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Old 04-28-2010, 01:10 PM
Sparty Sparty is offline
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Default Regal Resources could cut oil sands production costs

This seems to offer Regal resources another arrow in their quiver.

Admittedly there is a lot riding on the Oak Park trials but if it comes off then the blue sky is very blue indeed.

Regal Resources could cut oil sands production costs? Commercialisation pathway with major Canadian company


Regal Resources holds the exclusive worldwide license for the patent pending Underground Coal to Liquids (UCTLTM) technology. Agreement has been signed with a major Canadian oil sands company for testing of oil sands at Oak Park. This involves the provision of samples of Canadian oil sands. Potential on-going commercial arrangements are to be reviewed by both parties in light of the outcomes of the Oak Park tests.

The UCTL technology has the potential to be deployed in an above ground application to upgrade a broad range of hydrocarbons via a process called Surface Carbon to Liquids (SCTL). Hydrocarbons which may lend themselves to upgrading via SCTL could include brown coal (lignite), black coal, oil shale and bitumen derived from Canadian oil sands. SCTL has a potential application as a bitumen upgrading technology which is designed to convert raw oil sands derived bitumen into enhanced pipelineable liquid hydrocarbon products. Raw bitumen from Canadian oil sands can be derived from either open cut mining or via in-situ recovery methods such as SAGD. Steam Assisted Gravity Drainage (SAGD) is an in-situ oil sands recovery process widely used in Canada, and involves the underground injection of steam into oil sands deposits to cause the bitumen to separate from the sands and be brought to surface via extraction wells. SCTL is designed to enhance the quality of the raw bitumen brought to surface by donating hydrogen and improving viscosity to make the product easier to transport via pipe and to raise its value to refineries.

The agreement with a major oil sands company sees potential application of Regal?s SCTL technology to the upgrading of oil sands derived bitumen already brought to surface. Due to confidentiality requirements, the Canadian Corp?s identity cannot be released to the market. The initial Agreement between Regal and the Canadian Corp:

* Sets out parameters by which test results can be measured
* Sets out an agreed basis for reimbursement of the costs of the tests
* Makes provisions for confidentiality
* Contemplates further commercial negotiations should testing prove successful.

The Canadian Corp will be present during the testing and fund the laboratory analysis and other costs associated with the testing. Testing is expected to commence in Q2 or Q3 2010. Should the test results indicate the SCTL technology is prospective, the Canadian Corp and Regal intend to hold further negotiations regarding the pathway to commercialise the SCTL technology for the Canadian oil sands industry.

SCTL could have application at a much lower cost than that of current upgrading oil sands methods. Canada has a multi-billion dollar oil sands industry. In 2008 the Canadian oil sands industry produced the equivalent of approximately 1.2 million barrels of oil per day with projections to expand this to over 3 million barrels per day by 2020, all of which will need diluents and/or upgrading. According to a Canadian Energy Research Institute paper dated May 2008, current processing costs are approximately $30/barrel and are considered high by world standards. The processing cost of $30/barrel incurs an annual cost to the oil sands industry of approximately $13 billion. If SCTL can be proven as a ?hydrogen donator? and as a permanent ?viscosity upgrader? for raw oil sands bitumen, this could represent a very significant market opportunity.

Regal has previously announced that it will also be conducting tests on Canadian oil shale, which is a separate opportunity to that of oil sands. The potential application of SCTL in Canada presents Regal with a business opportunity which is complimentary to its main focus on UCTL. The testing program for UCTL, which is focussed initially on coals in-situ, is continuing at Oak Park as previously announced.

 

Disclaimer: The author of this post, may or may not be a shareholder of any of the companies mentioned in this column. No company mentioned has sponsored or paid for this content. Comments on this forum should never be taken as investment advice.

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