Shares jumped nearly 9% in mid-afternoon trading Monday after Syntroleum Corporation announced that its renewable fuel joint-venture Dynamic Fuels, in partnership with Solazyme Inc., has been awarded a major renewable fuel contract with the U.S Navy.
Under the contract's terms, Dynamic Fuels will deliver the Navy a total of 450,000 gallons of fuel produced at its biofuel production plant in Geismar, Louisiana -- the largest single purchase of biofuel in U.S. history.
The fuel will be manufactured using both used cooking oil and Solazyme's algae-based oil as feedstock. Dynamic Fuels will supply the Navy with 100,000 gallons of jet fuel (Hydro-treated Renewable JP- 5 or HRJ-5) and 350,000 gallons of marine distillate fuel (Hydro-Treated Renewable F-76 or HRD-76).
For the Navy, this contract will play a significant role in achieving its ambitious goal to source half of its total energy consumption for ships, aircraft, tanks, vehicles and shore installations from alternative sources by 2020. Specifically, this biofuel order will help the Navy hit its target to launch a Green Strike Group composed exclusively of nuclear vessels and ships powered by biofuel by 2012.
The target, which was set forth as part of an agreement signed with the United States Department of Agriculture in January 2010, is just Green Strike Group's demonstration phase. By 2016 the Navy intends to sail the Green Strike Group as a Great Green Fleet - composed of nuclear ships, surface combatants equipped with hybrid electric alternative power systems running on biofuel, and aircraft running on biofuel.
After a seemingly rocky start for Dynamic Fuels, the company is picking up momentum. In October 2010 it began producing biofuel at its $170 million commercial plant, which the company claims is the largest in the nation.
Beyond the U.S. Navy, Dynamic Fuels also has another branch of the military on its supply list-- the United States Air Force Reseach Laboratory. And, in September 2011, commercial airline KLM Royal Dutch Airlines began using biofuel supplied by Dynamic Fuels for flights between Amsterdam and Paris.
Dynamic Fuels Management Committee director Jeff Bigger sees the contract as confirmation of his company's momentum saying, “We’ve previously provided the U.S. military with fuel for testing. We believe this contract confirms they recognize the performance and environmental advantages of our fuel since they’re coming back for more and are asking for a much larger volume.”
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