An emerging surfeit of natural gas, methane, has chemists and engineers studying how to turn it into pricier commodities, like diesel fuel or other oil substitutes.

A San Francisco start-up company in western United States, Siluria Technologies, is pursuing a newly developed method of converting natural gas to an oil substitute.

Siluria has decided not to go after gasoline or diesel but instead to produce ethylene, a building block for plastics, fertilizers, pesticides, beverage bottles, tires and lots of other materials that are now made from oil. Ethylene can also be turned into alkanes, a class of hydrocarbons that are a component of gasoline.

In Siluria's newly developed conversion process, using a new kind of catalyst, the conversion from the natural hydrocarbon molecule, methane, to the synthetic one, ethylene, gives off heat instead of requiring it. Further, their conversion process would also involve releasing less carbon dioxide into the atmosphere than traditional conversion methods such as the Fischer-Tropsch process.

For the time being, Siluria has not yet demonstrated its method beyond the laboratory, but the company hopes to open a pilot plant in 2012 or 2013.

Limits on carbon dioxide emissions would encourage the new technology, although at the moment the big draw is the price of natural gas, which is running at a discount to oil approaching 80 percent, on an energy basis.

(Source: A Lower-Carbon Route to Replacing Oil [New York Times])