The following is my analysis of how Quadrise MSAR could fit into the Greenfield joint venture between TomCo and Valkor, using Petroteq technology.

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Opinion: How Quadrise MSAR could help Greenfield unlock Asphalt Ridge

Opinion contributed by dustofnations. Thanks particularly to ianb, dtwin26, & bod100 for their input, feedback & research over the last few months

The Petroteq process utilised at Asphalt Ridge, Utah, uses a proprietary set of solvents to extract oil from Utah’s kerogenic rock/sands with modest energy and water requirements, leaving mostly just sand behind. Towards the end of the process, the solvents are evaporated and distilled from the recovered crude to reuse them.

However, as detailed in the public SEC filings I have found, what is produced is a very heavy crude, probably in the API 8-14 range (super-heavy crude/bitumen); in order to control the viscosity of the product, Petroteq selectively leave certain of these solvents in the finished/upgraded crude product.

This probably sounds awfully familiar to the regular reader; it’s essentially using a diluent or 'cutting', but via a slightly atypical route. As a reminder, cutting is a process by which high-value, low-viscosity distillates are added to low-value, high-viscosity residues in order to reduce viscosity enough to produce a salable product.

In the case of the Petroteq process at Asphalt Ridge, the kerogenic crude produced requires cutting in order to lift it to WTI crude specifications (and be bought by refineries at an acceptable price).

peq docs
Figure 1. SEC filing from Petroteq describing per-barrel costs in 2015
pet docs 3
Figure 2. SEC filing from Petroteq describing the process required to meet particular crude viscosity specifications

I believe there are a few important implications to this:

  • The more diluent left in the finished crude product, the more expensive the per-barrel cost is to Petroteq, as they have to buy in the solvent ingredients. That is, the lower the viscosity of the finished product, the higher the cost to produce. As illustrated by the image above, as of 2015, condensates formed a considerable proportion ($15.56 - $18.32) of the per-barrel cost of produced oil.

  • Greenfield (Valkor & TomCo) could save a substantial amount of money (per barrel equivalent) by using a technology such as MSAR to control viscosity, and recovering the maximum possible solvent for reuse.

  • Petroteq spent a considerable amount of money on propane for heat and other parts of their process (see picture, $1.07 - $1.41); most of this could be displaced by MSAR, aside from any propane that might be needed as part of their solvent formulation. There is also modest usage of diesel ($0.37 - $0.19).

  • Use of diluents in the finished product also adds to the carbon cost of the fuel, as these solvents have to be refined elsewhere and brought in by truck.

Quadrise’s MSAR fuel could provide an interesting solution to all of these issues:

  • MSAR controls viscosity with water instead of diluents (i.e. Petroteq’s solvents), and it works directly with even the heaviest residues. This would allow the maximal recovery of Petroteq’s solvents for reuse; this could dramatically reduce the per barrel expenditure on solvents to an absolute minimum. [1]

  • MSAR should have no problem meeting emissions requirements for heat generation onsite, as it allows almost complete carbon burnout (no soot/black carbon), and reduces NOx up to 50% (reduces thermal NOx).

  • Instead of attempting to control viscosity via solvents, Greenfield would maximise solvent recovery. This would produce the heaviest possible residue, which would normally have a very low value; however, the MSAR process can handle this residue without issue, upgrading it into a high-value fuel that meets whatever viscosity specification is required.

  • MSAR is a finished, premium fuel product, and does not require any further refining. This would allow Greenfield to sell MSAR directly to consumers and bypass the mid and downstream completely. This clearly has substantial effects on margins that could be achieved by Greenfield, that would otherwise have gone to refiners, distributors, etc.

Greenfield have the opportunity to develop a new fuels market in Utah and beyond

The challenge and opportunity for Greenfield is to find local consumers of MSAR fuel, and perform any alterations necessary to boilers and engines to facilitate combustion of MSAR instead of standard heavy or intermediate fuel oils (HFO/IFO).

Valkor, one of the Greenfield JV partners, is an EPC company, with extensive experience in this space; it is plausible that they could use their existing capabilities to perform any work required in-house or via their network of consultants.

Indeed, this seems like an obvious opportunity for Greenfield to "bundle" services in with their fuel; offering clients low-cost or free conversions in return for using MSAR fuel, as well as providing coverage for any technical issues that may arise.

This would strongly benefit the client by removing any CAPEX risk, with the cost being covered by Greenfield’s profit margins on the fuel.

Further, clients would have a great degree of comfort by being supported by an EPC organisation.

Use of MSAR in industrial applications is rather simple, with very modest modifications required. The fuel has also been tested very extensively, with successful results in a variety of different applications.

The Utah and tristate area has a wide variety of heavy industry that would likely benefit from a lower impact and lower-cost fuel; there are also excellent transportation links to the rest of the regional markets. MSAR applications would include industrial boilers, electrical power generation, heavy diesel engines and machinery, inland and ocean-going marine, cement production, amongst others.

Low-sulphur MSAR opportunity in marine

Interestingly, the crude produced from Asphalt Ridge is sweet (very low levels of sulphur); it should easily meet the IMO2020 0.5% sulphur standards without requiring scrubbers. The implication of this is that low-sulphur MSAR produced by Greenfield could be sold directly into the marine bunkering market, if customers can be identified.

Again, Valkor’s experience in marine and their existing relationships could prove extremely useful in acquiring customers; they may be able to perform any conversion work, and assist clients in trialing the fuel (e.g. LONO trials).

As covered in Quorum in depth on several occasions, the marine market is the largest segment consumer of HFO products, and the environmental and economic benefits are quite compelling.

IFO380 and IFO180 are the prevalent high-sulphur fuel oil standards purchased at bunkering hubs for very large marine vessels. IFO is an initialism for intermediate fuel oil (IFO) with the number being kinematic viscosity in centistokes (cSt) — a rather old-fashioned unit. The same applies for IFO180, but it has a lower viscosity of 180cSt.

There are various standards and sub-specifications that an operator’s bunkering team would look into if they were actually ordering fuel for a vessel; these are just high-level benchmark standards that give an indication of where the market is going for the most common fuels.

ULSFO is similar to IFO380, but has ultra-low sulphur content (<0.5%) to be compatible with recent IMO 2020 rules on sulphur content in marine fuels.

Sulphur is notoriously difficult to remove, so usually a low-S feedstock is preferred. Often blending is used to achieve a net low-sulphur fuel, but this keeps causing problems with feedstock incompatibilities (solid matter such as wax drops out of solution and clogs up the feed lines, filters, pumps, etc).

MSAR has tuneable viscosity, so it can meet the various standards described by simply by tuning levels of water, surfactant chemicals, etc. Further, the fuel can be low sulphur if using a low-sulphur feedstock such as that produced at Asphalt Ridge.

So, with the right feedstock MSAR, can be made to match the required viscosity and sulphur specifications. Additionally, it would be considerably cheaper than any other marine fuel, as it is distillate-free and refining-free; essentially it would comprise of just Asphalt Ridge crude, water, and Quadrise’s specialty chemicals.

A complication is that the vessel needs small modifications to burn MSAR, and there may be LONO [2] requirements for any 2-stroke marine diesel engine models Quadrise have not tested on before.

Greenfield, being based in the US, also have an interesting opportunity to service inland lake transportation, Jones act vessels that hop between domestic ports in the US, as well as the standard bunkering market for large international marine vessels (bulkers, container vessels, tankers, etc).

More discussion of MSAR Marine can be found in previous editions.

MSAR fuel

For those who are less familiar with the product, MSAR is an oil-in-water emulsion fuel, with fuel micro-droplets encapsulated inside of a continuous water phase (meaning the fuel droplets to not touch). It is the headline product of Quadrise Fuels International.

This is achieved via the addition of their patented chemical additives and emulsification process, which uses surfactants, polymers, and other chemicals, processed via a high-speed colloid mill, to produce a highly-stable fuel.

For those who are interested, a more in-depth exploration and technical breakdown of MSAR is available from our coverage of the Quadrise Research Facility tour.

The Independent QFI Shareholder Community Forums are another source of excellent information, analysis and discussion.


1. There would always likely be a small proportion of solvent that would remain in the finished product, as it would either be technically or economically infeasible to recover
2. Letter of no objection from engine manufacturer to satisfy insurers


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