San Francisco-based startup Siluria Technologies has
attracted $120 million in venture capital from the likes of Saudi Aramco
and Paul Allen on the promise that it has discovered a Holy Grail of the petrochemicals industry.
Siluria Technologies’ new ethylene plant is a 4-story-tall maze of
pipes and valves and pressure vessels. If it were a standalone plant it
might be impressive. But this one is tucked in among dozens of giant
petrochemical complexes along the Houston Ship Channel and situated
within a larger polypropylene site operated by Brazilian chemicals giant
Braskem
So how does this facility stand out? Because it’s unique. All the
rest of the world’s ethylene is made the old-fashioned way: by breaking
apart larger hydrocarbons such as naphtha (sourced from crude oil) or
ethane (found in natural gas). In contrast, Siluria’s technology is all
about building up ethylene out of smaller methane molecules. The plant
takes in purified methane, mixes it with oxygen in the presence of a
revolutionary catalyst and creates the plastics feedstock ethylene.
Ethylene, the single most commonly produced petrochemical in the
world, is the basis for myriad plastics like polyester, beverage bottles
and PVC. It’s vital for the production of solvents, coatings,
antifreeze and pharmaceuticals. By some estimates the worldwide ethylene
amounts to $150 billion a year. And there’s so much cheap crude oil and
natural gas flowing through the United States right now that up and
down the Gulf Coast the world’s biggest chemical companies have
unleashed tens of billions of dollars in a building boom to expand
ethylene production. ChevronPhillips Chemical Company is investing $6 billion to build an ethane cracker. Near Lake Charles, Sasol is spending
$8 billion on an ethane cracker and six chemical plants. OxyChem is
building its own billion-dollar cracker in Ingleside. ExxonMobil is constructing one at Baytown.
Operations engineer Joel Vincent turns a
valve at the Siluria Technologies plant in La Porte, Texas, March 2015.
(Photo courtesy of Siluria, by Aaron M. Sprecher)
Now why does the world even need a new way to make ethylene when the
old way is good enough to attract so much investment? Because Siluria
thinks its process, called the oxidative coupling of methane, can do it
cheaper. That’s mainly because methane is the cheapest, most plentiful
part of the natural gas stream. At about $3 per mmBTU, you can spend
just $20 to get the same amount of energy content in methane as there is in a barrel of oil — which even at current low prices costs more than twice as much.
And also because there are massive supplies of “stranded” natural gas
far from petrochemical centers like the Gulf Coast — gas that in places
like the Bakken shale too often just gets flared off because the costs
of building out pipelines and processing plants is prohibitively
expensive. Siluria could some day provide a more economically viable
alternative. “Anywhere you’re making a bunch of methane, you’ll have
synergies with our technology,” says CEO Ed Dineen. “And it’s a better
alternative than LNG for moving gas long distances.”
Dineen will have a tough time gaining market share. Gas-rich Qatar
has invested more than $50 billion in the past decade trying to squeeze
more value out of its methane — both by chilling it to -260 degrees and
exporting it as LNG as well as by backing the construction of enormous
gas-to-liquids plants. Royal Dutch Shell
built the $20 billion Pearl GTL plant in Qatar, while Sasol constructed
the smaller Oryx plant. Both utilize the 90-year-old Fischer-Tropsch
Process to turn natural gas into a whole bucket of products including
waxes, lubes, super-clean diesel and jet fuel. And yet Sasol, which
perfected its F-T technique in South Africa turning coal into fuels,
announced in 2012 that it would build a $10 billion gas-to-liquids plant
in Louisiana, but shelved the plans last year after deciding it would
cost too much.
Maybe they
should give Siluria a try. Dineen claims that with oil prices at $50 a
barrel, the Fischer-Tropsch process “just doesn’t make money,” whereas
Siluria’s tech deployed at an existing oil refinery should be able to
generate a 40% rate of return even with oil at $40 a barrel, and a 100%
return at $90 a barrel.
That could upend the business plan for the likes of Cheniere Energy LNG -1.54%,
which has already invested more than $10 billion building out new
natural gas liquefaction plants that next year will begin exporting
American shale gas to the world.
To be sure, Siluria is far away from displacing the old ways of
making ethylene, let alone supplanting LNG or even Fischer-Tropsch. The
new plant — financed in large part by a recent $30 million
equity injection by Saudi Aramco Venture Partners — is capable only of
making a ton of ethylene a day. Compare that with the 4,000 tons per day
or more that those world-scale plants under construction will churn
out. And Siluria won’t even be selling the output from its plant,
because the volumes aren’t big enough to justify the expense of adding
in all the ethylene purification equipment. “Data is the main product,”
says Dineen.
Right now, Siluria’s engineers are working to replicate in the new
plant all the experiments and results from their pilot plant near San
Francisco. That’s where they concocted the secret sauce of their
process: the catalyst. Catalysts are substances that increase the rate of chemical reactions
without reacting themselves. They are vital to virtually every
industrial chemical process, especially those that crack ethane or
naphtha into ethylene.
For decades engineers had tinkered with catalysts that could help
couple together oxygen and methane to make ethylene by enabling the
chemical reaction to occur at a low enough temperature that the methane
wouldn’t simply get burned off. Another challenge is getting the
reaction to stop with ethylene rather than continuing on to yield
nothing but carbon dioxide and water.
http://www.forbes.com/sites/christopherhelman/2015/04/14/a-tech-upstart-turns-shale-gas-into-plastics-and-gasoline/2/?ss=energy
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