Sonic, Shell team for oilsands patent
Details of 'innovation' not disclosed
By Shaun Polczer, Calgary Herald
June 24, 2009
CALGARY - A small startup has teamed up with one of the world's largest oil majors to develop a patent for processing heavy oil and oilsands.
Vancouver-based Sonic Technology Solutions on Tuesday said it has partnered with Shell Canada to jointly file a patent application for the recovery of bitumen from oilsands.
The application was made in Canada and filed under the Patent Co-operation Treaty, allowing for submissions to other countries at a later date. The application builds on earlier work by Sonic as described in an earlier provisional patent application and incorporates further work conducted and funded by Shell, the company said in a news release.
"We are very pleased that Shell's progress to date has borne out our earlier proprietary work which has now been strengthened with Shell's additional results," said Sonic CEO Adam Sumel.
Sonic is listed on the Venture Exchange, where its shares jumped three cents, or almost 25 per cent, to 16 cents.
The company says it uses high-amplitude/low-frequency sonic reactors for a variety of applications in the oil and gas and environmental services industry, including upgrading heavy oil.
The Shell deal came about in 2007, when Sonic worked with Western Oil Sands to develop new technology to separate bitumen from sand for use at the Athabasca Oil Sands Project. Shell added research and intellectual property that will be incorporated into the patent.
Although the basic concept is documented on Sonic's website, a great deal of mystery and intrigue surround the process and Sonic said details of the "innovation" as disclosed in the patent application will be available when the it is published by the Patent Office.
Likewise, Shell officials were tight-lipped with respect to details of the application.
"We're not going to disclose details of the patent for competitive reasons," said spokesman Phil Vircoe.
Although the Shell partnership is important for the company, Sonic is staying more focused on developing a proprietary upgrading process, Sumel said. On its website, it claims to enhance bitumen with an American Petroleum Institute (API) rating of 10 degrees to a pipeline-capable 28 degrees API.
On June 2, Sonic said it had struck a deal with Mirex Energy Inc. to construct and operate the first PetroSonic heavy oil upgrader in the Lloydminster region. The project will initially be designed for a 1,000 barrel per day (bpd) facility to be located on the Elizabeth Metis settlement in Alberta.
If successful, it could herald a major breakthrough for heavy oil upgrading. Producers have long sought a portable, small-scale solution that would allow upgrading of smaller production volumes in the field. Currently, upgrading requires construction of massive pressure vessels costing billions of dollars capable of processing hundreds of thousands of barrels a day to achieve the needed economies of scale.
The first unit is slated to come into service in the first quarter of next year.
"It's for the smaller producers that are being held to ransom to the big upgraders," he said. "If it works on a commercial scale, then we've got something many people in the world want."
Upgrading economics are predicated on wide differentials-- or discounts--applied to heavy oil compared to lighter benchmarks like West Texas Intermediate. The wider the variance, the more value to be gained upgrading.
But heavy oil differentials are at historic lows. On Tuesday the difference between the Edmonton Par benchmark and a barrel of Imperial Bow River heavy was a little more than $4, or about five per cent, compared to a historical average of 25 to 30 per cent. The difference between Edmonton Par and EnCana's Western Canadian Select blend was about $2.50, far below the threshold to make upgrading in the province economic.
To address the shrinking value proposition, several smaller companies have held out the promise of "silver bullet" technologies to reduce the cost structure.
Last week, Ivanhoe Energy touted its proprietary upgrading process at the Canadian Association of Petroleum Producers' annual investment gathering. On the production side, Petrobank Resources aims to partially upgrade bitumen in the ground with unique in situ combustion technology that sets fire to the oil pool.
Gerald Bruce, a spokesman with the Canadian Heavy Oil Association, said various parties have been promising field scale upgraders for nearly 30 years. Although he's familiar with Sonic's technology, he's taking a skeptic's view until somebody actually puts a producing unit in the field.
"Philosophically it has a good ring or appeal to it," he said, "but if it's such a good idea, why isn't everybody flocking to it?"
spolczer@theherald. canwest.com
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