “suicide genes” that would kill them if they escaped the lab or fuel production facility. Some companies are sticking with searching for and breeding natural strains. “Re-engineering algae seems driven more by patent law and investor desire for protection than any real requirement,” said Stan Barnes, chief executive of Bioalgene, which is one of those companies. But Dr. Venter and Mr. Mendez argue that there are huge obstacles to making algae competitive as an energy source and that every tool will be needed to optimize the strains.

Sapphire Energy seems one of the best-positioned companies to do that. The company, which is three years old, has raised $100 million from prominent investors, including Bill Gates. Sapphire is also getting $100 million in federal financing to build a demonstration project containing 300 acres of open ponds in the New Mexico desert.

The company has inserted a gene into algae that allows the organisms to make a hydrocarbon they would not naturally produce, one that would help make fuel. “You don’t want to take what algae gives you,” said Mr. Mendez, who previously worked for medical biotechnology companies. “You want to make the best product.”

The company is also developing algae that can thrive in extremely salty and exceedingly alkaline water.

It has even developed what might be called Roundup Ready algae. Like the widely grown Roundup Ready soybeans, these algae are resistant to the herbicide Roundup. That would allow the herbicide to be sprayed on a pond to kill invading wild algae while leaving the fuel-producing strain unhurt.

Not all these traits are being developed by genetic engineering, because in many cases scientists do not know what genes to use. Instead, the company screens thousands of strains each day, looking for organisms with the right properties. Those desirable traits can be further enhanced by breeding or accelerated evolution.