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TomCo Energy: Tapping into market for low sulphur fuel oil

Snapshot

  • Developing technique for oil sands plant in Utah
  • Test programme underway
  • Product will be used for bunker fuel for shipping
Tomco operations

Quick facts: TomCo Energy plc

Price: 0.675 GBX

AIM:TOM
Market: AIM
Market Cap: £4.55 m
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How it’s doing

TomCo Energy plc (LON:TOM) is currently working with the joint venture partner Valkor to finalise planned upgrades and a proposed work programme to the Petroteq Energy existing oil sands plant (POSP) at Asphalt Ridge in Utah.

The oil shale explorer said it believes it will take around three months to complete the upgrade works to the POSP, with the test programme expected to take a further four to six weeks, with third-party verification of the process to then be undertaken following the testing.

The process under development would produce a low sulphur fuel oil product that could be sold directly into the market place as bunker fuel for shipping, rather than being sold as a crude product to refineries.

The price of bunker fuel has not gone below $30/bbl at any point in the recent market turbulence.

Greenfield venture

Quadrise Fuels International PLC, which is providing technology to Greenfield (the TomCo and Valkor joint venture company), in a statement in mid-August, revealed that the proposed project would proceed into Phase 1. This will involve a commercial trial using Quadrise’s MSAR technology - which creates an emulsified synthetic heavy fuel oil - on heavy and paraffinic oil deposits in Utah.

This will initially see proof of concept work at the Quadrise Research Facility using oil samples supplied by Greenfield. Additionally, Quadrise will loan a range of MSAR equipment to Greenfield, along with specialist services to assist Greenfield in completing a proposed commercial-scale demonstration. The demo operation will aim to produce over 600 barrels (100 tonnes) of power grade MSAR fuel.

Quadrise noted that it will continue to cooperate in good faith to agree the commercial terms of a conditional MSAR licence and commercial supply agreement for the production of MSAR fuel under Phase 2 - envisaged as a 10,000 barrels per day operation at Utah facilities owned or operated by Greenfield.

The news sent Quadrise shares 35% higher and TomCo gained more than 25%, which is indicative of the potential on offer should the project advance further.

Modular separation plant for oil sands

TomCo is involved in the development of a new system for processing of oil sands, based on a process which has undergone initial development and testing by another operator in Utah. This process could be commercialised on a relatively fast timescale.

Globally oil sands are already being exploited on a large scale, but the system being examined by TomCo will use a new processing technology that differs from the systems used by the larger-scale operations which are well-established in Canada.

And perhaps most importantly, the process under development would produce low-sulphur bunker oil ready for use in shipping and power generation, rather than producing crude oil which requires refining.

What the analyst says: Ed Stacey, Proactive Research 

Aside from the ready-for-market output product, the separation system has other unique advantages compared with existing oil sands separation technologies, including:

  • Limited environmental impact, with a modest water requirement, and no “dirty” sand to remediate at the end of the process
  • A scalable modular system with limited capex requirement
  • Read the full note here

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TomCo Energy: Analyst highlights attractive economics of a new oil sands...

Proactive Research analyst Ed Stacey takes a look at TomCo (LON:TOM) following the news of a joint venture to help unlock the potential for oil sands development using an innovative new production technology. TomCo's an oil & gas exploration and production company which operates in the...

on 9/7/20

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