To become obscenely rich, use the combo:sell hi, you say "Look at BQI on the AMEX, no different, almost same "estimate(s)", and its trading at $4-$5, ENG is actually one step ahead of them, and is only at $2. To think I sold this at $1.03 cause I got bored.....Geeez. This is goin to $3.50 in a matter of days....."
First of all, I hope that you have bought back into ENG, and if not, then buy back in on Monday. Secondly, there is no comparison between BQI and ENG. BQI's properties are 100% owned and contain a minimum of 10 billion barrels of oil, and considering their oil shale property, plus increasingly more efficient methods being developed for extracting their oil sand property, they probably have several multiples of that.
However, BQI is a long term hold. ENG is a stock whose price is on the move. Considering how long it is going to take to develop BQI's properties, even if you hold on to ENG and wait for it to reach $100/share, the price of BQI will probably still be close to where it is now. However, eventually, BQI is going to reach a price of $200/share or higher. Therefore, if you sell ENG at a price of $100/share and then take some, or all of your profits, and put them into BQI, the profits you make from just these two trades will make you, and everyone else that does it, obscenely rich.
Here is a summary of BQI
Tar sands, which are soaked in bituman, an oil that looks and flows like thick molasses, may represent as much as 2/3 of the world's total petroleum resource, with at least 1.7 trillion barrels of bitumen in the Canadian Athabasca Oil Sands. Bitumen is so thick that it can not flow through pipe lines, but it can be upgraded on site to sweet crude by adding hydrogen to its basic struture and then it can be sent out by pipe line. When upgraded, one barrel of bitumen turns into one barrel of sweet crude. Using present day extraction methods only 300 billion barrels of the 1.7 trillion barrels of bitumen in the tar sands can be recovered. But even this smaller amount is larger than the entire reserves of Saudi Arabia. Saskatchewan, which is across the border from Athabasca, was known to have multiple surface showings of bitumen, but because it was in a more remote, colder and mostly uninhabited area of Canada, no companies acquired land in the area and so no drilling was done to determine it's bitumen reserves and so any bitumen present has not been included in the official Canadian reserves, and it was not even known if the bitumen present was the same grade as that found in the Athabasca area. But this is now changing because one company, Oilsands Quest, BQI, took a chance, and several years ago they started acquiring land in Saskatchewan. They have also recently put in winning bids for land in Atahbasca for a total 618,000 acres of tar sands. This is the largest tar sands land holding of any company in Canada. This land area is larger than the entire state of Rhode Island. In addition to their oil sands, they have 490,000 acres of oil shale also located in Canada. Both the oil sands and oil shale are 100% owned. They are now drilling their oil sands property and have discovered that the oil sands of Saskatchewan are more saturated with bitumen than the sands being mined by companies in Athabasca. BQI has now drilled 20% of their oil sand property and have come up with a preliminary minimum estimate that it contains 10 Billion barrels of bitumen using present day methods of extraction. But it must be remembered that newer more efficent methods of extracting the bitumen from oil sands are being researched and so this preliminary estimate may increase over time.
As a comparison, Exxon Mobil is the world's largest integrated oil company (ahead of BP and Royal Dutch Shell). Exxon Mobil engages in oil and gas exploration, production, supply, transportation, and marketing worldwide. It has proved reserves of 13.6 billion barrels of oil equivalent. Exxon Mobil's 40 refineries in 20 countries have a capacity of producing 6.4 million barrels per day. The company supplies refined products to more than 35,000 service stations in 100 countries. It also provides fuel to 700 airports and more than 200 ports. Exxon Mobil is also a major petrochemical producer. The company posted consecutive US records for annual corporate earnings for 2005 and 2006.
So eventually BQI's reseves may equal Exxons. Exxon has many times the number of shares of stock compaired to BQI, and Exxons' share price is many times higher than BQI, and so eventually the stock price of BQI may be multiples of its present price, but right now BQI is just an exploration company. It will need to spend billions to build an onsite refinery to upgrade any bitumen that is extracted and this may require them to form a joint venture with another company, but so far, even though several companies have inquired about forming a joint venture, all have been turned down. First BQI wants to continue drilling their property so that they can get a better idea of what they have and thus be in a better barganing position when talking with another company about a joint venture. In the meantime, several institutions have given the company working capital of tens of millions of dollars.
There are several companies already producing oil in Athabasca and the cost of producing oil from the tar sands is $28/barrel, so this shows that tar sand production is very profitable. The Canadian oil sands have been in commercial production since the original Great Canadian Oil Sands (now Suncor) mine began operation in 1967. A second mine, operated by the Syncrude consortium, began operation in 1978 and is the biggest mine of any type in the world. The third mine in the Athabasca Oil Sands, the Albian Sands consortium of Shell Canada, Chevron Corporation and Western Oil Sands Inc. began operation in 2003. Petro Canada is also developing its $33 billion Fort Hills Project, in partnership with UTS Energy Corporation and Teck Cominco. If approved in 2008, Fort Hills Oilsands upgraders are slated to begin output in 2012.
Tar sands is a common name of what are more properly called bituminous sands, but also commonly referred to as oil sands. They are a mixture of sand or clay, water, and extremely heavy crude oil. The use of the word tar to describe these deposits is a misnomer, since tar is a man-made substance produced by the destructive distillation of organic material. Although it appears similar, the material in tar sands is a naturally-occurring, extremely heavy form of crude oil in which the lighter fractions of the oil have been lost, and the remaining fractions have been partially biodegraded by bacteria. As a result, the term oil sands is technically more accurate.
There are several methods being used to extract the bitumen from the tar sands. Originally the surface sands were strip mined, but most of the tar sands are covered by layers of overburden and extaction of the bitumen from these deeper deposits requires methods other than strip mining. Over time these extraction methods have become more efficient and less expensive and even newer, more efficient and less costly methods, are being developed. Present day methods include:
Cyclic Steam Stimulation (CSS)
The use of steam injection to recover heavy oil has been in use in the oil fields of California since the 1950s. The Cyclic Steam Stimulation or "huff-and-puff" method has been in use by Imperial Oil at Cold Lake since 1985 and is also used by Canadian Natural Resources at Primrose and Wolf Lake and by Shell Canada at Peace River. In this method, the well is put through cycles of steam injection, soak, and oil production. First steam is injected into a well at a temperature of 300 to 340 degrees Celsius for a period of weeks to months, then the well is allowed to sit for days to weeks to allow heat to soak into the formation, and then the hot oil is pumped out of the well for a period of weeks or months. Once the production rate falls off, the well is put through another cycle of injection, soak and production. This process is repeated until the cost of injecting steam becomes higher than the money made from producing oil. The CSS method has the advantage that recovery factors are around 20 to 25% and the disadvantage that the cost to inject steam is high.
Plus there is a limited amount of water present in the area and there has been a multiyear drought in the area.
Steam Assisted Gravity Drainage (SAGD)
Steam assisted gravity drainage was developed in the 1980s by an Alberta government research center and fortuitously coincided with improvements in directional drilling technology that made it quick and inexpensive to do by the mid 1990s. In SAGD, two horizontal wells are drilled in the tar sands, one at the bottom of the formation and another about 5 metres above it. These wells are typically drilled in groups off central pads and can extend for miles in all directions. In each well pair, steam is injected into the upper well, the heat melts the bitumen, which allows it to flow into the lower well, where it is pumped to the surface. SAGD has proved to be a major breakthrough in production technology since it is cheaper than CSS, allows very high oil production rates, and recovers up to 60% of the oil in place. Because of its very favorable economics and applicability to a vast area of tar sands, this method alone quadrupled North American oil reserves and allowed Canada to move to second place in world oil reserves after Saudi Arabia. Most major Canadian oil companies now have SAGD projects in production or under construction in Alberta's tar sands areas and in Wyoming. Examples include Japan Canada Oil Sands Ltd's (JACOS) Hangingstone project, Suncor’s Firebag project, Nexen's Long Lake project, Petro-Canada's MacKay River project, Husky Energy's Tucker Lake and Sunrise projects, Shell Canada's Peace River project, Encana's Foster Creek development, ConocoPhillips Surmont project, and Devon Canada's Jackfish project, and Derek Oil & Gas's LAK Ranch project. Alberta's OSUM Corp has combined proven underground mining technology with SAGD to enable higher recovery rates by running wells from underground within the tar sands deposit, thus also reducing energy requirements compared to traditional SAGD. This particular technology application is in its testing phase and has stranded oil and other carbonate applications as well.
Vapor Extraction Process (VAPEX)
VAPEX is similar to SAGD but instead of steam, hydrocarbon solvents are injected into the upper well to dilute the bitumen and allow it to flow into the lower well. It has the advantage of much better energy efficiency than steam injection and it does some partial upgrading of bitumen to oil right in the formation. It is very new but has attracted much attention from oil companies, who are beginning to experiment with it.
The above three methods are not mutually exclusive. It is becoming common for wells to be put through one CSS injection-soak-production cycle to condition the formation prior to going to SAGD production, and companies are experimenting with combining VAPEX with SAGD to improve recovery rates and lower energy costs.
Toe to Heel Air Injection (THAI)
This is a very new and experimental method that combines a vertical air injection well with a horizontal production well. The process ignites oil in the reservoir and creates a vertical wall of fire moving from the "toe" of the horizontal well toward the "heel", which burns the heavier oil components and drives the lighter components into the production well, where it is pumped out. In addition, the heat from the fire upgrades some of the heavy bitumen into lighter oil right in the formation. Historically fireflood projects have not worked out well because of difficulty in controlling the flame front and a propensity to set the producing wells on fire. However, some oil companies feel the THAI method will be more controllable and practical, and have the
advantage of not requiring energy to create steam.
Companies are also looking into methods that will require minimal use of water.
The price of BQI is so low because they are going to be spending probably several years exploring/drilling their property. But while they are spending the time determining how much bitumen is present on their property, and where the best areas are located for starting production, when they finally are ready to start extracting the bitumen, they will have their choice of methods to use and some of these methods may be much more efficient and more economical than present day methods. BQI was being hindered in their ability to explore their Sakatchewan property because the native Clearwater River Dene Nation was blocking road access to the area and BQI had to air lift men and supplies to the area, but this problem has now been resolved.
"During the blockade, our employees from the local area were not allowed through the blockade and had to be airlifted in. They, and we, had been increasingly concerned that they were unable to get to their jobs," said Mr. Hopkins. "We appreciate the efforts of the Clearwater River Dene Nation and the Province of Saskatchewan to address the issues surrounding the blockade and are pleased that it has been removed." The blockade was established on June 21 by the Clearwater River Dene Nation to draw attention to its claims about lack of consultation; it was removed Friday, July 6.
"We will continue to consult with all First Nations people, Metis and other residents of our neighboring communities, as we have done since 2004, before we began exploration activities in Saskatchewan," said Mr. Hopkins.
Over time BQI will explore and develop the property and as they develop their property and eventually start production their share price will increase dramatically. There is a chance that production costs will go up rather than down over time. Present day methods of extraction, such as Steam Assisted Gravity Drainage (SAGD) use gas to generate the steam, and the price of gas is climbing sharply. The Canadian government is considering building nuclear power plants in the area and this cheaper power source could then be used instead of gas. Plus methods that don't require gas or water, which is short supply and might end up being a limiting factor, may be developed. But even if it ends up costing $35 to extract a barrel of oil, even with todays price of $100/barrel, that means that you have a profit of $65/barrel of oil. With ten billion barrels of oil, that is $650 billion dollars and the company may eventually end up with a lot more than 10 billion barrels of oil. Plus this doesn't take into account BQI's oil shale, which contains very high grade high priced oil fractions such as benzene, which can be used can be used by the specialty chemical industry. The property hasen't been drilled, but because of large size, almost equal to the size of Rhode Island, it also may contain large amounts of oil products and this property has not even been factored into BQI's share price. So over the long term the price of BQI is probably going to be a factor of ten times or more higher than it is now, probably a lot more than 10 times higher, and this makes BQI an excellent long term buy.