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: John M who wrote (97)	3/17/1998 2:22:00 PM
From: The Scottster	Read Replies (1) of 281

Just a few words in defense of Syntroleum. Earlier it was stated that the company was started by "two brothers in their garage". The comparison was made that a competitor was started by an engineer with credentials. Ken Agee (one of the two brothers) is more than a guy in a garage. He is an engineer in a garage. He is a a young but talented chemical engineer, who gave up a secure position to develop this process. He didn't make any money for several years, and probably would have been forced to close the doors early on, but he was lucky enough to have a brother who understood the business aspects of bringing the process to market and raising the capital needed. The process doesn't need pure oxygen, which cuts out the need for an oxygen plant. It doesn't deal with solids, because it doesn't need to. Coal mines don't deal with liquids, and gas wells don't deal with coal. I've never seen a gas field that produces coal. Some gas comes from coal seams, but coal isn't produced from those wells. If any solids are produced they drop out in the separator. Most gas wells use separators to remove the condensate. They're relatively cheap and simple. The number of stranded gas fields is huge. you don't need coal fields too. The reason the Syntroleum liquids will sell for more than the market price of crude is that they will be used as feeder stocks to increase the output and quality of refineries. When you have to produce a product of a certain makeup, and your base stock is inferior in some way (such as being too heavy, waxy, or dirty) you often have a choice of adding significantly to your capital cost or using higher grade crude for a portion of the mix. One advantage of Syntroleum is its ability to tailor the crude makeup. By adjusting the process and the catalyst you alter the hydrocarbons produced. You also produce a product with a very narrow band of hydrocarbons. Typical crude contains hundreds of different hydrocarbons. Maybe 70% of the cured is in the range the refinery needs. The ones too heavy have to be split or converted into lower value products. Using a tailored feed stock could greatly reduce processing costs, thus allowing for higher prices. Will it work? I don't know. That is what we will see with the Texaco plant.

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