July 26 (Bloomberg) -- Paul Allen’s Vulcan Capital led a $30 million venture capital investment in Siluria Technologies Inc., a closely held company that’s developing processes to convert natural gas into transportation fuels and chemicals.
Vulcan Capital, which manages the personal investments of Microsoft Corp. co-founder Allen, led the third round of financing with Moscow-based venture investor Bright Capital, Siluria said in an e-mailed statement.
San Francisco-based Siluria is developing a catalytic process that combines molecules of methane, the principle component of natural gas, to produce ethylene, a chemical that’s the basis of the petrochemical industry. The technology may give producers another market for their natural gas, which is mostly burned as a fuel to generate steam or power and fell to a 10-year low in April in part due to an expansion of U.S. shale drilling.
The company’s process is compatible with standard equipment though it differs from conventional steam cracking used by chemical makers to break down petroleum or natural gas derivatives into different products, and is less energy intensive, Siluria says on its website.
The funding will support a “commercial demonstration plant” that may be built next year and Siluria plans to partner with chemical or gas companies on subsequent projects, President Alex Tkachenko said by telephone.
The ethylene Siluria produces is chemically equivalent to that made through conventional processes, meaning it can be converted into transportation fuels, chemicals or materials such as plastic. The company is focused on converting natural gas produced from oil and gas wells, though its process functions with biogas from landfills or anaerobic digesters and could be used by partners interested in those sources of methane.
“Our technology is indifferent to the source of methane,” Tkachenko said. “Where there is a difference, of course, is in the abundance,” he said.
Other companies including Honeywell International Inc. and Dow Chemical Co. are also developing catalytic conversion processes for natural gas.
Existing Siluria backers including Arch Venture Partners LP, Alloy Ventures Inc., Kleiner Perkins Caufield & Byers, Lux Capital, Altitude Life Science Ventures, Presidio Ventures Inc. and the London-based charity Wellcome Trust Ltd. reinvested, the company said. Siluria has raised a total of $63 million, it said.
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