Someone outside of SI sent this to me. He copied a Bloomberg Business News article that was printed a few days ago. This article is likely what caused a slight uptick in SLHO and RNTK a few days ago. Last time I post for someone else. Last time I post copyrighted material. Sorry for the copyright infringement, but hey, we're on the internet, the new frontier, no barriers, to bodly go... blah blah blah
here it is
Hi Schopenhauer,
I tlked to you a few weeks ago. How is it going? I still do not have a
SI account yet, still wainting for profits off RNTK before joining. Here
is a news article about GTL dated 11/28/97. Can you please post it on
the SI thread? Thanks!
I rode the SLH trian up the curve, I think this one is going to be even
better!
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The fields of Alaska's Prudhoe Bay contain enough natural gas to
supply the entire U.S. for a year.
That fuel would be worth US$69 billion if it could be sold at
current
prices. Instead, it is practically worthless because profit margins
are
too small to justify building a natural gas pipeline from Alaska to
major U.S. markets.
TD
Half the world's supply of natural gas is locked up in remote fields
like Prudhoe that cannot be exploited profitably using conventional
techniques. That is why the world's biggest oil companies, including
the
Royal Dutch Shell Group, Exxon Corp. and British Petroleum Co., are
considering investing billions of dollars in the unconventional
process
of turning natural gas into synthetic oil.
"Over the next five to 10 years, there will be between three and 10
gas-to-liquids projects," says Paul Jahn, manager of marketing and
strategy at Bechtel Group Inc., an engineering and construction
company
that expects to build many of the plants.
Synthetic oil or the fuels made from gas can be shipped profitably
by
tanker or pipeline, if the cost of production is low enough. It also
easily can be converted into diesel fuel, a high-value product that
can
be sold anywhere in world.
Oil companies are betting that technological improvements have cut
the
cost of using the 70-year-old gas-to-liquids process enough to make
diesel fuel production profitable from remote fields, despite huge
initial outlays for plants and equipment. The process also is being
touted as a way to aid the environment, both by preventing the burning
of natural gas that cannot be shipped to market from remote wells, and
by creating a clean-burning diesel fuel.
The gas-to-liquids process was developed by German chemists Franz
Fischer and Hans Tropsch in the 1920s. However, it has always been
less
expensive to refine diesel fuel from oil than from natural gas, so the
process has rarely been employed.
The Germans used it, extracting gas from coal to get the raw
material,
when their oil supplies were cut off during World War II. South Africa
built plants to turn gas from coal into fuel because world sanctions
against its apartheid policies prevented it from purchasing cheap oil.
Now conservative estimates are that new technology has made changing
gas to liquids profitable when oil prices are higher than US$20 a
barrel. Others say profitability when oil prices are as low as US$15
is
possible. Oil prices have averaged about US$21 this year.
"Now is the time for this technology; the economics are there," says
Larry Weick, a vice-president at Syntroleum Corp., a Tulsa,
Okla.-based
company that is licensing its own variant on the Fischer-Tropsch
process
to Atlantic Richfield Co., Texaco Inc., USX-Marathon Group and
Argentina's YPF SA.
Although companies are certain the projects can pay off, investors
with deep pockets are needed to build the expensive plants.
"A gas conversion project isn't a small undertaking, though it may
be
easy to find a billion dollars on Wall Street," says Samuel Tam,
manager
of advanced petroleum and chemicals technology program at Bechtel.
Perhaps the biggest of the gas-to-liquids projects now on the books
is
planned by Exxon. The largest U.S. oil company is in talks with Qatar
aimed at the construction of a US$2-billion plant designed to convert
750 million cubic feet of gas to 85,000 barrels of diesel fuel each
day.
Arco, Texaco and Syntroleum are planning a pilot project of
unspecified size at a refinery in Washington state. Arco has extensive
natural gas reserves in Alaska that could be prime candidates for the
project.
Royal Dutch Shell, another company at the forefront of developing
the
process, already has a plant in Sarawak on the island of Borneo that
can
produce 12,500 barrels a day of diesel and related fuels as well as
paraffin waxes used for candles and coating food such as apples.
The gas-to-liquids process creates a cleaner fuel than diesel
created
from crude oil, an important plus for refiners who face tougher
emission
standards worldwide.
Diesel created from natural gas can reduce emissions anywhere from
10%
to 30% over regular fuel, according to studies done by Southwest
Research Institute, a San Antonio-based organization that is testing
the
product in diesel engines.
"This fuel will be excellent ... either as a pure fuel or as a
blending component to improve the quality of petroleum-derived
diesel,"
says Thomas Ryan, an engineer with Southwest Research Institute.
Global warming fears could also push development of gas-to-liquids
projects. Representatives of the world's governments will meet in
Japan
next month to decide whether to cut emissions of greenhouse gases that
scientists theorize could cause global warming.
The conference could bring restrictions on "flaring" - the burning
of
"waste" natural gas from remote oil wells. Gas-to-liquids projects
could
provide a profitable alternative to burning the gas.
Advocates of the process also point out that it produces large
quantities of water as a byproduct. That water could be sold or at
least
put to use in deserts, where many of the world's gas wells are
located.
Investors, aware of oil companies' plans for gas to liquids, are
putting money into shares of firms that are experts in the process.
Stock in SLH Corp. (SLHO/NASDAQ), a Kansas City-based company that
owns a 33% stake in Syntroleum, has risen more than eightfold since
March. The shares have a 52-week trading range of US$60 1/4 to US$6
5/16, and closed Wednesday at US$53 3/4.
* The shares of Rentech Inc. (RNTK/NASDAQ), a Denver-based firm that
licenses its gas-to-liquids process, have a 52-week trading range of
* US$2 1/4 to US$1 cents and closed Wednesday at US29 cents. Rentech is
currently in talks with Texaco about forming an alliance to license
the
technology worldwide. |
