Wescorp Energy’s (OTCBB: WSCE) Technology Provides Solution for Oil and Gas Industry’s Produced Water

POINT ROBERTS, WA and DELTA, BC –September 16, 2009, www.Investorideas.com an investor and industry research portal covering the water sector and oil and gas sector, presents an industry snapshot of the oil- water separation technology industry and its opportunity, by Lisa Springer CFA, Equity research analyst.

 

The report examines how Wescorp Energy (OTCBB: WSCE) is providing solutions for one of the oil and gas industry’s environmental challenges.

 

Proprietary Oil-Water Separation Technology Addresses Multi-Billion Dollar Market Opportunity

Lisa Springer CFA, Equity research analyst and financial writer

Stocks Covered: Wescorp Energy (OTCBB: WSCE)

 

One of the greatest challenges oil and gas companies face is cleaning “produced water”, water that comes up with the production of oil or gas, or  water left over from their drilling operations. This water, contaminated with hydrocarbon solids, sand, drill cutting and salt, is a major source of pollution and must be brought to the surface, treated to separate the water from residual oil, then disposed of either by re-injecting the treated water into the ground or pumping it into a surface separation pond. Treating and disposing of this water can cost as much as $12.00 per barrel and energy companies also lose thousands of dollars in potential oil revenues each year because some oil remains trapped in the water despite treatment.  

The scope of the problem becomes apparent when you consider that oil and gas companies must dispose of some 250 million barrels of oilfield contaminated water daily. The global market for the cleaning and re-use of produced water is estimated to exceed $50 billion annually. Oil revenues lost because treatment technologies leave some oil still trapped in the water are not trivial, either. An article in the May 12, 2008 edition of Oil and Gas Journal titled “Produced Water Management: Controversy versus Opportunity” suggests as much as nine tons of oil remain trapped in oilfield water for every million tons of hydrocarbons produced. 

Wescorp Energy (OTCBB: WSCE) has developed and begun commercializing a proprietary oil-water separation technology that is able to remove more of the residual hydrocarbons from treated oilfield water. Depending on the specific technology, conventional treatment methods can leave as much as 5,000 to 30,000 parts per million of hydrocarbons behind. Wescorp’s technology reduces the hydrocarbon component of treated water to less than 10 parts per million.   H20Maxx technology uses an aeration process based on microscopic bubbles several orders of magnitude smaller than conventional technologies. The bubbles attach to oil droplets in the water and break the oil/water interface, allowing the oil to be skimmed off. The benefits of H20Maxx technology include lower disposal costs, the ability to recycle treated water in drilling operations, thus reducing fresh water consumption and the recovery of greater amounts of residual oil.

To help commercialize its technology, Wescorp Energy has formed a 50/50 joint venture with Cancen Oil Canada Corporation, a leading provider of oilfield waste management services. Cancen plans to deploy a combined 12 H20Maxx and HCXT Solids units over the next 12 months at its processing facilities.  HCXT technology removes solids from oilfield water and cleans the solids to a standard allowing them to be used as gravel or fill. In September, the joint venture received a $1.0 million funding commitment to begin constructing three remediation units, consisting of two H20Maxx units and one HCXT Solids unit. As part of the agreement, Cancen will fund, operate and manage the joint venture. Revenues generated from treating and disposing of oilfield water and selling additional oil recovered in the treatment process will be shared equally by the partners.

Revenues generated by the joint venture are likely to ramp up quickly as more units are deployed. Each H20Maxx unit can process approximately 2,000 barrels of oilfield water per day. If third party disposal fees are $5.00 per barrel, each unit could generate $10,000 in daily fees and $3.6 million in annual fees. If twelve units are deployed in their current operations, disposal fees could exceed $43 million annually. Wescorp’s 50% share of unit revenues would be $21.6 million.  Construction costs are approximately $500,000 per unit ($6.0 million for 12 units) so payback on the original investment is achieved in a few months. 

Revenues generated from the sale of recovered oil could be even more significant.  Cancen thinks by incorporating H20Maxx technology into their current facilities they could recover of an additional 500 to 1,000 barrels of oil per day by its processing facilities. At $70 per barrel oil, each additional 100 barrels is worth $7,000. Wescorp’s share would be half that, or approximately $3,500.  Assuming 12 units operating, Wescorp’s share of revenues from oil sales could be $42,000 per day or more than $15 million annually.

The economics of HCXT Solids units are equally as compelling. Cancen plans to deploy HCXT Solids units along with H20Maxx units. In western Canada, oil companies can pay as much as $450 per cubic meter to dispose of contaminated oilfield solids. Assuming Cancen treats 50 cubic meters of oilfield solids each day, each HCXT Solids unit could generate daily revenues of $22,500 (i.e. 50 meters X $450 per meter) and annual revenues of $8.1 million.  Wescorp’s share would be 50% of that or $4.05 million. Twelve HCXT Solids units deployed in the field could generate a $97 million annualized revenue stream and Wescorp’s share would be half that or approximately $48 million.

The joint venture plans to deploy 12 remediation units over the next twelve months and more units next year as Cancen continues to expand its footprint. The agreement also allows the joint venture to build and deploy portable units, which will provide on-site remediation for Cancen clients drilling in the Alberta Oilsands.      

Lisa Springer Bio/ Disclaimer: http://www.investorideas.com/About/Lisa-Springer-CFA/

Previous Industry release by Lisa Springer- 

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Featured Water Stocks and Oil and Gas Showcase Company: Wescorp Energy Inc. (OTCBB: WSCE ) is an Oil and Gas solutions provider focused on deploying its water remediation and environmental technologies that overcome tough operational challenges facing oil and gas operators today on a global basis. Virtually anywhere in the world oil is produced contaminated water is produced, this includes associated formation water in conventional oil and gas production and potable water used in unconventional oil production such as the massive Oil Sands development in Alberta Canada.

Using conventional oil/water/solids separation technology, between 0.05% - 5% (500 ppm - 50,000 ppm) residual oil content remains in the water, Wescorp's patented, proven and highly scalable H2Omaxx microscopic aeration technology addresses this crisis by being able to increase the recovery of oil and reduce the amount of hydrocarbons in the contaminated water to less than 0.001% or 10 ppm. Wescorp's H2Omaxx is extremely economical and environmentally friendly eliminating the use of chemicals, filtration systems, high temperature systems and high pressure vessels.

Wescorp Energy Inc Showcase Profile Page: http://www.water-stocks.com/CO/WSCE/Default.asp

Wescorp Energy Inc Company Website: http://www.wescorpenergy.com/

 

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Source: Water-Stocks.com, Oilandgasstocksnews.com, Investorideas.com, Wescorp Energy