$100 billion in stranded gas, flared each year – bad for economics, bad for climate.
Now, along comes Siluria with biotechnology that changes the economics, and opens new opportunities to make high-value ethylene from all that low-cost natural gas.
If you were watching the second Obama-Romney presidential debate last night, or heard about it, it might have struck you as significant that the two remaining candidates for the most powerful job on the planet spent zero time debating the issue of climate change, and five minutes debating the problem of $4 gasoline.
Which is one reason why Obama and Romney — who generally gave every indication that they would have preferred pistols at ten paces over the town hall debating format — were falling over each other in agreement that rising oil and gas production was somewhere between a great thing and a transformatively great thing.
It suggests that one of the few areas for real agreement between the parties, even in the midst of the political silly season, is the problem of flaring natural gas.
From an economic point of view, natural gas producers flare around $100 billion in unused gas every year. Looking at climate impact, the resulting CO2 emissions are greater than the annual CO2 output of France, according to a Reuters report from last year.
It’s an energy independence issue, an economic development issue, and an emissions issue – the same three Es that drive biofuels as an alternative to fossil fuels.
The fundamental problem is that gas is so hard to move around and generally all we do with it is burn it for heat or electricity.
Sure, Dow and others are building ethane crackers that use natural gas as a feedstock. These are very mature, robust technologies that steam crack natural gas in order to produce ethylene, propane and other fuels and chemicals. But they cost billions of dollars and take millions of tonnes of natural gas.
So, what’s the answer?
It turns out that biotechnology has a great role to play here.
A company called Siluria, which we have profiled in the Digest in the past, has made immense strides in finishing off the science of its bio-based approach to resolving the problems of a technology called the oxidative coupling of methane – a real mouthful which is generally known as OCM.
OCM is a process that converts methane into ethylene – transforming a $200 per tonne molecule into the most widely-produced chemical compound in the world (109 million tonnes last year – and rising fast), currently selling for around $1200 per tonne. Glad Wrap, for example, is the polymerized version of ethylene. Plus, plastic bags, bottles, boxes, containers, pens, and on and on.
So valuable, in fact, that the price of ethylene makes it unusable as a transportation fuel, despite the little known fact that you get about 50 percent better mileage on ethylene than gasoline, and the CO2 emissions are lower (NOX is higher, though).
Back to making high-value ethylene from low-cost methane.
The problem is that no one has been able to make OCM work on an economic basis – the catalysts just didn’t have the right selectivity or activity rates. After a great deal of excitement and research in the 80s and 90s, attention petered out.
Along comes Siluria, with a biotechnology approach, spun out of Angela Belcher’s lab at MIT. Inspired by the way nanomaterials are created by nature, Siluria develops metals and metal oxide crystals grown on biological templates.
Bottom line: the company makes breakthrough catalysts that enable OCM to work economically, and open up the opportunity to make money with gas, which enables it to be transported at a profit. Moreso, it results in a cost-competitive product with ethane cracking, but on a lower-scale, with lower capital requirements and smaller fields.
Where’s the technology in its development?
“In the stages of a company – science to engineering to commerce,” noted Siluria CEO Alex Tkachenko, “we are done with the science, and very deeply engaged with the engineering, after a crazy busy year and a half. The big thing to prove is that it can work in commercially available equipment, because it is critical for the partners we have discussed OCM with that no equipment breakthrough is required.”
Over the next 24 months, the company expects to build a demonstration plant and continue development efforts in its current pilot facility. In support of its plan, the company this summer raised $30 million from existing investors, and with Paul Allen’s Vulcan and a hot Moscow-based venture firm, Bright Capital, leading the round. Among the others investing in this effort – the Wellcome Trust, which biofuels followers will recognize from its substantial commitments to Sapphire Energy and a transformation in algae-based biofuels.
By directly converting methane into the same highly flexible intermediate (ethylene) that forms the backbone of today’s petrochemical industry, Siluria’s customers can take advantage of existing technology and infrastructure to turn ethylene into lower-cost fuels, chemicals, and materials. Inspiring stuff – we’ll keep an eye out on this new application for biotechnology.
And – we’ll all enjoy, perhaps, some relief from all that flaring.
By. Jim Lane