Siluria has raised the funds it needs to build a demonstration plant for making the chemical ethylene from natural gas, rather than oil.

The MIT spin-off announced yesterday that it has raised $30 million in a round led by Microsoft co-founder Paul Allen’s Vulcan Capital and Moscow, Russia-based Bright Capital. Existing venture capital investors, including Kleiner Perkins Caufield & Byers, also participated, bringing the total the company has raised to $63.3 million.

The company has developed a method for turning methane, the main component of natural gas, into ethylene, a common industrial chemical normally derived from oil. Ethylene is used in the production of many everyday products, such as the plastic, and could be converted into liquid fuel.

Typically, refiners “crack” petroleum with heat to produce ethylene, a smaller chain hydrocarbon. Siluria instead uses catalysts to chemically combine two methane molecules to make ethylene, a process which can operate at much lower temperatures and is far less energy-intensive than traditional steam cracking.

The company’s technology originated in the lab of materials scientist and biological engineer Angela Belcher at MIT, whose research focuses on mimicking natural processes to make desired products, such as a virus-powered battery. Siluria has a catalyst-screening and discovery process where a virus serves as a template for creating nanowire catalysts, (see “Natural Gas to Chemicals”). The method lets Siluria refine the catalysts and expand its library, which the company says gives it an advantage over the many other methods tried for making ethylene from methane.

Today’s funding will allow the company to build a demonstration plant next year to fine-tune the process, according to the company. Siluria then intends to partner with chemical companies for commercial-scale plants. The company says that its catalysts can work with conventional reactors, which reduces the risk of scaling up.

Given the low cost of natural gas, it’s not surprising Siluria, which raised $20 million less than a year ago (see “Natural Gas Upgrade”), has attracted more funding. Expect more companies to seek out methods for making chemicals or fuels with methane as a feedstock.