By OGJ editors
HOUSTON, Oct. 1 -- Syntroleum Corp., Tulsa, said its Sweetwater gas-to-liquids project in western Australia might get suspended although the company is continuing to explore alternatives.
Meanwhile, Syntroleum will take a third quarter write-down of $25-30 million to cover the capital costs for plant design and other costs related to the 11,500 b/d GTL plant under development on the Burrup Peninsula for several years.
"The chances of the project going forward are looking slimmer and slimmer. It's on life support," a company spokesman said.
Syntroleum said its engineering, procurement, and construction contract with the German engineering firm of Tessag Industrie Anlagen GMBH expired Aug. 31. Tessag is a member of the RWE group of companies in Frankfurt (OGJ Online, Sept. 4, 2001).
In earlier US Securities and Exchange Commission documents, Syntroleum had said a contract extension deadline was Oct. 31, but Syntroleum since has been put on notice that the contract actually expired Aug. 31.
"Over the past 2 years, the company has been seeking third party equity participation in the project, attempting to obtain both debt and equity financing to fund final design, construction, and start-up of the plant. To date, these efforts have been unsuccessful," a news release said.
Syntroleum said it is pursuing other projects that incorporate its proprietary process to convert natural gas into synthetic liquid hydrocarbons. These include the potential development with Ivanhoe Energy Inc., Vancouver, BC, of a 185,000 b/d GTL plant in Qatar; the installation of a GTL plant in Peru by Syntroleum unit Syntroleum Peru Holdings Ltd., provided it confirms sufficient natural gas reserves on Block Z-1 off Peru's far northern coast (OGJ, Sept. 23, 2002, p. 90); construction of a GTL fuels demonstration plant near Tulsa to provide fuel to government vehicle fleets under a US Department of Energy's Ultra-Clean Fuels Program; and development of a contract with the US Department of Defense involving the design of a floating GTL plant.
"Value still remains in the Sweetwater project, including technical designs, construction arrangements, and all other development work done for the project," said Kenneth Agee, Syntroleum chairman. "The company is confident in the value of GTL specialty chemicals business, and we will continue to be opportunistic in seeking applications for the technical design work done to date for new projects in the future."
