Introduction

Oil-Tech has contributed its patented retort technology, pilot plant and 34,000 acres of land leases in Utah to Millennium Synfuels in exchange for its ownership in Millennium Synfuels. In return, Millennium Synfuels is charged with commercializing the Oil-Tech retort technology from this point forward.

The Potential

The attempt to produce oil from shale rock is a well known endeavor in the oil industry. The World Energy Council estimates that there are over 2.6 trillion barrels of recoverable oil in the Green River formation area located in Utah, Colorado and Wyoming. This reserve has the potential of making the United States energy independent. Oil shale reserves also occur in many other countries, including Canada, Sweden, Estonia, Scotland, Spain, Italy, China, Russia, South Africa, Australia, Zaire, Brazil, Jordan, India, Israel and France. The stakes are obviously enormous.

Past efforts by major companies to tap this treasure have been plagued by a series of problems, with no company being able to reach the elusive goal of producing the shale oil continuously and economically.

Oil-Tech has been successful in perfecting its breakthrough processes such that a barrel of oil is estimated to cost between $5-8/bbl depending upon rate of oil (kerogen) production from our retort clusters and $23-28/ton (barrel) for mined shale depending upon mining methodology as well other process economics. It is important to note that these are conservative estimates and we fully expect to lower our costs by cogeneration of electricity via the heated spent shale as well as achieve lower mining costs by increasing the scale of production of mined shale.

Market Supply and Demand

According to the United States Department of Energy, worldwide oil production rates are projected to increase by 1.1% per year through the year 2030, reaching an annual level of approximately 43 billion barrels of oil per year.

United States domestic oil demand is approximately 20.7 million barrels per day (870 million gallons) with 58% of all consumption imported at a current cost of over $150 billion per year, amounting to the largest single element of our trade deficit.

While the global demand increases, existing reserves are being depleted and new reserves are becoming increasingly difficult to identify.

The Challenge

The immediate question that likely comes to mind was how a small startup company is able to succeed when major companies with access to large intellectual and financial resources were not.

The early years at Oil-Tech were devoted primarily to studying prior attempts at oil shale extraction with a view towards analyzing their flaws. Through continued persistence and inventive genius, we have been able to perfect the process such that synthetic "oil" may now be produced in an economical and environmentally friendly fashion.

Our company also frequently called upon the expertise of its diverse shareholder base. The passion the shareholders feel for the company gives us access to a diverse pool of resources that would otherwise be difficult to engage.

This reliance on in-house genius and perseverance, actively supplemented where appropriate by high qualified outside resources, has been one of the keys to Oil-Tech’s success.

Process Description

After shale rock has been mined, the rock is further crushed. This rock is then lifted via conveyor equipment to the top of an 80 foot building and deposited in a feeder bin setting on top of the heating column, known as a “retort”. The retort heats the shale rock until the hydrocarbon vapors containing organic materials are released. These vapors are then vacuumed into a condensing unit, thereby producing raw shale oil.

One ton of shale rock will typically produce between 30 and 60 gallons of shale oil compound. This oil is subjected to a process which creates two marketable products – refinery feedstock and pyridine nitrogen. Pyridine is a basic, organic, and aromatic nitrogen with many uses and markets. This may be used amongst other purposes as an asphalt additive. The pyridine makes up approximately 2% of the shale oil.

The refinery feedstock has been shown to be low in sulfur content and is thus viewed as “sweet” or “light”.

The resulting spent shale has a large heat value that will be used as a source for heating new shale rock entering the retort. The spent shale also has residual carbon content that may be combusted to further produce energy. Finally, after all hydrocarbons are condensed, propane, which is non-condensable at atmospheric pressure, may be scrubbed, compressed, chilled and bottled as clean energy, ready for market.

The spent shale has potential market value in various areas as building materials, industrial spill absorbents and for land fill. Such potential has not yet been fully investigated.

Environment Impact

The retort is a sealed unit, vacuum purged and environmentally friendly, with no toxic output. Propane/methane gas, the cleanest burning gas known to the energy industry, is a byproduct of the process that may either be flared off or used to support the cogeneration efforts.

The raw spent shale has been tested by the State of Utah and found to be non-polluting. The State thus granted permission to store spent materials on the surface. The State is also interested in using the spent shale to fill old abandoned Gilsonite mines.

Minimal water is required for the process. Unlike most other designs, the retort does not require water for its operation. The mining operations and spent shale operations will require a small amount of water for activities such as dust control and cleaning equipment.