“Real Gasoline Created Without Using Oil — Three Times Cheaper, $0.58 a Gallon”

Sniffing out the "gas for $0.58 a gallon" teaser pitch from Sean Brodrick for Oxford Resource Explorer

The article below originally appeared on July 17, 2014 around the time the teaser pitch from the Oxford Club folks started circulating. The ad is being seen by lots of our readers again now, and we’re getting a lot of questions about it, so we re-post it here for your information… the ad seems unchanged since we first saw it, and the following article has not been updated or edited.

Careful readers will note just how disingenuous it is for Oxford to continue their promotions using this same ad, because the plant that was supposed to start selling “gasoline without oil” in “months” is now likely at least two years from even starting construction — Sasol, the company that planned the massive investment and trumpeted the size and scope of it last year (and yes, Sasol is the stock teased in the ad, still), shelved the gas-to-liquids plant last year.

It may still get built someday, but with oil prices low it sure won’t be built soon and the company has postponed making a final decision on construction. And while the ad has been touting 50%+ gains in “weeks” and 165% gains in “months” from the climb they expect in the share price of Sasol (SSL), the truth is that the ad started running a little over a year ago, when SSL was near all-time highs close to $60, and the shares have been cut in half since.

That’s no surprise for an energy company, of course, and everyone makes bad picks and loses money when the market goes against their thesis (I sure do), but continuing to run essentially the same promotion for almost two years, with no acknowledgement of the fact that the planned plant now has no chance of being built and operational within the next few years, is taking it a bit too far. Perhaps that’s why we’ve had so many folks writing in to say, “no, they say the plant is just about to start selling gas so it can’t be Sasol” … but no, the facts and details in the ad haven’t changed and they’re still clearly about Sasol, it’s just that the real world has changed in the year since the ad started running… and the crazy hype of the ad now seems even more completely ridiculous once you compare it to that real world.

Maybe Sean Brodrick still likes Sasol, or he and the Oxford Resource Explorer folks think it’s a beaten-down opportunity for other reasons now, or maybe they’re just running the ad because it still works to get attention from readers like you and I … regardless, they’re still sending this ad, and we’re still getting questions, so here’s that original article from the Summer of 2014 (and yes, we included the several hundred reader comments from the past year at the end if you’d like to see them):

—from 7/17/14—-

Sean Brodrick is touting a company that can create much cheaper gasoline — and, of course, he’d like you to sign up for his Oxford Resource Explorer newsletter to learn all about it.

So he provides some hints and clues that serve to whet your appetite — enough to make it seem real, and to seem like you can almost touch those juicy profits. But oh, wait, first please send us your $49 (don’t worry, that’s “on sale” from $159, and is far less than the $7,995 he says his research is worth).

Which leaves us no choice. We don’t like to be manipulated into buying stuff, and we don’t like secrets — so what is the stock? We’ll sift through the clues and tell you what he’s really pitching. If you want to subscribe to his newsletter after that, well, that’s up to you — but don’t do so just to find out about a secret stock. That’s like getting married just because you want to find out about whether or not your beloved sleeps with his socks on.

On to the clues, then.

“Real gasoline created… Without Using Oil!

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  • Works in Any Vehicle
  • 46% Cheaper (Profitable at $1.71 a Gallon)
  • 40% Cleaner Than Today’s Gasoline.

“Early Investors Could Make 90.5%… 281.9%… And Even 1,063% in a Few Years…”

The precision really adds to the believability, right? If you say something’s going to double, well, that’s a throwaway line and we know you’re guessing. But if you say it’s going to go up 90.5%, well, you must be actually doing math! Maybe you’re right!

Or maybe not. That’s why he says “could” and “in a few years” — as always with a teaser pitch, there are plenty of “maybes” to protect against future complaints (and lawyers).

Here are some more clues to get us going.

“A little-known company is doing what should be, by all conventional logic, the impossible.

“It’s creating gasoline… without using oil.

“To everyone but company insiders, this may sound like science fiction.”

The first thing that came to mind, even before we piled up the clues to shovel them into the Mighty, Mighty Thinkolator, was algae oil — that’s probably because the Motley Fool has been repeating their teaser ads for algae oil company Solazyme (SZYM).

But no, Brodrick isn’t teasing Solazyme as a gasoline-maker (probably a good idea, SZYM is focusing first on higher value-added stuff, industrial and food chemicals, because algae oil is expensive to make — they did get their new plant opened in Brazil and the stock jumped up a bit this Spring, but it’s now back to around where it was when we covered that teaser first in December). His pitch is about using natural gas to make gasoline.

No, not using natural gas instead of gasoline — that would be the pitch advanced so often for perennial disappointer Westport Innovations (WPRT) and their natural gas fuel injector technology that helps vehicles (especially heavy trucks) run well on CNG or LNG. Natural gas as a feedstock, instead of crude oil, for making gasoline.

The economics are obviously good for that process if it can be at all efficient — at least for the US, where natural gas prices are so very low compared to oil, and that appears to be the crux of Brodrick’s argument. Here’s a bit more from the ad:

“This company will soon create enough gasoline on American soil to fuel more than 10.3 million cars a year… and ramp up from there.

“Experts at a secretive U.S. House and Energy Committee meeting recently predicted this fundamental alteration of chemistry will have a ‘substantial impact on the U.S. economy.’

“Cambridge Energy Research Associates calls it, ‘the biggest innovation in energy,’ in terms of scale and impact.

“The Brookings Institution reports that this new process, ‘will account for 24% of all of the liquid gas supply in the United States by 2017.’ ….

“… the origins of this story begin with technology forgotten since World War II…

“These were secrets filed away for over 70 years… buried in dusty archives… only recently rediscovered….

“Today, it costs companies like Exxon Mobil an average of $77 to create a barrel of gasoline using oil.

“This little-known company creates ‘gasoline without oil’ for just $36 a barrel!”

OK, so that “Technology forgotten since WW II” bit probably caused a few of you to fire a few synapses in your brains… what was that company that used German technology to make gasoline? Hmmm….

The ad goes on to tease the huge profits that can be made in energy, particularly from big cost savings or new production techniques or similar breakthroughs — like the directional drilling, hydraulic fracturing and new cements that have created fortunes and built new name-brand companies like Halliburton and Baker Hughes (or, in the early days of gasoline, John Rockefeller’s Standard Oil).

And Brodrick is even careful to emphasize that although this technology is still a big breatkhrough, it’s not new and it’s not as risky or “out there” as ethanol, “algae gas” or “sun gas”. It is in use now and is, apparently, scaleable and profitable …

“Right now, this company is quietly producing 34,000 barrels per day in a small desert nation… far from the spotlights of Wall Street.”

So you hear “natural gas” and “small desert nation” and you probably think of Qatar. Good work!

Now let’s throw on the Fischer-Tropf process that was used in Germany to create diesel fuel from coal, and we’re getting tantalizingly close to revealing this “secret” stock.

More clues…

“Soon, it will distribute this ultra-cheap gasoline all across America…

“As I write this, trucks are clearing land for a plant to come on line just months from now.

“People driving by can’t imagine the scale of what’s going to go on here.

“Covering 650 acres… it will rise out of a Gulf Coast bayou… With direct access to the massive natural gas fields pumping out record amounts of natural gas across Texas and the rest of the U.S.”

And Brodrick says he expects natural gas prices to fall again with rising production, and crude oil prices to rise, which would just make the spread even better for this secret company. So who is it?

OK, we’ll take you out of your misery — Brodrick is teasing the South African giant Sasol (SSL).

Which is indeed one of the global experts on using the Fischer-Tropf process and other innovations to refine solid (coal) or gaseous (natural gas) energy sources into liquids. That’s not because they took off as global innovators who pursued this fantastic new technology, it’s because they used to be the state-controlled oil company in South Africa, and no one wanted to sell them crude oil under apartheid… so they had to come up with a way to use their abundant coal as an industrial and transportation fuel.

And the story is certainly a very compelling one, at least in the big picture: The US has abundant and inexpensive natural gas and a fantastic gas distribution system, Sasol is building a huge liquefaction plant in Louisiana to refine and catalyze the gas into gasoline and other valuable chemicals, and gasoline and those chemicals are priced on the international markets so are much more valuable than the mostly-landlocked natural gas, which should create great profits.

Brodrick quotes a “Pulitzer-Prize-winning journalist” as well, in calling it “one of the most improbable and important American business stories of the past decade.”

That article is here, from the Wall Street Journal a couple months ago — just in case you’d like some confirmation or more background on the size of their operations.

I’ve invested in Sasol in the past, back during the last oil runup in 2006-2008 or so, and haven’t looked closely at them very much since — but they are building that $20+ billion plant in Louisiana and they have built a similar plant in Qatar and have plans to expand globally. It is a more complicated firm than just these gas-to-liquids plants, though that’s part of their growth strategy — they still have huge operations at home in South Africa, and it’s a big company with a market cap approaching $40 billion.

The stock is not particularly expensive, it trades at less than 11X expected 2015 earnings and pays a small dividend, and their balance sheet appears pristine — not sure where they’re getting the $20 billion to build these new plants, since they don’t currently have any net debt, but they do have the flexibility to add some debt to the balance sheet and they may have partners or government incentive smoothing the way as well.

Sasol has said in the past that they need oil to be about 16X more expensive than natural gas for these plants to work (that’s presumably using the price/barrel for crude, and the NYMEX/henry hub price for natural gas per mcf, the two standard measures) — right now oil is a bit over $100 and natural gas is back down to $4 so that’s a ratio of about 25, well within their zone of profitability.

Brodrick is pretty far outside the mainstream in his prediction of “90% growth in the coming weeks… 281% in the next few months… and 1,063% in the next couple of years” for this company — analysts are predicting that earnings will be pretty flat, about $5.46 for the just-ended fiscal year and $5.33 for the current year, and that the earnings will rise by less than 2% a year for the next five years.

I don’t know who will be correct about that future growth (and it’s only two analysts providing those average estimates), but these are extremely long-term capital building projects, they are complicated, and Sasol does have a substantial amount of exposure to foreign currencies along the way. They have boosted revenues substantially over the past decade, but it definitely hasn’t been a straight line.

So … that’s about all I can tell you in half an hour of catching up on Sasol — yes, they can make gasoline cheaper with natural gas than you can with crude oil, but that’s after this $37 billion company builds a $21 billion complex (and keeps building similar-sized operations in other areas and countries), and assuming that pricing dynamics remain friendly for the gas-to-liquids operations… it looks to me like it’s still a well-run company but not one that’s likely to see windfall profits overnight, and that it’s worth considering the risks of building these huge projects like their US plant in Louisiana and bringing them into profitable, steady operation.

That’s just me and a few minutes of though and reading, though — it’s your money, so if you were to buy Sasol you’d want to understand it quite a bit better than that. So go forth, researchify for yourself, and come back and let us know: Is Sasol right for your portfolio? Do you think it’s going to return profits of 90% in “the coming weeks?” Just use the friendly little comment box below to share your thoughts.


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Roy
Guest
Roy

This appears to be the type of investment for the young that have a long term objective. The most worrisome factor is that world conditions could have major effects on the whole area of power generation, use and price.

Make haste…… Slowly.

bernard perlman
Guest
bernard perlman

The article overlooked the most important mis statement in the promo. The claim was “This product could be used to replace gasoline in any vehicle without any type of modification”. It costs about $7000 to convert a car to natural gas. The only natural gas vehicle I know of sold in the USA is a Honda Civic which sells for $7000 more than a gasoline powered Civic. They had so many problems with the natural gas powered Civic that they may have stopped making it. Another minor detail. Natural gas is not readily available in the USA so good luck… Read more »

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RixTime
Guest
RixTime

You missed EVERYTHING that this article was about!! EVERYTHING!!
It’s not about using natural gas DA!! It about converting natural gas
into gasoline!

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Will Zerby
Guest
Will Zerby

So for about $11,500 you can take advantage of natural gas for your car.
And maybe a map to all natural gas stations.

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DLTAZ
Guest
DLTAZ

what a bunch of stupid investors…you guys making your idiot comments missed the entire point. This is NOT the old Fischer-Tropf process. It is not LPG or LNG. Pay attention. This is NEW technology to CREATE a facsmile gasoline without oil using a proprietary process by catalyzing syngas made from natural gas for less than 50% the cost of producing conventional gasolines. But that’s ok. Your ignorance will serve to provide opportunity to the rest of the investor pool that actually perform due diligence BEFORE spouting ignorant comments that are far from the truth of the matter. Move along now,… Read more »

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wood
Guest
wood

They are either that stupid or they are trolls for those that have the most to lose.

paul hudek
Guest
paul hudek

Siluria Technologies also claims to have an efficient method to produce ethylene and
to convert the ethylene to gasoline or other fuels. They seem to have adequate funding.

paul hudek
Guest
paul hudek

Siluria Technologies also claims to have an efficient process to convert natural gas
to ethylene and the ethylene to gasoline and other fueis.

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Sargam
Guest
Sargam

Siluria has some big names behind it but is still pre-IPO. You cannot buy it.

Larry
Guest
Larry

There is a privately held company, in part funded by Texas A&M that claims to have a process that is significantly more effective. They have a demo site in production in Robertson County Texas. Co name is Synfuels International. Don’t appear to be publicly traded.

sdmaley
Member
👍5

Their website has some ‘interesting’ content, such as “The Definitive Guide to Monetizing North Slope Natural Gas as a Strategic Energy Resource”: http://www.synfuels.com/BinderWhitepaperforCongress.pdf

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quincy adams
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quincy adams

About 7 years ago ExxonMobil abandoned plans for a similar plan in Qatar where gas was available for pennies.

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Mary
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Mary

Do you know anything about Sun Gas also an alternative to oil. Sounds interesting

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John Harris
Guest
John Harris

I see this as a short to medium term shot at best. Long term – 20 years or more, I expect to see most carbon based fuels replaced by nuclear power plants making tons of electricity with much of that replacing coal and gas fired electric plants and a lot going to generate hydrogen from water to fuel the vehicles that currently guzzle gasoline or diesel (or jet fuel). Maybe wishful thinking but once the right wing stops denying climate change (and science in general) it maybe might happen. But I won’t hold my breath and won’t invest in SSL… Read more »

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Harold Wilson
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Harold Wilson

I don’t know anybody who denies that the climate changes. In the 1970’s Time Magazine ran 3 cover stories about the certainty that we were entering a new ice age – at that time you would undoubtedly condemn those that said we actually were going to enter a period of warming. The climate models showing that “horrific” warming have essentially all been wrong (especially over the last 17 years) – The arrogance that “scientist” (especially those who get huge grants to study climate change & will continue to get them so long as the fear mongers tell us of the… Read more »

hipockets
Member
👍1233

Not 100 % wrong — close to it, though.

crossroads49
Member
👍57
crossroads49

The fact that Time Magazine ran 3 cover stories doesn’t provide evidence of anything.
When 97% of climate scientists say man-made climate change is happening, I choose
not to bury my head in the sand. Understand that there is a difference between climate
and weather.

Boomstick
Guest
Boomstick

You do realize that the 97% figure has been debunked, don’t you?

hipockets
Member
👍1233

Boomstick, would you cite your information?

commissioner
Member
👍3
commissioner

Thank you for saving me the trouble of pointing htat out.

Al
Guest
Al

Climate scientists are not real scientists. They are nothing but statisticians! They are taking the statistics from past years and fitting it to whatever formula their bosses are paying them to prove. If you don’t get required results you lose your grants. Most professors in universties are grant whores. Plain and simple. There is not one legitimate physicist that believes in man-induced climate change. Except for the chem-trails. Those need to be stopped completely.

William G. Wells, Jr. (Retired: Professor, Exec Asst To Apollo Program Director; retired Air Force Colonel who faced death--up close-- about 12 time as I recall)
Guest
William G. Wells, Jr. (Retired: Professor, Exec Asst To Apollo Program Director; retired Air Force Colonel who faced death--up close-- about 12 time as I recall)

Al sounds like a Tea Party Charter Member and seems as poorly informed as most of them. As a former professor, I think he doesn’t know crap about what most professors do–but many of the basic ideas that underlie entire industries come from them. Yes, there are some who are worthless as in any other profession. And his circle of physicists is obviously quite small–and I would bet that any Al does know also reject evolution. (As for me :Educated at M.I.T-electronic eng., Univ of Chicago-Physics & Math; Purdue (MBA–Quantitative focus). But to the main point: greatly appreciate the dissection… Read more »

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frederick
Guest
frederick

well 100% of scientists said ours was the only galaxy and ran Edwin Hubble out of town for proposing otherwise. so much for 97% of scientists who really have no idea if there is or isn’t man made climate change. no one can prove it one way or the other. PERIOD. that said, if my kid pees in the pool, I can live with that BUT if all the neighborhood kids come over and all pee in the pool, I’d have a problem. so we need to stop peeing in the atmosphere, and on the ground, or in the ocean… Read more »

Old Rob
Guest
Old Rob

Hurray for you Frederick!

jj3for earth
Guest
jj3for earth

…now I gotta pee!

Steven Ritter
Guest

I learned about global warming in class at college in the 70s. The scientific community then, as now, said we were facing global warming, not cooling. Time magazine, while better than Fox News, should not be used as your source for science. The real money is on the side of oil and gas producers to try and confuse the public — apparently they have done a decent job on you — virtually everything you have written is wrong. The climate models that showed a warming have been correct, and the polar ice caps are melting at a much faster rate… Read more »

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djackson265
Member
👍117
djackson265

Sorry Dude, but the polar ice caps are in fact GROWING, not shrinking, and the average temps have been falling for years. The numbers coming out of the “models” are invalid because the numbers going into the models have been fudged, and that has been shown definitively by comparing annual data recorded to NOAA’s adjusted data. The Earth goes through cycles of heating and cooling and the climate is in a constant state of change, and it’s pretty arrogant to think that we can actually impact it, especially with ridiculous stories about the “hole in the ozone” and “the greenhouse… Read more »

advantedges
Member
👍97
advantedges

mmmmmmm We better have Gumshoe put a line item in his budget to send you up to the North Pole so you can research “directly” on how the Polar Ice Caps are growing. While you are there, please ask the Polar Bears how Life is treating them, as their environment is fading away — Before you go up, be sure to stop off in the Rockies in Montana and talk with the wildlife there about how your theories apply to living things in their region. Several species have been devastated. A Hint: spend less time on your soapbox preaching, and… Read more »

Mark
Guest
Mark

90% of the worlds glaciers are in retreat – melting. That does not happen in a world that is getting colder or in a world that is staying the same. That happens in a world that is warmer then it was in the past. This is supported by a century of independent scientific measurements, decades of NASA photographs from space, etc. You can debate the cause all you want but the fact is that the world is warmer then it was in the past or the glaciers would not be melting.

glenn
Guest
glenn

Jackson you correct, and climate change when it happens has been ongoing for millions of years. It is more likely due to solar cycles, and other external factors. In addition, I saw where the data was fudged. Lots of well researched stories written about that. Last I too remember the coming of the next ice age stories.
Man made global warming that will cause a dire catastrophe is a scam.

Rusty Brown in Canada
Guest
Rusty Brown in Canada

1. It’s Mount Pinatubo, not “Penatubo”.
2. Pinatubo blew in 1991, not “the 1980s”.
3. CFCs are manmade. They do not occur in nature. http://cfc.geologist-1011.net/

James Lax
Guest

As good as it gets when it comes to a real world explanation ! Brilliant… Required
reading for all the youngsters who have any interest in the TRUTH !

sdmaley
Member
👍5

Two recent books conclude we are likely headed into cooler to colder times.
One written by a ChemE R&D Engineer, see: http://theinconvenientskeptic.com
One written by a geologist: http://climatewholestory.com/

1paglee
Member
👍237
1paglee

Well, yes, and the sunspot cycle is predicting global cooling so we had better start taxing carbon fuels because obviously CO2 is now even having a disastrous effect on the sunspot cycle!

Piporro
Guest
Piporro

The oil companies want to sell oil and make profits and my well say and promote whatever they have to to achieve that end. The pro Anthropogenic global warming crowd does the same thing as evidenced by the fudged numbers etc. That leaves us peons who like to argue an issue like this in a quandary and that is who to believe. The cure to the problem of Anthropogenic warming is obvious. World wide use of crude oil in 1985 was about 50 million barrels a day and that was enough to generate cries from the left of doom. Today… Read more »

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arch1
Member
👍7784

Well said,,,,Who can tell me what the optimum global temperature should be?

tcliffortcliffordpont
Member
👍4
tcliffortcliffordpont

The question is what to do about climate change and who is responsible. Human contribution to the proposed causes is equivalent to the ratio of the thickness of a dime to a football field – the 100 yard one. There was also much more warming in the first half of the twentieth century than the second, so go figure.

Stan
Guest
Stan

The global warming Jihadist’s claimed the artic circle would be thawed to the point that ships would be able to pass through it for the first time in history during the summer of 2013. Rich people traveled north in their yachts to be among the first to sail through. However, the polar ice cap actually froze 60% larger that summer, trapping 20 yachts in the ice. They had to be rescued, and their yachts are still there. Global warming is a great scare tactic used by alternative energy people to scare the masses into funding their research and development at… Read more »

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Rod
Guest
Rod

God has nothing to do with it , whatever God you believe in, there is no God

Bill
Guest
Bill

Rod, unless you want to discuss a relevant investment — like maybe a publicly-traded atheist bookstore with growing profits (unlikely but possible) — personal religious or anti-religious postings really have no place in an investment forum.

Rusty Brown in Canada
Guest
Rusty Brown in Canada

Whoa, Nellie!
It was Stan who dragged inappropriate religious inclinations into this forum with his talk of “…to spread the gospel of Jesus Christ.” and “…see you on the day of Judgment.”
Please don’t blame any of the rest of us for a retort to this gratuitous provocation.
Thank you.

Jewelfires
Guest
Jewelfires

Ah Stan, did it happen to occur to you that you cited two countries where there is no free speech in order to complain about Anything that was really going on??

Jim
Guest
Jim

It’s takes more faith to be an atheist than otherwise. The Hubble space scope tracks galaxy motion and track it back to a point. There’s nothing behind that point, alluding that something (God?) started the universes at that point. Maybe they just started from nothing…..right.

ywilliard
Member
👍8
ywilliard

Jim, to an atheist ,faith is a dirty word. We don’t know yet how the universe started, but if you claim God started it you have not explained anything because now you must explain how an intelligent creature came into being.

Victor
Guest

AMEN! THOSE DAMNED IDIOTS FROM THE “ACLU” WILL BE ON YOU NEXT!

Mace
Guest

For Steven Ritter: You must have slept through class or maybe you’re just a liar or full of crap. Time magazine wasn’t anyone’s source for science in the article/issues reference above. You would have to be completely ignorant and closed minded to think so, much less write such a statement. Time magazine wrote many articles in many issues in the ’70’s, at least 1 entire issue “reporting” the science of the day from so called “climate scientists”. Time wasn’t the source of the science and if you were even a fraction of being as informed as you would like one… Read more »