Ivanhoe Energy (Middle East) Inc., a subsidiary of Ivanhoe Energy Inc., and Egyptian Natural Gas Holding Company (EGAS), the state organization charged with the management of Egypt's natural gas resources, have signed a memorandum of understanding for Ivanhoe Energy to prepare a feasibility study to construct and operate a gas-to-liquids (GTL) plant that would convert natural gas to ultra-clean liquid fuels in Egypt.
EGAS has agreed to commit up to 4.2 trillion cubic feet (tcf) of natural gas, or approximately 600 million cubic feet (MMcf) per day for the anticipated 20-year operating life of the proposed project, if the study indicates that a GTL project is economically feasible.
"This commitment of natural gas to a project is a significant step toward the potential development of a GTL plant in Egypt," said Leon Daniel, Ivanhoe Energy's President and Chief Executive Officer. "This agreement advances our discussions related to GTL opportunities in Egypt, which have been ongoing for a number of years."
Ivanhoe Energy has commenced the engineering design of a GTL plant to incorporate the latest advances in the GTL technology. Ivanhoe Energy also is in the process of obtaining an updated market analysis for GTL products to reflect changes since the original evaluation was completed several years ago. Plant capacity options of 45,000 and 90,000 barrels per day will be evaluated. If the feasibility study indicates that a GTL plant is economically viable the parties will enter into negotiations for a definitive agreement for the development of a project.
Ivanhoe Energy holds a master unlimited-volume license for the proprietary GTL technology owned by Syntroleum Corporation. The technology is used to monetize stranded natural gas deposits by converting natural gas into ultra-clean liquid synthetic fuels. GTL liquid products, ultra-clean diesel and naphtha fuels, attract a premium price over today's low-sulphur fuels. Low-sulphur diesel currently is trading at a spot price of over US$80 per barrel on world markets