Latest / Kitco MINING / Aviation Fuel Crisis Drives Syntholene Push | Dan Sutton

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Aviation Fuel Crisis Drives Syntholene Push | Dan Sutton · Kitco MINING

• 0:06
  SPEAKER_00: Welcome to Kitco Mining.
• 0:07
  SPEAKER_00: Now we often talk about the resources needed for the energy transition, but there's also an immediate vulnerability sitting right in front of us right now.
• 0:15
  SPEAKER_00: Commercial aviation and global jet fuel supplies are tightening rapidly.
• 0:20
  SPEAKER_00: U.S.
• 0:20
  SPEAKER_00: prices have surged past$4 a gallon, and major carriers like Luftanza are cutting tens of thousands of flights.
• 0:26
  SPEAKER_00: Even this morning, a new headline, Chevron CEO, just saying that this squeeze will only get worse when it comes to the kerosene problem.
• 0:34
  SPEAKER_00: Now the airline industry desperately rather needed an alternative, but early biofuels are usually too costly, they're hard to scale.
• 0:41
  SPEAKER_00: And today we're looking at a company treating synthetic fuel as a resource extraction and infrastructure play.
• 0:46
  SPEAKER_00: Joining me is Dan Sutton, CEO of Sinteline Energy.
• 0:49
  SPEAKER_00: Welcome back to the program, Dan.
• 0:51
  SPEAKER_00: Thanks so much, Jeremy.
• 0:52
  SPEAKER_00: Always a pleasure to be with you.
• 0:54
  SPEAKER_00: And you.
• 0:54
  SPEAKER_00: And you know, it's I find it an interesting timing.
• 0:56
  SPEAKER_00: My my family and I, my wife and I, and our baby just came back from Europe.
• 1:00
  SPEAKER_00: There was a minute there where we are worried about this Lufthansa strike, and then you add on the fuel issue that's happening right now.
• 1:08
  SPEAKER_00: And just today, I mean, we have Chevron CL warning of those tightening supplies, major airlines continuing to cut thousands of flights uh to manage fuel costs and low inventories, frankly.
• 1:19
  SPEAKER_00: Uh, how structurally exposed is the commercial aviation sector to these legacy fuel networks right now?
• 1:26
  SPEAKER_01: I would say 100% exposed.
• 1:28
  SPEAKER_01: Aviation fuel is often the canary in the coal mine when it comes to supply chain constraints, conflict, or complexity uh when it comes to fossil-based feedstocks for end fuel products.
• 1:39
  SPEAKER_01: And there really is no alternative.
• 1:42
  SPEAKER_01: Aviation in particular, but not alone, also marine shipping, train transport, a diversity of sectors that demand a huge volume of liquid fuel.
• 1:51
  SPEAKER_01: There's just not a lot of alternatives.
• 1:53
  SPEAKER_01: We're calling them hard-to-abate sectors.
• 1:55
  SPEAKER_01: If you want to fly a plane across the Atlantic in a matter of hours and not days, you're obligated to use high energy density liquid hydrocarbon fuel, kerosene, jet A1.
• 2:06
  SPEAKER_01: And today there's no other way to make it except with fossil fuels.
• 2:10
  SPEAKER_01: Sinthelene is something to solve that problem.
• 2:13
  SPEAKER_00: Yeah, yeah.
• 2:14
  SPEAKER_00: To your point, I mean the market has heard so many times the green fuel pitch before, but it but it usually falls apart on unit economics.
• 2:22
  SPEAKER_00: But uh why has the industry consistently kind of failed to reach cost parity with fossil fuels up to this point?
• 2:30
  SPEAKER_01: I think it's a core, two core drivers are contributing to this.
• 2:34
  SPEAKER_01: When we look at bio-based biofuels as an alternative for fossil kerosene, this chemistry is really well understood, but the limitations come in the feedstock availability.
• 2:44
  SPEAKER_01: We're already running up to the physical limitations of things like corn oil for ethanol, soybean oil, or waste feedstocks.
• 2:52
  SPEAKER_01: And those often truck times trade coincident with food prices.
• 2:57
  SPEAKER_01: So what we see is the more fuel that one needs to make with bio-based feedstocks, the more expensive those feedstocks become.
• 3:04
  SPEAKER_01: They've never demonstrated their capability to get to cost competitiveness with fossil fuels.
• 3:09
  SPEAKER_01: And so this other alternative, which has become more popular in recent decades, is synthetic fuel or e-fuel.
• 3:16
  SPEAKER_01: This uses the abundant feedstocks of hydrogen and carbon, but what's been limiting in the cost capabilities over the course of the last few years is that the energy sources that are used to make this fuel, you require a huge amount of energy, and that fuel has been reliant on intermittent renewable resources to generate electricity.
• 3:37
  SPEAKER_01: What synthetine does different is we use geothermal power, which is base load.
• 3:42
  SPEAKER_01: It has a low intermittency factor, and we not only use the electricity, but we also use the heat.
• 3:48
  SPEAKER_01: In our thermal hybrid production process, we can net reduce the amount of electricity that we need and reduce the cost and variability of that electricity, which is the core driver of our cost competitiveness.
• 4:00
  SPEAKER_00: Yeah, yeah, makes sense, especially with some of these cost spikes.
• 4:02
  SPEAKER_00: Now, and you know, this brings us to your actual operations, as you just mentioned, because for our KICCO mining audience who understands, you know, the complexities of resource development and energy intensity, your approach in Iceland is is is highly relevant here.
• 4:16
  SPEAKER_00: I mean, you you recently secured that site lease, and you even have that new construction permit at the historic, I'll get you to say it, Dan, but is it uh Hussevik power station?
• 4:26
  SPEAKER_00: That's exactly right.
• 4:27
  SPEAKER_00: Yeah.
• 4:28
  SPEAKER_00: Yes.
• 4:29
  SPEAKER_01: Cynthia last week spoke.
• 4:32
  SPEAKER_00: Sorry, I mean, you're you're you're that that alone is you know that bypass, right?
• 4:37
  SPEAKER_00: I mean, a massive electrical cost by plugging into that high uh geothermal heat.
• 4:41
  SPEAKER_00: Uh, just explain a little bit to the audience and and walk us through how that that thermal integration works and what it means for your CapEx.
• 4:51
  SPEAKER_01: So, first and foremost, this thermal integration strategy has been demonstrated at a prototype scale.
• 4:56
  SPEAKER_01: At the Idaho National Lab going back into the mid-2010s and even on into 2022, they used a simulated heat source in a lab environment to show that the use of integrated heat can reduce the cost of hydrogen production, hydrogen being the key feedstock to synthetic fuels, about 70% and into a range where we can imagine the industrial scale-up delivering cost competitiveness with fossil fuels.
• 5:22
  SPEAKER_01: Simply in fact, we're taking this a step further.
• 5:25
  SPEAKER_01: We're actively in construction on the world's first geothermally integrated solid oxide electrolyzer cell.
• 5:32
  SPEAKER_01: This is kind of the key piece of technology which allows us to feed not just electricity, but also heat into our system and attack those cost competitiveness and ultimately, hopefully, cost competitiveness with fossil fuel.
• 5:46
  SPEAKER_01: So in Iceland, we have an unusual abundance of geothermal power.
• 5:51
  SPEAKER_01: Iceland is essentially a large volcano on the mid-Atlantic ridge, and the known and explored geothermal resources provide this massive scaling opportunity for industrial users of not just geothermally generated electricity, but also geothermal heat.
• 6:08
  SPEAKER_01: And so combine that with Iceland's incentives towards producing more hydrocarbon fuel in country by Iceland for Iceland, especially for their aviation sector, anchored by customers like Iceland there.
• 6:21
  SPEAKER_01: And I think we've got a perfect storm of different factors that will allow us to take the results of this demonstration facility, validate them with third parties, and hopefully show that Iceland can be the future home of low-cost e-fuels for decades to come.
• 6:36
  SPEAKER_00: Yeah, it's a fascinating story.
• 6:38
  SPEAKER_00: I mean, let's talk about the end product.
• 6:40
  SPEAKER_00: As I said, just watching the amount, but just being in Europe, watching the sheer volume of commercial flights taken off, the scale of the fuel required is, you know, staggering.
• 6:49
  SPEAKER_00: I mean, airlines clear clearly don't have the time or capital to kind of rebuild their fleets just to accommodate new fuel type.
• 6:56
  SPEAKER_00: Uh, you're engineering what you call ESAF.
• 6:58
  SPEAKER_00: I mean, it's kind of that pure molecular kerosene that you're you're talking about.
• 7:02
  SPEAKER_00: Explain to our audience why a true kind of drop-in fuel requiring absolutely zero modifications to those airline or those aircraft engines, or I guess even the airport pipeline that's fueling them, is the only realistic way this industry scales.
• 7:19
  SPEAKER_01: I think it's very difficult to imagine a different pathway for these super high energy density demands, such as jet aviation.
• 7:28
  SPEAKER_01: Electrification doesn't really work.
• 7:30
  SPEAKER_01: The thermodynamics of how heavy batteries are and how much thrust and energy density is necessary just hasn't really demonstrated itself in our current understanding of physics.
• 7:40
  SPEAKER_01: And so being able to use liquid hydrocarbon fuels is the only way we really understand right now how to get the amount of thrust and the amount of flight time in uh in an airline and in an aviation context.
• 7:55
  SPEAKER_01: So the cool thing about synthetic kerosene, synthetic Jet A1, synthetic liquid fuel in general, is it is a similar output to what you get from fossil-based hydrocarbons.
• 8:06
  SPEAKER_01: The difference is with a fossil-based hydrocarbon fuel, you refine down from crude oil feedstocks, you get a fraction of a diversity of different fuel types, some diesel, some gasoline, some kerosene.
• 8:18
  SPEAKER_01: But with a synthetic model, we actually design the molecules that we want from the ground up.
• 8:24
  SPEAKER_01: And so we can take hydrogen and carbon, we synthesize them in long-understood, substantially industrially mature fuel synthesis reactors.
• 8:34
  SPEAKER_01: And what we're left with is C9 to C16, the exact hydrocarbon chains that we're looking for that deliver that energy density, that thrust.
• 8:44
  SPEAKER_01: And not only are they drop-in substitutable to airline turbines, motors, engines, any consumer of synth of liquid hydrocarbons today, but they're also compatible with existing tankers and pipelines.
• 8:57
  SPEAKER_01: And we've got 150 years worth of many trillions of dollars worth of petroleum infrastructure with synthetic hydrocarbons, we can consider how to keep utilizing that for decades and maybe centuries to come.
• 9:10
  SPEAKER_00: Yeah, I guess, you know, since you and I spoke last time, really is game time.
• 9:15
  SPEAKER_00: I mean, you know, you got that construction permit, it's underway.
• 9:17
  SPEAKER_00: You're talking about kind of targeting end of year to have something on the ground there.
• 9:22
  SPEAKER_00: Uh, you also secured an expression of interest from Icelandair for about 250 million liters over a decade.
• 9:27
  SPEAKER_00: I mean, how critical is it to lock in that offtake demand before you fully scale, you know, the commercial facility?
• 9:35
  SPEAKER_01: Really important.
• 9:36
  SPEAKER_01: And for Sinfiline and firms like it, it's actually an essential part of the project finance process to lock in bankable take or pay off-take agreements forward-selling our fuel production well before we ever get shovels in the ground.
• 9:49
  SPEAKER_01: Now, Iceland Air is interesting.
• 9:51
  SPEAKER_01: They're a fantastic customer, they're a regional customer.
• 9:54
  SPEAKER_01: They also underpin Iceland's now massive tourism industry and have grown their airlines so substantially over the last 20 years.
• 10:02
  SPEAKER_01: I understand they're one of the fastest growth airlines in the world, and that trend continues.
• 10:06
  SPEAKER_01: But they're also a relatively small airline.
• 10:08
  SPEAKER_01: And so as we enter into discussions with other airlines, airline groups, oil and gas traders, and oil and gas super majors, the conversations have been uniform.
• 10:19
  SPEAKER_01: Everybody is looking for more of this fuel.
• 10:21
  SPEAKER_01: Everybody is looking for a cost-competitive variant that allows us to scale industrially.
• 10:27
  SPEAKER_01: And so I think we couldn't be in a better time and a better place in history.
• 10:31
  SPEAKER_01: We know we need this fuel.
• 10:32
  SPEAKER_01: Our customers know that they need this fuel, and we have the advantage of being able to lock in these long-term supply agreements before we have to take the risk on CapEx and construction capital for incrementally larger commercial scale production.
• 10:46
  SPEAKER_00: Yeah, you know, speaking of capital, I mean, you I wanted to look at your capital structure and your timeline, especially since you're, you know, recently, I think you secured DTC Ba eligibility to reduce friction for US investors at home.
• 10:58
  SPEAKER_00: Uh, you're you're a newly public traded company, right?
• 11:00
  SPEAKER_00: I mean, you're taking on a heavy uh infrastructure project.
• 11:03
  SPEAKER_00: Just talk to the audience a bit what what is the fundamental value proposition for an investor looking at your stock today versus say, you know, waiting until your 1,000-hour effects kind of test is fully complete.
• 11:16
  SPEAKER_01: We want to give our investors exposure as early in the process as we can.
• 11:21
  SPEAKER_01: The company's actually been around for four or five years before we ever became publicly traded.
• 11:26
  SPEAKER_01: We started trading on December 12th, 2025.
• 11:29
  SPEAKER_01: So it is pretty early in our career as a PubCo.
• 11:33
  SPEAKER_01: But I think we're looking for the kinds of investors who understand that taking on the risk of sort of recent technological proof points, lab scale prototyping, onto then demonstration facility and into commercial scale operations over the next few years, there's plenty of risk baked into that profile.
• 11:52
  SPEAKER_01: But for the right kind of investor, they understand that that represents a huge amount of upside.
• 11:57
  SPEAKER_01: For small oil and gas companies, refiners, things like this, these are often worth many billions of dollars.
• 12:02
  SPEAKER_01: We have private peers in the e-fuel sector who we intend to be a lot more cost competitive than.
• 12:08
  SPEAKER_01: These are also sometimes worth billions of dollars.
• 12:12
  SPEAKER_01: So this is the right time, the right story, the right technological advent.
• 12:16
  SPEAKER_01: And we want retail investors, institutional investors, and stakeholders to come along for the ride with us.
• 12:23
  SPEAKER_00: We should probably talk about executional risk just a little bit.
• 12:26
  SPEAKER_00: And it's good because I mean, what you know, whether it's supply chain bottlenecks for those electrolysers or integration, you know, delays with your general contract.
• 12:34
  SPEAKER_00: I mean, what do you think is a single kind of big risk to the timeline right now?
• 12:38
  SPEAKER_00: And how are you mitigating it?
• 12:41
  SPEAKER_01: It's the thousands of little tiny risks, and they all compound on each other.
• 12:45
  SPEAKER_01: Right now, we are looking like we're on track for delivery of the demonstration infrastructure by the end of 2026.
• 12:52
  SPEAKER_01: We're sort of uh slightly ahead of schedule and slightly under budget, and that is a lot of different kinds of project management disciplines, engineering disciplines, contracting disciplines that all come together to be able to deliver projects on time and on budget.
• 13:07
  SPEAKER_01: Now, I think our key de-risking position there is personnel.
• 13:11
  SPEAKER_01: At the end of the day, it's all about the people, and we're really lucky on the Symphileine team that our executives, our directors, our project management teams, general contractor, engineers, these are all individuals and teams that have built their career reputations on delivering projects on time and on budget.
• 13:29
  SPEAKER_01: And that is what I want to deliver to our investors.
• 13:32
  SPEAKER_01: If we can show at this demonstration scale that we have the capability to rein in these risks, manage these risks, and mitigate them, I think it will deliver a lot more assurances to future industrial and institutional partners as we imagine a commercial scale up.
• 13:47
  SPEAKER_01: Yeah.
• 13:47
  SPEAKER_00: And just like on a side note, I mean, how how excited are the desks talking about deals with this in the headline?
• 13:53
  SPEAKER_00: Obviously, we know this isn't going to mitigate kerosene levels tomorrow in the market, but there seems to be a need for alternatives.
• 14:00
  SPEAKER_00: I mean, are you having interesting conversations?
• 14:02
  SPEAKER_01: Lots of interesting conversations.
• 14:04
  SPEAKER_01: We try to make ourselves aware, uh, make our stakeholders aware of all the stuff that's going on.
• 14:09
  SPEAKER_01: This is a relatively new industry, and I think it's a relatively new concept, but the movement of synthetic fuel from interesting green prospect or mandate pass-through obligation for airlines and on towards strategic hedge, there's no other show in town.
• 14:27
  SPEAKER_01: We're either dealing with fossil-based hydrocarbons or we're dealing with e-fuel.
• 14:31
  SPEAKER_01: These are the only scalable pathways to be able to deliver the massive demands of liquid fuels.
• 14:37
  SPEAKER_01: I think when it comes to crude oil, it's about 105 million barrels per day.
• 14:42
  SPEAKER_01: And when that even gets interrupted a little bit, and for a few days or weeks or months, we see ripple effects through the entire economy.
• 14:50
  SPEAKER_01: It's not just fuel, it's also all of our consumer durables, our groceries, our food.
• 14:55
  SPEAKER_01: And so the reality of scaling up an alternative supply chain decoupled from fossil feedstocks, this has gone from interesting, hopeful aspiration to massive political priority.
• 15:08
  SPEAKER_01: We're seeing that on the institutional desks, we're seeing that with the industrial investors.
• 15:12
  SPEAKER_01: And uh, rest assured that my phone's been ringing off the hook since the beginning of this conflict.
• 15:17
  SPEAKER_00: Yeah, absolutely.
• 15:18
  SPEAKER_00: Fascinating approach to a very real problem in the aviation sector.
• 15:22
  SPEAKER_00: Interesting about the the political situation, too.
• 15:25
  SPEAKER_00: I could imagine that there's some need for this, you know, especially when you're talking about having um, you know, some oil on the ground in terms of these strategic supplies.
• 15:34
  SPEAKER_00: Uh, this could be something like that.
• 15:37
  SPEAKER_01: I absolutely think so.
• 15:38
  SPEAKER_01: And the conversations around energy sovereignty, energy independence for nations like the United States, regions like the EU and the UK, I think this Iranian conflict has underscored that there are now huge prospective risks, political risk premiums that are going to be baked into the future prices of crude oil and liquid fuels for many years to come.
• 16:02
  SPEAKER_01: And so we need alternatives.
• 16:04
  SPEAKER_01: We need alternatives that are able to be anchored inside friendly, politically stable, democratic nations and e-fuel supply chains when coupled with specific high-temperature energy sources that can deliver this thermal hybrid production pathway.
• 16:19
  SPEAKER_01: This is now achievable and Synthely's setting out to prove it.
• 16:23
  SPEAKER_00: Yeah, fascinating.
• 16:24
  SPEAKER_00: All right, well, we'll be watching the progress over at Hussevik, uh, Husavic, right?
• 16:29
  SPEAKER_00: Facility uh closely.
• 16:31
  SPEAKER_00: You got it just right, Husavic.
• 16:32
  SPEAKER_00: All right, all right, I'll be better next time.
• 16:34
  SPEAKER_00: Uh appreciate this, Dan.
• 16:36
  SPEAKER_00: Thanks for joining KitComining today.
• 16:37
  SPEAKER_00: Uh, keep us in touch with this news.
• 16:39
  SPEAKER_00: Absolutely will, Jeremy.
• 16:40
  SPEAKER_00: Thanks so much for your time.
• 16:41
  SPEAKER_00: Thanks, mate.
• 16:42
  SPEAKER_00: All right, that was Dan Sutton, CEO of Syntheline Energy.
• 16:45
  SPEAKER_00: You can find them trading under the ticker ESAF on the Venture Exchange and the ticker SYNTF on the OTC for our U.S.
• 16:54
  SPEAKER_00: audience.
• 16:54
  SPEAKER_00: I want to thank you for watching KitComani.
• 16:56
  SPEAKER_00: Some great stories coming up this week.
• 16:57
  SPEAKER_00: Stay tuned.
• 16:58
  SPEAKER_00: I'm Jeremy Savin.