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While converting seawater to fuel is feasible, this is bordering on fodder for the Unicorn Corral, especially in the quotes from the Navy personnel.
1st Rule of Fight Club, er, Thermodynamics is that energy cannot be created. I think it's a safe bet that these "reactor systems" require a large input of energy (electricity?). I don't believe for a moment that they will be able to use this to create fuel without some outside source of energy.
Now, if they use it to fuel planes that take off from a nuclear powered ship, sure I can see that being useful.
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