SLH Corp. (SYNM) - From natural gas to crude oil Message Board

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Technology Stocks : SLH Corp. (SYNM) - From natural gas to crude oil

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To: Tokyo VD who wrote (82)	3/14/1998 11:37:00 PM
From: John M	Read Replies (1) of 281

I've talked to Mr. Agee three times to quiz him on the process. Don't know the man personally just called him in Tulsa and met him at a GPA conference. The proof I need to see is a commercial operating plant that can be purchased with a process guarrantee. My personal feeling is that they do have something here. The evidence that this is true is the participation of majors. I'm also enjoying the ride on this stock knowing full well all the answers are not there yet. Now the capital: The number I was given to use in July 1997 was about $25,000/BPD of capacity for the Alpha Catalyst. I believe you will find this number in Syntroleum's brochures. The Chain limiting catalyst eliminates the hydrocracker and reduces the number further - I had heard down to $20,000/BPD. This catalyst was not commercial at that time nor do I believe that it is commercial now. These numbers were based on studies by Syntroleum and Bateman Engineering. Much has happened since then I would assume in developing an actual first project. Texaco has also added a great deal to the catalyst design and I believe it is a multiphase type instead of fixed bed vertical. Perhaps some reality has crept into the picture. I was sharing some of the information I had come across from that early time frame. I do not have a confidentiality agreement with any of those players (obviously if we are talking) nor am I an insider in any way. I was, however, very interested in the process and the economics. I can tell you that with the investment numbers above, the economics appear to work even if you buy the gas in the US (as long as you can sell the products for about $30/bbl). If the plants cost significantly more as you indicate - successful economics are highly dependent on finding stranded gas reserves which have a very low value (Alaska, South America, etc.) I am watching this stock very closely to see if Texaco actually builds this plant. From all I've read it appears to me that they plan to. One thing to keep in mind is that Texaco can afford to spend some research money to develop this technology as can ARCO and Marathon. ARCO and Texaco both have pilot projects under construction in refinerys on the West Coast. I'm a little surprised that the South American Texaco plant will be built before the results from Texaco's pilot are finalized. One other thought on the cost from an engineer who builds plants (me) - I think this plant will be barge mounted which raises costs. Also when you build the first one of anything it definately costs more until you figure out how to optimize the design. The 75 MM$ number you quoted would be about 20% more than the rule of thumb I was using for the Alpha catalyst plant (25 M$/BPD X 2500 BPD = 63 MM$, 75/63 = 1.2). For the first commercial plant ever built and the special requirements for an offshore/overseas environment this could easily happen. I hope that explains my earlier message. I like you would also like to see some definative movement on the Texaco plant. If we do see that, this thing might be more than just a wild stock event. JM

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