14 October 1998

Syntroleum Corporation announced that it has retained Southwest Research Institute to test a new family of synthetic fuels being developed by Syntroleum for use in diesel engines. These tests will form the basis of the company's application for certification of the fuels under the Energy Policy Act (EPACT) of 1992. The goal of the program is to produce synthetic diesel fuels that qualify as alternative fuels under EPACT.

Syntroleum also announced that it has entered into a separate agreement with the University of Kansas Center for Research, Inc. (CRINC) to conduct further tests on Fischer-Tropsch (F-T) fuels in combustion ignition (diesel) engines. The agreement, which was signed 15 September 1998, follows a cooperative fuels testing and development effort that began in the summer of 1997. Objectives of the ongoing work are to determine the F-T middle distillates most suitable as fuels in diesel engines without the need for further refining, determine the merits of these fuels compared to conventional diesel fuel, and determine which F-T fuel would best qualify as an alternate fuel under the guidelines set out by the Environmental Protection Agency (EPA) and the Department of Energy (DOE).

Under EPACT, the federal government and many large cities are required to convert an increasing percentage of certain fleets (i.e. buses, mail trucks, garbage trucks and other vehicles) to alternative, non petroleum-based, fuel vehicles (AFVs). DOE modeling information suggests that fleet use of alternative fuels could reach 600,000 barrels per day, or as much as 38% of all light duty vehicle fuels, by 2010.

Currently, less than three percent of total highway transportation fuels consumed in the US are alternative fuels. This figure is low because the majority of highway transportation vehicles are diesel powered and there is virtually no alternative fuel available for them. Biodiesel, which was approved as an alternative fuel in 1996, is currently produced in very limited quantities reportedly selling for about $3 per gallon. With the exception of biodiesel, all other available alternative fuels require major changes in vehicle power plants, or new engines altogether. Additionally, all other currently available EPACT fuels require completely separate distribution infrastructures. Synthetic fuels produced using the Syntroleum Process would not require any modification of engine type, and could use existing channels of distribution.

Tulsa-based Syntroleum Corporation licenses its proprietary process for converting natural gas into synthetic crude oil and transportation fuels. Current licensees include YPF, Texaco, ARCO, Kerr-McGee, Marathon and Enron.

Source: Syntroleum Corporation