MODEC is pleased to announce that it has signed a Joint Demonstration and Testing Agreement ("JDTA") with Petróleo Brasileiro S.A. ("Petrobras"), alongside its existing partners Velocys Inc, the leading technology innovator for clean synthetic fuels and Toyo Engineering Corporation ("Toyo Engineering"), which provides for the construction and operation of an integrated Gas-to-Liquid ("GTL") demonstration plant based on the company's technology.

Petrobras is the Brazilian national oil company and the largest company in Latin America, MODEC is the world's second largest owner/supplier of Floating Production Storage and Offloading vessels ("FPSOs") to the oil industry, and Toyo Engineering is a global Engineering, Procurement and Construction company.

The GTL demonstration plant, which will be located at the Petrobras facility in Fortaleza, Brazil, will incorporate the Velocys' microchannel reactor and catalyst technologies for the key Steam Methane Reforming ("SMR") and Fischer-Tropsch ("FT") sections of the plant. It will be operated for nine months, after its construction and delivery in early 2011 and the subsequent commissioning and testing periods. The total cost of the plant, estimated at tens of millions of dollars, will be covered by MODEC and Toyo Engineering, whilst Petrobras will be responsible for the installation and operating costs of the demonstration plant.

Following successful demonstration, it is expected that the first commercial deployment of the GTL technology will be on an FPSO, for example, to mitigate flaring of associated gas resulting from the development of offshore oil fields.

The partners will be working to manufacture its reactors with Kobe Steel, Ltd., one of Japan's leading steel makers, with whom it has been collaborating for over a year.

"This cooperative development project will not only greatly enhance the environmental performance of classic oil FPSOs, it will also promote the monetisation of waste gas, and create an opportunity for the introduction of a new generation of FPSOs in marginal gas field developments."

"Microchannel technology provides a number of advantages for offshore GTL. Not only does it accelerate SMR by 200-fold and FT reactions by 10-15 fold. It also greatly reduces the size of the key pieces of equipment and makes it possible for a GTL facility to be located on a floating vessel."

"The size and cost advantages of microchannel technology offer the best opportunity to develop offshore GTL as a practical way of producing commercially significant quantities of synthetic fuels on FPSO vessels."