Siluria, Backed by Arch, Alloy, and Kleiner Perkins, Seeks Cheaper & Cleaner Plastics

8/19/10Follow @xconomy

Kristina Burow of Arch Venture Partners was itching to tell me something back in mid-June when we met at her office in San Francisco’s Mission Bay district. It involved a startup, had something to do with her chemistry training, and clearly had her excited.

The startup wasn’t quite ready to come out of stealth mode then, but it’s out there in a big way now.

The company is Siluria Technologies, and its work was first described in depth by John Markoff of The New York Times in late June. The idea is to create a new low-emissions technique for making ethylene—a key ingredient in plastics that is the most commonly used chemical intermediate product in the world. Siluria isn’t saying how much money it has raised to pursue this concept, but on a visit to the company’s Mission Bay lab last week, I learned it has gotten financial support from not just Arch, but also Alloy Ventures and Kleiner Perkins Caufield & Byers—where technologist Bill Joy has gotten involved.

“We’re taking the most abundant feedstock in the world, natural gas, and turning it into the world’s largest chemical product, ethylene,” says Alex Tkachenko, Siluria’s president.

Burow, when I followed up with her, explained why she’s excited about the potential at Siluria. “”We have a terrific team and a very powerful platform to build novel catalysts with improved properties. Some of these catalysts have already shown utility in transforming methane into ethylene in a reaction that has long been considered a grand challenge of the petrochemical industry.”

Chemists at big companies have been pursuing various ways of improving the ethylene production process for about three decades, with little to show for it. The process today is the same one developed about 70 years ago. It’s called “steam cracking,” in which an oven is heated to 800 degrees centigrade or more, reaching such an extreme heat that it “cracks” the backbone of hydrocarbons into an intermediate product that gets turned into ethylene. This process, just like it sounds, uses up a huge amount of energy itself and creates no small amount of carbon emissions.

An estimated 140 million metric tons of ethylene are produced worldwide every year, Siluria estimates. Ethylene goes into everything from tires to paints to water bottles, cosmetics, eyeglasses, and the molded plastic casings that are in your computer. The market, Siluria figures, is worth about $160 billion a year.

“Ethylene is in everything you see in this room,” Tkachenko said during my visit to his company’s conference room.

Siluria’s idea is to come at this problem in a novel way. Instead of heating up hydrocarbons to crack them into an intermediate, it is attempting to take natural gas (methane) and run it through a new chemical process that converts the raw material into ethylene. The idea comes from the lab of MIT materials scientist Angela Belcher, who for years has been studying ways to make inorganic materials with novel surface structures that exhibit all the variety people can find in odd structures like diatoms and sea urchins.

The scientific concept, which the Times described in its piece, depends on using a genetically engineered virus that serves as a template to grow a chemical catalyst, which can turn natural gas into ethylene. It’s designed to work by altering surface areas on the methane in such a way that the conversion reaction can be performed at lower temperatures. Tkachenko and Erik Scher—Siluria’s vice president of R&D—apparently told the Times they call this a “hairball,” although they didn’t use that term on my visit.

The company got started in 2008, as Tkachenko and the investors started going through the scientific papers and trying to figure out the best early applications of this process. They settled on using methane as the raw material of choice, because it’s relatively cheap, clean, and abundant, and comes from domestic sources, Tkachenko says. The raw material, known as feedstock, should be about 40 to 70 percent cheaper than oil over time, he says. There’s also an energy security angle here, since there’s thought to be about 300 years worth of natural gas supplies from domestic sources, compared with about eight years of oil from domestic sources, Tkachenko says.

Although the Siluria team achieved some important early proof of their concept last year, it’s not yet ready to declare victory over the likes of Dow Chemical or anybody else that has thought about cleaner, cheaper ways to make ethylene. The team of chemists at Siluria are running many experiments to tweak one variable here, another variable there, in the process to see if they can come up with something that’s truly optimal in terms of cost-effectiveness, Scher says. Once they have that nailed, then there is the small matter of finding the major chemical partners it will need to commercialize such a process, which surely will take a lot of resources.

“We’re not going to do this alone,” Tkachenko says.

Maybe it was just a little bit of Friday afternoon goofiness after another hard week in the lab—I had the bright idea of meeting these guys at 4 pm—but they seemed to be having more fun than the average entrepreneur I talk with every day. They razzed each other about one being the biologist (Tkachenko) and the other being a chemist (Scher), and how they don’t understand each other. Tkachenko, more than once, poked fun at himself for being part of the company’s administration, calling himself “useless overhead.” Before I left, frankly with my head spinning a bit about exothermic and endothermic reactions, I asked these guys if they are having fun.

Scher didn’t hesitate. “Yeah, we are.”

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