Ivanhoe Holds Master License For Gas-To-Liquids Technology - A Key To Clean Air And Healthier Cities

Ivanhoe Energy has joined a select group of industry-leading companies that are showing the way to the commercialization of a new generation of green fuel products. These products are derived from large deposits of low-cost natural gas currently locked in remote energy basins around the world, with no economic transportation links to markets.

Ivanhoe has acquired a master license from Syntroleum Corporation, securing rights to use its process to convert natural gas into transportation fuels on an unlimited number of projects around the world. Industry majors BP, Marathon and Texaco also hold Syntroleum licenses. Other major global energy companies are pursuing GTL projects, using variations on the basic chemistry pioneered in the 1920s by German scientists Frans Fischer and Hans Tropsch.

GTL fuels, such as ultra-clean diesel, contain non-detectable levels of sulfur, metals and aromatics. Diesel engines perform more efficiently on synthetic fuels because of the extra power from a higher cetane index and the elimination of contaminants that attack emission-reducing equipment. As a product, GTL fuels surpass new federal rules in the United States, Europe and Japan that require refineries to reduce the sulfur content of diesel fuel to 15 parts per million. Such regulations are providing the impetus to the introduction of new, green, designer fuels to a much wider market.

Since GTL diesel already exceeds the new worldwide specifications for low-sulfur diesel fuel, it will be in demand for blending with conventional diesel to satisfy increasingly strigent clean-air standards. The auto industry has rapidly developed new engine technolgies that, with GTL fuels, can meet clean-air standards - giving green fuels a clear economic advantage. Stripping sulfur out of traditional crude-oil products is prohibitively expensive.

Fortunately, Ivanhoe is unfettered by investments in traditional crude-oil refineries. Recognizing tht environmental necessities present business opportunities, Ivanhoe has invested in an international license to use the Syntroleum process, positioning itself as a producer of green fuels, with a strategic key to unlock the vast potential of stranded natural gas.

What are the benefits of Gas-to-Liquids (GTL) technology?

GTL processes like the Syntroleum Process hold a number of potential benefits.

1. Monetizing gas reserves. GTL has the potential to convert a significant percentage of the world's estimated proved and potential gas reserves - estimated to be upwards of 14,000 TCF of natural gas - which today hold little or no economic value, into several hundred billion barrels of oil equivalent of great economic value to the companies and countries that control them.

2. Eliminating costly or environmentally disadvantageous practices. GTL will help eliminate the need for flaring or reinjecting natural gas, permitting early development and production of oil fields shut in by the inability to dispose of associated gas and reducing the negative environmental impact of flaring.

3. Economic development of remote gas. GTL will permit the economic development of many remote gas discoveries that are otherwise deemed too far from market to have any economical value.

4. Development of Environmentally-Superior Liquid Fuels. GTL will yield synthetic hydrocarbons of the highest quality that can be used directly as fuels or blended with lower quality crude oil derived fuels to bring them up to compliance with more stringent environmental and performance specifications.

The Syntroleum GTL Process

In the patented Syntroleum GTL process, natural gas is mixed with compressed air and steam to produce a synthesis gas. Then, through a catalytic reaction, the gas is converted to a range of ultra-clean synthetic oils, which can be further refined to produce transportation fuels and hydrocarbon products. Potentially valuable by-products include heat, which can be used to produce electricity, and agricultural-grade water.

The Syntroleum process is a cost-effective refinement of GTL technology that has been in use for generations. A major advantage is that the process uses compressed air instead of pure oxygen to facilitate the conversion reaction, substantially reducing the capital cost and vastly improving safety at the process.