Wednesday, November 5, 2014

Well Power, Inc. (WPWR) Portable, Configurable Micro-Refinery Technology Ideal for Smaller Operators & Wildcat Drilling

Fracking has led to increased energy resource recovery all over the planet in recent years and nowhere is that more evident than right here in the U.S., where E&P activity in North Dakota’s Bakken and other shale plays has led to the country retaking the top slot as the biggest oil producer on earth, surpassing even Saudi Arabia and Russia. Q1 output this year climbed to more than 11M bbls/day, with France’s IEA confirming Bank of America’s earlier analysis that the U.S. is now the number one global producer of oil and natural gas liquids. IEA projections further indicate that output will continue to rise through 2019, hitting around 13.1M bbls/day, creating substantial, growing opportunities for companies who can serve the needs of the industry.

Unfortunately, pipeline and LNG/CNG (liquid/compressed natural gas) logistical capacity has not kept pace with the proliferation of fracking and horizontal drilling technologies, leading to serious economic and environmental problems, as stranded natural gas ends up flared right into the atmosphere for want of either room in the gas pipelines, or expensive facilities required to render the gas transportable to distant markets. The Wall Street Journal estimates that in North Dakota alone this April, as much as 10.3B standard cubic feet of gas was burned off at wellheads across the state, an even more alarming statistic considering the amount of energy used by drilling and well maintenance equipment.

Maxed out pipelines, the steep costs and regulatory obstacles for building LNG plants, lack of CNG hardware (not to mention associated risks) and the growing glut of gas, means that as much as 30% of gas production is simply ending up wasted, flared into the air by companies who could really use the addition to their bottom line. DOE estimates for the roughly 50% of homes in America using natural gas for heat this winter indicate a savings of only 5% will be experienced and the latest EIA working natural gas inventory data shows we are 294B cubic feet lower (3,840 Bcf total) than the same time last year, or around 310 Bcf off the 5-year average.

North Dakota’s Industrial Commission (NDIC) has even moved to curb gas flaring with stringent new regulations aimed at reducing flaring to 26% by Q4 this year, and to as little as 10% by 2020. An initiative that tracks well with the World Bank’s guidance from June, where they urged energy producers to stop flaring by 2030, citing the 5.3 trillion cubic feet of gas flared globally each year as enough to power the continent of Africa and the fact that such flaring is a seriously negligent environmental hazard to boot.

There is tremendous earnings potential for companies who can step in and fill the gap here, and one such company is Well Power (OTCQB: WPWR), which is developing a proprietary Micro Refinery Unit (MRU) technology anticipated to process up to 250 Mcf gas flows, right at the wellhead, into electricity or Engineered Fuels™ (diluents, drop-in/no-sulfur diesel and pipeline-quality synthetic crude). More importantly, and unlike many other players in the sector, WPWR’s MRU technology, exclusively licensed from Canada-based ME Resource Corp., is a scaled-down, modularly configurable and highly portable (skid-mounted) solution that is perfect for moving from site to site.

Adaptability of design is key in the often difficult operating environments E&Ps are known for and the ability to generate energy or saleable secondary products directly at the well site are a serious boon to individual well economics, making the technology highly sought after, especially by smaller operators and exploratory/wildcat operations. Site-specific configurability is a huge advantage, with the ability to handle sweetening or dehydration, produce mixed or separated product streams, tailor product specifications on-site, or even derive co-gen/HVAC secondaries from the excess heat and pressure generated.

Key advantages of the MRU technology, such as improved safety and single-vessel design with extremely efficient, integrated heat exchange, and the ability to do high yield (over 50% pentane plus or C5+), make the technology really stand out among competitors. 100M cubic foot per day plus production capacity from MRUs is music to the ears of Eagle Ford Shale operators in Texas, where WPWR has already secured licensing, and the company has first right of refusal to license the technology in other states as well. The MRU units will be made available for outright purchase, but also through leasing and JV with WPWR, making this technology even more attractive to smaller operators. In addition to avoiding the likely crippling regulatory fees on flaring which are rapidly emerging, the MRU technology also means individual wells can expect better initial startup times, as they do not have to wait for tie-ins.

For more information on Well Power, visit: www.wellpowerinc.com

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