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Helpful. Ive never promoted QFI to anyone, simply state the facts. It’s entirely up to Greenfield if they use MSAR and I’m certain that will be determined on economic grounds.
You have ignored the facts or don’t know what they are. The bitumen delivered to the refinery will be processed by a non-complex refinery specialising in bitumen products and spread onto the roads of Utah this summer, that’s your current market.
I also think Greenfield will be profitable without QFI given current oil prices, but investors will want more than that if they’re to stump up $185m for a new plant. They need maximum profits which, again, is why Steve Byle came calling.
Salinger, I know you want to promote QFI and MSAR as the saviour of Petroteteq and Tomco but it is not true.
MSAR is an option for the plant(s); no more and no less.
The plant(s) will be and the test plant is profitable without MSAR. The plants will have a number of output options: Asphalt, crude, No 6 diesel and MSAR. They want the built in flexibility so that they can take advantage of seasonal and opportunistic pricing opportunities.
It may or may not be the case that MSAR is worth using. No one will know until the QFI test is run, then they kit out the plant to run MSAR and then do some test runs. So it is a little way off.
I have no issues to grind with QFI or MSAR: I have made good money trading in and out of QFI on spreads.
“ The solvent is not added to the output post production so it can be transported”
Therein lies the problem. Holders here seem to not understand the history of PQE. The product is bitumen whatever you claim, George Stapleton believes so, that’s fine for me. Large amounts of extra solvent most definitely are required to pump and deliver the oil, that also is a fact and why Steve Byle first contacted QFI as the cost of transport to refinery was prohibitive. It’s all out there, you just have to look.
@Bob... Think you are being slightly pessimistic. Based on comments from Petroteq they expect production costs to be cut to $25 per barrel and these would be largely offset by sand sales. So overall could be in the $5-10 range. Transport costs will vary depending on where it goes and who they use. My own model so far is based on $45/barrel clear profit and that is very attractive.
Bitumen is 10 degrees and below. The output is over 10 degrees and therefore not bitumen. It is a matter of definition. It is bitumen in the ground but once processed it is not.
I am not confusing anything. All in production cost is less than $30. Transport costs are variable and it depends on the offtaker and the product. The solvent is not added to the output post production so it can be transported. The solvent is used in the extraction process and is a residual in the output. They can operate the plant to optimise the amount of residual solvent.
I might get AB to double confirm it when he WhatsApps me later.
The RNS advised they were getting $70.91 per barrel, less transport of $13 making $57.91 if the $30 PB cost is correct then they are making $27.91 PB, however they only transported 200 barrel, so they only made $5582. My understanding is that this was a higher than expected $ for the grade of oil.
Whilst this is great progress and prove of principle, its not going to make a business that would validate the investment required for the large units. Yes, their is also the sand at $15-20 per tonne, which effectively offsets the above transport costs, but still does not make the investment required a no brainer.
I understand the reason that such a small amount was sold is that it went to a local, small, refinery that can deal with "heavy sweet crude"and that the weight limit for the tanker was the limiter. The importance (IMO) of the MSAR via QFI is that it will change the API, thus other refineries would take it, at greater volume, and at a similar or higher price.
Best guestimate for MSAR tests is late August, then it will have to be made at the correct formula and shipped to Utah, allowing for usual delays, we should have Greenfield produced oil with MSAR by year end 2021 (IMO).
The output is not bitumen, it is close to but not bitumen.
About 5% of the solvent remains in the output. On your pricing they would be paying $300 a barrel for the solvent. PQE has already stated that production costs are less than $30 a barrel all in.
They have already stated that they can produce No 6 diesel off the plant: in which case, no need to refine it or use MSAR.
Whether MSAR ends up being used or not will come down to the tests to be run by QFI and the economics. There is no NEED to use it but it may be that they decide to use it all the time, some of the time or not at all.
PS on the output from the Crown ore it is about 1.5 tons of sand per barrel of output and from the AR ore about 1.74 tons per barrel. So a bit more processing needs to be done per barrel from AR but on the other hand they have more sand to sell per barrel. Swings and roundabouts.
PPS two things that they want from future production plants is flexibility on the inputs and the outputs.
@Killjoy - I guess that's one take on it. I prefer to await the final FEED report. Before then though it's both interesting and funny reading all people's views on where TOM will end up. Taking into account the transport costs it's a good price per barrel for a low API crude oil.
It was a puzzle as to how PQE can sell their 10.2 API low Sulphur bitumen (heavy sweet crude oil) to a Nevada refinery for the same price as 40 API WTI when the the volumes are so small - 200 bbl, and the refined products (the crude slate) from the 10.2 API bitumen are less valuable than those from high spec. WTI.
There is only one refinery in Nevada. It is in Eagle Springs, Ely - 400 miles by road from Vernal, Utah. The refinery is owned by the Foreland Refining Corporation and it has a capacity of 2,000 bbl/day. It is a very small refinery when compared to the tidewater refineries in Texas that each manage 500,000 bbl/day. It is even small in comparison with the nearby Salt Lake City refineries that operate at 60-70,000 bbl/day. As befits its size, the Ely refinery is an uncomplicated set-up with just an atmospheric distillation column. The refinery specialises in asphalt paving materials, burner fuels & fuel oils. The Ely refinery used to take oil from the nearby Gabbs Valley oil field which appears to have ceased operations.
It all starts to make sense; a small and straightforward refinery specialising in asphalt paving products pays a premium for locally produced 10.2 API bitumen trucked in in small batches as that is all they are set up to handle. Plus it's the summer months and it's the start of the local road building / re-paving season.
It depends from which site the ore sample will be sent. The ore on the PQE SITE is not as rich as the ore from the Greenfield lease, from where the oil sample when produced will be sent. Which is why I think there is a delay in sending the sample to QFI until end June. Aimho.
A sample of produced oil is also being prepared for shipment to Quadrise Fuels International Plc in the United Kingdom, for the purpose of assessing the suitability of the heavy sweet oil produced by the POSP for their MSARÒ technology. It is expected that this sample will leave the US before the end of June 2021, with testing taking place following arrival in the UK.
The product is bitumen, it cannot be pumped and stored like normal oil. To get rid of it they dilute the bitumen with solvents used in the process, historically that amounts to around $15 per barrel. $57 minus $15 means PQE (or whoever operates the POSP) receive nett income of $42 per barrel.
This is your reality and why they’re sending samples to QFI. MSAR production does away with solvents and instead of selling your oil to the refinery you sell what is now fuel to power and industrial users and perhaps shipping companies for bunkers. Low sulphur fuel oil sells for around $75 per barrel, so you can why QFI fit in with their longer term plans.
Hi Toby, well, the way I would look at it, is that if Greenfield can get full WTI price and not need QFI, TOM should fetch a higher price. QFI Can only be justified, if MSAR increases the sale price more than QFI will ask for use of their technology. Aimho.
Orslega I'm rather surprised that Petroteq achieved standard WTI price of US$70.91 per barrel (less transport costs). I understood the product produced was low sulphur "bitumen" hence the requirement for QFI technology to convert it to MSAR. If Petroteq can consistently achieve WTI standard price where does this leave QFI? I should perhaps declare my hand here. I am a long term (8+ years) QFI holder and only bought into TOM at it's price drop last month.