Syntroleum closing of gas-to-liquids plants
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September 07, 2006 04:45 PM US Eastern Timezone
Syntroleum Announces Successful Completion of Fuels Run and Catalyst Demonstration
TULSA, Okla.--(BUSINESS WIRE)--Sept. 7, 2006--Syntroleum (Nasdaq:SYNM), a leader in Fischer-Tropsch (FT) technology, announced today that it has completed the production of 100,000 gallons of ultra-clean aviation fuel for the military at the company's 70 barrel per day Catoosa Demonstration Facility (CDF). In addition, Syntroleum has successfully completed the longest run of its catalyst testing activity at the company's two barrel per day pilot plant. As a result, and in addition to the suspension of CDF operations as previously announced, operations at the pilot plant will also be suspended beginning October, 2006.
"Having completed the essential work of operating the CDF and the pilot plant, we are now able to take the prudent step to temporarily suspend further operations at these facilities. Our continued research can now be conducted at our lower cost labs," said Jack Holmes, president and CEO of Syntroleum. "We will maintain these plants in a state such that if any of our licensees, joint venture partners, or customers would like to fund further operations for specific purposes, we can quickly and efficiently restart the facilities to meet their objectives."
Syntroleum anticipates significant cost savings across all categories of its current operating structure as a result of the facility shutdown. Labor reductions related to plant operations and support, as well as other reductions in staff in order to streamline operations, will total 46 full-time positions, and the company estimates it will incur a one-time charge of approximately $0.9 million as a result. The cost savings associated with these events are expected to reduce Syntroleum's total quarterly expenses by more than 50 percent going forward.
"These operating reductions are a result of company management taking an intense and disciplined approach to testing and demonstrating its technology, including catalyst performance and economics, as well as our cost structure going forward," continued Holmes. "The cost savings brought about by the successful catalyst work, suspension of plant activities, and streamlining of operations will have an immediate and positive impact on our bottom line, as well as the long-term economics of our Fischer-Tropsch process."
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Demonstration Plant: No Longer Needed: Syntroleum cuts back
By RUSSELL RAY World Staff Writer
9/8/2006
tulsaworld.com
Gas-to-liquid fuel plants in Catoosa and Tulsa are being closed, eliminating 46 jobs at the company.
Tulsa-based Syntroleum Corp. eliminated 46 jobs Thursday due to the closing of gas-to-liquids plants in Catoosa and Tulsa and a need to reduce costs.
The layoffs represent about a third of Syntroleum's Tulsa-area employment.
"It's the right business decision for us to make," said President and CEO Jack Holmes.
Syntroleum, which employed about 125 people before the layoffs, has drawn widespread attention for its proprietary process that converts natural gas or coal into liquid fuel. The technology is gaining momentum amid high oil prices and the nation's growing dependence on foreign crude.
But the publicly held company has closed its demonstration plant at the Tulsa Port of Catoosa, saying the facility has fulfilled its commitments and is no longer needed. By mothballing the plant, the company expects to save $1.2 million a month.
A two-barrel-a-day pilot plant in Tulsa also will be closed, effective Oct. 1.
"We planned all along not to run those facilities any longer than we needed to," Holmes said. "We accomplished what we said we were going to do."
The jobs that support
those plants have been eliminated. Other jobs were cut to streamline company operations, Syntroleum said.
"Our continued research can now be conducted at our lower-cost labs," Holmes said in a press release. "We will maintain these plants in a state such that if any of our licensees, joint venture partners or customers would like to fund further operations for specific purposes, we can quickly and efficiently restart the facilities to meet their objectives."
The Catoosa plant was built to provide the cleaner-burning fuel to the military and other federally funded research programs for testing and evaluation.
Most recently, Syntroleum delivered 100,000 gallons of the unique fuel to the Department of Defense for testing in military aircraft.
Another 200,000 gallons was provided to the Department of Energy's Ultra-Clean Fuels Program, which tested the fuel in city buses in Washington, D.C., and vehicles at Denali National Park in Alaska.
The job reductions and plant closures will cut the company's quarterly expenses by more than 50 percent, according to a press release.
The savings "will have an immediate and positive impact on our bottom line, as well as the long-term economics of our Fischer-Tropsch process," Holmes said in the release.
The coal-to-synthetic-fuel process was invented in 1923 by German scientists Franz Fischer and Hans Tropsch.
The job reductions will lead to a one-time charge of about $900,000, the company said.
Syntroleum, which has never posted a profit in its 22-year history, lost $28 million during the first half of 2006.
Shares of Syntroleum have plummeted over the last year. The stock closed Thursday at $4.42 a share, down from near $16 a year ago.
Russell Ray 581-8380
russell.ray@tulsaworld.com |
