Startup turning natural gas glut into gasoline

America is awash in natural gas, thanks to the controversial practice of fracking.

Now a San Francisco startup company, Siluria Technologies, has a new way to turn that gas into chemicals, jet fuel and gasoline.

The ability to make liquid fuels from natural gas has existed since the 1920s. But up to now it hasn’t been cheap, requiring high heat and pressure to work. Siluria’s technology needs less heat and less energy — and therefore costs less. The company is gearing up to build its first demonstration plant. And it has hired a new chief executive officer with deep experience in the chemical industry to guide Siluria out of the lab and into the marketplace.

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“There’s going to be this long period of time when we have this excess gas,” said Edward Dineen, the new CEO. “If you believe that, and I do, then having technologies that give you better options for that gas would make sense.”

Dineen most recently served as CEO of LS9, a renewable fuel and chemical company in South San Francisco. He also held executive positions at LyondellBasell Industries and Arco Chemical Co. Siluria has raised $66 million in venture capital to date, from such investors as Bright Capital, Kleiner Perkins Caufield & Byers and Lux Capital.

Siluria is looking to capitalize on America’s natural gas boom. The process of hydraulic fracturing, better known as fracking, has unlocked large gas deposits trapped in shale rock beneath Ohio, Pennsylvania, West Virginia and other states. Natural gas prices have plunged as a result.

Companies are now trying to build export terminals that could ship the gas abroad in liquid form. But until those terminals materialize, prices will likely stay low.

Enter Siluria.

The company was founded in 2008, spun out of another called Cambrios Technologies Corp. Its 40 employees now operate out of an office in Mission Bay, near UC San Francisco’s hive of medical research.

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Siluria’s conversion technology uses chemical catalysts picked by a screening system that can test hundreds of potential catalysts each week. Through a process known as oxidative coupling of methane, the catalysts help combine methane molecules into ethylene. The ethylene molecules can then be strung together in chains to produce gasoline, jet fuel or polymers.

The most common process for making liquid fuels from natural gas or coal, a process known as Fischer-Tropsch, needs temperatures on the order of 600 degrees Fahrenheit. Dineen won’t specify the temperature needed for Siluria’s process, but says it is far lower. It is also less complex, requiring less-specialized equipment.

As a result, Siluria may turn natural gas into a direct competitor with oil. The startup’s process may be able to make chemicals and fuels at a cost competitive with — or lower than — the cost of similar products made from crude. The company plans to open a demonstration plant next year, although it has not yet announced a location.

“The key challenge for us now is scaling up,” Dineen said. “This is certainly a technology that has global applications.”