Oil company startups

The natural gas boom is often viewed as a great disrupter to coal-fired power plants. But what about displacing oil? One startup has developed a process to turn natural gas into petrochemicals and fuel.

The boom in natural gas production in North America is often viewed as a great disrupter to coal-fired power plants. But what about oil?

San Francisco-based startup Siluria Technologies is working to commercialize a process that replaces oil with natural gas to make chemicals, plastics and transportation fuels like gasoline, jet fuel and diesel.

It's a provocative and potentially profitable endeavor. The fuels and chemicals Siluria can make are indistinguishable from products made from oil. The only difference is cost.

Natural gas is vastly cheaper and more abundant than oil. Natural gas and oil is four to five times less expensive than oil in North America and nearly half the price of crude in Europe.

And the company says it chemical process is more efficient and flexible than other conventional gas-to-liquids technology. (Scroll down to read about the process in detail). The chemical process is especially attractive because it works with existing infrastructure used by the petrochemical and oil and gas industries.

Siluria's process has attracted the interest and dollars from high-profile investors, including Kleiner Perkins Caufield and Byers. Siluria announced last week it raised million in a financing round led by new investors Bright Capital and Paul Allen's fund Vulcan Capital. To date, Siluria has raised .5 million.

Siluria will use the monies to fund the construction of a demonstration plant next year and commercialize its technology.

Siluria President Alex Tkachenko doesn't see the process as displacing oil altogether. And told me in a recent interview that he's doesn't want to project an impression that the company expects to revolutionize an industry worth a trillion dollar over night.

However, the repercussions over the long-term could be revolutionary, Tkachenko said.

"When oil came around it took many decades to significantly impact coal consumption - and we're still not completely done with it - but look how it transformed the world, " he said. "That's kind of how we think about our work."

Of course, this all hinges on Siluria's ability to raise enough funds from investors, industry partners and future customers to commercialize to bring its process to market.

Tkachenko wouldn't give a detailed timeline to commercialization, saying only that it would likely be less than five years and more than one. The company's first task is to build the demonstration plant and test equipment to determine which types of reactors, pumps, compressors fit together best and most economically.

The demonstration plant will be located closer to a source of natural gas and an industrial setting. Tkachenko says the company will likely partner with a company in either the petrochemical or oil and gas industry.