Syntroleum, Tessag Sign EPC Contract for Sweetwater Gas-to-Liquids Project; Plant Capacity Increased to 11,500 Barrels per Day

    TULSA, Okla., Sept. 4 Syntroleum Corporation announced today that its Syntroleum
Sweetwater Operations Ltd. (SSOL) subsidiary has completed an agreement for
the engineering, procurement and construction (EPC) of its Sweetwater
gas-to-liquids (GTL) plant with the German engineering firm of Tessag
Industrie Anlagen GmbH.  Tessag is a member of the RWE group of companies
(Frankfurt, Germany: RWE).
    The plant, which will be located on the Burrup Peninsula in Western
Australia, will employ the proprietary Syntroleum Process to convert natural
gas into ultra-clean, high-performance and sulfur-free synthetic specialty
products such as lubricants, industrial fluids and paraffins, as well as
synthetic transportation fuels.  The EPC contract covers engineering,
procurement, construction, pre-commissioning, commissioning and testing of the
plant, plus personnel training for a price of $599.5 million.  The plant's
operating capacity has increased from 10,000 to 11,500 nominal barrels-per-day
as a result of pilot plant tests demonstrating higher conversion rates than
those included in the original design basis.  The price is an increase from
Tessag's February 2001 quote of $506 million, primarily as a result of an
increase of $35 million for Tessag's contingency and margin (now totaling more
than $100 million), higher costs associated with additional product upgrading
facilities, expanded operating parameters for the autothermal reformers (ATRs)
and Fischer-Tropsch (F-T) reactors, higher labor costs due to wage-rate
inflation in the Western Australia region and changes in foreign currency
exchange rates.
    "This is one of the last major milestones needed for the Sweetwater
project to go to financing," stated Mark Agee, Syntroleum president and chief
operating officer.  "The per-barrel cost of this project is more than we
anticipate for subsequent specialty plants, since this is our first commercial
plant and it must bear substantial additional costs associated with the
performance guarantees necessary to obtain non-recourse financing.  However,
the economics are still sound.  Based upon the increased capacity, third-party
product price forecasts and our current estimates of owner's costs, our
economic model indicates over $100 million after-tax cash flow per year."
    The EPC price is subject to escalation if Syntroleum fails to provide
Tessag notice to proceed by October 31, 2001.  The final price may also vary
up or down with exchange rates until financial close on the project, when the
price will be fixed in US dollars.  This amount does not include interest
during construction and other owner's costs, which include proprietary
catalysts to be supplied by Syntroleum.  These costs are yet to be finalized,
but could represent a substantial portion of the total plant costs.
    The EPC contract includes substantial plant performance guarantees for
throughput (minimum 10,000 barrels per day), product quality, product yield,
gas consumption, emissions and completion schedule.  The contract provides for
a schedule of 35 months to mechanical completion of the plant with financial
incentives for achievement of successful startup and provisional acceptance by
the company within five months after mechanical completion.   To date, SSOL
has completed more than 100 contract and project documents necessary to obtain
financial close.  The only significant project-related contracts outstanding
are for site lease, water supply and transportation of natural gas and
finished products, all of which are currently in final negotiation.
    The completion of the EPC contract enables Syntroleum to proceed with
efforts to secure financing for the project.  Syntroleum has retained Merrill
Lynch to assist in completing the project financing.
    "It is important to note that the cost of the Sweetwater project cannot be
used to project the cost of a synthetic fuels plant based on Syntroleum
technology," Agee went on to say.  "Current studies estimate that a synthetic
fuels plant of comparable size, based upon Syntroleum moving bed technology,
could be built for approximately $25,000 per barrel of daily capacity, or
approximately $288 million, for an 11,500 barrel per day facility.  As plant
size increases, the cost per barrel of daily capacity decreases due to
economies of scale."
    Syntroleum Corporation is the developer of a proprietary technology for
converting natural gas into synthetic liquid hydrocarbons.  The company, in
partnership with others, plans to build GTL plants using its technology in a
number of global locations, Sweetwater being the first.  Additionally,
Syntroleum licenses its process to oil companies for the manufacture of fuels.
Current licensees include ARCO (now BP), Enron, Ivanhoe Energy, Kerr-McGee,
Marathon, Repsol-YPF, Texaco and the Commonwealth of Australia.
    This document includes forward-looking statements as well as historical
information.  Forward-looking statements include, but are not limited to,
statements relating to the cost, schedule, financing and other aspects of the
Sweetwater project, as well as statements relating to the testing,
certification, characteristics and use of synthetic fuels and alternative
fuels, the Syntroleum Process and related technologies and products, GTL
plants based on the Syntroleum Process (including the development of planned
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), construction
risks, risks associated with investments and operations in foreign countries,
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.

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