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!
- 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.
“Itās 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.
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just click here...“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 canāt imagine the scale of whatās 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.
Here is a little info on bio-fuel from a reliable source to help understand the science.
http://iic.pnnl.gov/news/transformations/fundamental_applied.stm
My amall investment in SSL several years ago has grown by 84% — not bad, but rather slow. It may be possible to build new plants for GTL conversion, but the investment needed is enormous.
It may be more efficient to utilize pressurized methane in powering big trucks because they have the capacity to haul the big heavy tanks that are required. Boone Pickens has been pushing for this and it is slowly coming along, but the cost for converting existing vehicles for pressurized methane makes such conversions unattractive. There is also a chicken and the egg problem because there are few fueling stations and more statons won’t be built until there are more users.
True — Westport is the big name for nat gas engines, Pickens was an early force in Westport (WPRT) as well as the Fuel Systems fueling station company (FSYS), but the “someday” promise of those folks has never panned out on the scale so often predicted. Their businesses are still growing, but to boom they’d need a major government boost — particularly to get fueling stations much more widespread.
I am curious as to how G2X may tie into this based on the information I found below? Article in online publication “Hydrocarbon Processing” which indicates the first permits granted for this process in the Lake Charles area.
G2X Energy announced that the state of Louisiana and the Federal EPA have granted its wholly-owned subsidiary, Big Lake Fuels, the required air permits to construct and operate a natural gas-to-gasoline facility in Lake Charles, Louisiana.
The permits, issued by the Louisiana Department of Environmental Quality (LDEQ), are the first permits to allow for the construction and operation of a commercial scale plant to convert natural gas into liquid transportation fuels.
Dennis The more of these plants that get built the less petroleum will be used in motor fuels. That may tend to keep the petroleum prices down and may lead to less recovery efforts in played out fields. I do not see a major change in gasoline prices due to this, as these plants are very expensive to build and that cost must be recovered. This is also likely to deter the switch to NatGas as fuel for hiway trucking as more diesel will also become available and it has the highest energy density of fuels now in use, thus gives greatest range before fill-ups. Bad news for Hydrogen. IMHO
It doesn’t look like G2X is a public traded company
For those that doubt the abundance of natural gas check out this evidence of undersea fields waiting to be tapped atcomparatively shallow depths.
ww.bbc.com/news/science-environment-28898223
Should be: http://www.bbc.com/news/science-environment-28898223 (3 w’s, not 2).
But perhaps I am belabouring the obvious here. Just tryin’ t’help.
Rusty Thanks for catching that. Here is a related story.
http://www.bbc.com/news/business-21752441
as far as power generation goes, is there a financially viable company developing anything to do with thorium?
Not that I’ve ever found. There’s no real market demand for thorium in the foreseeable future, so no real financial underpinning for thorium producers. Lightbridge is the one stock occasionally touted for their thorium reactor designs, but even they don’t use the word “thorium” in their presentations these days.
THORIUM – thorium cannot maintain a continioous nuke reaction you have to add some 233 (??) – it also requires a different type of plant – yes there is lots of it and it does its thing at a higher temp which the experts say is safer – any way it’s a few (many) years off – lightbridge is doing the research – wait and see
About Fischer-Tropsch. The process for converting coal into gasolene was first used by Hitler’s Germany because it was cut off from crude oil supplies during World War II. Then
the same process was used by Apartheid South Africa which funded and subsidized Sasol
to use the same coal bed methane process to make gasolene from local coal. So the basic politics of making oil from coal is Fascist but that is history.
Now South Africa branched out into a new variety of Fischer-Tropsch to make oil from natural gas. This too has political implications: Opec (notably Saudi Arabia and Venezuela) will not be happy. The big oil companies will not be happy. Russia, which has a hold on European imports of its natural gas from Siberian fields will not be happy.
But this neo-fascist technology makes me very happy indeed.
Does anyone here know whether those plants will produce the finished product of gasoline and diesel fuel or just the feedstock? Present refinery capacity will soon be over run by shale oil and unless crude is exported storage capacity will be filled and force shutdown of wells.
Natural gas may get a price boost as more is used to generate power. Conference in Calgary, Canada Tues to consider getting off coal for power generation in Alberta because of coal’s pollution problem.
Well, this has all been very interesting to read. I base my opinion on the science contained in the movie “Soylent Green”. At the rate we are going, food, breathable air, and drinkable water will all run out by the year 2000. I believe in clean environment for our health. Therefore, this whole argument is “moot”. Predictions of things out of our control are rarely right. Let’s clean up the environment all we can so that we don’t all have to wear masks because of the “smog alerts” like they are doing now in China. Remember the “smog days” in L.A.? If you want your grandchildren to breathe poison, let’s do nothing. If you like clean air, do something. The end of the world is coming. But, asteroids or bacteria just might beat the global warming crisis.
Clean in the environment is good. Poisons in the environment is bad. IMHO, that is what matters.
A living with what comes optimist,
Steven
Steven Well said. Who could disagree with maintaining a clean environment,,,if we make a mess,lets clean it up Actually I think the USA has a good record in doing this. As to Soylent
Green and such,,,We are all living in the future,,why does it not match all those dire predictions of the Seventies?
Fear and Greed make the world go ’round………………Follow the Dollar !!
This a headsup on where LNG is headed in spite of efforts by luddite Environazis to stop terminals being built. There is a huge world market for such as this IMHO
http://www.nytimes.com/2014/10/28/business/energy-environment/lithuania-offers-example-of-how-to-break-russias-grip-on-energy.html?partner=socialflow&smid=tw-nytimesbusiness&_r=0
I don’t know any luddite environazis but doesn’t it make sense to keep American energy products here on American soil instead of letting stockpile in China or Russia or elsewhere (leaving us in the lurch if push comes to shove)? All the fancy computerized trucks, tanks, planes, and whatnot are useless without fuel to run their engines/generators.
I know tens of millions of Luddite Environazis…. I live in California….
Musings: I watch the weather on TV and then look out the door to see if it’s raining(LOL)
I’ve heard it said that the glaciers are melting causing the oceans to rise(as high as 2 ft. now) and I go to the beach and it is still the same. I listen to climate change rhetoric and still I haven’t noticed any real change for the last 66 years. I guess I’ve just got my head in the sand. As for energy, it seems that all the solutions being worked on will be a part of the energy mix, depending on availability cost, supply and demand. And all the chicken littles of time have been selling fear to make a profit in money and/or influence.
Alan I applaud your wisdom,,,,,fear sells/makes money for the fear mongers. Would you like a weather forecasting method that is close to 60% accurate? always call for tomorrows weather to be the same as today. You are only wrong when weather changes and trends usually last a few days,,such as five days of rain followed by six sunny days then snow for two weeks. Very seldom goes rain1,sun1.rain1,sun1. I have often asked if you cannot tell tomorrows weather better than even chance why should you pay any attention to models for 20 years.
You go to the beach and it hasn’t changed? Along our coast in ma I’ve watched homes be washed away and rebuilt several times in my 50 years. You haven’t noticed a change in the weather? I remember little Easter dresses when I was a babe – this year we had 5 feet of snow at Easter. For those who believe (in what they want to believe), no evidence is necessary; for those who don’t, no evidence is enough. Let me guess, Fox “news”?
Weather has changed since the beginning of time! What makes the “Climate Change” theorists so foolish is their insistence that “this time it’s man’s fault”. What a KROC! If we had the ability to change one iota of weather we would have exploited it for crop production many times over by now. Some people will believe what they want to believe indeed!!!
I think blaming any dissenting opinion to the fake science of AL Gore and his crew capitalizing on really disproven fear tactic bad science is a bit demeaning. Smart people have debunked most of the climate change fear tactics by proving the cyclical changes that have been happening since the dawn of earth as we know it. I don’t think it a good thing for China to pollute the air but the reality is more than FOX news has chimed in including my very well known family member [who is a Democrat BTW} Said the science is so bad it is laughable, AND? The findings were proven to be faked.
FOX NEWS….for DUMB FOX !
I bet YOU believe CNN!
Deb if you want truth about the Science http://wattsupwiththat.com. It provides both sides of the issues and voted “Best Science Blog” three years running.
http://heartland.org see the 10th Annual Climate Conference” videos. It was the fourth conference I attended and very informative.
Anyone dumb enough to live on any land/water juncture especially Mass. gets what they deserve. Went to a seminar about Water/Floodplain Insurance as a result of Sandy. You seafarers are in for MAXIMUM PAIN with the new insurance rates. Most of those 50 year events were Hurricanes or significant Nor’easters. You strike me as ignorant of weather history in your region. The beach is pounded by rip tides and undercurrents that are magnified by storms. We taxpayers are done paying for your stupidity.
I think Laura has made a compelling argument, even if anecdotal, for the existence of global cooling.
If I may come back to the subject: $1.71 gasoline:
First, it’s Fischer-Tropsch, not Tropf.
Second: Sasol’s new gigantic plant in Louisiana has the sole purpose, according to company information, of “cracking” ethane, i.e. converting it to ethylene, ethanol and industrial chemicals. They state that making gasoline may be considered sometime in the future, and it would require substantial additional plant expansion and investment.
So there is no quick windfall in sight.
I want to thank you all at Stock Gumshoe for exposing SSL to us “little” investors. Todays markets seem to have worse odds than Vegas slot machines and guys like you are a huge help to us. The regular Oxford Lettter is actually pretty good & had I have followed their advice I’d have made some money but I , unfortunately, trust nobody. You guys are a breath of fresh air in this corrupt world!
Great post took me 2 days to get thru it! Phd’s scientists,Engineers,crackpots & then there is Travis, Well done to you all, lots of IMHO, lots of reference, lots of energy you guys care about this. Played like a tennis match great shots with no clear winner, started in July & still going.
So 1970 my 1968 440 Charger double pumper,3/4 cam,4 spd got > 4mpg around town something to do with spinning tires I recall. Premium gas .43/gal (.34 reg) $2.00 apiece from the guys & we cruised all weekend. Really those were the days!
Now 2014 2001 BMW 330xi auto non turbo does NOT spin tires even in snow! 19mpg in town maybe 24 on a trip. In New England premium is $3.50 on a good day. Drives like a go cart crazy good on the “twisty’s” but $75 to fill with none of the guys helping out. Reality of today.
When my grandson’s grandson gets his licence around 2058 he will probably want a Mustang GT. Ford will probably be selling them. They will have options like a heat fluctuator to replace the HVAC of today. Steering,speed,brakes will all be joystick controlled when not automated or voice activated. Key access will probably be a chip inserted under the skin on the back of your hand. It will cost 59.000 WC (world coins, mashup dollar/euro/yen) It will get 66mpg in town (govt rec) 105mpg on trips (highways will have magnetic unidrive using -0- fuel) It will not have a 5.0 engine more like .02 thorin/turbine/elec drive. You would not fill it just restock the required elements maybe once or twice a year.
All this tech beyond tech would obviously carry over to trucks,ships,power plants,etc. Great HUH? Also by this time the jury will be in on the climate (not weather, I liked that). My wise investment choices of today would pay for great grandson’s car & life if I pay attention to Travis. Mostly because I bought 4 shares of SSL ($47.50) every month. Isn’t that what this is all about? When I first found Travis 2009 I think, I liked that he was from New England, didn’t sell out to the warm weather nor did he promise untold riches. He only promised honest research with imput from the “mighty mighty thinkolator”. So fight all you want boys it’s just that nobody “wins” . Pick a stock or 2 & make some money because if you guys have been at this since July and not invested….. what are you doing here?
” Too soon we get to old too late we get to smart” My Norweigen aunt Dora used to say that.
Some day the earth will crumble under Saudi Arabia. The Keystone will be built,(money here guys) & dry up. The earth cannot produce hydrocarbons any where near the rate we use(waste) them. The GTL Fischer-Tropsch formula will probably help us to what’s next. So as the Phd’s think, the engineer’s calculate, the crackpots pontificate, the future will happen… then you guys can start a new blog!
FYI no degree, no infield experience, no um… curriculum vitae, but I do make money in the market!
Thanks Travis
Andrew
Andrew I’d rather understand the Chemistry. Wikipedia has an adequate explanation of the Fischer-Tropsch Process including the History and the Players since the late 30s. There are operating FT plants and have been since the 50s. The FT Process is best applied to what is designated as “STRANDED GAS”, inaccessible to transportation or major pipelines.
The great thing about Organic Chemistry is that having the appropriate feedstock you can synthesize just about anything, saturated, unsaturated compounds, alcohols. etc.
With the proper catalyst, reactor temperature and pressure you can make any liquid fuel you want—–but making the numbers work that’s another matter.
All these new processes need MAJOR INFASTRUCTURE to make them work and lead times that span DECADES.
I conversed with a Legislator from NORTH DAKOTA at the Climate Conference I attended in June. He stated that the shale oil they are extracting from the BAKKEN DEPOSIT is able to be used as DIESEL FUEL without REFINING. Compete with that.
By the way I make money in the market as well, but I don’t chase these “pipe dreams” with my winnings.
2 HOURS to get through the post. Do you use braille? Or had to find someone to tees it to you.
You might be making some money like some of these sensationalists are: Front running their flawed recommendations. If you act FAST, DON’T do your homework, then sometimes you can profit because you’re the first sucker in, and make money off later suckers.
I’ve often wonder why done of these “miracle investment” methods get sold too. The reason is that some opportunities will get “arbitraged away” if they become general knowledge, OTHERS will make more money with more participants. The latter, you sell to as many people as possible, then if it really is a good idea, and will do better if more people believe, then maybe it can be win/win. I bet other than blatant front running, this usually isn’t the car l case.
Yvonne – this is a reply to your comment, 27 comments down in main comment 7 [ it’s a convoluted thread š ]: Wish we had a “Super Like” button. You deserve two clicks on it.!.
Since we don’t: Right on! I could not have said it any better. When I have tried, I usually carried it a few steps farther – What created God? What created that? What created that … ad infinitum. Occam’a razor to the rescue!
I’m glad you are here. Keep commenting.
Occams Razor? NOT with “Likes”! There should be 1 to 11 “Like” buttons, but having just one with a field next to it, where the rater can put in a number WOULD be simpler. From 1 to 10? NO! 1 to 11. It’s just like a 1 to 10 scale, and 11 is like “OMG I wish this went higher than 10!” Simple. Maybe 1 to 6 would be OK. Courser resolution though.
That God thing keeps me up at night!
Oct 24, 2014 article in Hydrocarbon Processing shows that the Sasol GTL project is still a “maybe”, subject to their ethylene cracker economics at adjacent site as well as accurate GTL planning estimates going forward. Big capital projects require much planning, analysis, estimating and sometimes retreat (when the economics change). In addition, the GTL process normally produces low-sulfur diesel, not gasoline. That would require further processing (and cap investment). So the hype of the initial Oxford Resource Explorer is overboard. It will be years before any start-up occurs, and that’s only if the project gets a GO in 2015.
Corrections to above: ……subject to their ETHANE cracker…
…….. gets a GO in early 2016.
This is such a poorly pitched and bad investment opportunity with misleading facts and wilful ignorance of the realities of the energy markets. It’s sad to see companies targeting the gullible with misinformation and unsubstantiated “facts”. Gas to Liquids is nothing new and in fact several Oil Majors have invested heavily in Gas to Liquid (GTL) projects. Shell’s Pearl plant in Qatar is currently the biggest in the world. There are several glaring issues with this “opportunity” aimed at just pushing subscriptions:
– There is no CO2 savings. The energy required to compress the natural gas means there is little to no carbon emission savings.
– GTL has a much lower energy content. This means you need more of it to get the same MPG as Gasoline from Oil. If you price it on energy content it is not cheaper. It also is much less effective in cold weather as the cold flow properties are quite poor.
– It has been available for years and companies have been unable to find a large enough market for it meaning there is already more than enough to go around. There is simply no demand for GTL.
– The US has an over abundance of gasoline and has currently become a net exporter while enjoying some of the lowest consumer fuel prices in years. This on its own makes the profitability of any new projects very unlikely.
Yes GTL is a clean and cheap synthesized fuel which will play it’s part but is being well explored and is nothing new and is certainly not the “bullet train” this pitch claims it to be. If this is the best investor advice you can get I would give this newsletter a miss and stick with the Sunday comics…
“GTL has a much lower energy content.”
GTL is a process. The products produced by that process have whatever energy content the laws of physics and chemistry decree. If GTL is producing “gasoline” then it will have the same energy content that any “gasoline” has. If it produces “ethanol” then it will have the same energy content that any “ethanol” has. You are likely thinking of the energy-compromised product currently mandated by the Feds here in the USA; which is a mixture of gasoline and ethanol. The resulting mashup has lower energy content because ethanol has significantly lower energy per unit than gasoline. To put it bluntly, 1.5 gallons of ethanol are required to produce the same energy as one gallon of gasoline. And, ethanol is more corrosive so the entire fuel system has to be re-designed to use E-series gasoline. Using it in older engines is not advised. In larger metropolitan areas, one can still obtain 100% gasoline for older engines. Elsewhere … well … it’s your problem.
Sure, if course if it’s “just like gasoline” it had the same energy content. Any energy differences to make it from Natural Gas vs Crude would be reflected in the price.
Has Ethanol done anything positive for us? With 33% less energy content, it sounds like 10% Ethanol, saves about 7% of gasoline per gallon. What are the costs due to corrosion, and redesigns? And how much does the Ethanol cost to make? As long as it’s domestically produced, I’d rather see the farmers get that money than OPEC.
OPEC is a fractured cartel, in a market with at least a temporary growth in total oil supply, AND increased usage of other sources of energy. AND THEY ARE ADDICTED TO THEIR OIL REVENUE. Saudi Arabia keeps radical Islam at bay by bribing their citizens with oil money proceeds. At recent levels (10/16/16) they are in fiscal trouble. As is Russia, and even Iran. In a “fractured cartel” cheating is inevitable. To reduce supply means to buy production, this reduce revenue to hopefully be more than made up for as prices rise. But if you are in fiscal trouble already, cutting production is like being the first seal to jump in the water that may be tasking with sharks. If your fellow cartel members font follow your lead, you could get eaten!