HENDERSON, NV, Sept. 9, 2011 /PRNewswire/ - Stellar Resources Ltd. (OTC-QB:SRRL) "Stellar" is pleased to provide an update on its business strategy as approved by its board of directors. Stellar is committed to developing and acquiring oil and gas technologies that have high impact on the profitability of oil and gas projects. Stellar's strategy is to apply these high profit impact technologies to its own oil and gas exploration and production projects.
Stellar's own ZeroGap technology has potential to be a high profit impact technology. Today we are releasing additional information from the ZeroGap evaluation report written by Michael Tenhover, Phd to illustrate what we understand as a "High Profit Impact Technology."
The ZeroGap technology is at an early stage and without results of pilot or field trials it is always difficult to provide a definite value.
As discussed in this memo, the scientific and technical concepts related to ZeroGap are valid and appear to be novel. It shares many characteristics with existing commercial processes, but clearly targets a unique niche.
Some of the encouraging factors related to ZeroGap based on this memo are:
- Very large overall market size- multiple billions of bbls of oil- $000's of billions.
- Room for new technologies in the marketplace and places where ZeroGap may be fitted into existing approaches.
- ZeroGap is a "Platform Technology" with multiple benefits.
- The proposed technology is on a sound scientific basis and is likely to find applications.
The current oil extraction technologies mentioned earlier have generated multiple $billions in value for the companies involved. Cenovus Energy, Inc (Calgary, CA) for example is a very prolific user of SAGD technology. The majority of their income comes from SAGD oil production and Cenovus has a current market capitalization of over $28 billion.
It is important here to point out the very wide variety of potential target markets available to a new oil extraction technology. Just three of those mentioned here: Stranded oil, transition zone oil, and heavy oil would each constitute a huge market. Both stranded oil and transition zone oil are both in the 100+ billion bbls range just in North America. I think that both of these are potentially excellent fits to ZeroGap approach—combining heat plus viscosity modifications plus upgrading to recover more oil. For the estimate below, however I will just consider the Heavy Oil segment.
Upgrading oil provides also lot of value in terms of pipeline performance and value to a refinery. For refineries (reference Chevron Crude Oil Marketing), formulas are available to calculate the increased value of oil as it is upgraded.
Below API 34, Chevron values each 1/10 of a API increase at $0.0425 per bbl. So, for API 15 upgraded to API 22, an increase in value of about $3 per bbl. Another way to get at this increased value is to look at commercially traded crude oils. For example Napo Crude (Ecuador) with a API of 19 trades at a $12 discount to WTI Crude (API 39.6)- that works out to $0.60 per API degree per bbl.
To give my best estimate of the value at this very early stage, I will use the methodology that we used when I was with The Standard Oil Company. The value at the commercial scale category is estimated by assuming that the new technology if successful will capture 1% of the market and have a 10% impact on that segment—this is a very conservative approach. The other categories are estimated using discounts based on project experience.
Here, of course, the market is very, very large. Just the one segment- Heavy Oil is currently produced at about 10 million bbls per day. That's $365 billion per year. In the future, more of the World's oil production will be in the heavy oil category. In the next decade, the amount of heavy oil production will likely double--- representing an $800 Billion per year market.
Dr. Michael Tenhover, has over 30 years of experience in the oil and gas industry and is the former chief scientist for advanced materials at BP. Dr. Tenhover has 36 issued US patents, 3 invited review chapters for scientific books, 89 publications in peer reviewed scientific publications and has given numerous invited scientific lectures at conferences and major universities around the world.
Stellar Resources Ltd.
President & CEO
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SOURCE Stellar Resources Ltd.