Siluria Bags $30M from Saudi Aramco for Natural-Gas-to-Gasoline Tech

Many startups are seeking to take advantage of cheap and abundant natural gas to make chemicals and fuels, but Siluria Technologies is one of the few moving to large-scale production.

The San Francisco-based company today said that Saudi Aramco Energy Ventures has invested $30 million of a planned $50 million Series D round expected to close this year. It’s the first time that Siluria has taken on a strategic investor, rather than financial investors, a move that could lead to Saudi Aramco using Siluria’s natural gas-to-chemicals process.

The money will be used to complete construction of a demonstration plant in La Porte, TX and continue research into using Siluria’s technology in other areas. Siluria expects to be operating two commercial-scale plants in 2017: one for producing the chemical ethylene and one for making gasoline from natural gas, says Rahul Iyer, the company’s vice president of corporate development.

Siluria’s technology uses catalysts to synthesize methane into more complex—and valuable—molecules, a fundamentally different approach to making the chemicals and fuels used in the petrochemical industry.

The traditional method of making ethylene, a common chemical used in various industries, is to use steam to “crack” long-chain hydrocarbons, such as naptha, into a two-carbon compound. Gasoline is similarly refined from crude oil using high temperatures and pressures.

Siluria’s chemical approach is less expensive and less polluting because less energy is needed during the processing, Iyer says. Natural gas enters a tube-shaped reactor in which secret catalysts trigger a chemical reaction between the natural gas and oxygen in the air to produce ethylene. In a similar method, it can combine ethylene molecules into gasoline.

Siluria is a good example of the innovation happening in fossil fuels and how the abundance of natural gas—particularly in the U.S., thanks to fracking—is dramatically changing the energy and chemicals industries. At current prices, making gasoline from natural gas with Siluria’s technology costs about $1 per gallon, Iyer says.

The low price of natural gas has even attracted some companies that had first planned to make fuels from plants. Primus Green Energy and Calysta both scrapped plans to make fuels from biomass and switched to natural gas as a feedstock.

Siluria also demonstrates the hefty capital requirements for commercializing energy technologies. The company has now raised nearly $100 million since 2008 to develop its approach, which grew from the lab of MIT materials scientist Angela Belcher.

The investment from Saudi Aramco, the world’s largest energy company, is expected to lead to business for Siluria, Iyer says. Saudi Aramco is already a large producer of industrial chemicals, and Siluria’s natural gas-based method will allow it to produce ethylene at low cost while giving it a hedge from the volatile prices of conventional feedstocks.

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