The United States has the world’s largest coal reserves with an estimated 268 billion recoverable tons. Converting just 5 percent of the U.S. coal reserves to Fischer-Tropsch fuels would equate to the existing U.S. crude reserves of 29 billion barrels. We could virtually double our nation’s domestic motor fuel supply without drilling a single well or building a new refinery. The Department of Defense and Department of Energy are currently evaluating information responses from industry participants, including Syntroleum, regarding the construction and operation of various coal-to-liquid plants in the U.S. that could help satisfy our nation’s and military’s fuel needs.
In November 2005, we announced that we had entered into an agreement with another company to conduct laboratory-scale demonstration of our Fischer-Tropsch (FT) catalyst with coal-derived synthesis gas produced at an established gasification facility. Syntroleum intends that this testing program with Eastman Chemical Company will demonstrate the effectiveness of the Syntroleum FT catalysts with proven coal-derived synthesis gas clean-up and treatment processes for use in a CTL application. The testing program, funded 100% by Syntroleum began in December 2006 and will continue through mid-2007 to gather catalyst performance data for use in development of reactor designs for future commercial coal-to-liquids plants using Syntroleum technology. Initial production of FT waxes and light products was achieved in mid-December and the overall testing program is currently meeting Syntroleum expectations.
On January 25, 2007, we signed a non-binding memorandum of understanding (“MOU”) with the China Petrochemical Technology Company (“Sinopec”) to establish a joint technology development effort to advance Fischer-Tropsch technology in China based on Syntroleum’s nitrogen diluted synthesis gas conversion technology, and to determine the most advantageous alternatives to jointly market Fischer-Tropsch technology in China.
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