Interview: New Siluria CEO sees opportunity in small-scale petrochemicals

By ADRIENNE BLUME
Executive Editor

Hydrocarbon Processing spoke with Siluria Technologies' new CEO, Erik Scher, about the company's progress and commercialization plans for its Oxidative Coupling of Methane (OCM) technology and its process for converting ethylene to liquid fuels.

Mr. Scher, who is a founding member of Siluria and who previously served as executive vice president in charge of managing the company's technical groups, assumed the chief executive role today. He replaces Ed Dineen as Siluria's interim CEO.

2015 milestones. Last year, California-based Siluria saw significant developments in three areas. The first was the April 1 opening of the company's OCM demonstration plant at Braskem America's petrochemical facility in La Porte, Texas, for which HP was on hand.

The plant has successfully produced ethylene over the course of roughly 16 runs, showing excellent correlation with results from Siluria's three OCM pilot plants at its San Francisco Bay-area facility in Hayward. Data from the La Porte demo plant also shows better catalyst performance than the pilot facilities.

In terms of financing and partnerships, Siluria recently closed a new financing round led by Saudi Arabia-based National Petrochemical Industrial Co. (NATPET), an independently operated petrochemical company that is a new investor in Siluria.

The new financing round followed strategic investments from existing Siluria investor Saudi Aramco and others, resulting in a total raise of $150 MM since the formation of the company. All of the capital has been invested in Siluria's technology development platform.

The third area of business development for Siluria in 2015 was the continued development of its commercial portfolio, including projects in the ethylene, petrochemical and midstream spaces, as well as integration with refineries.

Siluria commenced several feasibility studies in 2015 for specific projects in a range of geographies that are home to cheap, abundant sources of methane and ethane—namely, the Middle East, Russia, Southeast Asia and North America.

The North American studies are not limited to the Gulf Coast, but extend to more remote areas of the country, such as those covered by the Marcellus and Utica shale plays.

Future commercialization efforts. The company's future strategy is twofold, and includes the development of existing and new technologies.

Over the past seven years, Siluria has brought two breakthrough technologies from conception to commercialization, and the company will continue to develop and improve those technologies.

"When you deploy a new technology, it's groundbreaking and disruptive because it's the first of its kind," Mr. Scher said. "There's a lot of room for us to develop those technologies to suit the needs of the company and its partners. The technology development cycles in our industry are decades long. So, we'll continue to work on OCM for a long time, and we'll continue to disrupt the industry."

Mr. Scher noted that Siluria expects to launch commercial plants in the 2018 time frame for its OCM and ethane-to-ethylene technologies.

The company is also working on the front-end development of new technologies, in conjunction with strategic partners. Siluria plans to utilize its learnings and its technology intellectual property infrastructure to further improve petrochemicals in the energy space.

Responding to market volatility. On the topic of low oil and gas prices, Mr. Scher acknowledged that an impact has been seen on the petrochemical industry, particularly in the US. "The oil price decline has already impacted the US, and it will for a while, until prices go back up," he said.

"Surprisingly, that presents a unique opportunity for Siluria, based on the strengths of the technology we've developed. One of our unique features is the ability to be economically viable at a much smaller scale."

Although Mr. Scher acknowledged that Siluria's technology can be applied to world-scale plants, the existing market is easier to navigate as a small-scale producer than as a world-scale cracker operator, he said.

"We can size an OCM plant to make ethylene in the quantities we want to make it in, and match that to small-scale derivatives production, creating an opportunity for us that other players in the marketplace don't have," he said.

Acquisition opportunities. Mr. Scher also noted that Siluria's technologies integrate well into existing gas processing plants, and he sees an opportunity in the midstream industry to acquire assets.

"With oil prices being down and E&P [exploration and production] pulling back, midstream assets are sitting idle and not making money," he said. "Those are assets in the ground that we could acquire for a much smaller price, and then integrate with."

"This is a very volatile market," he added. "But right now is a really great time to lock in natural gas prices. You can get a 10-year strip on natural gas very cheaply right now. You can't do that with oil, and you can't do that with ethane. But you can do it with gas."

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