September 12, 2012
A major U.S. airline is on the verge of signing an agreement for more than 20 million gallons a year of synthetic jet fuel made from natural gas.
“It could be two weeks; we had hoped to announce it here [at the ILA Berlin Air Show], but we are still dotting some I’s and crossing some T’s,” said George Boyajian, VP for business development at Primus Green Energy, based in Hillsborough, NJ.
The deal will break new ground in several areas, not least the volume of fuel involved. It calls for the airline to take all the pricing risk upfront on 10 or 20 years-worth of natural gas, as well as all the synthetic jet fuel production, essentially locking in its fuel price for the next two decades.
“Locking in U.S. natural gas prices now for the next 10 years will be the equivalent of $70 a barrel for crude oil,” said Boyajian. Natural gas is abundant in the U.S.— the country is a net exporter — and reserves are estimated at 200 years, he added.
Once the airline has signed the deal, Primus will arrange project financing for a $200 million refinery, probably to be sited in Louisiana. Plans call for groundbreaking next year, and production in 2015.
Meanwhile, Primus will complete a demonstration plant for its catalytic process early next year, and will work toward certifying its method of making synthetic fuel which, he allowed, could take up to three years.
Primus, he said, has been using the same process with different catalysts for making synthetic 93-octane gasoline from natural gas, and the refinery could be run profitably doing just that until the synthetic jet fuel is certified.