SYNM: Syntroleum and Sustec Announce Joint Development Agreement for CTL Project
Monday June 5, 7:39 am ET
TULSA, Okla.--(BUSINESS WIRE)--June 5, 2006--Syntroleum Corporation (Nasdaq:SYNM - News) and Sustec Industries AG, a private company based in Switzerland, announced today that they have entered into a project development agreement to jointly develop Fischer-Tropsch projects in the future and specifically for a nominal 3,000 barrel per day (bpd) Syntroleum Fischer-Tropsch (FT) and Synfining® unit as the first phase of a larger planned project at Sustec's Schwarze Pumpe industrial facility at Spreetal, Germany. This joint project is the first phase of a possible 20,000 bpd Fischer-Tropsch project. Sustec's project includes an expansion of their existing gasification capacity using FUTURE ENERGY GSP® Technology which was originally developed by Sustec and its predecessor companies and recently acquired by Siemens Company (NYSE:SI - News). Sustec also intends to expand its methanol production and power plant at Schwarze Pumpe following the installation by Siemens of new GSP® gasification units totaling over 1,000 megawatts (MW) capacity (See Sustec and Siemens press releases, dated May 16, 2006).
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The 3,000 bpd Spreetal CTL plant will be the first project under the Sustec-Syntroleum joint venture announced in January this year. The Syntroleum FT unit will be a slurry reactor utilizing cobalt catalyst and will produce ultra-clean diesel and specialty chemicals from synthesis gas made from lignite coal, municipal waste and biomass that currently are being gasified at the Schwarze Pumpe facility. The existing Rectisol syngas and carbon adsorption units used for syngas clean-up processing will also be expanded as part of this initial FT project. The pre-FEED engineering work and feasibility study for the current project, named Spreetal CTL, are expected to be initiated by mid-summer with completion of this work expected by the end of this year. Final project sanction is expected to be decided by first quarter 2007.
Sustec has pledged significant initial equity in the Schwarze Pumpe expansion project including the 3,000 bpd CTL plant. This project has been pre-qualified for financial support from the Saxony (Sachsen) State Government and is currently eligible for over a EUR 100 million ($128 million) grant. The 3,000 bpd Syntroleum FT and Synfining® project segment is intended to be the first phase of a 20,000 bpd planned Spreetal CTL facility at Schwarze Pumpe in the future under the Sustec-Syntroleum agreement.
The project development agreement replaces the memorandum of understanding executed in January of this year. Sustec and Syntroleum will both hold a 50 percent interest in the project development agreement.
"The Spreetal CTL project is expected to be the first commercial plant utilizing the Syntroleum FT and Synfining® technologies and a critical step in our business plan," stated Jack Holmes, President and CEO of Syntroleum Corporation. "Commercial demonstration of the integration of gasification technology with Syntroleum FT technology is much faster at an existing plant, and this strategy has been our primary focus in recent months. We are pleased to be working with Sustec on the Spreetal CTL project at the Schwarze Pumpe facility which has a long history of gasification technology innovation and operating experience. As we stated when we announced our agreement earlier this year, the strategic and commercial value of our venture with them would become increasingly clear as this announcement demonstrates. In the brief period that we have been advancing our coal to liquids agenda, we have established this alliance with a leader in the field of gasification and have progressed the first project to this advanced stage. We believe this is further recognition of Syntroleum as an industry leader in Fischer Tropsch."
Dietmar Friess, Sustec AG CEO said, "We continue to believe that the Syntroleum FT technology is market ready and that our first commercial plant at Schwarze Pumpe will provide a basis for developing future CTL business opportunities together. The European market for ultra-clean fuels is very strong and the expansion of our core processing business is a major strategy for Sustec. We look forward to a long relationship with Syntroleum in this business sector world-wide."
Syntroleum Corporation owns a proprietary process for converting natural gas or synthesis gas derived from coal and other carbon-based feedstock into synthetic liquid hydrocarbons. The company plans to use its technology to develop and participate in natural gas and coal monetization projects in a number of global locations. Syntroleum has operated an FT pilot plant in Tulsa, Oklahoma, since the early 1990s and has been operating its 100-bpd Catoosa FT demonstration facility since 2004.
Sustec Schwarze Pumpe GmbH, a fully owned subsidiary of Sustec Industries AG, owns and operates the Schwarze Pumpe facility at Spreetal, Germany. This facility currently produces over 90,000 Nm3/hour (3.2 million ft3/hour) of syngas derived from coal, waste oils, biomass and municipal wastes. The first commercial GSP® gasifier (200 MW thermal capacity) went into operation in 1984 utilizing lignite coal as feedstock. Sustec and its affiliates own intellectual property rights related to operations of the GSP® Technology at the Schwarze Pumpe facility. The R&D center FUTURE ENERGY GmbH and other related companies were recently sold to Siemens. Sustec retains a license for use of the technology at Schwarze Pumpe and has the option to get a GSP® Technology license for future CTL Projects with Syntroleum.
This document includes forward-looking statements as well as historical information. Forward-looking statements include, but are not limited to, statements relating to the development of future Fischer Tropsch projects, including the Spreetal project, ownership of intellectual property rights, execution of definitive agreements, joint technology development and market development. When used in this document, the words "anticipate," "believe," "estimate," "expect," "intent," "may," "project," "plan" "should," and similar expressions are intended to be among the statements that identify forward-looking statements. Although Syntroleum believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include failure to execute definitive agreements, the potential that commercial-scale GTL or coal-to-liquids plants will not achieve the same results as those demonstrated on a laboratory or pilot basis or that such plants will experience technological and mechanical problems, the potential that improvements to the Syntroleum Process currently under development may not be successful, the impact on plant economics of operating conditions (including energy prices and government support for such plants), construction risks, risks associated with investments and operations of GTL and coal-to-liquids plants, the ability to implement corporate strategies, competition, intellectual property risks, Syntroleum's ability to obtain financing and other risks described in the company's filings with the Securities and Exchange Commission.
® "Syntroleum" is registered as a trademark and service mark in the U.S. Patent and Trademark Office
Contact:
Syntroleum Corporation, Tulsa
Mel Scott, 918-592-7900
mscott@syntroleum.com
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