California Cleantech Startup Says It Can Make Dollar-A-Gallon Gasoline From Natural Gas -- Not Oil

A California cleantech startup says it has found a way to produce $1-a-gallon gasoline – not with oil but with natural gas. The fuel-making process is increasingly catching the attention of oil companies looking to lower their refinery costs and tap new markets for fossil fuels.

Siluria Technologies this week said its latest $30 million fundraising round was led by Saudi Aramco, the world’s biggest oil company. The startup’s process can turn natural gas into not only gasoline but also jet fuel and industrial chemicals. “When they [Saudi Aramco] look across that spectrum, they have a strong interest in increasing the value of their gas,” Ed Dineen, Siluria’s chief executive, told the San Francisco Chronicle. “This will allow them to do that.”

At Siluria’s tiny pilot plant in Hayward, in the San Francisco Bay Area, the company is producing small batches of gasoline. The money raised on Wednesday will allow it to finish construction of a demonstration plant in La Porte, Texas, at a plant run by Brasken SA (NYSE:BAK), a Brazilian petrochemicals firm, Xconomy reported. Siluria aims to operate two commercial-scale plants by 2017. One will make gasoline, while the other will produce the chemical ethylene.

Fuel companies have known for nearly a century how to turn natural gas into liquid fuels, the Chronicle noted. In recent years, interest in gas-to-liquid facilities has soared amid a U.S. and global shale gas drilling boom. But the most common fuel-making approach, which requires intense heats and high pressures, has largely proved to be prohibitively expensive. Siluria’s process promises to be cheaper – especially at current natural gas prices – because it doesn’t require the same levels of pressure and heat.

The Chronicle explains:

“It uses a chemical catalyst to take methane molecules from natural gas and combine them into ethylene, a hydrocarbon widely used in the chemical industry. The ethylene can be sold as its own product, or it can be processed with other catalysts to produce liquid fuels. The catalysts stitch together carbon atoms from the ethylene to create gasoline or diesel or jet fuel.”

Siluria has now raised nearly $100 million since 2008 from a handful of major cleantech investors, including Kleiner Perkins Caufield & Byers.