09-05-01 Syntroleum Corporation and Petroleum Geo-Services announced that they have signed a letter of intent to pursue a joint venture to develop, market and operate mobile marine production facilities, based on Syntroleum's proprietary gas-to-liquids (GTL) technology.
If completed, the joint venture will be a separate operating company that offers contract GTL services to gas producers to convert otherwise stranded natural gas from offshore fields into marketable hydrocarbon products ranging from synthetic crude to finished fuels, such as diesel and jet fuel. The mobility of floating facilities will permit their use at multiple locations, thereby providing access to fields that are otherwise too small to justify permanent GTL facilities. Such facilities could also enable conversion and monetisation of gas that is normally flared or otherwise wasted.

The planned joint venture company will have its initial operations based in Aberdeen, Scotland and will be the exclusive means by which Syntroleum and PGS offer marine-based GTL services to third parties. Syntroleum believes there is significant market potential for such GTL facilities for use in small associated gas fields, for monetisation of gas caps (gas cap blow down), short-term use as an early production system on large fields while a large permanent GTL plant is being built, and as a long-term solution for offshore gas in a range of water depths, including the expanding activity in deepwater regions around the world.
In association with UK-based AMEC, engineering and design work necessary to marinise the Syntroleum Process has been underway for a number of months. Increasing interest in GTL technology from companies with stranded offshore gas has prompted both Syntroleum and PGS to accelerate development efforts. According to the UK-based Infield Systems Worldwide Offshore Energy Database, offshore gas reserves total 2,847 tcf. This equates to approximately half of the world's current known gas reserves.

"This is a concept we've envisioned for a long time, but we have always known that it required the right partner," stated Larry Weick, Syntroleum's vice president for licensing and business development. "With PGS, we feel that we have found that partner. They have both the field operations and marine experience, coupled with ownership of marine production facilities. Syntroleum's GTL design enables smaller footprints and more compact plants than other technologies, thereby opening opportunities for mobile, marine-based facilities. Syntroleum's air-based design is inherently safer than oxygen-based designs, which is an important consideration for offshore applications. In total it all seems like a very good fit for both companies."
"This is a natural extension of our business model," stated Kaare Gisvold, president of PGS Production. "The abilities to offer GTL in the offshore environments around the world mark a major step forward for the industry. We are pleased to be at the forefront of this initiative with Syntroleum. It has huge strategic value for many areas of the world where there is a willingness to avoid the pollution and waste of gas flaring from existing operations. In addition, this places both PGS and Syntroleum in a strong position to offer methods of producing the huge reserves of offshore gas that are located in ever deeper waters, which until now were considered stranded."

The PGS Group offers a range of technologically focused oil and gas exploration and production services. In the production sector, PGS Production owns and operates four floating production, storage and offloading systems (FPSOs) and operates production facilities for oil and gas companies. It currently employs over 3,000 personnel worldwide and is involved in production of around 20 % of the UK's oil and gas.
PGS, via its Joint Venture with Clough Engineering of Australia, has also contracted with Syntroleum to provide operating and maintenance services for the Sweetwater project, a 10,000-bpd GTL specialty products plant that is being developedin Western Australia.

Syntroleum Corporation is the developer of a proprietary technology for converting natural gas into synthetic liquid hydrocarbons. The company, in partnership with others, plans to build GTL plants using its technology in a number of global locations. Additionally, Syntroleum licenses its process to oil companies for the manufacture of fuels. Current licensees include ARCO (now BP), Enron, Ivanhoe Energy, Kerr-McGee, Marathon, Repsol-YPF, Texaco and the Commonwealth of Australia.