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Sasol (SSL -3.5%) is looking for contractors to help it become the first commercial oil producer in Mozambique and to extend a gas pipeline that will increase exports to neighboring South Africa.
Good afternoon Sasol Limited (SSL) looking for a strong hour of power!
announced improved results for the fiscal year ended June 30, 2013, aided by enhanced operations and a favorable exchange rate, partially offset by lower oil and product prices.
The South Africa-based petrochemicals group reported headline earnings per share, excluding one-time items of R52.53 (US$6.00), up by 24.9% from R42.07 earned in the last fiscal year.
Segmental Analysis
South African Energy Cluster: Within its South African energy cluster, Sasol Mining's operating income decreased 3.2% to R2.2 billion, affected by higher transportation, mining and other expenses. However, the sector witnessed increased output.
Sasol Gas generated an operating profit of R4.1 billion, up 36.3% year over year. This increase can be attributed to higher sale prices and output.
Sasol Synfuels' operating profit jumped 29.6% to R28.6 billion, mainly reflecting higher output and positive foreign exchange movements that significantly made up for cost escalation.
Sasol Oil reported an operating profit of R2.1 billion as against R1.6 billion in the last fiscal year. The improvement is aided by improved refining and marketing margins along with increased prices of petroleum products. To some extent, this was offset by the drop in output.
International Energy Cluster: Sasol Synfuels International recorded an operating profit of R1.6 billion, down from R1.9 billion in the prior fiscal year. The result was affected by a drop in output owing to the shutdown of the Qatar-based ORYX gas-to-liquids plant.
Sasol Petroleum International incurred an operating loss of R1.9 billion, narrowed from the loss reported in the prior fiscal year, mainly reflecting improved gross margin. This was however partially offset by increased exploration, operation and depreciation expenses.
Chemical Cluster: Sasol Polymers incurred an operating loss of R2.8 billion against a profit of R716 million in the prior fiscal year. The segment results were adversely affected by weak domestic margin.
Sasol Solvents' operating income was down to R916 million, from the previous fiscal year's level of R1.4 billion. The results were affected by weak product prices and margins.
Sasol Olefins & Surfactants reported an operating profit of R3.6 billion, up by 12.1% from the income of R3.2 billion during the corresponding period of 2012. The positive comparison came on the back of increase in margin from the company’s operations in the U.S. This was however partially offset by margin pressure in European activities.
Operating Cash Flow & Capex
Sasol generated R59.3 billion in operating cash flow, a 24.0% year-over-year increase, primarily due to higher flow of cash from operating activities somewhat nullified by increased working capital. The world's largest producer of motor fuels from coal spent R32.3 billion in capital expenditure during the period.
Dividend
The company announced a final cash dividend of R13.30 per share. The dividend will be paid on Oct 14 to shareholders of record as on Oct 11, 2013. The holders of American Depositary Receipts (“ADRs”) will be paid on Oct 25, 2013.
Stocks to Consider
Sasol Ltd. currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
http://www.zacks.com/stock/news/108999/sasol-posts-stronger-earnings
Whether we like it or not, there will come a day when our reliance on oil and other fossil fuels will have to be taken over by renewable energy sources. Despite the fact that US oil production is surging and could soon be the world’s biggest producer of the black gold, it is still a smart idea to develop an alternative energy source. Additionally, President Obama has said that he will continue to fund and support alternative energy programs in his second term. I believe Gevo Inc. (NASDAQ: GEVO) stands to benefit.
Gevo is on the renewable chemicals and biofuels side of the alternative energy industry. The company’s main focus is on Isobutanol, a four carbon alcohol that can be used as an added fuel blendstock. The direct integration of Isobutanol into chemical and fuel products that we already use increases the overall economic and environmental value.
The alternative fuel company has already gotten a green light from the US EPA as a fuel additive and is being tested as a fuel source for the US Air Force. Back in June of 2012, Gevo completed its first “alcohol to jet” fuel test in an A-10 Thunderbolt II which was successful. Now, the company has a list of partners that want to use the fuel additive such as Coca-Cola (NYSE:KO), Sasol Limited (NYSE: SSL) and Lanxess, to name a few.
Over the past year, however, shares have fallen 67% as the US economy continues to haggle along with its recovery. To be clear, alternative energy plays are not meant as short term investments and could take a few years before any meaningful integration into society. With that being said, Gevo is well positioned already and could see profitability in the next 1 to 3 years. Looking at the financials, Gevo has a market cap of $79 million and currently has a “buy” rating from analysts. The stock has no price to earnings but is currently trading at a discount to book value at 0.72. Furthermore, price to cash is discounted at 0.86. Another major plus for the stock is its financial strength with a quick ratio of 4.37 and current ratio of 4.55. Additionally, since business model does not require fast amounts of capital, Gevo only has a debt to equity ratio of 0.49.
Generally speaking, alternative energy stocks are hard to love as high entry costs plague balance sheets with years before any meaningful profit is made, if they last that long. Gevo’s main biofuel, Isobutanol, does not require big loans and heavy spending to develop, which makes it easier to own if an investor is interested in the alternative fuel markets. The bottom line here is with a US EPA backing, successful use of the biofuel by the US Air Force and partnerships with big name companies, Gevo is in the beginning stages of a successful business that is surely to prosper.
For more and other great stories visit: http://emerginggrowth.com/posts/an-executive-order-and-an-alternative-energy-benefactor/01/24/2013
Breakout time in SSL!
SSL on trend line support. Think it will hold Dcon?
AFMC: US Air Force completes F-22 synthetic fuel trials
BY: Jeffrey Decker , Flight International
11/24/2008
The US Air Force has concluded analysis of the effects of using a natural gas-based synthetic fuel with its Lockheed Martin F-22, as work to trial the technology accelerates through its trainer, transport and fighter fleets.
No anomalies were detected in F-22 flight tests, or during ground tests of its F119 engines at Pratt & Whitney's West Palm Beach facility in Florida, says Jeff Braun of the synthetic fuel certification office at Wright-Patterson AFB, Ohio.
Flight tests using the Northrop T-38 supersonic trainer have recently commenced, while a Lockheed C-5 transport (below) will conduct a demonstration flight on 9 December and ground tests of the Lockheed F-16's General Electric F110 engine will start in mid-January.
The C-5 demonstrations will be conducted from Memphis Air National Guard base in Tennessee. "We are currently planning one sortie with the aircraft operating a single engine on the 50/50 Fischer-Tropsch blend, followed by a second sortie with all engines utilising the 50/50 blend," says Braun.
Planning for synthetic fuel trials with the Lockheed C-130 transport, Fairchild A-10 ground-attack aircraft and Northrop Grumman RQ-4 Global Hawk and General Atomics MQ-9 Reaper unmanned air vehicles are ongoing, and Braun adds: "We will hopefully fly all by summer 2009."
The USAF aims to certify its entire fleet for synthetic fuel use by 2011, and to meet half of its domestic fuel needs by 2016 from fuels converted from coal and natural gas through the Fischer-Tropsch process.
Less than 570,000 litres (150,000USgal) of fuel provided by Shell remains for testing. "We recently took possession of 60,000 gal of Sasol fuel [from South Africa], and will accept another 335,000 gal during fiscal year 2009," says Braun.
The office of the assistant secretary of the air force for installations, environment and logistics is expected to select a private partner during December to develop a Fischer-Tropsch production facility at Malmstrom AFB, Montana.
Can concept of clean coal be salvaged?
http://www.msnbc.msn.com/id/27685081/
Can the U.S. military move to renewable fuels?
Sohbet Karbuz, Bulletin of the Atomic Scientists
The U.S. military is the world's largest single consumer of oil. Its efforts to fund renewable energy projects are haphazard and do little to address its dependence on oil for vehicles. A full energy-use profile would allow the U.S. military to know how it uses its fuels, which would allow for a truly comprehensive energy policy.
In a 1906 planning document, the U.S. War Department imagined, "In 1950, the U.S. military [will be] a highly effective, mobile, and mutually supporting force, protecting all required American interests through dominant air, land, and sea operations powered by a petroleum energy standard that is reliably and economically produced from domestic sources."
That vision came true except regarding the last two words. Oil production in the United States, the largest producer in the world at the beginning of the 20th century, reached its peak in 1970. Today, the United States is the world's largest oil importer, and the U.S. military is the single largest consumer of oil in the world. (For more detail see War Without Oil: A Catalyst For True Transformation.)
From the end of the Cold War to the first years of the 21st century, the Pentagon's energy consumption dropped by some 40 percent, but with the "Global War on Terror," consumption has risen again. Oil fuels the U.S. military's nearly 11,000 aircraft and helicopters, 200 combat and support ships, 200,000 tracked and wheeled vehicles, and 190,000 non-combat vehicles, such as trucks, passenger cars, and buses (not to mention many unmanned aerial vehicles and missiles).
Although fuel costs represent less than 3 percent of the Defense Department budget, indirect costs such as those for transporting fuel to battlefields and distributing it to the end-user, add to the total. When the cost of the army's entire logistics network is added to the cost of delivered fuel, gas prices are $13-$19 per gallon. In the air force, these costs can be much higher, military grade jet fuel delivered through aerial refueling costs upwards of $42 a gallon.
The military is aware of its dependence on oil, and is working to increase its energy efficiency and to create viable alternative fuels such as biofuels and synthetic liquid fuels from natural gas and coal.
(31 October 2008)
I'm looking for the 13-day price EMA to be support now...
Did you pick up some SSL today Dcon?
SSL in a presignal buy area. Buy signal happens with a decisive close > 13-day price EMA...
Regards,
frenchee
#board-4258 TSP Trend Timing: EFA (I), TLT (F), SPY (C), and VXF (S)
Got ya I picked some more at .70
Me along time ago . {Semper Fi}
lots of chop with SSL. I'm not trusting it until it can decisively close > 13-day price EMA.
signs of a climax bottom folks. Friday's candlestick shadow is long and selling volume decisive. Probably the start of a bottoming process...
nice gap up today...
looks like things are a changing.
with ahe upheavel in South Aferica maybe thhngs are settling down.I hope so . Dcon
Also if I remember correctly synm sold them some kind of tech to them I could be wrong but I thought they did. Dcon
Nyasulu To Chair Sasol
Javier Espinoza, 09.08.08, 1:20 PM ET
LONDON - Sasol, the South African energy firm, elected a black chairwoman to lead the company's board, a notable at a company that had once been seen as dragging its feet on empowering historically disadvantaged victims of decades of racial segregation.
Hixonia Nyasulu, 54, is the founder of a women-controlled investment vehicle called Ayavuna Women's Investments. She is the first woman and the first black person to chair Sasol, which makes fuel from coal
"Although there is continuity, she will make a positive impact in a business where it is relatively unusual to have a woman in charge. Her appointment better reflects the make up of a new South Africa," Jonathan Kennedy-Good, an analyst with Deutsche Securities, told Forbes.com. "She represents a very stable leadership within the company as she has been with them for some time," he said.
In March, Sasol moved to make its shares more widely available to black investors. (See "Sasol's $3.2 Billion Racial Justice Call.") That followed changes at the company in the wake of a 2003 filing with the U.S. Securities and Exchange Commission that identified empowerment of black people as potentially having an "adverse impact" on Sasol's business and finances. Late last year, the company changed its articles of incorporation from the Afrikaans language to English, ostensibly to make them more accessible to an international investor base but having the effect of removing a link to South Africa's apartheid era.
Sasol (nyse: SSL - news - people ) also posted a 50.0% jump in annual earnings for the year through June 30 on Monday, to 38.09 rand ($4.80) per share, on the back of higher oil prices and a favorable exchange rate. The company said operating profit rose 32.0%, to 34.0 billion rand ($4.2 billion), and declared a final dividend of 9.35 South African rand ($1.19), a 58.0% rise from last year.
Shares of Sasol rose 2.8%, or 1,060 South African rand ($134.42), to 38,360 South African rand ($4,871.83), in afternoon trading in Johannesburg. Although the company's earnings were slightly shy of estimates, it guided 2009 estimates to a big gain from the current year, according to TradeTheNews.com.
Until recently, Nyasulu was a member of the Banking Enquiry Panel, appointed by the South African Competition Commission to investigate charges in the retail banking sector, access to the National Payment System and competition in the sector. She has served on the boards of several South African companies since 1992 and she is also a member of the board of international companies. She is currently a director of Anglo-Dutch consumer products firm Unilever. She is also part of the JPMorgan South Africa advisory board.
Pat Davies, Sasol's chief executive, told Forbes.com her experience at both local and international companies makes her a good bet for Sasol. "She is a powerful leader with a valuable contribution as she sits on a number of boards with a widespread experience in many industries," Davies said in a phone interview from Johannesburg.
Davies replaced Pieter Cox as Sasol's CEO in 2005 and accelerated the company's inclusion of blacks. Cox became the chairman at that time and announced his retirement on Monday, paving the way for Nyasulu's appointment.
Hey frenchee
I would love to see the other one hit 50.00 per share or more like SSL .Dcon
Me along time ago . {Semper Fi}
SSL a strong buy according to Ford Research
Earnings growth has shown acceleration.
Ford's earnings momentum measures the acceleration or deceleration in trailing 12 month operating
earnings per share growth. The upward curvature of the plotted points in the graph on the left indicates
that while SSL's earnings have increased from $3.44 to an estimated $4.67 over the past 5 quarters,
they have shown acceleration in quarterly growth rates when adjusted for the volatility of earnings. This
indicates an improvement in future earnings growth may occur.
Over thirty years of research have shown that the major catalyst of price performance is the change in
the growth of earnings per share. Ford measures earnings momentum and analysts' forecast changes
to get an early indication of changing earnings patterns.
Very undervalued according to earnings yield.
SSL's operating earnings yield of 8.5% ranks above 82% of the other companies in the Ford universe of
stocks, indicating that it is very undervalued.
Ford measures the relative valuation of each company against all other companies in our research
universe. Operating earnings yield, an earnings-to-price ratio based on the last 3 quarters of operating
earnings and the current quarter's estimate, has proven to be the most reliable relative valuation
measure. A stock may stay undervalued or overvalued for a long period of time. For this reason it is
important to combine this factor with short term catalysts such as earnings momentum or price
momentum that may unlock potential valuation adjustments.
Very Positive price momentum. Expect above average performance.
SSL's stock price is up 36.7% in the last 12 months, down 12.6% in the past quarter and up 3.9% in the
past month. This historical performance should lead to above average price performance in the next
one to three months.
Another important catalyst, especially in regard to intermediate and short term performance, is the
historical price action of the company. Long term historical performance is a good indicator of future
price performance, but much more importantly, large price movements over the intermediate and short
term tend to reverse themselves. Ford's price momentum measure integrates historical long and short
term price changes creating ratings that are highest for stocks with strong twelve month price
performance that have a price consolidation in the past quarter and especially the past month.
A good quality rating.
SSL is considered good quality based on its size, average financial leverage and low earnings volatility.
Good quality companies on average exhibit an average degree of price volatility.
While not part of the overall recommendation, Ford's quality rating has been a good indicator of the
potential price volatility of a company. Ford measures quality based on company size, financial leverage
and the volatility of earnings. Quality may not have a direct relationship to performance, but it does
have a close relationship to the dispersion of returns among individual stocks. Attractive, high quality
companies can have less downside volatility in weak markets and often produce strong returns during
complete market cycles.
Company Scores Very Good Fundamental Grades -
MarketGrader currently has a BUY rating on SASOL LTD (SSL), based on a final overall grade of 73.6 scored by the company's fundamental analysis. SASOL LTD scores at the 95th percentile among all 5262 U.S. listed equities currently followed by MarketGrader. Our present rating dates to April 1, 2007, when it was N/A from a BUY. Relative to the Integrated Oil & Gas sub-industry, which is comprised of 26 companies, SASOL LTD's grade of 73.6 ranks tenth. The industry grade leader is OCCIDENTAL PETROLEUM CORP (OXY) with an overall grade of 87.8. The stock, up 10.36% in the last six months, has outperformed both the Integrated Oil & Gas group, up 0.23% and the S&P 500 Index, which has returned -1.65% in the same period.
Wow, haven't been watching it for a bit. Nice going :)
Just picked up some near the lows of the day. Looks like 46 is going to hold as support.
Considering the financials will be out in Sept, the price increase may be an indicator. Right now it's a flip show imo
Top!
http://investorshub.advfn.com/boards/board.aspx?board_id=11687
Got a feeling the downtrend line will be broken before the uptrend line in the daily chart in the iBox. What's your opinion MARINE-1?
See the potential trendline support on the daily chart in the iBox. If we get a bounce, probably worth a nibble...
I nominate you!
Somebody needs to wake this place up. as usual the price climbs on these china plays before the word gets out, amazing!!!
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=30016673
Top!
U.S., China: The Feasibility and Fate of Liquid Coal
Summary
Coal-to-liquid (CTL) technology has been sidelined for decades by exceedingly affordable oil. Today, with the price of oil at record highs, CTL is starting to look more appealing, though hurdles to its widespread use remain, particularly in the United States.
Analysis
Coal-to-liquid (CTL) technology essentially liquefies coal and allows it to be burned in conventional engines, mainly diesel and aviation engines. With the price of oil at record highs, we examine the status of CTL in the context of the United States and China — by far the world’s two heaviest producers and consumers of coal.
The Fischer-Tropsch process that converts coal to liquid actually dates back to 1920s Germany, where it was pursued to compensate for a lack of domestic petroleum resources. It would ultimately account for 90 percent of the Third Reich’s aviation fuel and half its total fuel consumption, playing a significant role for imperial Japan as well.
But though this process is well understood, it has languished for decades because of exceedingly affordable oil (although South Africa still uses the process). With oil prices now at record highs, that logic no longer holds: CTL is technically feasible and easily compatible with current infrastructure and diesel and aviation engines. It is generally thought to be financially feasible with oil at around $70 a barrel — which oil has held above for a year now. (Sustained prices at this level are an important prerequisite for investors in CTL, and it is not yet clear whether the current rise is irreversible.)
United States
But there are lingering problems with the technology. The problem for CTL in the United States is carbon emissions. The full cycle of coal liquefication, taken as a whole, emits more carbon than the full cycle of petroleum production does.
The key to reducing this footprint is known as carbon capture and sequestration (CCS), which essentially is the collection and storage of carbon emissions rather than the release of those emissions into the air. However, CCS is seven to 17 years from maturity, and doing it on a large scale is both complex and expensive — adding greatly to the cost of CTL. Bringing a CTL plant with CCS online can cost $5 billion to $10 billion — a huge investment by any measure and a significant risk, given the long-range uncertainty of oil prices.
The coal industry has pursued government subsidization and guaranteed contracts in order to help fund the expensive build-out of such plants. However, opposition to the expansion of coal use in general by environmental groups and sympathetic members of the U.S. House and Senate has led to a staunch campaign against CTL efforts. Activists helped develop a provision in the 2007 energy bill that legally restricts federal use of alternative fuels that have higher carbon emissions over their production life cycles (from extraction to refinement) than petroleum does. Despite the provision, Congress may still provide CTL a toehold in a defense appropriation bill that would allow the defense department to purchase a small amount of CTL fuel.
Meanwhile, the extraction of oil from tar sands (and to a lesser extent from oil shale) is gaining momentum. Refinery and pipeline infrastructure is being expanded to accommodate these efforts, and both Canada and the United States have large and promising reserves. Oil from tar sands and shale is the alternative more likely to make a significant dent in U.S. fuel needs. Tar sands, in other words, are already proven, while an environmentally friendly CTL remains mostly on the drawing board. Nor does it help the CTL cause that most of the pollution from tar sands remains in Canada, while CTL would bring its environmental issues to the United States.
As a result, CTL in the United States will remain mired in the regulatory realm over the short term. Until there is meaningful movement, such as a victory in the defense appropriation bill, few will be willing to invest the massive amounts of money required to make CTL a practical alternative.
China
Such prohibitive environmental and regulatory opposition is not a problem in China. Although it is beginning to recognize air quality as a legitimate concern, China has been studying CTL technology for years, and alternative clean-coal technologies remain a priority in the Chinese coal industry’s 11th five-year plan. This priority will receive a significant boost in late 2008, when a CTL plant in Inner Mongolia operated by the state-owned Shenhua Group, China’s largest coal mining company, starts converting more than 3.75 million tons of coal annually into just over 300 million gallons of diesel and other oil products — the equivalent of approximately 20,000 barrels a day. Beijing’s ambition is to turn this into 286,000 barrels a day (approximately 4 percent of China’s energy needs) by 2020.
Funding and expertise will not be a problem. A host of foreign firms such as Royal Dutch/Shell, Sasol, General Electric, ABB Group and Siemens are lining up to help China experiment in deriving crude oil from coal. After 2009, when the successor to the Kyoto Protocol will likely be adopted, these companies will have incentives to develop modern energy technologies such as CTL/CCS.
Still, even in China, CTL development faces a number of barriers. First, the size and complexity of the country’s energy bureaucracy has been a barrier to meaningful energy reform for a decade. And because energy reform has been so bureaucratically cumbersome, China remains heavily reliant on coal for power generation, and it is already coming up short in terms of coal supplies. Building out CTL infrastructure (which would require even more power) is not going to be considered an effective solution in the current crunch, and further use of coal for power generation may also take precedence over CTL.
The Chinese also do not use this coal efficiently by Western standards, and they have less spare capacity and are experiencing shortages in coal reserves (in April, reserves fell below a week’s supply in some provinces). Chinese coal producers are currently prohibited from raising prices until 15 days of reserves are re-established. While the Chinese generally mine enough coal to meet their needs, they occasionally are forced to import small amounts when demand exceeds expectations.
And another crucial resource — water — also is in short supply. CTL technology is water-intensive, and China’s ground-water levels are sinking, not rising. Worse yet, drinking-water shortages are an annual problem in some parts of the country. Shenhua intends to meet its annual water needs with nearly 9 million tons of ground water and by recycling water from the coal mines. Whether this will be enough remains to be seen.
Meanwhile, the Chinese have already prioritized natural gas, wind and hydroelectric generation as a stopgap until more nuclear plants can be built. Chinese efforts in Central Asia and Africa to lock down more petroleum sources also will offset some of this need.
For the long run, Beijing has consciously chosen to move away from coal as a fuel for generating power. Nevertheless, China’s coal resources may prove to be an attractive alternative to oil. China’s heavily industrialized economy is beginning to feel an acute pinch from increased fuel prices (much more so than more service-oriented economies), and petroleum fuel shortages are reaching a crisis point.
It remains to be seen whether efforts in Inner Mongolia ultimately prove to be an expensive experiment or the beginning of a significant CTL contribution to China’s ever-growing energy needs. In any event, Beijing is not likely to rule out CTL as a promising alternative.
The Air Force is using coal to create synthetic fuel for its aircraft. Mr. Anderson talks about what the Air Force is doing now and future plans.
http://aimpoints.hq.af.mil/video/synthetic%20fuel.wmv
I think we will be able to keep that going .
SSL went on a short-term sell today Dcon.
Noted SYNM had a so-so day. Long as SYNM close above the up trendline below, your long will be safe.
International interest grows in U.S.-led alternative fuel push
BY: Caitlin Harrington, Jane's Defence Weekly
05/07/2008
Air chiefs in France, the United Kingdom and the United States are moving ahead with talks on the use of synthetic fuel to power military aircraft and the number of nations involved in the US-led effort is poised to dramatically expand.
William Anderson, the civilian head of the U.S. Air Force's (USAF's) alternative fuels programme, said that the air chiefs have each assigned working groups to meet in Paris this June to discuss the performance of alternative fuels in coalition aircraft, from the Lockheed Martin F-22 Raptor to the Dassault Rafale.
They will also exchange ideas on how to conserve jet fuel and how to make synthetic fuels more environmentally friendly.
The trinational talks were launched by USAF Chief of Staff General Michael Moseley along with French Air Force Chief of Staff General Stephane Abrial and U.K. Royal Air Force Air Chief Marshal Sir Glen Torpy in September 2007 at the annual Global Air Chiefs Conference in Washington.
Anderson said that he expects the talks to expand to as many as a half a dozen other countries and preliminary discussions have already taken place with Canada. With oil prices hovering above USD110 a barrel, there is plenty of incentive for others to join, he said, adding: "There's an opportunity to expand relatively quickly."
The USAF spent USD5.8 billion on jet fuel in 2007 and is on the front lines of developing alternative fuels because of concerns about high oil prices and politically unstable suppliers in the Middle East.
Plans are already in place to certify the entire USAF fleet to fly on a synthetic fuel blend by 2011.
However, Anderson said that allies will, inevitably, become more involved in alternative fuel programmes because coalition aircraft often rely on the same fuel sources.
Countries such as Qatar are already starting to build factories that produce synthetic fuel and coalition aircraft operating in Afghanistan and Iraq have to be prepared to accept whatever fuel is readily available in theatre, he stated.
"When we work as a coalition, we fly together, we land at the same airbases, we tank up at those airfields and we tank from the same tankers," Anderson told Jane's in a 23 April interview.
"Any use of alternative fuels will require that all the various coalition partners will be able to use them."
Some European countries have raised concerns about the environmental impact of the USAF's preferred synthetic fuel: a blend of traditional JP-8 jet fuel and a synthetic derived from coal. The process of converting the coal to liquid releases large amounts of carbon dioxide.
Anderson said that the USAF is looking for ways to reduce the resulting pollution, however, and that, overall, there is still wide support for the coal-to-liquids process among the militaries of ally nations.
"All three air chiefs believe coal is a very good alternative for jet fuel," said Anderson, "but we also have to get our heads around the greening of the fuel as we move forward."
The USAF prefers coal as a feedstock for synthetic fuel because it is plentiful in the United States. USAF officials are looking into ways to re-use the carbon released from the coal-to-liquids process, such as blending it with hydrogen to make even more fuel.
Anderson made his case for alternative fuels to European allies during a trip to France and the United Kingdom in late 2007, meeting with both government officials and companies involved in alternative fuels research, including Virgin in the United Kingdom as well as French engine manufacturer Snecma and nuclear technology company Areva.
The USAF is also proceeding with its alternative fuel testing plans; testing of the fuel in the F-22 Raptor will begin in the next few months. Those tests will mark the first time that synthetic fuel has been used to power a jet with a supercruise capability, which means that it can achieve supersonic speeds (above M1) without using an afterburner.
While European militaries have not yet begun testing and certification, industry has moved forward with its own efforts. Airbus, Rolls Royce and Shell recently conducted a flight test of an Airbus A380 that flew from the United Kingdom to France powered by a synthetic fuel derived from natural gas.
That is very true. maybe SYNM will get their act to gether.And geter done. LOL
one post left sure hope I get a green one soon so I can get legit on the paying roster. alot I would like to say just not in public. Dcon
RTK and SYNM are somewhat concept firms--Sasol is geting it done...
I got a board mark for ya there buddy LOL lucky # 3
see what happens Dcon
Sasol - 100% Synthetic Fuel Wins First-Time Approval for Use Internationally in Commercial Aviation
Wednesday April 9, 2:00 pm ET
Pioneering Fuel produced by Sasol, meets stringent performance standards and burns more cleanly than conventional jet fuel
JOHANNESBURG, South Africa, April 9 /PRNewswire-FirstCall/ -- Sasol (JSE: SOL; NYSE: SSL), the world's leading producer of synthetic fuels from coal and natural gas, today announced that it has become the first company worldwide to receive international approval for its 100% synthetic jet fuel produced by its proprietary Coal to Liquids (CTL) process
Thune: Coal-based fuel could save money, power security interests
BY: , Associated Press
03/31/2008
South Dakota Senator John Thune says fuel made from coal someday might power bombers that fly out of Ellsworth Air Force Base.
Thune says making coal-based fuel would help the South Dakota economy, cut costs for the Air Force and reduce dependence on unfriendly nations. He says that last week, a B-One bomber based in Texas made an experimental flight using coal-based fuel.
Thune says the Air Force is trying to diversify its fuel supply and hopes synthetic alternatives will power half of its air fleet in North America by 2016. Thune says firms need long-term contracts to invest in the expensive refinery systems needed to produce such synthetic fuels.
Thune says every time oil prices rise $10 a barrel, it costs the Air Force another $1.3 billion in fuel expenses.
The Air Force is currently seeking bids to build a coal-to-fuels plant at Malmstrom Air Force Base near Great Falls, Montana.
Coal - jet fuel of the future?
BY: Jeffrey Decker, Flight International
02/27/2008
As the US Air Force continues engine testing in a drive to quench its huge thirst for fuel with synthetic blends, pioneering energy company Sasol of South Africa is nearing approval of a 100% synthetic jet fuel. Airlines are looking to coal-to-liquid and gas-to-liquid fuels as drop-in replacements for expensive and finite petrol¬eum, and global development of facilities to produce these alternative jet fuels is well underway.
The approval process for Sasol's completely synthetic fuel started in 1999, following the seven-year effort to approve its 50/50 blend. "The final decision for the 100% synthetic fuel [specific to Sasol] is expected this month," says David Bishop of the Aviation Fuels Committee (AFC), the joint civil/military body that advises the UK Ministry of Defence on aviation fuel and development of the specification. "No other companies have so far asked for approval to Defence Standard 91-91 for their synthetic fuels," Bishop says, 91-91 being the specification most countries use.
Johan Botha, Sasol's general manager of product applications, says the 100% synthetic fuel will become part of the normal Jet A1 supply to the market. "Once the product is certified, it loses its identity as synthetic fuel and becomes Jet A1. No special arrangements are necessary to supply or use the fuel," he says.
Thorough investigation by the AFC is followed closely by industry standards setting body ASTM International. Today, only Sasol's 50/50 blend has AFC and ASTM approval for use in aircraft, says Stan Seto, the chair of ASTM subcommittee J on aviation fuels, but by year's end the door could open to other producers under new standards.
UK approval
"We have to wait for the UK Aviation Fuels Committee to approve the proposed changes in Defence Standard 91-91 before ASTM can move forward, because the ASTM changes reference back to the defence standard," says Steto. The subcommittee is debating language for a ballot, which will probably be posted for approval in the second half of 2008, he says.
Steto says the subcommittee is watching the USAF progressively test a 50/50 synthetic blend in each airframe and engine of its fleet. "Any approval by the Department of Defense of a blending product for JP-8, JP-5 or diesel fuel will eventually be requested for inclusion in the commercial aviation sector," he says.
Amending the ATSM fuel standards includes involvement by the Commercial Aviation Alternative Fuels Initiative (CAAFI), which is sponsored by the Air Transport Association, Aerospace Industries Association, Airports Council International-North America and the Federal Aviation Administration's Office of Environment and Technology. Participants hail from all corners of the international aviation industry.
CAAFI's timetable calls for certification of a 50% synthetic blend in 2008 (and a 100% fuel in 2010). "The bulk of the technical evaluation of the fuel is done," says Mark Rumizen, CAAFI's fuels specialist for aircraft certification. "Once you go through the technical evaluation, you have to update the industry specifications, which is primarily ASTM, and also the engine specifications and the international specifications. Once the specification is revised, any particular refinery will be allowed to make jet fuel from the process. They will have to offer supporting documentation that shows the process," Rumizen says.
Low-carbon fuel research supported by CAAFI (see P43), meanwhile, aims to calculate the "life-cycle environmental impacts of production and use of alternative fuels".
Broadly, synthetic fuel processing could become less polluting than typical jet fuel production. New carbon-capturing methods can store carbon dioxide that streams out of the coal or natural gas conversion plants, which use the 80-year-old process called Fischer-Tropsch. But exhaust of jet engines burning FT fuels have only marginally fewer greenhouse gasses than with today's kerosene. Some emissions tests measure just 1.6% less CO2, though they also show the almost complete elimination of oxides of nitrogen and sulphur. A slightly higher energy content than kerosene means 1% less fuel is needed for the same trip.
The synthetic fuel produces 50-80% less particulate matter, or soot, which is good for human health and helps military aircraft elude heat-seeking missiles. Conversely the contaminants in kerosene act as a lubricant inside the engine. Aromatics in particular help maintain elastomer seals in aircraft fuel systems, and when kerosene's 8-22% aromatic content by volume disappears in synthetic fuels it makes fuel leaks possible.
William Anderson, USAF assistant secretary for installations, environment and logistics says: "The real issue with Fischer-Tropsch fuel is it has no lubricity to it." With that problem solved, he says, there is nothing stopping blends up to 90%. "We know there are people out there looking for an additive," he says.
Sasol's 100% synthetic fuel does contain aromatics. "The lubricity properties of the fuel are similar to those of petroleum jet fuel," says Botha. Anderson says the USAF has had "numerous meetings with Sasol", and that the company could be one of many helping to achieve the goal of meeting half the USAF's domestic fuel need with synthetics by 2016. The USA spends $10 million on fuel per day, and each $10 per barrel price hike costs the USAF $600 million per year.
FT fuels are the first successor to kerosene and the USAF has quickened the pace to certify each engine in its fleet to run on a 50/50 blend. The Boeing B-52 bomber was certified in August 2007 after its first flight a year earlier. Certification of the Boeing C-17 airlifter in December brought increased commercial interest, as its Pratt & Whitney PW2000 engine also powers Boeing 757 airliners.
P&W helped with the tests. "In every case the FT fuel ran as well as kerosene, and in some instances it ran better," says Anderson. "We're speculating that the lesser qualities of contaminants are making it perform slightly better. When I say slightly, I mean really slightly, but it is noticeable."
Ground tests of the General Electric F101 engine have concluded and its flight tests on a Lancer B-1B bomber are set for March. As far as Anderson knows, those ground tests were the first time an afterburner has run using a synthetic fuel blend. Ground tests of the CFM56 engine were conducted at GE facilities near Cincinnati, Ohio, and will lead to flights of the Boeing KC-135R tanker. The CFM56 is one of the most widely-used engines in the world, powering the Boeing 737 series and Airbus A320 family as well as the A340-300.
Fighter tests
"We are currently working with the F-22, KC-135 and F-16. We anticipate the KC-135 will be first to fly, possibly in late spring/early summer," says the USAF. "The F-22 engine [F119] ground test is tentatively scheduled for the May/June timeframe at the Pratt & Whitney facility in West Palm Beach, Florida. The F-16 engine ground test [with the GE F110) will not be conducted until later this year."
These tests are fuelled by part of the 1.06 million litres (281,000USgal) of synfuel the DoD bought from Shell Malaysia. This year the DoD will accept bids to supply 500,000-750,000USgal. The soonest USAF expects commercial operations to be converting coal and gas for jet fuel in large amounts is 2012. Meeting half its domestic fuel needs by 2016, or 400 million USgal, is "highly dependent upon the alternative fuels industry".
"For what it's worth," Anderson says, "the air force efforts have got a lot of people interested in talking about this. Is that enough to get commercial capital and a developer and producer to put $2 billion into a plant? I honestly don't know. We are a customer that's establishing a market need, and that market need is to execute on the presidents' vision make sure we cover our national security concerns."
Air force documents claim the USA has enough fossil fuel reserves to become "the new Middle East" by tapping 1.4 trillion barrels of shale, 900 billion barrels of coal, 22.7 billion barrels of oil reserves and 100 million lb of pulp waste yearly. But between development and deployment is "the valley of death," when commercial investors will or will not support the technology.
Four years ago the FT process was economically feasible if oil rose above $40-50 a barrel, says Princeton University senior research scientist Robert Williams. "Today we think it will be competitive at $60-70 barrel," he says. Costs of building the immense conversion facilities are much higher now, largely due to the building boom in China pushing up the price of steel, cement, copper and other supplies.
Carbon dioxide capture
Williams analyses FT systems issues under Princeton's Carbon Mitigation Initiative. One key to economical facilities and minimised emissions under a carbon policy, he says, is CO2 capture and storage (CCS). This means pumping the huge amounts of CO2 produced as a byproduct of the conversion process into geological formations deep underground, for permanent storage or as a means of squeezing out extra crude oil after drilling (called enhanced recovery).
"If you only use coal and you don't do CCS, you're going to have a greenhouse gas emission rate that is almost twice that of crude oil-derived jet fuel," he says, "If you don't reduce the greenhouse gas emissions relative to crude oil, you're not going to get to first base."
CCS is pursued at a handful of industrial sites worldwide, and Williams believes FT facilities are ideal for helping prove the viability of CCS in widespread application. "The largest point sources of pure CO2 in the world are the two plants in South Africa that produce 150,000 barrels/day of FT liquids, and the rate at which pure CO2 is vented into the atmosphere is 20 million tons a year," he says.
That concentration means capturing CO2 during the conversion process is cheaper than off a smoke stack. To establish the widespread viability of CCS, at least six test sites are needed, each able to store a million tons a year or more, he says, and "If this is going to work, we're going to have to have literally thousands of projects around the world, each of them storing 1 to 10 million tons of CO2 per year".
The other key to profitable and environmentally-friendly FT fuels under a carbon trading policy is mixing the coal feedstock with biomass, such as waste from logging and agricultural operations. Pair that with CCS, he says, "then you require half or less as much biomass as with any conventional biofuel, like biodiesel or ethanol or cellulosic ethanol."
Williams says woodmill and logging residues "appear to be one of the cheapest sources of biomass", if the FT plant can be sited to exploit these feedstocks. As for whether to convert coal or natural gas into liquids, Williams says: "The only situation where you would consider making GTL is where you would have low-cost gas assets which can't be put into a pipeline for meeting other gas needs."
That is the case at the Pearl GTL plant in Qatar, where Royal Dutch Shell will produce 140,000 barrels a day of GTL products by 2011, as well as approximately 120,000 barrels a day of associated condensate and liquefied petroleum gas. How much will be directed to jet fuel has not been made public. "We can confirm that Shell is working with the regulatory bodies and OEMs to obtain approvals to use GTL kerosene in the aviation sector," Shell says.
The energy company continues to put 30 years of research to work converting gas in Malaysia, and is involved in joint studies with Shenhua Group and Ningxia, China's major coal producers, and with Anglo American in Victoria, Australia.
Qatar's gas is also tapped by Sasol,which is ramping up production at its Oryx GTL plant to 34,000 barrels a day by mid-2008. Botha says the company is looking at increased global exports. "The semi-synthetic Jet A1 is supplied from the Natref refinery as a fungible product to all oil companies in South Africa," he says. "Hence it is likely that product is supplied to Lanseria, Kruger Park and other smaller airports. Other airports have also been supplied on an ad hoc basis, including Windhoek [Namibia[, Gabarone [Botswana], etc."
Usually the blend is less than 50% synthetic, and it is always Jet A1. "It could be used for JP-8, but would then require the additional additives required by the JP-8 specification," Botha says. Sasol produces 43.8 million barrels each year at three plants.
Expansion plans
The company makes a variety of petroleum products from coal, and the USAF will require a range of aviation fuels from several suppliers. It says 23 CTL/GTL facilities have been built or planned overseas, and 14 are set for the USA. The largest are a Yankuang facility in China, planned to turn coal to 67 million barrels a year, an ExxonMobil GTL facility in Qatar set for 56.2 million barrels, and 54.8 million barrels from coal in a project led by the US state of Montana. The USAF is itself exploring the possibility of a CTL plant at the under-used Malmstrom AFB in Montana.
The Syntroleum plant in Tulsa, Oklahoma that provided the USAF's first test fuel is mothballed, but continues FT development. "The biggest to date would be the start-up of our plant with Tyson Foods in early 2010," says chief executive Edward Roth. It will use waste from turkey processing to produce diesel.
Rentech has plans to develop FT plants in California, Illinois and Mississippi. "We have the chemical layout of the plant done," says director of development Robert Freerks, now the facilities need designing. "A large-scale plant design is in the order of $100 million. It's an exceedingly expensive thing that you have to do before you can get financing for the plant."
Rentech is looking at USAF as a major customer, and ultimately plans to divert municipal wastewater into the feedstock. Rentech will sell its CO2 into a pipeline for enhanced oil recovery and storage, but first, paper recycling sludge will be mixed with coke and coal to make jet fuel.
Air Force pitches coal-to-liquids plant
BY: Matthew Brown, Associated Press
02/01/2008
Air Force officials laid out an ambitious plan Wednesday to develop a privately financed coal-to-diesel plant at Malmstrom air base within the next four years at a cost of $1 billion to $4 billion.
The plant, which would be among the first of its kind in the nation, would use a technology perfected in Nazi Germany to turn coal into synthetic fuels, including jet fuel for use by the Air Force.
The project has strong support from the coal industry, which considers synthetic fuels a promising new market as coal-fired power plants face opposition over climate change.
But environmental groups already are girding up to fight the project. At a community forum on the Malmstrom proposal Wednesday, they said the plant and others like it could increase emissions of the greenhouse gas carbon dioxide even as governments around the world struggle to cut those emissions.
Air Force Assistant Secretary William Anderson pledged that would not happen. He said the service will require whoever builds the plant to design it to capture carbon dioxide for use in industrial purposes.
"We won't buy a fuel that's not cleaner than current alternatives, and we don't support a plant on our base that doesn't produce a cleaner fuel," Anderson said.
Anderson also said the plant would help reduce the country's dependence on foreign oil, creating a homegrown alternative that would be fed by an estimated 250 years worth of coal reserves nationwide.
Montana has more than a quarter of those reserves, which Anderson said was one of the reasons Malmstrom was chosen for the new plant.
By 2016, the Air Force wants to use a synthetic jet fuel blend for up to 50 percent of the fuel used by its domestic fleet. That would require roughly 400 million gallons of coal-based fuel annually.
Chuck Magraw with the Natural Resources Defense Council said capturing the carbon dioxide from that much fuel production could prove impossible.
"I don't think it's achievable," he said.
Great Falls City Commissioner William Bronson said it was too early for his community to decide whether it will support or oppose the proposal. Until a company comes forward and submits a design and construction plan, he said, "we don't really know how to respond."
Worldwide, only three coal-to-liquids plants are now operating, all in South Africa. A fourth is expected to come online in China this winter, said Corey Henry with the Coal-to-Liquid Coalition, an industry group.
The Malmstrom plant is one of about 15 proposed in the United States, primarily in coal producing states including Wyoming, Pennsylvania and Ohio.
A second meeting between the Air Force, state officials and industry representatives was scheduled for Thursday. The Air Force has closed that meeting to the public and denied requests by The Associated Press and other news organizations to attend.
Anne Hedges with the Montana Environmental Information Center said closing the meetings was "outrageous" given the scope of the proposed plant and the level of public interest.
"This state has great open meeting laws. The federal government should honor those," she said.
Col. Bobbie Griffin, Anderson's senior assistant, said the Air Force wanted to offer companies interested in the project an opportunity for candid discussion absent a public spotlight.
"We've got nothing to hide," Griffin added.
Among the companies expected to attend Thursday's meetings were Chevron, ConocoPhillips, Shell, Rentech and the South African company Sasol.
This big dog is getting ready to bark! Buy signal on the weekly charts in iBox...
Coal-to-oil project approved
(Agencies-China Daily)
Updated: 2008-01-11 08:59
China's top coal company Yankuang Group has won initial governmental approval to build a 10 billion yuan ($1.38 billion) coal-to-oil project in Shaanxi Province.
Several technical experts sent by the National Development and Reform Commission (NDRC) have finished assessing the project in Yulin in the Northwest China province, Zhang Minglin, deputy general manager of Yankuang, told Bloomberg yesterday.
The NDRC hasn't yet given its final permission to start building the venture, he said.
The capacity of the project will reach 1 million tons of oil products a year, a source with Yankuang had told China Daily earlier.
Yankuang's Hong Kong-listed unit, Yanzhou Coal Mining Co Ltd, will take a stake in the project, Zhang said, without elaborating.
Yankuang may spend a further 50 billion yuan to expand the venture to 5 million tons a year by 2013, according to Zhang.
By 2020, coal-to-oil projects under Yanzhou Coal Mining Co will have the capacity of 10 million tons per year, said the company's website.
Coal already meets up to 70 percent of China's energy needs, mostly for the power and steel sectors. Oil imports have been increased to fuel China's booming economy, spurring the nation to look for technologies that can turn some of its coal reserves into fuel and other chemicals.
China's first direct coal-to-oil plant will start operation this year, according to China's largest coal producer Shenhua.
The project is based in Erdos in the Inner Mongolia Autonomous Region. Its annual output capacity is 1.08 million tons, and will consume 3.45 million tons of coal.
Shenhua launched the project in 2004. The company has joined forces with South Africa-based Sasol to set up two indirect coal-to-oil plants using Sasol's technology.
Experts estimate that by 2020, coupled with an annual capacity of 20 million tons of bio-oil, China's coal industry would be able to produce 50 million tons of oil products every year to help reduce the nation's oil imports.
But the government raised the threshold for coal-to-liquid fuel projects last year for fear that excessive development of the fossil fuel would pollute the environment and strain water supply.
Sasol starting to get into buying range again--not there yet however...
thanks much....
Both if you have the stuff to day trade. This firm is the world leader for synthetic fuel production IMO and unless oil dips below $60/barrel, it will be a profitable nitch. For a more speculative play, see SYNM.
Nice one here Frenchee... daytrade or investment? in your opinion....
Sasol's Liquid Fuel Creates Solid Profits
By CHRISTOPHER C. WILLIAMS
WITH $30 BILLION IN MARKET value, Sasol is puny compared to energy giants like ExxonMobil. But the South African company, which specializes in turning gas and coal into liquid fuel, has been one of the brightest stars in the oil sector since it was listed on the New York Stock Exchange in 2003. Its American depositary receipts (ticker: SSL) have soared about 400%, to a recent 50.28, leaving Exxon's shares ( XOM) and those of many other oil producers in the proverbial dust.
Even after this impressive run, Sasol could continue to shine, owing to high oil prices, solid profits and the global roll-out of the company's liquid-fuels technology. Some investors see Sasol's ADRs topping 70 next year, while its more heavily traded South African shares (SOL.South Africa), which change hands on the Johannesburg Stock Exchange, could rally to 465 rand from ZAR338 (a rand is worth about 15 cents U.S.).
Sasol operates through three "clusters": South African energy; global chemicals; and international energy, which houses the company's flagship gas-to-liquids, or GTL, facility in Qatar. The company supplies 37% of South Africa's liquid-fuel needs, and is laying the groundwork to be a major player worldwide as it plans facilities in other countries. Coal-rich and oil-poor nations such as India, the U.S. and China already have turned to Sasol to help lessen their reliance on imports of high-priced crude.
On its home turf, Sasol's liquid-fuel and refining operations are showing signs of accelerated growth. The world's leading coal-to-liquids, or CTL producer, the company converts about 45 million tons of coal yearly into about 160,000 barrels a day of jet, diesel and other distilled fuels for the South African market. Its CTL business, together with other energy and chemical operations at home and abroad, generated a record $14 billion in revenue for the fiscal year ended June 30, and almost $2.5 billion in net profits. Those results beat analysts' expectations, and the numbers are likely to keep climbing, particularly if oil stays above $70 a barrel, as many expect.
Sasol could post a 23% increase in earnings per share in fiscal '08, to $4.38, from last year's $3.55, on $12 billion of revenue. Two wildcards in analysts' earnings models -- oil prices and currency-exchange rates -- seem to be trending in the company's favor. A $1 gain in the price of oil adds $43 million in pretax profit to Sasol, while a 10-cent drop in the value of the South African rand (0.10 rand) adds $87 million. The rand has weakened in recent days to ZAR6.70 to the dollar, and oil, despite a recent sell off, stands at $95 a barrel. Some analysts raised their earnings estimates for Sasol in the past two weeks, as oil prices topped their expectations.
CEO Pat Davies says no other energy company has the "value proposition" in synthetic fuels that Sasol does. Sasol also churns out lots of cash, and uses it well.
Other trends at Sasol, such as volume growth, are easier to predict. Derrick Irwin, emerging-markets analyst at Evergreen Investments in Boston, is confident in estimating that the company's oil and petrochemicals output will rise by 10% a year for the next three years. Many global oil companies will be lucky to show low-single-digit volume growth.
Sasol's operations generate copious cash flow -- about $4.2 billion in fiscal '07. The company is using its cash to reduce debt and buy back stock. In another plus for shareholders, management recently hiked the annual dividend by 27%, to ZAR9 a share. The stock yields a relatively juicy 3%.
THE MARKET VALUES SASOL at 11 times analysts' fiscal '08 consensus estimate, about in line with the company's historic multiple. But that's too low, argues Irwin, given high oil prices, "good visibility to earnings" and the company's growth prospects.
Mark Coffelt agrees. The current valuation ignores almost all potential growth from international expansion, says the manager of Empiric Core Equity Fund (EMCAX). Ascribing a ratio of 16 to his $4.38-a-share estimate for fiscal '09, Coffelt values Sasol at 40% above its current price.
The stock "easily could get to $70 a share over the next year," Coffelt says, citing the likelihood of continued strong results. "You have a stock selling at a modest [price/earnings ratio], a good dividend and high growth. Essentially, a stock purchase of Sasol comes with a free call option that someday, perhaps soon, gas-to-liquid and coal-to-liquid [technologies] might be in big demand."
To be sure, as Morningstar analyst Justin Perucki notes, it will be several years before significant numbers of GTL and CTL facilities are built outside of South Africa. Commercialization of the technology remains costly, with many companies, including ExxonMobil, scrapping plants due to cost overruns.
No such hesitation exists at Sasol's Johannesburg headquarters. "As far as our technology goes, we are 100% confident," Group General Manager Lean Strauss tells Barron's.
Management is especially bullish on the company's ability to globalize its technology because Sasol has been at it for more than 20 years. Fearful of being locked out of world oil markets due to its apartheid policies, the South African government created the company in 1950 to develop alternate sources of energy. And in the cocoon of state ownership, Sasol developed into the world's premier maker of synthetic fuels and the country's largest industrial concern. It employs more than 30,000, including, officials often boast, the largest number of Ph.D.s in the Southern hemisphere. South Africa privatized Sasol in 1979, and today indirectly owns 26% of its shares.
That's not to say Sasol's progress has always been smooth. Getting its facilities up and running on time has proved challenging, and the company's first major gas-to-liquids plant, in Qatar, was hobbled by high amounts of particulate matter in the end product. Delays in the project, jointly owned with Qatar Petroleum, pinched Sasol's stock last year, but the company said it fixed the problem earlier this year.
The Qatar facility, called Oryx, is on track to be marginally profitable in the current fiscal year. It is set to produce 34,000 barrels a day of refined petroleum -- and it's economical at oil prices of around $15 to $20 a barrel. Irwin of Evergreen estimates Sasol's international synfuels operations -- mainly at the Qatar plant -- will generate ZAR1.5 billion in operating profit in fiscal '09, up from an expected breakeven this fiscal year.
If Oryx gets up to speed smoothly, Sasol's global roll-out will begin in earnest. A second plant is slated to be built in Nigeria by 2010, and potential projects are planned for China and Australia. In the U.S., the coal-rich states of Montana and Pennsylvania reportedly have proposed building CTL plants with Sasol, but the company maintains it would need government subsidies for the technology to succeed here to offset high capital costs. In addition, it would need to cut the heavy carbon-dioxide emissions created by its processes.
CTL IS MORE COSTLY THAN most conventionally produced oil, requiring oil prices of $50 to $60 a barrel to generate a profit. But with an estimated 1 trillion tons of coal reserves worldwide, coal-to-liquids could be an important alternative fuel source in coming years, and Sasol could be the main beneficiary.
"There's no other oil and gas company that has the value proposition in this area that we do," Chief Executive Officer Pat Davies, who has headed Sasol since 2005, said in an earnings conference call in September. "No one is producing gas-to-liquid volumes at the rate we are. No one is doing coal-to-liquids at all."
That could change in time; Royal Dutch Shell (RDSA) reportedly is investing an estimated $18 billion in a 140,000-barrel-a-day GTL project in Qatar, and China Shenhua (1088.Hong Kong), China's biggest coal company, also is pursuing a CTL plant.
Sasol officials regard would-be competitors with aplomb, comforted perhaps by the company's head start and numerous patents. "For an industry to develop, Sasol can't be the only player," says Strauss. "There's enough coal for everyone."
There's also enough room, say analysts, for competing synthetic fuels such as ethanol.
THERE ARE OTHER WAYS to play the CTL market, but few are as appealing as Sasol. Los Angeles-based Rentech (RTK), for example, is said to be making progress with its CTL process, but the tiny research-and-development firm is at least a couple of years away from showing profits.
Sasol, on the other hand, is a brand name that also offers investors the chance to buy into an attractive emerging market. South African stocks have underperformed emerging-market benchmarks this year, due mostly to rising interest rates, but the Johannesburg market still is up a robust 25%. Glen Prentice, a fund manager with WestLB Mellon Asset Management in London, is overweight the market, expecting an easing in monetary policy to fire up stocks next year.
Sasol is one of the largest companies on the Johannesburg exchange, and represents 3% of the country's gross domestic product, which itself is growing at a spiffy 5% rate. Still, investing in even relatively stable emerging markets carries political and economic risks. Morningstar has a fair-value estimate of $37 a share for Sasol, noting that the company could face price competition in coming years as South Africa deregulates its retail fuel market.
The Bottom Line:
Sasol's ADRs have soared about 400%, to just north of 50, since they were listed in 2003. The stock could be worth about 70 in a year if oil prices stay high.The biggest threat facing Sasol -- and the ExxonMobils of the world -- is a potentially sharp drop in oil prices. "If investors don't believe in relatively high long-term oil prices, we recommend they avoid investing in Sasol," says JP Morgan analyst Alex Comer. He happens to be bullish on both crude and the company, which is "in a good place" if its synfuel projects go well, he says.
Chances are that Sasol will always operate in the shadow of Exxon and other industry leaders. But that doesn't mean investors won't keep getting good mileage from its shares.
PEAKING OF WORLD OIL PRODUCTION: IMPACTS, MITIGATION, & RISK MANAGEMENT
http://www.theviewfromthepeak.net/docs/the_hirsch_report.pdf
See page 43
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This board is for fundamental and technical discussion about Sasol Limited, SSL.
Sasol Limited, through its subsidiaries, operates as an integrated oil and gas company. The company explores for, and produces, crude oil offshore Gabon; owns onshore interests in the Temane and Pande fields of Mozambique; refines crude oil into liquid fuels in South Africa; and retails liquid fuels and lubricants produced in its refinery and by Sasol Synfuels, through a network of retail service centers. It primarily offers liquid and gaseous fuels, including gasoline, diesel, jet fuel, fuel alcohol, illuminating paraffin, fuel oils, and liquefied petroleum gas, as well as lubricants. The company also produces and markets chemicals and synthetic fuels. Sasol produces syngas from natural gas and low-grade coal, as well as converts syngas into a range of synthetic fuel components, chemical feedstock, and industrial pipeline gas. In addition, it engages in the production and marketing of ethylene and propylene monomers, polypropylene, polyethylene, and polyvinyl chloride polymers. Further, the company markets a range of oxygenated solvents for the manufacture of paints, inks, coatings, adhesives, pharmaceuticals, cosmetics, fragrances, and other applications. Sasol also involves in international petroleum and gas exploration and production; and wax, ammonia, fertilizers, and commercial explosives production. It operates an international gas-to-liquids venture, the ORYX GTL plant, in Qatar in partnership with Qatar Petroleum. The company offers its products worldwide. Sasol was founded in 1950 and is headquartered in Rosebank, South Africa.
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