So-called gas-to-liquids technology has been proven on a larger scale, primarily at Royal Dutch Shell Plc's plant in Qatar. Smaller production typically is targeted for areas producing gas that's “stranded,” or unserved by pipelines. The economics depend on the feedstock staying relatively cheap.

While U.S. natural gas prices are currently about $3.50 per million British thermal units, the futures curve shows prices rising to more than $6 per mmBtu during the next 10 years. Every $1 increase in the price of gas boosts the cost of producing a barrel of diesel by $9, Oxford Catalysts said.

Oxford Catalysts can produce a barrel of premium diesel for $66, or $1.57 a gallon, using gas at $4 per thousand standard cubic feet ($3.89 per mmBtu) at plants with a capacity of just 1,500 barrels a day. The unprofitable technology developer said a plant that size can be built for about $150 million and would last for 20 years.

It costs about $124 a barrel, or $2.95 a gallon, to make premium diesel from oil, the company estimated. The U.S. average price for diesel at the pump is about $4.12 a gallon.

Eoin Treacy's view Simple economics dictate that when the supply of a vital commodity increases and its price relative to competing products declines, that demand will rise. The surfeit of natural gas in North America virtually ensures that investors will attempt to profit from the arbitrage and gas-to-liquids technology is another such avenue.

Since both Exxon Mobil and Royal Dutch Shell produce more gas than oil, it is natural that they are investing in technology and machinery to produce high margin products from that feed stock. Qatar is an obvious location for Gas to Liquids (GTL) plants since it has some of the world's largest reserves and cheapest to recover natural gas. However given the surge in US natural gas volumes, there is a convincing case for siting GTL plants in the USA.

Sasol is the global leader in coal-to-liquids and gas-to-liquids technology. The South African listing has been mostly rangebound since early 2011 and encountered resistance at the upper boundary in September. It found support today in the region of the 200-day MA and potential for an additional bounce can probably be given the benefit of the doubt provided it holds above today's lows. The weakness of the Rand versus the Dollar has exaggerated the decline experienced by Sasol's ADR which is listed in New York. It has returned to test a previous area of support near $40 and a clear upward dynamic would confirm the return of demand in this area.

Oxford Catalysts has a market cap of £84 million and analysts expect its burn rate to continue into 2015. The share has returned to test the psychological 100p level following an impressive rally. Having paused below 100p, the share is susceptible to mean reversion.