Syntroleum Successfully Tests Kansas Gas Well

Syntroleum Corporation has successfully tested its first gas well as part of its previously announced low-Btu gas initiative. has successfully tested its first gas well as part of its previously announced low-Btu gas initiative. Under the initiative, Syntroleum will drill and produce natural gas in the U.S. that was previously bypassed or under-produced due to high inert content. This domestic natural gas business parallels the international gas-to-liquids (GTL) business, both of which focus on stranded gas. GTL technology converts gas-to-liquid diesel fuel whereas this domestic business simply removes inerts resulting in pipeline quality natural gas.

"This well is the first step in the execution of our strategy to develop domestic stranded gas. This strategy fits very well within our overall corporate goal to use new technology to monetize stranded gas," said Syntroleum President and Chief Operating Officer, Jack Holmes. "The results of this well have exceeded our expectations for deliverability in this area." Syntroleum logged and tested gas in the company-operated 1-1 Colberg 19-9 well in Rice County, Kansas. The productive interval at a depth of 2,459 feet flowed at rates between 1.2 and 2.3 million cubic feet of gas per day with approximately 40 percent nitrogen. The experience in the area is that these wells will see an exponential decline in gas rate in the first year and then stabilize at a lower rate for longer periods. The tested reservoir is the deepest of three gas-bearing target reservoirs that will be tested in this well. This was the first well to be tested of four wells drilled and cased during August and September of 2004. The results of subsequent well tests will be reported as they are completed.

Syntroleum has leased over 64,000 acres with 100 percent working interest and over 85 percent net revenue interest in Rice, Reno, Stafford, and Ellsworth counties in central Kansas. Within the outline of this acreage more than 50 wells have been drilled since the 1960's, that tested natural gas with high nitrogen content. Based on the current geologic and engineering data, the company plans to develop this acreage on 160 acre spacing. The ultimate development plan could be modified based on the results of subsequent drilling. The key to monetizing this gas is to remove the nitrogen or other inerts using one or more technologies to achieve pipeline quality. Over the past two years Syntroleum has evaluated numerous nitrogen and CO2 removal technologies for lower rate gas wells. The first plant has been ordered and is expected to be delivered and operational early next year. "We expect to be drilling gas wells out here for several years. With the current demand for natural gas it is a good time to own U.S. domestic reserves," said Holmes.

Syntroleum Corporation is the developer of a proprietary technology for converting natural gas into synthetic liquid hydrocarbons. The company, in participation with others, plans to build GTL plants using its technology in a number of global locations. Syntroleum also licenses its process to others for the manufacture of fuels. Domestically, Syntroleum is developing a business utilizing new technology to remove inert gases from previously uneconomic accumulations of natural gas.

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