I spoke with RNTK late yesterday about the TCC JV and have some observations. But first, just thought I'd mention for any who harbor lingering feelings that RNTK would withhold a good announcement until market conditions are "right", Monday should have deep-sixed those feelings. This was a nice piece of news and Monday was hardly a primo day in the market.
While the press release was good and clear, I got a little additional flavor on some aspects. First, the cost to RNTK is "very reasonable".....it's a short study with only a few people involved. The basic issue is integration/compatiblity of the TCC Syngas producer with RNTK's Fe FT reactor. They already know TCC's unit produces Syngas and we all know RNTK's unit produces useful products from Syngas. So what's to analyze and test? From what I got out of the discussion, Syngas comes in many forms, varying in H2:CO ratio, temperature, pressure, etc. And the RNTK unit puts out stuff that gets fed back into the process, affecting the closed-loop input to the Syngas generator. So it's not a "given" that this is a marriage made in heaven.....they need to do the analyses and tests to evaluate the integrated functional performance. (Side note: They do not have to bring the TCC and RNTK hardware together to do the tests.) If that evaluation comes up positive, and they certainly hope it will, then economic analyses will be done based on the specific quantitative results of the analyses and tests. If that too comes up positive, they will have taken a nice step forward in making their reactors competitive in the natural gas GTL arena. I speculated that in a remote setting, some of the available gas could be burned to run the generators required to run the TCC torch and reactors and got an "of course" answer.
This is totally separate from the TX deal (which is still "on track" within the timing window they've given......but I have to agree with those who feel it's up to TX to do the final signing.....and RNTK has no control over that).
This JV is sure worth a shot and if it works, they do have that clause about royalties if the TCC unit works other GTLers. I have no idea what the royalty structure is so I can't say if it's "big" or not. But it would be another essentially zero cost revenue generator....and those are the very best kind.
I give them a lot of credit for putting together this JV, however small and one-sided in funding, with an extraordinarily good organization. TCC certainly had the option of signing with other GTLers. The simple fact that they signed with RNTK speaks very well of RNTK. Yes, they're paying for the study......but they stand to gain a lot if the study's successful.
Here's to a better day in the market and sunny days ahead for our little company.
H.W. |
