COQA - Salt Lake City, Utah 9 June 2011

Transcription

1 Reducing Diluent Required in the Transportation of Heavy Oils and Bitumen COQA - Salt Lake City, Utah 9 June 2011

2 Company highlights JetShear Technology The company has developed a proprietary technology that has a significant cost advantage over alternatives in the transportation of extra heavy oil Technology has been successfully piloted in Canada Reached commercial terms on 1,000 bpd facility in June 2010 with Canadian producer Began operating 1,000 bpd facility in first quarter 2011 on heavy oil site in eastern Alberta (Canada) Executed Letter of Intent on 5,000 bpd facility in May 2011 with a major oil sands producer Multiple tests for clients in lab and at pilot confirm technology benefits; stability of product confirmed 2

3 Company highlights (cont d) Experienced team with proven track record Joe Gasca, CEO 30+ years of industry experience, most recently serving as CEO of Ivanhoe Energy 21 years in major leadership positions at Texaco Dr. Esteban Chornet, Founder Inventor of JetShear TM technology Professor of Chemical Engineering at Université de Sherbrooke (Québec, Canada), affiliation with NREL Michel Chornet, VP Engineering 12+ years of engineering and technology development experience in the oil & gas and renewable energy sectors Shell and H-Power Marcel Matte, VP-Projects/Operations 23 years of process engineering and project management experience Most recently established and led Calgary office for Fransen Engineering Committed investors Rho Ventures and Braemar Energy Ventures 3

4 Fractal has proprietary patented technology to improve heavy oil quality Extra heavy oil (EHO) is very costly to transport to market Viscosity prevents EHO from being put directly in a pipeline Producers purchase light oil (diluent) at premium price to blend with EHO Highest operating cost for EHO producer (target client) JetShear - Significant reduction in viscosity Up to 50% reduction in diluent requirement Up to 3% net density improvement Improved netback diluent & tariff savings Cost effective Small scale provides significant cost advantage Small footprint Economies of scale with little to no scale up risk Attractive economics Project economics indicate 2 year payout on investment 4

5 Heavy oil industry the market 5

6 Heavy Oil industry value chain Upstream Midstream Downstream heavy oil producer truckers blending terminal heavy oil producer blending terminal JetShear application Pipeline Key Bitumen/HO Diluent Upgraded oil refinery Integrated producer/upgrader oil sands mine integrated upgrader 6

7 The Canadian Heavy Oil market Thermal Oil Sands in-situ Athabasca Oil Sands Region Mining Projects (currently 4) Peace River Oil Sands Region 10 API Fort McMurray 8-9 API SAGD Projects (currently 13) Conventional Heavy Oil ( cold ) Cold Lake Oil Sands Region 10 API Thermal Oil Sands in-situ Conventional Heavy Oil ( cold ) Edmonton Hardisty 12+ API Lloydminster/Provost Heavy Oil Region 7

8 Diluent* required for transportation of Heavy Oil is expensive Produced Bitumen/ Heavy oil Purchase C 5 + price plus tariff Sell blend price less tariff Bitumen & Heavy Oils are dense (<12 API) and highly viscous (100,000+ cst) requiring significant diluent to meet transportation quality specifications; often as much as 30% blend ratio Netback to the producer is highly volatile * Diluent is a light hydrocarbon (typically a natural gas liquid or condensate in Canada) that is used to dilute the heavy oil in order to improve its transportation characteristics (lower viscosity) 8

9 Using JetShear, a heavy oil producer can meet pipeline viscosity requirement with substantially less diluent Achieves viscosity spec using ~half the diluent 350 cp Results from Fractal Sherbrooke labs 9

10 Thermal facility application DHO INTEGRATION 10

11 JetShear the technology and its application 11

12 A very simple system! Pilot Facility Diagram 12

13 1,000 bpd JetShear Facility System layout Small footprint Fast Deployment Low Engineering Risk 13

14 1,000 bpd Facility Blending Skid Novel, patented technology in this box! South View of Skid North View of Skid 14

15 JetShear 1,000 bpd Site Heater Process Tank JetShear Pump Building Cooler MCC 15

16 JetShear process Conventional Blend Using complex technology Heavy Oil Heavy Oil Processed with JetShear * Solvation * Temperature - facilitates molecular mobility * Cavitation - liberates kinetic energy to chemical energy * Near sonic velocities * High shear forces 16

17 Pilot Results 17

18 300 bpd Pilot Facility 18

19 Results from Pilot Facility heavy oil We have successfully scaled up our process in the field! Without Jetshear ~2.7 API increase cs With JetShear ~90% reduction Pipeline 17.5 Specifications Viscosity API Gravity density (inverse) August 2009 Monthly Average Results 11.6 API feedstock, 80 API 14.5% blending ratio 19

20 Results from Pilot Facility - bitumen Bitumen--Diluent blend provided by a SAGD producer Bitumen Without Jetshear With JetShear ~91% reduction cs 600 ~2.5 API increase Pipeline 17 Specifications Viscosity API Gravity density (inverse) May 2010 Monthly Average Results 7.5 API feedstock, 70 API ~25% blending ratio 20

21 Maxxam Analytics Preliminary Assays Results 21

22 Discussion with COQA What are implications of the (relatively minor) changes in the assay for the dilbit processed using JetShear? What actions should Fractal undertake to address any concerns with the JetShear dilbit? 22

23 Visit our website: 23

24 Appendix 24

25 Protecting and enhancing value Two patents have been filed: US patent pending Process for treating heavy oils US issued May 17, 2011 Treated oils having reduced densities and viscosities Filing countries: Canada and USA National Filings Brazil, Ecuador, Colombia, Mexico, EU, Oman, China PCT application Work underway for new patent(s) 25

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27 Dilbit #2 27