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Syntroleum and Linc Energy Plan to Integrate Air-Based Fischer-Tropsch Technology with Underground Coal Gasification

TULSA, Okla., Aug 15, 2005 (BUSINESS WIRE) -- Syntroleum Corporation (Nasdaq:SYNM) announced that it has signed a memorandum of agreement (MOA) with Australian-based Linc Energy to pursue the development of a coal-to-liquids (CTL) project using the Syntroleum(R) Process in Queensland, Australia.

The agreement, which integrates Syntroleum's unique air-based Fischer-Tropsch (FT) technology with Linc Energy's underground coal gasification (UCG) expertise, is part of Linc Energy's ongoing Chinchilla Project which also includes early development of an integrated a power plant.

The MOA sets the terms of cooperation on the Chinchilla Project and future UCG-CTL projects will be pursued by Linc Energy under a CTL license from Syntroleum with options for Syntroleum's equity participation in these projects. Under the MOA, Linc Energy and Syntroleum will jointly fund a series of technology demonstration programs in advance of developing engineering designs for the CTL projects.

"Linc Energy has effectively demonstrated its UCG process at the Chinchilla facility for several years. Linc's underground gasification process has the potential to significantly reduce the capital cost of the CTL plants. They have produced commercial volumes of nitrogen-diluted syngas which we believe have the characteristics uniquely suitable for Syntroleum's air-based FT process," said Ken Roberts, senior vice-president of business development at Syntroleum. "We expect that Linc will continue to make rapid progress at their Chinchilla site. As the demonstration of integrating our technology with Linc's process occurs, Syntroleum is pleased to have the option to join with Linc as an equity participant in the Chinchilla Project. We are in a unique position to work with Linc to capitalize on vast coal resources in Australia and other parts of the world."

The UCG process utilized at the Chinchilla facility is similar to commercial techniques used in Russia for over 30 years. It involves injecting air and steam into an underground coal seam through a series of boreholes and igniting the coal in-situ. The coal seam is gasified and hot product gas containing the key feedstock for power generation or FT synthesis (hydrogen and carbon monoxide, or synthesis gas), is produced via a second series of boreholes.

The UCG syngas, which undergoes sulfur removal and additional conditioning at the surface, is similar to syngas obtained from conventional surface coal gasification systems, but production is achieved at a much lower cost. Underground sequestration of carbon dioxide (CO2) is often an important component of commercial designs. The coal-derived syngas is burned in gas turbines to produce power or is used as feedstock for FT reactors and refining processes to make ultra-clean diesel fuel.

The first commercial phase of the Chinchilla Project, which Linc Energy plans for next year, involves installation of a 30-40 MW power plant which will provide electricity to local markets. The second commercial phase of the Chinchilla Project, which plans for a 17,000 barrel per day Syntroleum CTL plant and power plant expansion, will be developed over the next several years.

Linc Energy currently holds over 4 billion tons of coal reserves in Queensland, Australia and intends to develop multiple worldwide CTL projects utilizing its proven UCG technology and expertise integrated with the Syntroleum(R) Process.

"We are pleased to be working with Syntroleum on this emerging UCG-CTL industry. The advancements they have made with the proven technology at their Catoosa Demonstration Facility complement the accomplishments we have made at our Chinchilla facility, setting the stage for successful integration of our two technologies," said Peter Bond, managing director of Linc Energy. "Demonstration of this concept will provide a roadmap for converting Australia's vast coal reserves into ultra-clean fuels."

Syntroleum Corporation (Nasdaq:SYNM) owns a proprietary GTL process for converting natural gas as well as other materials like coal and petroleum coke into liquid hydrocarbons. The company plans to use its technology, as well as others, to develop and participate in gas-to-liquids and coal-to-liquids projects in a number of global locations. For more information about Syntroleum, visit www.syntroleum.com.

For more information about Linc Energy, visit www.lincenergy.com.au.

This document includes forward-looking statements as well as historical information. Forward-looking statements include, but are not limited to, statements relating to the impact of the energy bill on Syntroleum and the coal-to-liquids industry, the testing, certification, characteristics and use of synthetic fuels and alternative fuels, the Syntroleum Process and related technologies and products, GTL or coal-to-liquids plants using the Syntroleum Process, government support for the construction and operation of such plants, the economic use of such plants and the continued development of the Syntroleum Process. When used in this document, the words "anticipate," "believe," "estimate," "expect," "intent," "may," "project," "plan" "should," and similar expressions are intended to be among the statements that identify forward-looking statements. Although Syntroleum believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that commercial-scale GTL plants will not achieve the same results as those demonstrated on a laboratory or pilot basis or that such plants will experience technological and mechanical problems, the potential that improvements to the Syntroleum Process currently under development may not be successful, the impact on plant economics of operating conditions (including energy prices and government support for such plants), construction risks, risks associated with investments and operations of GTL and coal-to-liquids plants, the ability to implement corporate strategies, competition, intellectual property risks, Syntroleum's ability to obtain financing and other risks described in the company's filings with the Securities and Exchange Commission.

(R) "Syntroleum" is registered as a trademark and service mark in the U.S. Patent and Trademark Office

SOURCE: Syntroleum Corporation

Syntroleum Corporation, Tulsa
Mel Scott, 918-592-7900
mscott@syntroleum.com

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