TIDMTOM
RNS Number : 0941Z
TomCo Energy PLC
16 September 2020
16 September 2020
TOMCO ENERGY PLC
("TomCo" or the "Company")
Greenfield Pre-FEED Report
TomCo Energy plc (AIM: TOM), the US operating oil development
group focused on using innovative technology to unlock
unconventional hydrocarbon resources, is pleased to announce the
receipt of the Pre-FEED (Front-End Engineering and Design) Report
(the "Report") for the proposed Greenfield Energy LLC
("Greenfield") operated oil sands plant. Greenfield is the
Company's recently formed 50/50 joint venture with Valkor LLC
("Valkor").
The purpose of the Report, compiled by Crosstrails Engineering
LLC ("Crosstrails"), a subsidiary of Valkor, was to confirm the
technical feasibility of a 10,000 barrel of oil per day ("bopd")
oil sands plant in Eastern Utah (the "Plant") and to make a first
estimation of capital and operating costs.
Highlights
-- The Report provides analysis of the Plant operations and indicates favourable economics
-- It is estimated that the total incremental cost of
production, including mining, fuel, electricity, personnel and all
expenses to take oil bearing ore from the earth to a commercial
petroleum product is likely to fall below US$30 per barrel of oil
("bbl"), targeting less than US$25/bbl in the next round of design
through heat recovery and various process optimisations
-- Confirmation that the Plant could feasibly be constructed
using conventional mining and oil processing equipment
-- Report concludes that the Plant could be constructed in a
relatively short time frame - estimated to be just over a year from
the commencement of construction to the start of production
-- Estimated capital cost for a 10,000 bopd Plant of US$185 million
-- The completed Pre-FEED Report provides a high level of
confidence in the project and will be used in the next project
step, Front-End Engineering and Design ("FEED"), as the project
progresses
Summary of the Report
The purpose of the Report was to confirm the technical
feasibility of an, in aggregate, 10,000 bopd oil sands plant in
Eastern Utah and to make a first estimation of the capital and
operating costs for the Plant, based on previous work undertaken by
Crosstrails in the preparation of a feasibility report for a 2,500
bopd unit and which has then been scaled up for this Report. The
Report confirms that, on the basis the Plant is able to be
constructed using conventional mining and oil processing equipment,
it should be feasible to construct a Plant capable of producing, in
aggregate, 10,000 bopd.
The Report is based on the Plant processing bitumen ore mined in
the Asphalt Ridge area near Vernal Utah, having an approximate
saturation of 7% by weight. It should be noted that a suitable
location for Greenfield's Plant has not yet been identified and
whilst Greenfield is seeking to identify a suitable site within the
Uinta Basin area, there can be no guarantee that it will be able to
do so and accordingly, the economics of Greenfield's Plant may be
materially different to those set out in the Report.
The Report assumes that the Plant will produce sales products
comprising a synthetic heavy fuel oil ("HFO") derived from Quadrise
Fuels International plc's ("Quadrise") MSAR(R) technology, subject
to Greenfield entering into a licence with Quadrise for the use of
the MSAR(R) technology at the Plant, as well as raw bitumen and a
small diesel fraction extracted from the lighter ends of the
bitumen extracted from the sands, along with the heavier ends of
the solvent utilised in that extraction.
The Report estimates that the capital cost of the 10,000 bopd
Plant will be approximately US$185 million, or US$18,500 per
nameplate bopd. The capital cost is inclusive of all project
management and engineering, all equipment and systems, site
construction, start-up, and commissioning sufficient to have a
fully operational oil sands plant capable of processing oil sands
ore into high grade bitumen product. The Report assumes that for
this design, contract mining will be used to provide ore to the
Plant and the capital costs do not include the cost of land, leases
and/or mining equipment.
As part of the Report, Crosstrails also undertook a basic
economic analysis of the Plant's operations, which indicates
favourable economics. The Report sets out that the total
incremental cost of production, including mining, fuel,
electricity, personnel and all expenses to take oil bearing rock
from the earth to a commercial petroleum product is estimated to be
below US$30/bbl, with the ultimate target of being less than
US$25/bbl in the next round of design through heat recovery and
various process optimisations. The Report does not take into
account any licence or royalty fees that will potentially be due
and the operating costs, including the mining costs, could vary
significantly from the costs assumed in the Report based on the
final site identified by Greenfield for the Plant and therefore,
the cost of production may be materially different.
The Report also details that the Plant could be constructed
within a relatively short time frame, as there is no equipment
required having a lead time longer than a year. As a result, the
Report estimates that from the commencement of construction to the
start of production would likely be just over a year, although this
will be confirmed as a part of the FEED.
The Board of TomCo believes that the Report provides a high
level of confidence that Petroteq Energy Inc 's Oil Sands Plant
("POSP") can be scaled up to enable production of 10,000 bopd,
subject, inter alia, to the successful completion of the proposed
upgrade works to the POSP that are currently underway and the
associated trials to demonstrate the POSP's commerciality, the
identification and securing of a suitable site for the Plant and a
licence being agreed with Quadrise for the use of the MSAR(R)
technology at the Plant.
The Report will be used as the basis for the FEED for the Plant,
with the Pre-FEED having defined, specified, and estimated all
major equipment needed for the Plant. In the FEED Study, actual
quotes will be received for all major equipment, with the balance
of equipment being estimated, to determine the capital expenditure
requirements for the Plant to within plus/minus 15%. It is
currently estimated that the FEED Study will take approximately
four months to complete from its commissioning and will further
detail and optimise operating costs in order to derive a refined
estimated total cost per produced barrel of oil.
Commenting, John Potter, CEO of TomCo, said : "We are delighted
with the conclusions of the pre-FEED study, which indicates that
the proposed commercial scale oil sands plant has favourable
economics, both in terms of plant construction costs and cost per
barrel of oil produced. This coupled with the potentially modest
time frame to construct a plant capable of producing ready for sale
products means that we are very excited for the future of
Greenfield. We look forward to progressing matters with our
partners and announcing further updates in due course."
Enquiries:
TomCo Energy plc
Stephen West (Chairman) / John Potter (CEO) +44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Richard Tulloch / Jack Botros +44 (0)20 7409 3494
Turner Pope Investments (TPI) Limited (Joint Broker)
Andy Thacker / Zoe Alexander +44 (0)20 3657 0050
Novum Securities Limited (Joint Broker)
Charlie Brook-Partridge +44 (0)20 7399 9402
IFC Advisory Limited (Financial PR)
Tim Metcalfe / Graham Herring +44 (0)20 3934 6630
For further information, please visit www.tomcoenergy.com .
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