The purpose of the joint venture is to develop, construct, own and operate GTL/Oil FPSO vessels. The companies are working together to identify projects that will allow the joint venture to participate in the upstream development of oil and gas reserves and the downstream processing of those at offshore locations.

Syntroleum owns a proprietary air-based GTL process for converting natural gas as well as other materials like coal and petroleum coke into liquid hydrocarbons. The air-based technology is more compact than that required by other GTL processes, and Syntroleum strategically is targeting stranded resources: hydrocarbon reserves that are either too small or too remote from major GTL installations. (Earlier post.)

The GTL/Oil FPSO study follows Syntroleum’s work with its GTL barge concept for shallow water. (Earlier post.)

By using this GTL/Oil FPSO technology concept, companies could develop offshore gas reserves that otherwise would be uneconomical and in the process avoid the financial costs of re-injection of natural gas back into the reservoir or environmental costs of flaring the gas.

Bluewater and Syntroleum expect that engineering, design and construction costs will decrease for successive vessels, which has occurred with other new processing technologies as with liquefied natural gas. Furthermore, Syntroleum continues to make significant strides in advancing and improving its technology.

In 2005, as a direct result of work at its Catoosa Demonstration Facility, Syntroleum was able to increase its single train capacity from 12,000 barrels per day to 17,000 barrels of ultra clean products per day. Recent experience at the plant indicates the company can achieve a rate of up to 25,000 barrels per day of GTL products in a single train.

This is a significant step forward for both companies as we leverage our combined expertise, and Syntroleum’s air-based GTL technology is seen as the key. There are numerous offshore gas discoveries in the one-to-three trillion cubic foot range where we can add significant value using this FPSO technology.

Continued operation of our facilities has allowed us to improve our technology and increase throughput efficiencies. This increased capacity is very important in any plant, but particularly for a ship-based design where deck space is limited.

—Jack Holmes, Syntroleum President and CEO

Bluewater has been developing and operating FPSO vessels around the world since 1985. Its FPSO contracts include numerous projects that manage oil, water and gas separation; gas handling, water injection and power generation; as well as offshore storage, offloading and export tanker management. Bluewater also is a leader in the design of mooring systems for the safe transportation of produced oil and gas from the wellhead to production vessel, and from floating storage to export tankers.

Syntroleum and Bluewater expect this 50/50 joint venture to be the first step in forming an equity group to participate in the financing of offshore GTL production and storage projects. The formation of the joint venture is subject to negotiation and execution of definitive agreements.