After decades of exhaustive attempts to overcome the dirty reputation of
oil sands, we finally have an environmentally-friendly and low cost method to
tap into these vast resources in the state of Utah -- good news both for
Mother Nature and all oil and gas investors.
MCW Energy Group's CEO,
former Exxon President of the Arabian Gulf region, Dr. R. Gerald Bailey,
tells Oilprice.com in an exclusive interview that his hunt for an innovative
technology that simultaneously makes money and cleans up the environment is
over. The race to capitalize on Utah's vast oil sands resources is on, and
only the 'clean' -- both financially and environmentally -- will survive.
Coming hot off of the successful launch of clean oil sands operations in
Utah, while other oil sands projects are under fire from protesters, Dr.
Bailey discusses:
·
The difference between Utah and Alberta when it comes to oil
sands resources.
·
How new technology can -- and is -- extracting oil sands
without harming the environment.
·
Why the new technology is as much about remediation as it is
about extraction
·
How to create new revenue streams and use the resulting clean
sand for other purposes.
·
Why it's finally possible to make money extracting oil from oil
sands cleanly -- despite the current world's depressed oil prices.
·
What Alberta's tailings ponds look like now, and what could be
done to clean them up -- eventually.
Interview by James Stafford of Oilprice.com
James Stafford: After many years of oil companies attempting to
develop Utah's vast oil sands deposits without harming the environment, where
are we now?
Gerald Bailey: Right now, we're experiencing an exciting moment in
the history of oil sands technology. For the first time, we can finally
extract oil from Utah's oil sands without any environmental damage. And
significantly, we can do it at a cost that makes sense, even in this
depressed oil price environment. It's taken decades for someone to come up
with this technology and actually make it commercially viable; and it was
these elements that attracted me to MCW Energy. I wanted to get involved in
this project while it was still new and largely off investor radar -- now
it's poised to explode as an additional source for independent American oil
production.
James Stafford: So, oil sands don't necessarily have to be dirty?
Gerald Bailey: No, oil sands in themselves are not dirty. It is
quite simply sand that contains oil, just like sand underground in an
oilfield contains oil. They are dark with oil. The word 'dirty' has been
derived from the fact that most current extraction processes use hot water or
steam, which results in an oily water stream that leaves behind toxic
tailings ponds.
James Stafford: How is this new proprietary extraction
technology developed by MCW Energy different? How does it work?
Gerald Bailey: It's really quite simple. The technology works in
the same way as soap takes grease off plates: The grease adheres to the soap
and pulls it away and off the plate. Our technology -- which focuses on
proprietary solvents -- works in the same way. It adheres to the oil and
pulls it away from the sand.
James Stafford: What happens with the sand after this process?
Gerald Bailey: Well, that depends on what other local market uses
there are. Generally speaking, we wash the sand with our solvents and then
return it to the earth 99.9% clean. You can grow plants on it and it is no
longer contaminated with oil.
James Stafford: And are there any other uses for this sand? Is
there any kind of a market for this once it's been cleaned up?
Gerald Bailey: As I mentioned, for now the sand is usually returned
to the earth -- clean and safe. But there are other potential applications
that we are exploring. One possibility is to sell the cleaned sand as frack
sands, which is a spin-off business that's growing as fracking activities in
America increase. Frack sands require certain quantities of silicon and not
all sands are equal in this respect. Much of the desired frack sand comes
from the Midwest -- from Wisconsin and Michigan, for instance. For years Utah
oil sands containing bitumen/asphalt have been used in Utah, Wyoming and
Colorado to build roads and highways.
James Stafford: So the immediate term goal is to focus on ramping
up production in Utah and then licensing the technology for global
application?
Gerald Bailey: Yes. MCW has achieved commercial viability already
through a fully operational oil sands plant in Asphalt Ridge, in the heart of
the Utah oil reserves both in sands and in conventional reservoirs, near the
town of Vernal. It's termed "America's first environmentally-friendly
oil sands extraction project." Since the beginning of this year, we have
been cleaning Utah's oil sands and selling the oil to the market.
James Stafford: Why Utah?
Gerald Bailey: Asphalt Ridge is one of Utah's 8 major oil sand deposits.
Asphalt Ridge alone is believed to hold some 1 billion barrels of recoverable
oil. Utah has some 55% (Department of Energy Estimate: 32 billion barrels) of
the United States oil sands deposits.
James Stafford: How much is the project producing now and what are
the forecasts?
Gerald Bailey: The project is producing 250 barrels a day right now
at a very reasonable production cost of $30 per barrel, with plans to build a
5,000/bpd plant, which could bring costs down to $20 per barrel. Even in this
current world market, those numbers mean profit. While Alberta's oil sands
are expensive to produce oil using their existing technologies, and are very
troubled right now, MCW can make a profit on Utah's oil sands even with oil
at $40 per barrel. And that's what today's market is all about -- innovations
that spell profit even in times of crisis. Finding a company that has no debt
-- such as MCW -- in this atmosphere was a huge selling point for me.
James Stafford: How do you convince the public of the prospects of
clean oil sands for Utah given the international outcry about Canada's dirty
oil sands?
Gerald Bailey: That is the challenge. Certainly, Canada has given
oil sands a bad name and that is unfortunate, but the process and situation
in Utah is entirely different and the two cannot be compared.
Utah oil sands are found in a different position---much of Utah's oil
sands deposits lie from surface to just 400 feet. You can just scoop up the
oil sands with a front loader and then process it with MCW's proprietary
solvents. The oil comes out and you sell the oil and put the sand back in the
environment.
In comparison, Canada's oil sands have to be mined because they are
several hundred feet deep and the oil needs to be extracted with steam. The
resultant polluted water returns to surface with residual oil that cannot be
separated. This dirty water and sludge is stored in huge tailings ponds, so
large I understand they can be seen from space. Utah's sands are oil wet,
rather than water wet, eliminating the need for tailings ponds.
James Stafford: What does this really mean for the environment?
Gerald Bailey: We are here to clean up the oil sands business --
for now, starting in Utah. And any savvy investor knows that technology that
is environmentally friendly and commercially viable rules the day. This is
already a proven, cost-effective technology. Our main technology process
advantage is that we require no water to extract hydrocarbons from the oil
sands. Almost all other technologies require up to 3 barrels of water for
every barrel of oil produced.
Utah being largely a desert state, usage of water for resource development
is an extremely touchy issue. Our system features a closed-loop
technology....nothing leaves the system except the cleaned sands and oil. And
after tweaking our process, we've managed to dramatically reduce our labor
costs, decrease the costs of the petroleum products we use in extraction and,
increase our process efficiencies ---all which result in the lowest
production costs in the industry. Our next step is to share this technology
with the rest of the world. For now, that means anywhere that has oil sands
deposits similar to Utah's.
James Stafford: Are you talking about a technology that extracts
oil sands in an environmentally- friendly manner, or does it have broader
environmental applications?
Gerald Bailey: Oh, the environmental applications are much broader.
Our process may also be viewed as a remediation technology. This is not just
an opportunity to get in on another source for oil, but also an opportunity
to clean up the land after disasters or the resulting polluted tailings ponds
resulting from other less efficient extraction processes
James Stafford: Are you suggesting such a technology could have
played a role in cleaning up the Deepwater Horizon oil spill, for example?
Gerald Bailey: I am. We could have applied our technology there and
cleaned up significant areas of the contaminated beach. If you go there right
now, you can still find a lot of polluted sand behind the beach dunes and in
the adjoining swamps. This technology will certainly add value for its wider
remediation applications.
James Stafford: For now, though, MCW's technology seems to be
flying under the radar -- where many will not have heard of it.
Gerald Bailey: You know, I recognized this when I joined the
company that MCW had a technology that nobody else had. I also recognized
that it could make a huge splash on the world oil scene. Now it's ready to
reach out to the public. This comes at a time when oil sands extraction is a
tense issue in Utah, with protesters attempting to block an oil sands project
owned by another company, which is using a water-based technology. Educating
the public on the different processes of extracting oil sands will be key to
pushing an environmentally friendly agenda forward.
There has been no protest to our Asphalt Ridge project in Utah to date
because we emit nothing to the air or soil and there is no water to discard.
MCW has worked very closely with the Energy Development Department in Utah,
meeting or exceeding all environmental requirements. We're working under the
guidelines of their Responsible Resource Development Program, which is proof
that resources may be safely developed with placing the environment at risk.
Nonetheless, the general public still needs to be made aware of both the
environmental and economic possibilities here for the future.
James Stafford: What is the long-term goal here? Building plants
around the world, or licensing the technology?
Gerald Bailey: MCW is prepared to go several routes. We can build a
plant for others, or we can build and operate these extraction plants as a
joint venture. However, licensing is definitely an excellent way to deploy
our technology worldwide. This unique MCW technology has major global
applications. You can create an attractive revenue stream for everybody who
implements it. Russia, China, Afghanistan, Dominican Republic, Namibia,
Jordan and Trinidad -- these are all great potential license purchasers with
considerable oils sands deposits.
Eventually, we could even potentially clean up Alberta's tailings ponds by
de-watering the abandoned sludge and applying our new solvents to squeeze the
rest of the oil out.
It is actually surprising that nobody discovered this before... it is like
the Wright Brothers, they found a way and they proved the process. Someone
always comes along to solve the problem. MCW has accomplished this...Our
technology works; there is no pollution; nothing toxic goes back into the
ground or into the air. We will be driving a lot of cars on the refined
gasoline that comes from these huge reserves. This is a national and
historical first -- one I am willing to bet my 50-year reputation on.
