LONDON (Alliance News) - Quadrise Fuels International PLC Monday said the economics of its heavy fuel substitute "remain sound" despite lower oil prices.
The company, which produces a low cost alternative to heavy fuel oil for the shipping, refining and power generation markets, said the economics of its MSAR fuel have not been impacted on the same scale as the heavy fuel industry.
The Quadrise MSAR process adds value in refining by replacing high-value distillates with water and chemicals to create a substitute for conventional heavy fuel oil. Quadrise said a recent assessment of refining companies has shown that the heavy fuel price has fallen by 60% and said this has only led to a 20% reduction in the MSAR value-add, it said in a statement.
The value-add is driven primarily by the price difference, or spread, between heavy fuel oil and diesel. The company did not give any details about the assessment or what period of time it was conducted over.
"The economics of converting to MSAR production remain compelling even in such apparently adverse circumstances," it said.
Quadrise has been engaged directly with Saudi Arabian refinery owners on a joint study of the technical and economic impact of implementing MSAR technology at major oil refineries within the Kingdom.
The company said many large scale oil and energy projects in Saudi Arabia are being downscaled, deferred or cancelled due to the oil price, but Quadrise said an MSAR programme "requires limited capital investment, short lead times and is highly cash generative," and said it therefore expects that MSAR projects would be advanced rather than deferred.
"The intention is to confirm the [Saudi Arabia] programme in the current environment with a view to setting a defined timetable for the "production to combustion" pilot programme targeting completion during the first quarter of 2016," said the company.
It said the pilot programme in Saudi Arabia can only take place during the winter months when demand for power is lower.
"Quadrise has always considered the refining industry to be itself a potential client for the MSAR process for fuel substitution within their own operations - especially for on-site integrated power generation," Quadrise said.
"Indications are that this application could aggregate to a significant business in it own right and the company is presently pursuing a number of opportunities with a view to securing an early demonstration plant opportunity," the company added.
At the end of December, the company reported a cash balance of GBP9.8 million and said management "continues to operate the company on a low cost base," and has sufficient funds for all of its commitments.
Quadrise shares were down 12% to 13.38 pence per share on Monday morning.
