Forget what you know about oil production. One energy company may be about to revolutionize the way that humanity produces oil. More than that, this amazing technology can also be used to clean up much of the economic carnage produced by ‘dirty’ oil production – and at a profit.
Sound too good to be true? Petroteq Energy Inc. (TSX: V.PQE, OTCQB: PQEFF, Forum) has not only created this revolutionary oil tech, it is already using this technology in its own oil production. The Company is now about to recommence this heavy oil production at a new location on its property: Asphalt Ridge.
‘Fracking’ is a term now on the tip of the tongue of almost every energy investor. It, too, has revolutionized oil production, although not necessarily for the better.
This technology has simply been banned in some U.S. states because of concerns about water pollution and climate issues. Even if such fears are overblown, this method of oil production consumes vast quantities of fresh water. Given that most of this oil production takes place in arid geography, this means competing against the interests of other water-users in these jurisdictions.
Then there is the heavy oil contained in oil sands. Until now, such oil production has been even more harmful from an environmental standpoint. Typical oil sands production today also consumes vast quantities of water, produces enormous volumes of greenhouse gases, and generates huge accumulations of tailings – causing even more environmental harm and requiring extensive reclamation efforts.
Why is the world (and Canada, in particular) currently producing so much of this dirty oil? It is because we have already pumped and consumed the vast majority of all oil resources that can be extracted with minimal environmental consequences.
There are trillions of barrels of oil contained in oil sands, all over the world. However, most of these deposits are not currently being moved to production. In part, this is because of the harmful environmental consequences, in part it is a function of the enormous cap-ex required for this form of heavy oil production.
Not only is such oil production harmful, it is expensive. At current crude prices, the economics of attempting to put most of this oil into production are dubious. Petroteq’s patented process for tar sands production is clean and it is cheap.
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How clean? Once Petroteq has finished its oil extraction, the sand from these oil sands is so clean that the U.S. Environmental Protection Agency has pronounced it totally safe (i.e. contaminant free). In a conference call with Stockhouse Editorial, Petroteq’s management quipped that the sand could be safely sold to golf courses to fill all of their “traps”.
How is it possible to turn tar sand into (clean) beach sand? It is all in the nature of this incredible technology. Yet ultimately the concept here is simple. PQE literally washes the oil off of this sand, with essentially 100% efficiency.
The lynchpin of this technology is the Company’s proprietary solvent/surfactant. Ultimately, this production process is more similar to mining than typical oil extraction. Oil sands are scooped out of the ground, run through a mill to break down the clumps, mixed with the solvent, and then heated (to separate the oil from the solvent).
Obviously it requires powerful chemical agents to ‘scrub’ this oil sand with such remarkable efficiency. However, this is non-polluting technology, because after the oil is extracted, the solvent is recycled and reused.
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Many readers will applaud the development of this clean oil extraction technology. But investors want to make money. Petroteq’s technology is not merely “revolutionary” because it is such green tech, it is also extremely cheap technology.
The architect of this technology is Dr. Vladimir Podlipsky, a chemist with a wealth of R&D experience. The Company is led by a veteran management team that includes the former President of Exxon for the Arabian Gulf/Abu Dhabi/UAE.
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The Company put its initial pilot plant into production for $5 million: 250 barrels of oil per day (bod). For an additional $5 million, PQE has been able to scale up this modular facility to 1,000 bod. For Phase 3, Petroteq can put a 5,000 bod facility into production for only $40 million. Conventional oil sands producers can only drool with envy at those figures.
The robust economics of this technology don’t stop here. These cheap-to-construct facilities can also be operated at very low cost. The numbers speak for themselves.
At the Company’s (new) 1,000 bod Asphalt Ridge facility, located in the state of Utah, Petroteq can produce this clean oil at a total cost of $18 -$25 barrel. Even at current prices, management estimates net-backs of $17 - $25 per barrel. There are two take-aways for investors with respect to the strong economics of this technology.
At current prices, Ashphalt Ridge can be very profitable producing this clean oil from its oil sands operations. Once Phase 3 is completed (estimated for 2019), the Company is projecting daily revenues of $240,000, and net profits of $40 million per year. More than 87 million barrels of oil are available in this shallow, high grade resource.
The even more important point here for investors is the Big Picture: the trillions of barrels of oil currently locked into oil sands. Using conventional (dirty) technology, much of this oil would/could only be economically extracted at dramatically higher crude prices, requiring massive investments of cap-ex, implying enormous project risk, and generating massive environmental consequences.
Petroteq’s game-changing technology is potentially thekey to unlocking trillions of barrels of oil, cleanly and economically. This still leaves out another stellar quality of this technology: amazing efficiency.
A hundred years ago, when oil was plentiful and easy to extract, in the most lucrative oil fields oil companies could produce 100 barrels of oil, while consuming only one barrel of oil in the process. This represented an “energy surplus” of roughly 100:1.
As oil has become increasingly hard to find (and extract), efficiency in the oil industry has plummeted. Fracking and conventional production of oil sands oil is extremely energy-intensive. The energy surplus has collapsed to a ratio of between 6:1 and 2:1. Put another way, with some of this expensive, environmentally harmful oil production, energy companies consume up to half the oil they produce – just in the production process.
This is an incredibly important detail that Big Oil has worked very hard to conceal.
Petroteq can produce oil sands oil much cheaper than Big Oil.
Petroteq can produce oil sands oil in a much cleaner way than Big Oil.
Petroteq can produce oil sands oil much more efficiently than Big Oil.
PQE estimates the energy surplus from its clean/cheap technology to be 22:1 – 22 barrels produced for each barrel consumed. Again, Big Oil can only drool with envy.
In Utah, Colorado, and Wyoming alone, there are an estimated 1.2 to 1.8 trillion barrels of oil contained in the oil sands of those three states, according to the U.S. Department of Energy. Very little of these oil resources are currently under development, but thanks to PQE this could be about to change dramatically.
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However, producing its own oil is only a small part of the equation in Petroteq’s business model. Two other huge avenues of opportunity are:
- Licensing this revolutionary technology to other oil companies
- Cleaning up much of the environmental devastation produced in previous oil sands production
Will other oil companies want to continue with their current heavy oil operations? Will they be able to afford to continue to produce oil in this dirty, expensive, inefficient manner? Will governments continue to allow oil companies to operate in this manner, when there is a clean/cheap/efficient alternative?
The oil & gas industry is arguably the largest industry on the planet, with the sector valued at more than $1.7 trillion in 2015. It is a larger sector than all metals markets combined. In this mega-market, the licensing potential of Petroteq’s superior technology boggles the mind.
Then there is all of this dirty oil that has already been produced, and the horrific pollution that tarnishes (in particular) the province of Alberta. Is PQE the solution for literally cleaning up Canada’s oil sands industry?
The Company’s Founder, Chairman, and CEO, Aleksandr Blyumkin, connects the dots for investors in the profit potential for using this technology to heal the environment.
When we turn our technology toward the opportunity of remediation of oil spills it becomes even more interesting. Revenue around cleanups can be $100 a ton for contaminated material. This would be combined with the hydrocarbon that we would recover that could add another $50 in revenue per ton.
Our cost of operation would likely be less than 30% of those revenues. It is a high margin opportunity.
Mining investors are familiar with “tailings operations”: efforts to monetize mine waste by extracting the residual metals. But there is little actual clean-up involved in such projects. PQE can clean and monetize these heavy oil tailings dumps – and turn a handsome profit for shareholders while doing so.
Meanwhile, Petroteq is busy working on a second oil & gas revolution: using blockchain technology to overhaul the entire supply chain of this massive sector. Readers who are interested in this new initiative should watch for an upcoming Stockhouse feature centered on this development.
Producing enough energy to supply the world’s needs has increasingly become a process of choosing between the lesser of evils. Incur the risks of using nuclear power? Suffer the environmental carnage of harvesting the world’s vast oil sands? Risk the (still unknown) consequences of fracking?
Petroteq Energy is endeavouring to replace these potential “evils” with its own virtuous circle: producing oil more efficiently, more cleanly, and at less cost than existing options. And while it is doing this, its revolutionary technology can make the planet a cleaner rather than dirtier home for humanity.
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FULL DISCLOSURE: Petroteq Energy Inc. is a paid client of Stockhouse Publishing.