zareba plc

Another interesting and very positive article. I note with great interest the connection with BP and the fact that most of Quadrise's scientists were previously with BP. BP have actually expressed their interest in the technology already! Answers lots of other questions as well!!!!



MSAR in race to cut natural gas dependence

When geologist Alfred Fischer and chemical engineer Gordon Hoy asked oilsands developers to consider using their technology as fuel replacement for natural gas, the general response was incredulity.

Their fuel, called Multiphase Superfine Atomized Residue (MSAR), is made from a mix of bitumen, water and a dash of surfactant, a fancy word for dishwashing detergent, and has combustion characteristics similar to natural gas.

MSAR has been tested by the National Research Council and it is now being tested in a pilot project backed by four major oilsands players: Petro-Canada, ConocoPhillips, Deer Creek Energy Ltd. and Paramount Resources Ltd.

"It's proven technology," Mr. Hoy says. "We think we have the best economic package and also got security of supply because oilsands developers own their own feedstock. The economics are spectacular."

The pair are part of the 14-member team at Quadrise Canada Fuel Systems Inc., a private Calgary-based startup that hopes MSAR will be widely embraced by companies developing in-situ projects in the oilsands in the next few years, where development is booming because of high oil prices.

MSAR is one of at least five technologies in a race for acceptance by the sector to replace or reduce natural gas dependence. Others, like nuclear energy, are also being looked at.

At the moment, natural gas is widely used in oilsands plants as a fuel to create steam to melt bitumen so it can be pumped to the surface. It's also used in upgrading operations.

At the present rate, natural gas use in the oilsands will triple to 1.3 billion cubic feet a day in the next 10 years, about 8% of Canada's entire gas production.

The question is whether a scarce, clean-burning fuel like natural gas should be used in such large quantities to produce a lower grade fuel.

"What we'd like to do is change the paradigm -- instead of using natural gas, we want to use MSAR," said Mr. Hoy, business development vice-president at Quadrise.

The rising cost and availability of natural gas are also major worries. The high cost of gas is seen as one of the three major risks of oilsands development. The others are labour shortages and lower oil prices.

Natural gas availability is also a concern because conventional production is declining as fields mature. By the end of the decade, more supplies are supposed to come from the Arctic via the yet-to-be built Mackenzie Valley pipeline, but that megaproject was put on ice last month by Imperial Oil Ltd. because of costly aboriginal demands and mounting red tape.

Concern about gas availability is so high that the government of Alberta said last week that natural gas rebates aimed at reducing the impact of high gas costs for consumers might be eliminated to encourage conservation.

It helps that the oilsands industry is in a hurry to reduce its own dependence on high-cost energy. "With natural gas prices where they are right now, at US$6.50 per thousand cubic feet, the pressure is really on, because it's the No. 1 cost for oilsands plants," said Greg Stringham, vice-president of the Canadian Association of Petroleum Producers. "They are looking for all kinds of things to reduce operating costs and this is the biggest one."

The Long Lake project, a partnership of Nexen Inc. and OPTI Canada Inc., is the first major operation to do away with natural gas use. Long Lake uses a process called OrCrude that produces its own synthetic gas through the gasification of the least valuable part of the barrel, called asphaltene. First oil from the project is expected at the end of next year.

MSAR, meanwhile, is the progeny of an emulsion fuel developed in the 1980s in Venezuela by BP PLC and the national oil company, Petroleos de Venezuela SA, for applications to bitumen deposits similar to those found in Northern Alberta. The fuel they created, called Orimulsion, has been commercially available for power generation worldwide since 1988. Its development continued in Canada, where BP wanted to apply it to its Canadian heavy oil business.

Alan Stockwell, now a scientist at Quadrise, worked for BP in both countries and was one of its inventors.

"BP was very interested in emulsion technology as a way of transporting bitumen and heavy oil out of Alberta," Mr. Stockwell said. "It's a relatively simple process, but all the best things are simple, and it works."

BP later sold its oil business in Canada. It remains one of the few large oil companies without an oilsands presence.

The BP scientists involved in the technology formed Quadrise Ltd., a company in the U.K. that is one of the major shareholders of Quadrise Canada.

Geologist Alfred Fischer, chief executive of the Canadian company, said MSAR's biggest advantage is that there are virtually unlimited supplies of bitumen in Northern Alberta. Supplies of dishwashing detergent, made from beef fat, are also ample. The firm plans to source it from plants in Saskatoon or Chicago.

He said MSAR is also less costly than other technologies. He estimates the fuel would reduce the cost of producing bitumen by about US$2.50 a barrel compared with natural gas.

However, MSAR produces more carbon dioxide emissions, which could be re-injected into the reservoir at additional cost.

Mr. Fischer expects to see major use of MSAR starting in 2008 and 2009. Quadrise is currently raising $41-million from private investors and is looking at becoming public in a couple of years.

"What is the best use of natural gas? In our opinion, it should be burned by residential consumers, not in an industrial process that produces low grade hydrocarbons".