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Wescorp Energy Set to Revolutionize Oil Industry
By James West
MidasLetter.com
Tuesday, November 3, 2009
Its very seldom that a great new technology comes along that can actually change some aspect of a mature industry in such a way as to revolutionize it. Yet Wescorp Energy’s (OTCBB:WSCE) H2Omaxx water remediation system is about to do just that. And the deployment model Wescorp has developed will ensure a growing revenue stream from multiple sources as evidenced by it its recent joint venture announcement. But we'll get to that a bit further along.
Water, Water Everywhere
The 90 million barrels of oil consumed by this planet each day comes with a heavy environmental price tag. Its impossible to go to any major city and notice a distinct yellow-red haze colouring the air. Strategies to address the issue of hydrocarbon generated greenhouse gases are abundant, and governments around the world have acknowledged that we can’t continue spewing such titanic volumes of contaminants into the air we all breathe.
But there is another environmental disaster that unfolds every day on the production side of oil and gas, and the imminent legislation by governments to force oil producers to take action has created the superb opportunity that Wescorp is now to capitalize on.
Oil and gas production worldwide generates a tremendous amount of unwanted “produced water”– water that is contaminated naturally from the formation and artificially through oil and gas processing, resulting in massive volumes of produced water, containing solids, sand, drill cuttings and organic and inorganic salts. Meeting local state, provincial and federal environmental compliance is a challenging issue.
Every barrel of oil produced comes with a disproportionate amount of water, which in the petroleum industry, counts as a waste stream. As oil under pressure in formations deep underground raises to the surface under natural or artificially induced pressure, the water that coexists with the oil in these formations comes out with the oil. And the ratios are utterly astonishing.
Industry wide, there is three times as much “produced water” created as there is oil. In many modern oil and gas operations, the amount of water produced is at least 6 barrels of water for every single barrel of oil. In older “stripper” wells, that produce a few barrels of oil a day, the ratio can be as high as 99:1.
In Canada’s oil sands, which is quickly becoming one of the most prolific oil production regions in the world, water is consumed and contaminated on such a grand scale, that Greenpeace has expended great amounts of effort to draw the world’s attention to the growing environmental catastrophe that is the oil sands in an effort to force a change to the way water is contaminated.
The government of Canada has responded by seeking technological solutions to improve the ecological protection level. Wescorp, with its H2Omaxx solution, may be on of the front runners in the water remediation category.
What is H2Omaxx?
H2Omaxx is a commercially proven, safe, effective, and economical process for cleaning and separating oils and solids from produced water using patented technology. Testing by a wide range of independent and government certified labs and end users has demonstrate Wescorp’s H20 Maxx technology being economically viable and technological superiority of the system relative to other water remediation systems on the market.
Wescorp Energy's H20 Maxx technology focuses on helping oil and gas producers solve their "produced water" issues. Our H20Maxx process incorporates patented aeration technology employing microscopic bubbles several orders of magnitude smaller than conventional technology, resulting in providing the client with (cleaner produced water) by lowering the amounts of (parts per million) hydrocarbon, providing them with options of reinjection, or disposal or off shore discharge, additional oil recovered, and reduced operational expenses on their processing facilities.
In wells producing heavy oil with a high solids content, H2O Maxx through its separation process has demonstrated its ability to increase daily oil production. Hence increasing the producers daily revenues.
"Our patented process has shown it can reduce operating costs as well" said Wescorp vice-president Dave LeMoine. "Reservoir engineers have stated, it is well known that injecting hydrocarbon free water back in to the formation will reduce the amount of well workovers needed(cost the producers ten of thousands of dollars per event), and may extend the reservoir life cycle."
“During a test project in the North east Alberta area, we were taking produced water from clients, running it through our system, and they were capturing up to 30 barrels oil more per day. That might not sound spectacular, but at $70 a barrel for oil, and for a company that has a hundred wells or more, the increased revenue is substantial to say the least.”
Joint Venture Opportunities
Among the models available to Wescorp for developing their own revenue stream, Wescorp has successfully deployed a joint venture model that delivers revenue as an incremental participation in the increased oil recovery of their joint venture partners.
One example of the model is a recently entered joint venture with Cancen Oil Canada Corporation, a Government approved Oilfield Waste Management and Processing company based in Calgary, Alberta.
Under the terms of the joint venture agreement a combination of a minimum12 H2O Maxx water units and HCXT Solids units will be strategically installed over the next 12 months at Cancen’s facilities. These technologies will significantly increase efficiency and reduce operating costs which will result in increased profitability.
“Cancen is delighted to be the joint venture partner of Wescorp Energy,” stated Keith Talbot, President of Cancen Oil Canada Corporation. “Wescorp’s leading edge water and solids remediation technologies are a perfect fit into our business model and will allow Cancen to become a technological leader in the oilfield waste processing industry in western Canada. With the addition of Wescorp’s technologies, we expect our business to grow exponentially.”
Anticipated revenue projections for Cancen JV.
“As stated by Cancen above by them integrating our technology, growing their business and increasing their saleable oil production, these numbers may be conservative said Dave LeMoine, “In reality, the more Cancen process’s the more the JV (Wescorp) makes”
The Upside
The oil and gas business is worth hundreds of billions of dollars on a global basis. As governments move to mandate more environmentally benign production practices, Wescorp’s H2Omaxx stands to be one of the primary beneficiaries of this revolution in industry attitudes.
Besides oilfield water transport, recovery and disposal companies like Cancen, the opportunities in other sub-sectors of the petroleum industry are diverse and abundant. The H2Omaxx technology is expected to find broad acceptance and deployment across:
- Conventional on shore and off shore oil and gas produced water;
- Unconventional heavy oil (tailing ponds);
- Enhanced oil recovery (SAGD ,Cyclical Steam Injection);
- Third party oil and gas waste disposal industry (Cancen J.V.);
- Frac fluid recovery;
- Drilling and completion fluids recovery;
- Bilge water (marine transportation).
Conclusion
Given the tremendous upside potential for Wescorp as it deploys the H2Omaxx technology across the entire industry, and with a market cap of less than CA$24 million, there exists a great opportunity for risk-tolerant investors to take a crack at what could be one of the most revolutionary technologies to come to the oil and gas industry in a decade.
Follow the company’s progress online at www.wescorpenergy.com.
SOURCE: http://www.midasletter.com/news/09110302_Wescorp-Energy-set-to-revolutionize-oil-industry.php
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