Ivanhoe Energy Joins Syntroleum's Sweetwater Gas-To-Liquids Project
Thursday, October 5th 2000, 12:00 am
By: News On 6
BAKERSFIELD, Calif. and Tulsa, Okla., -- Ivanhoe Energy Inc. (Nasdaq: IVAN) (TSE: IE) and Syntroleum Corporation (Nasdaq: SYNM) announced today that Ivanhoe has signed a letter of intent to participate as a partner in Syntroleum's Sweetwater gas- to-liquids (GTL) project under development in Western Australia. Ivanhoe has funded $2 million for front-end engineering and other project development costs and will acquire a 13% equity position in the project for an additional $19 million.
"We are excited about investing in Syntroleum's first commercial-scale GTL plant," stated Dave Martin, Chairman of Ivanhoe. "Our participation will bring us closer to the technology and set the stage for Ivanhoe's ultra-clean GTL fuel developments worldwide."
Ivanhoe is currently in advanced discussions with national petroleum corporations to convert stranded gas reserves into sulfur-free transportation fuels using the Syntroleum GTL process. Ivanhoe's investment in the Sweetwater project gives the company a strategic advantage in executing its plan to use Syntroleum's technology to monetize large, stranded gas deposits while producing easily transportable, clean fuels and reducing greenhouse gas emissions worldwide.
"We are very pleased to have Ivanhoe become a partner in Sweetwater," stated Kenneth Agee, Chairman of Syntroleum. "Ivanhoe's participation enhances the equity capital for the project and is another step forward in moving Sweetwater to financial close and into the construction phase."
The Sweetwater project, which was announced on November 15, 1999, is a nominal 10,000 barrels per day plant that will employ the proprietary Syntroleum Process to convert natural gas into ultra-clean synthetic specialty products such as lubricants, industrial fluids and paraffins, as well as synthetic fuels. Syntroleum announced on June 9, 2000 that a NYSE-listed company had signed a letter of intent to participate as a 13% equity partner in the project, subject to satisfaction of certain conditions. Ivanhoe's participation is also subject to satisfaction of various conditions, including Syntroleum obtaining project financing, and execution of definitive agreements. Engineering for the plant is underway with the German engineering firm of Tessag INA.
The plant will be located on the Burrup Peninsula in Western Australia. Syntroleum announced on February 18, 2000, that it has signed a gas supply contract for the plant with North West Shelf Venture Partners. The project will also receive multi-user infrastructure support from the State of Western Australia. In addition, the Commonwealth of Australia is providing support for further development of Syntroleum's GTL fuel technology with a A$40 million loan to Syntroleum to facilitate research, development and demonstration of GTL technology in Australia. The Commonwealth has also purchased a Syntroleum GTL fuel license for A$30 million.
In July of this year Syntroleum completed a $90 million public offering, with most of the proceeds earmarked to fund the company's equity portion for the Sweetwater project. The company announced on October 2, 2000, that Merrill Lynch would provide structuring advice and assist the company in all aspects of the Sweetwater project debt financing, which is currently anticipated to be in the range of $400 million.
Syntroleum Corporation is the developer of a proprietary process for converting natural gas into synthetic liquid hydrocarbons. The process is designed for application in plant sizes ranging from 2,000 barrels per day to more than 100,000 barrels per day. The company, in partnership with others, plans to build specialty chemical plants using its technology in a number of global locations. In addition, Syntroleum licenses its process to oil companies for the manufacture of fuels. Current licensees include Arco (now BP Amoco), Enron, Ivanhoe Energy, Kerr-McGee, Marathon, Texaco, Repsol-YPF and the Commonwealth of Australia.
Ivanhoe Energy is an exploration and development company. The company's principal current projects are in California, USA, and in China. In California's southern San Joaquin Basin, Ivanhoe has interests in more than 300,000 exploration acres in partnership with two major integrated oil companies. In China, the company is heading a development program of new and reworked wells to enhance oil recoveries on 22,400 acres on the Dagang field, in partnership with China National Petroleum Corporation and Nippon Oil Exploration Ltd., of Japan.