Syntroleum Shutters Gas-To-Liquids Demonstration Plant
08 September 2006
Syntroleum announced the completion of the production of 100,000 gallons of Fischer-Tropsch aviation fuel for the military at the company’s 70-barrel-per-day Catoosa Demonstration Facility (CDF)—and with it, the cessation of operation of the facility.
In addition, Syntroleum has suspended catalyst activity testing at its 2-barrel-per-day pilot plant, saying that its work was complete.
Having completed the essential work of operating the CDF and the pilot plant, we are now able to take the prudent step to temporarily suspend further operations at these facilities. Our continued research can now be conducted at our lower cost labs.
We will maintain these plants in a state such that if any of our licensees, joint venture partners, or customers would like to fund further operations for specific purposes, we can quickly and efficiently restart the facilities to meet their objectives.
—Jack Holmes, president and CEO of Syntroleum
Syntroleum anticipates significant cost savings across all categories of its current operating structure as a result of the facility shutdown that are expected to reduce Syntroleum’s total quarterly expenses by more than 50% going forward.
Syntroleum posted a net loss of $15.0 million for the second quarter of 2006 compared to a net loss of $0.6 million for the second quarter of 2005. Six-month loses for the period ending 30 June 2006 were $28.0 million, compared to a net loss of $12.2 million during the same period of 2005.
The company incurred expenses for the second quarter of $6.3 million related to research, development, and engineering programs, including $2.7 million of expenditures at its Catoosa Demonstration Facility, compared to $4.9 million for these activities in the quarter ended June 30, 2005. General, administrative and other expenses for the quarter ended June 30, 2006 were $6.8 million, including $1.7 million for non-cash equity compensation. This compares to $4.8 million of general, administrative and other expenses for the same period last year, including $0.2 million of non-cash equity compensation.
The company is providing F-T fuel to the Air Force for trials in a B-52. (Earlier post.)
So are we to assume that Fischer-Tropsch is a losing proposition and not viable in the real world. If they are the leader in Fischer-Tropsch and they are cut and running just as soon as they can, thier obligation with the Gov is done. Is this a "tried it, it didn't work, move along" or did I miss interpret.
Posted by: Joseph | 08 September 2006 at 01:15 PM
If they proved it worthwhile, let's hope they mothballed it.
Posted by: Lucas | 08 September 2006 at 01:38 PM
So are we to assume that Fischer-Tropsch is a losing proposition and not viable in the real world.
The purpose of a pilot plant is to prove the technology, not to make an operating profit. So once they established their particular technology does or does not work, you would expect the plant to be shut down.
The real test will be if any larger scale plants are built using the technology. Rentech's iron-based catalysts may do better in practice, particularly with coal-derived syngas, since they're supposed to be more tolerant of impurities in the syngas.
Posted by: Paul Dietz | 08 September 2006 at 02:40 PM
This is just an interim step, and MUCH bigger projects lie ahead. The USAF plans to use at least 200 million gallons of alternative aviation fuel in 2008. Some of that may be biofuels, but we all know that these biofuels face limitations on the supply side currently. As I see it, the rest of that alternative fuel will most likely be derived from CTL or GTL F-T jet fuel.
Syntroleum is also the only company, to my knowledge, that has submitted a sample of fuel to the USAF for testing. They intend to fly a B-52 Stratofortress using a blend of JP-8 and F-T jet fuels.
Only two of the eight(!) large jet engines will be running on the blend, but when you have to keep such a massive vessel aloft, it's best to err on the side of caution.
Depending on the outcome of the Air Force's test flight, due to be conducted this month, we shall see if the USAF and Syntroleum will enter into a larger, more long term agreement. They will need a lot of new facilities to produce such large amounts of liquid fuels, but if anybody has the resources to make that a reality, it is the United States Military.
Posted by: Bike Commuter Dude | 08 September 2006 at 06:40 PM
200 million gallons of alternative aviation fuel in 2008? I'll believe it when I see it.
Posted by: Mark_H | 08 September 2006 at 08:20 PM
I wouldn't bet too heavily against 200 mil barrels per year from coal in the year 2008.
I looks likely that it's possible and I'm guessing the US military desire an alternative to crude based aviation fuel.
Andy
Posted by: Andy | 09 September 2006 at 10:35 AM
I wouldn't bet too heavily against 200 mil barrels per year from coal
That should be gallons, not barrels. It would be about 5 million barrels, or about 13,000 barrels/day.
Posted by: Paul Dietz | 09 September 2006 at 11:18 AM
"200 million gallons of alternative aviation fuel in 2008?
I'll believe it when I see it."
I believe it's called the Department of Defense’s Assured Fuel Initiative. It is already past as policy, and this is just one phase in the program. There is already billions of dollars of support being thrown into this project and others.
Posted by: Bike Commuter Dude | 09 September 2006 at 12:06 PM