Who knew that zest from an orange peel could potentially be a low-cost solution to pollution in the oil sands industry?
U.S. Oil Sands
, (TSX: V.USO
, Stock Forum
) a Calgary-based company with project in Utah, said it has developed technology to recover bitumen from oil sands without producing all of the solids and chemical waste that need to be dumped into tailings pond.
U.S. Oil Sands, which traded at 13 cents Tuesday has a market cap of $110.9 million, based on 853 million shares outstanding. The 52-week range is 24 cents and 7 cents.
The company plans to deploy the technology at a bitumen mine in Utah, which it hopes will produce 2,000 barrels of oil per day for a fraction of the high costs that normally go with large projects in the Alberta oilsands.
“We plan to be in production by the middle of 2015,’’ said U.S. Oil Sands Chief Executive Cameron Todd during an interview with Stockhouse.
Todd and U.S. Oil Sands President Glen Snarr were attending the Prospectors and Developers Association of Canada convention in a bid to raise the company’s profile with investors.
Major oilsands producers deploy a method called the Clark Hot Water Extraction process, which was developed in the 1920s. It leads to the production of a toxic mix of residual water, solids, and added chemicals which are not easily disposed of and have created the need for massive tailings ponds to store the waste.
The problem is that heavy oil doesn’t separate from water easily. So the Clark process uses a caustic soda that produces a soap-like material and later a sludge that has to be stored in tailings ponds.
But U.S. Oil Sands says it has developed a proprietary extraction process that involves the use of biodegradable, non-toxic solvent derived from citrus products, including oranges.
The solvent from oranges is mixed with oil sands and hot water. Todd said the solvent is a degreaser that removes the oil from sediment. It can do this without producing the sludge that needs to be stored in waste ponds.
“We have been working on this for over 15 years, both as individuals and as a company, ‘’ said Todd.
U.S. Oil Sands is hoping to put its Utah mine into production for a cost of $50 million, or $25,000 per barrel of oil of cap ex, he said. By comparison, Todd said it cost Exxon Mobil Corp.
, Stock Forum
) and Imperial Oil
$12.9 billion to put the Kearl Lake oil sands project in Alberta into production at a cap ex price-tag of $110,000.
The company has the financing to meet its goals after raising $81 million late last year.