http://www.nature.com/nature/journal/v463/n7280/pdf/nature08721.pdf
(may require paid subscription for full access to paper) https://www.orau.gov/gtl2010/abstracts/Keasling_Jay_06.pdf

Biodiesel is commonly produced through a series of steps involving the cultivation of a high-oil producing bioenergy crop, extraction of the crop's oil, and application of chemical processing steps. The chemical steps usually entail high energy and processing costs. Recent research could make the biomass to biodiesel conversion route less costly. A collaborative research group of the United States Department of Energy (US-DOE)-Joint BioEnergy Institute (JBEI), recently reported the development of an E. coli bacterium which can convert biomass directly to biodiesel, and other fatty-acid-derived chemicals. Using the tools of synthetic biology, they first diverted fatty acid metabolism toward the production of fuels and other chemicals from glucose. Then they engineered the new E.coli strain to produce hemicellulases (enzymes for the conversion of hemicellulose from plant biomass into simple sugars). A complete production scheme has been reportedly demonstrated, but strategies to achieve "increases in titer, productivity and yield" are needed for industrial transition. Details of the study appears in the journal, Nature (URL above)..

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http://www.pnas.org/content/106/51/21550.abstract?sid=870ef4d7-2491-4c4a-bd3c-b9a9725e0666
(may require paid subscription for complete access to paper)
http://researchstories.asu.edu/stories/self-destructing-bacteria-improve-biofuel-production-1350

Seed oils from cultivated plants have long been used as raw material sources for biodiesel production. Recently, however, attention has shifted to the use of microorganisms (particularly photosynthetic microorganisms) as potential oil sources for biodiesel production. One such type of microorganism under study is a class of photosynthetic bacteria, called "cyanobacteria". Since the oil produced by these microorganisms is generally an intracellular product, the cell walls have to be destroyed by application  of physical or chemical means (such as ultrasound, high pressure, or use of chemicals) Cell wall disruption often entails a high oil recovery cost. Researchers from the Arizona State University (ASU, United States) have developed a way to reduce the cost of oil recovery from cyanobacteria, by programming it to "self-destruct". The programmed autolysis is induced by the addition of nickel; autolysis eventually liberates the intracellularly-trapped oil without further addition of physical or chemical recovery processes. The ASU press release gives an overview of the method: "The genes were taken from a mortal bacterial enemy, called a bacteriophage, which infect the bacteria, eventually killing the microbes by causing them to burst like a balloon. The scientists swapped parts from bacteriophages that infect E. coli and salmonella, simply added nickel to the growth media, where the inserted genes produced enzymes that slowly dissolved the cyanobacteria membranes from within". The full paper is recently published in the Proceedings of the National Academy of Sciences (PNAS) (URL above)..