From Natural Gas To Auto Fuel In One Easy Step

The bowels of the earth hold enough recoverable natural gas to make 500 billion barrels of synthetic crude oil. Unfortunately, many of the reservoirs are located in such isolated corners of the globe that it is prohibitively expensive to harvest and transport the gas. But a technology that cheaply and efficiently converts natural gas into liquid fuel means such huge reserves can now be tapped. Australia, an oil-poor, gas-rich country, is so enamored that it plans to build a 10,000 barrel-a-day processing plant--the technology's biggest test yet.

The conversion process, which was developed by Tulsa-based Syntroleum Corp., is relatively simple. Engineers mix natural-gas molecules and air in a reactor, add a catalyst and a little energy, and voila! Out comes a colorless liquid fuel. The process is cheap, too: A barrel costs about $21 to produce--roughly the same as for crude oil.

Syntroleum also claims that its synthetic fuel is good for the environment. Because it is sulfur-free, it doesn't generate the gritty, black soot associated with gasoline. That will appeal to companies looking for low-sulfur fuels as emission standards tighten. In five years drivers might be tanking up on Syntroleum's alternative.

Before it's here, it's on the Bloomberg Terminal.