Syntroleum Corporation has completed its merger with SLH Corporation which, prior to the merger, owned approximately 31 percent of the outstanding common shares of Syntroleum. The merger was approved by the shareholders of both companies at separate meetings held August 6.
Among other things, the merger gives the combined company, which will be called Syntroleum Corporation, access to approximately $50 million of cash and other assets formerly held by SLH. Syntroleum intends to use this capital to accelerate the development and commercial implementation of its proprietary Gas-To-Liquids (GTL) process.
The company plans to use a portion of the cash made available by the merger to fund its capital commitments for two previously announced GTL projects. One is a specialty product GTL plant being developed with Enron Capital and Trade Resources in Sweetwater County, Wyoming. A second GTL plant is being developed with Texaco and the engineering firm of Brown & Root. The company also intends to continue to make significant investments in research and development.
The Syntroleum Process is a simplification of traditional GTL technologies aimed at substantially reducing both the capital cost and minimum economical size of a GTL plant, as well as plant operating costs. To this end, a unique characteristic of the Syntroleum Process is its use of air, rather than pure oxygen, in the conversion process.
Syntroleum believes that the Syntroleum Process can, in some circumstances, be cost-effective in GTL plants with throughput levels as low as 2,000 barrels per day (based on energy prices in recent years), and can be competitive with other GTL processes at any plant size.
Company officers have stated that the ability to scale plant size down will allow placement of GTL plants on skids, barges and ocean-going vessels. This is expected to allow use of GTL plants in a wider variety of locations, including isolated and offshore areas.
To date, Syntroleum has entered into license agreements with Texaco, ARCO, Marathon, YPF, Enron and Kerr-McGee. It is currently in license discussions with several other companies.
Syntroleum also intends to establish joint ventures with its licensees and other partners to design, construct and operate GTL plants. The company has already formed the joint venture with Enron.
Finally, the company plans to provide mobile GTL plants on a contract basis.
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