TULSA, Okla.--(BUSINESS WIRE)--June 5, 2006--Syntroleum
Corporation (Nasdaq:SYNM) and Sustec Industries AG, a private company
based in Switzerland, announced today that they have entered into a
project development agreement to jointly develop Fischer-Tropsch
projects in the future and specifically for a nominal 3,000 barrel per
day (bpd) Syntroleum Fischer-Tropsch (FT) and Synfining(R) unit as the
first phase of a larger planned project at Sustec's Schwarze Pumpe
industrial facility at Spreetal, Germany. This joint project is the
first phase of a possible 20,000 bpd Fischer-Tropsch project. Sustec's
project includes an expansion of their existing gasification capacity
using FUTURE ENERGY GSP(R) Technology which was originally developed
by Sustec and its predecessor companies and recently acquired by
Siemens Company (NYSE:SI). Sustec also intends to expand its methanol
production and power plant at Schwarze Pumpe following the
installation by Siemens of new GSP(R) gasification units totaling over
1,000 megawatts (MW) capacity (See Sustec and Siemens press releases,
dated May 16, 2006).
The 3,000 bpd Spreetal CTL plant will be the first project under
the Sustec-Syntroleum joint venture announced in January this year.
The Syntroleum FT unit will be a slurry reactor utilizing cobalt
catalyst and will produce ultra-clean diesel and specialty chemicals
from synthesis gas made from lignite coal, municipal waste and biomass
that currently are being gasified at the Schwarze Pumpe facility. The
existing Rectisol syngas and carbon adsorption units used for syngas
clean-up processing will also be expanded as part of this initial FT
project. The pre-FEED engineering work and feasibility study for the
current project, named Spreetal CTL, are expected to be initiated by
mid-summer with completion of this work expected by the end of this
year. Final project sanction is expected to be decided by first
quarter 2007.
Sustec has pledged significant initial equity in the Schwarze
Pumpe expansion project including the 3,000 bpd CTL plant. This
project has been pre-qualified for financial support from the Saxony
(Sachsen) State Government and is currently eligible for over a EUR
100 million ($128 million) grant. The 3,000 bpd Syntroleum FT and
Synfining(R) project segment is intended to be the first phase of a
20,000 bpd planned Spreetal CTL facility at Schwarze Pumpe in the
future under the Sustec-Syntroleum agreement.
The project development agreement replaces the memorandum of
understanding executed in January of this year. Sustec and Syntroleum
will both hold a 50 percent interest in the project development
agreement.
"The Spreetal CTL project is expected to be the first commercial
plant utilizing the Syntroleum FT and Synfining(R) technologies and a
critical step in our business plan," stated Jack Holmes, President and
CEO of Syntroleum Corporation. "Commercial demonstration of the
integration of gasification technology with Syntroleum FT technology
is much faster at an existing plant, and this strategy has been our
primary focus in recent months. We are pleased to be working with
Sustec on the Spreetal CTL project at the Schwarze Pumpe facility
which has a long history of gasification technology innovation and
operating experience. As we stated when we announced our agreement
earlier this year, the strategic and commercial value of our venture
with them would become increasingly clear as this announcement
demonstrates. In the brief period that we have been advancing our coal
to liquids agenda, we have established this alliance with a leader in
the field of gasification and have progressed the first project to
this advanced stage. We believe this is further recognition of
Syntroleum as an industry leader in Fischer Tropsch."
Dietmar Friess, Sustec AG CEO said, "We continue to believe that
the Syntroleum FT technology is market ready and that our first
commercial plant at Schwarze Pumpe will provide a basis for developing
future CTL business opportunities together. The European market for
ultra-clean fuels is very strong and the expansion of our core
processing business is a major strategy for Sustec. We look forward to
a long relationship with Syntroleum in this business sector
world-wide."
Syntroleum Corporation owns a proprietary process for converting
natural gas or synthesis gas derived from coal and other carbon-based
feedstock into synthetic liquid hydrocarbons. The company plans to use
its technology to develop and participate in natural gas and coal
monetization projects in a number of global locations. Syntroleum has
operated an FT pilot plant in Tulsa, Oklahoma, since the early 1990s
and has been operating its 100-bpd Catoosa FT demonstration facility
since 2004.
Sustec Schwarze Pumpe GmbH, a fully owned subsidiary of Sustec
Industries AG, owns and operates the Schwarze Pumpe facility at
Spreetal, Germany. This facility currently produces over 90,000
Nm3/hour (3.2 million ft3/hour) of syngas derived from coal, waste
oils, biomass and municipal wastes. The first commercial GSP(R)
gasifier (200 MW thermal capacity) went into operation in 1984
utilizing lignite coal as feedstock. Sustec and its affiliates own
intellectual property rights related to operations of the GSP(R)
Technology at the Schwarze Pumpe facility. The R&D center FUTURE
ENERGY GmbH and other related companies were recently sold to Siemens.
Sustec retains a license for use of the technology at Schwarze Pumpe
and has the option to get a GSP(R) Technology license for future CTL
Projects with Syntroleum.
This document includes forward-looking statements as well as
historical information. Forward-looking statements include, but are
not limited to, statements relating to the development of future
Fischer Tropsch projects, including the Spreetal project, ownership of
intellectual property rights, execution of definitive agreements,
joint technology development and market development. When used in this
document, the words "anticipate," "believe," "estimate," "expect,"
"intent," "may," "project," "plan" "should," and similar expressions
are intended to be among the statements that identify forward-looking
statements. Although Syntroleum believes that its expectations
reflected in these forward-looking statements are reasonable, such
statements involve risks and uncertainties and no assurance can be
given that actual results will be consistent with these
forward-looking statements. Important factors that could cause actual
results to differ from these forward-looking statements include
failure to execute definitive agreements, the potential that
commercial-scale GTL or coal-to-liquids plants will not achieve the
same results as those demonstrated on a laboratory or pilot basis or
that such plants will experience technological and mechanical
problems, the potential that improvements to the Syntroleum Process
currently under development may not be successful, the impact on plant
economics of operating conditions (including energy prices and
government support for such plants), construction risks, risks
associated with investments and operations of GTL and coal-to-liquids
plants, the ability to implement corporate strategies, competition,
intellectual property risks, Syntroleum's ability to obtain financing
and other risks described in the company's filings with the Securities
and Exchange Commission.
(R) "Syntroleum" is registered as a trademark and service mark in
the U.S. Patent and Trademark Office
CONTACT: Syntroleum Corporation, Tulsa
Mel Scott, 918-592-7900
mscott@syntroleum.com
SOURCE: Syntroleum Corporation
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