Velocys develops technology to produce cleaner fuels from both conventional and renewable sources such as bio-waste.

Due to a surge in natural gas production in the United States, several firms are turning it into lubricant base oils or transport fuels through a technology known as gas-to-liquid refining.

Pinto Energy is a small-scale gas-to-liquid developer which is developing a plant near the port of Ashtabula in Ohio to convert natural gas from the Marcellus shale region into solvents, lubricants and low-carbon transport fuels.

The facility will initially have a capacity of 2,800 barrels per day (bpd), but that could be expanded to 10,000 bpd, Velocys said.

The acquisition of Pinto Energy is a key stepping stone for commercial growth, Velocys Chief Executive Roy Lipski said in a statement. "Our primary mandate remains technology leadership in smaller scale gas-to-liquids," he added.

(Reporting by Nina Chestney; Editing by David Holmes)