'Stranded' Fuel Could Boost Energy Stocks

Anyone with at least a few neurons firing in should know that the current arrangement by which the U.S. obtains its energy is, well, inconvenient.

We are passengers of the world's largest economy, which is almost entirely dependent on the importation of fossil fuels. The majority of these fuels are sold to us by gangs of warlords, communist revolutionaries and religious extremists who don't exactly have America's best interests at heart.

The recent political and economic shift toward developing alternative (meaning nonfossil fuel) energy sources is largely meant to address these issues. However, even in the best-case scenario, we are years away from having a self-reliant and environmentally friendly energy policy.

While the domestic reserves of crude oil are pretty much tapped out, the U.S. continues to have abundant reserves of natural gas and coal. Thus, it is frustrating to know that only about half of our reserves of natural gas and coal are economic to produce and market, according to the Energy Information Administration.

Converting these "stranded" reserves into fuel for transportation and other outlets could go a long way to reducing our state of dependence on crude oil imports until alternative energy sources reach critical mass.

A small handful of technologies aimed at recovering stranded energy sources are in the works. One, called GTL (gas to liquid), converts natural gas into liquid fuels like diesel and jet fuel. Another, CTL (coal to liquid), converts coal into liquid fuels.

GTL and CTL plays must fit within strict economic limits. According to analysts at Morningstar, CTL is only profitable when oil is above $40 a barrel. For GTL to work, oil must clear the more manageable $20-a-barrel hurdle.

Syntroleum (SYNM Quote - Cramer on SYNM - Stock Picks) is one of a handful of companies active in pursuing these technologies. Syntroleum builds GTL and CTL plants that are scalable so that they can be moved to remote areas where the hydrocarbons are extracted from the ground.

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