Syntroleum plans NGL/GTL project in northwestern Peru

By an OGJ Online Correspondent

LIMA, Dec. 3 -- Syntroleum Corp. plans to develop an integrated natural gas liquids/gas-to-liquids project in the Talara basin of northwestern Peru.

The project will have three phases. In Phase I, Syntroleum will build a 2,000 b/d NGL plant to upgrade and replace an existing plant owned and operated by the local power company, Electrica de Piura SA (EEPSA). The plant is expected to process gas and extract NGLs from 30 MMscfd of local production.

In Phase II, Syntroleum plans to expand that plant and build a 5,000 b/d GTL plant. At full capacity, Phase II is expected to process 100 MMscfd of natural gas, and the combined NGL and GTL production is expected to total 10,000-11,000 b/d.

In the last phase, the company will expand the GTL facility as more gas is developed nearby. The company expects that enough gas will be found to support 20,000-40,000 b/d of GTL capacity.

"This project represents a unique opportunity for the phased development of a GTL fuels plant," said Mark Agee, Syntroleum's president and CEO. "The revenue expected to be generated by the NGL facility, in addition to capital we expect to raise from additional financial and strategic investors, will support the costs of developing a GTL plant processing as much as 20,000 to 40,000 b/d of sulfur-free synthetic fuels."

Phases of the project will begin after detailed engineering studies, site acquisition, permitting, financing, completion of front-end engineering design, and execution of definitive agreements.

Syntroleum will negotiate with EEPSA and local gas producers for the assignment to Syntroleum of EEPSA's current gas supply contracts.

Syntroleum will also buy associated gas that companies are not using from the North Coast producers, including the Peruvian oil companies Petro-tech Peruana and Graña Montero Petrolera, Argentine's Perez Companc, US company Mercantile Peru, and China's Sapet Development.

EEPSA, the North Coast gas-fired generator with 150 Mw of capacity, is the main consumer. Some of the gas will also go to the Malacas plant and the 62,000 b/d Petroperu Talara refinery.

Fernando Zuñiga, chairman of BPZ & Associates, said GTL could be used in the Camisea gas project due on stream in early 2004.

In connection with the plan, Syntroleum Peru Holdings Ltd. and BPZ Energy Inc., an affiliate of Houston-based BPZ & Associates, on Friday signed an exploration and production contract with Perupetro SA, the state oil regulator, for offshore block Z-1 in the Tumbes and Talara basins.

The 1,155 sq mile block is in 30-500 ft of water. The license is for 40 years with a 7-year exploration phase. Syntroleum holds 95% and BPZ the rest.

In the exploration stage, the companies will drill at least three exploratory wells, complete field studies, reprocess at least 1,000 km of 2D seismic lines, and process and interpret at least 250 km of seismic. Perupetro estimates the cost of the minimum program at $26 million.

Previous exploration has led to an estimate of 540 MMcf of gas in the block, said Perupetro. It is anticipated that development of these reserves would facilitate Phase III expansion of the Talara project, said Syntroleum.

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