TIDMTOM
RNS Number : 6780A
TomCo Energy PLC
28 March 2017
28 March 2017
TomCo Energy plc (AIM: TOM)
("TomCo" or the "Company")
Strategic partnership to develop new oil shale technology
TomCo Energy plc, the oil shale exploration and development
company focused on using innovative technology to unlock
unconventional hydrocarbon resources, is pleased to provide an
update on its strategic direction and to announce that it has
incorporated a new Utah-based subsidiary company named TurboShale
Inc. ("TurboShale"). TurboShale will seek to develop and
commercialise new propriety technologies for processing oil shale.
In addition to the provision of management and administrative
services by TomCo, TurboShale's executive and technology team shall
comprise of Ray Kasevich and Jeb Rong of Massachusetts-based JR
Technologies LLC ("JR Technologies") and Graeme Hossie of UK-based
Venture Development Partners Ltd ("VDP").
A Letter of Intent outlining the principal commercial terms of
this collaboration has been agreed between the Company, JR
Technologies and VDP, and it is expected that the final
co-operative framework agreement will be executed soon. A further
announcement will be made in due course as and when
appropriate.
Background
As announced on 14 June 2016, TomCo's technology partner, Red
Leaf Resources, Inc. ("RedLeaf") completed the Seep Ridge
Preliminary Front End Engineering Design ("pre-FEED") study. While
the capsule costs were in-line with expectations, the Seep Ridge
processing plant costs were higher than originally budgeted,
resulting in the total cost per barrel coming in at the higher end
of expectations. In addition, RedLeaf's joint venture partner and
shareholder, TOTAL E&P USA Oil Shale, LLC ("TOTAL"), announced
that it was not prepared to move forward with the Early Production
System Capsule ("EPS").
Since June 2016, RedLeaf has experienced further delays in the
EPS at their Seep Ridge site. Furthermore, significant uncertainty
remains with regards to the ongoing involvement of its joint
venture relationship with TOTAL.
As a result of the abovementioned factors, TomCo has had to
re-evaluate its future strategy for its Holliday Block oil shale
project and seek alternative technological solutions which could
have the potential to, not only be effective, scalable and
environmentally benign, but also be economically viable at today's
oil prices.
Since the results of the Seep Ridge pre-FEED study became known,
TomCo has researched various alternative oil shale technologies to
retort oil shale in-situ, especially Radio Frequency (RF) heating
technology, oxidation heating technology and oil upgrading
technology.
Radio Frequency (RF) Heating Technology
The RF in-situ heating method that has been selected by
TurboShale, was tested by Texaco, Badger and Raytheon during the
early 1980's (in the laboratory for six years, and for three years
in the field in Utah, on the Mahogany Zone, from the Green River
Formation, less than 10 miles away from TomCo's Holliday Block
project). The results of this programme showed that downhole RF
antennae in several continuous pilot studies over a three-year
period could successfully heat up and retort oil shale in-situ at
less than 200ft from surface, and that high-grade shale oil could
be produced and recovered from the antenna itself and nearby wells,
using standard oil field gas lift methods. Retort temperatures
averaged 350(o) C in commercial quantities at the surface, without
affecting the water table in a separate geological formation below
the Mahogany Zone. This technology has not been commercialised to
date, largely due to the oil price slump in the 1980's and 1990's,
and the takeover of Texaco by Chevron. A detailed description of
this technology can be found in expired patents US4140179,
US4301865 and US4457365.
TomCo's management travelled to Boston in December 2016 and met
with the original Technical Director of this RF testing programme,
Ray Kasevich, and his business & technical partner Dr. Jeb Rong
who, between them, have decades of experience in researching and
operating RF heating technologies and other high power
applications. TomCo commissioned a desktop economic study by JR
Technologies that showed RF heating alone could be used to produce
oil commercially at current oil prices.
JR Technologies has agreed to join TurboShale and assign its
patent US7891421B Method and Apparatus for In-Situ Radiofrequency
Heating (US Application 62/017/408), and its patent application
US2015/035433A1 Subsurface Multiple Antenna Radiation Technology
(SMART), to TurboShale. JR Technologies will supervise all the RF
laboratory work, and any subsurface field work for TurboShale.
Oxidation Heating Technology
Heating oil shale by RF uses significant amounts of electricity
and TurboShale plans to test new oxidation heating technology that
may aid in the heating of oil shale at lower cost. Laboratory
studies show that when oil shale is pre-heated to around 250-300(o)
C, then air added at ambient temperature, an oxidation reaction is
initiated with a small portion of the kerogen in the oil shale
(about 4%), mainly carbon, causing an exothermic reaction that is
up to nine times the heat required for oil shale pyrolysis. This
could be an extremely cost efficient way of retorting oil shale
in-situ, but is unproven in the field so far.
The University of Utah has been selected to carry out laboratory
work on the oxidation heating technology, using drill core samples
from the Holliday Block and its bench scale retorts. Various
heating patterns and techniques will also be studied to improve the
quality of the shale oil production.
High Voltage (HV) Fracturing
TurboShale may also look at High Voltage (HV) Fracturing, to
improve the permeability of the shale for the oxidation heating
technology, so that RF heating is no longer needed once oxidation
heating is initiated. RF heating would microfracture the oil shale
along the bedding planes, by boiling the intrinsic connate water
(water trapped in the sediments during formation), but it is not
known whether this will be enough permeability to allow the
oxidation heating technology to work effectively. HV Fracturing is
a tool to generate strong electric pulses (alternating and impulse
current waveforms in succession) that cause localised shock waves
which may fracture the rock parallel to, and perpendicular to, the
bedding planes in a way that can be highly controlled by electrode
placements. The energy requirement for HV Fracturing is low. This
technology has been independently tested at a full scale by Chevron
USA Inc. and JR Technologies LLC on the Green River Formation in
Colorado and is explained in detail in patent application
US2015/0167440 A1.
Oil Upgrading Technology
Research by TomCo's management has shown that retorting kerogen
into shale oil can have a number of problems that need to be
investigated, such as high nitrogen levels (this poisons the
catalysts used in refineries so is usually restricted to less than
0.25%), high Total Acid Number (corrodes pipes in refineries and
pipelines), high Pour Point (the temperature at which oil will flow
easily in a pipeline) and high Olefin content (gums up pipelines).
The University of Utah will test for these properties. It also
intends to produce a number of shale oil samples for testing by
Ceramatec Inc. based in Utah, which invented a process for
denitrogenating shale oil using natural gas produced during the
retorting process (rather than relatively expensive imported
hydrogen gas), and contacting it with the shale oil under elevated
temperatures and pressures, in the presence of molten sodium.
Series A Fund Raising
TurboShale intends to raise up to US$1.5 million by way of a
private placing of equity. The net proceeds of which shall be
applied to its laboratory testing programmes, patent applications
and to general working capital. In addition, during this initial
phase, a scope of works pertaining to the second phase of
development shall be conducted and costed in detail. Graeme Hossie
of VDP who has agreed to join TurboShale's executive board, shall
oversee and assist in the raising these funds. Earlier in his
career, Graeme was part of the original London Mining Plc team, and
was instrumental in their funding activities.
Assuming full subscription, TomCo anticipates that its holding
in TurboShale will be diluted to 40%, with JR Technologies owning
20%, new investors holding 20%, VDP holding 10%, and 10% remaining
in treasury.
TomCo shall provide management services to TurboShale, initially
at a rate of $7,500/month. In addition, TomCo shall be paid
$2,500/month for administrative services.
Series B Fund Raising
Once the laboratory test work has been completed in
approximately 12 months' time, TurboShale intends to raise a larger
tranche of funding in a Series B Fund Raising round, to commence
field testing at TomCo's Holliday Block in Uintah County, Utah, and
prove commerciality of the TurboShale technology to other oil shale
companies. The intention is that TurboShale generate revenues from
both license fees and royalties from oil production.
Chris Brown, TomCo's CEO, commented:
"This is an extremely exciting time for TomCo and our new
subsidiary TurboShale. We believe we have found a collection of
technologies that can be competitive at current oil prices and
address the problems of producing shale oil from kerogen. While we
continue to monitor the progress at RedLeaf, TurboShale allows
TomCo to have greater control of its future development plans.
There are estimated to be 3 trillion barrels of oil in the Green
River Formation in the USA, and TomCo Energy has 126 million of
these barrels in JORC Measured Category at the Holliday Block
alone, so the prize for commercialising oil shale production is
huge. I am very pleased that Ray Kasevich and Jeb Rong have agreed
to join TurboShale and to work on the TurboShale(TM) Technology. I
am also looking forward to working with Graeme Hossie again, who
co-founded London Mining with me."
Enquiries:
For further information, please visit www.tomcoenergy.uk.com or
contact:
TomCo Energy plc
Contact:
Telephone: +44 (0) 20 3823 3635
Andrew Jones (Chairman) andrew@tomcoenergy.uk.com
Chris Brown (CEO) chris@tomcoenergy.uk.com
Strand Hanson Limited (Nominated Adviser)
Contact:
James Harris / Richard Tulloch +44 (0) 20 7409 3494
SVS Securities plc (Broker)
Contact:
Tom Curran / Ben Tadd +44 (0) 20 3700 0093
Tavistock Communications (Financial PR)
Contact:
Jos Simson +44 (0) 7920 3150
Jos.simson@tavistock.co.uk
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
- ENDS-
This information is provided by RNS
The company news service from the London Stock Exchange
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