While the high cost, regulatory risk and uncertainty of being allowed to build a CO2 pipeline to serve an EOR worthy oil field with CO2 limits its use to only the largest oil reservoirs that can justify the multi-hundred million dollar investment of a million-dollar-a-mile CO2 pipeline – there are literally 1000s of smaller, but no less EOR-worthy oil reservoirs in which Fossil Bay’s portable Exhaust Gas Injection N2+CO2 EOR can re-pressurize and revive oil production in these depleted old oil wells at a burdened cost of <$15-$25 per barrel of recovered oil.
Besides attracting Accredited Investors who may appreciate receiving high tax-deductions, high-yield debt repayment and high ROIs from an investment in a portable Exhaust Gas Injection N2+CO2 EOR project – the Fossil Bay Energy business model may be especially attractive (and beneficial) to independent and major Oil Companies that currently own marginal stripper wells, leases held for production and even long dormant, plugged and abandoned oil leases (that previously produced millions of barrels of oil before becoming pressure-depleted and getting closed-down decades ago after their primary recovery phases).
These old and currently worth-less oil properties have the most to gain from using Exhaust Gas Injection EOR equipment to re-pressurize their oil reservoirs: producing new EOR oil to sell, bringing new royalties to mineral rights owners and much-wanted new profits to oil companies and their investors from oil leases that currently produce little or no income.
Likewise, these old and inactive oil fields currently offer little or no bookable reserves-value to its mineral rights owners/operators and shareholders, because they cannot profitably produce oil from these fields.
However, under the latest SEC Oil-Reserves accounting rules reporting oil companies can re-classify their currently undeveloped reserves as more valuable "proved reserves" if they can be "economically producible" using new technologies and have a development plan for those reserves that provides for drilling within five years of being booked.”
By entering into a 5-Year Portable N2+CO2 Exhaust Gas Injection EOR Agreement with the likes of Fossil Bay, the owners/operators of EOR-worthy oil leases, under SEC-rules, could thus start to book all of their previously-unbookable reserves as newly bookable, "economically producible" Proved Reserves (contingent upon a drilling/EOR start-date within 5 years).
This is a major benefit to the oil industry and its bankers. With substantially increased reserves-valuations enabled by portable exhaust gas injection EOR, every oil company in America with currently dormant oil leases could literally leverage as collateral new Proved Reserves in these old oil leases with various Banks and Reserves Based Lenders.
With such economically-producible Proved Reserves recognized under SEC accounting rules, Reserves Based Lenders and Bond Issuers should welcome lending their money to EOR ventures because the risks are mitigated by the lower $15-$25 per barrel oil recovery costs AND borrowers are more likely to make profit, and pay back their loans (even if the price of oil falls to $35 a barrel!).
This should be a welcome change for bankers and investors who previously loaned 100s of billions of dollars to the shale oil industry, many of whose average oil recovery costs of $50-$80 a barrel are now underwater and unprofitable, given today’s even lower oil prices.
Converting oil reserves that previously could not be collateralized under Reserves Based Lending rules into newly Proved Reserves that can now be collateralized (as enabled by today's portable Exhaust Gas Injection EOR technology) can greatly help oil companies by increasing the Borrowing Base Amount of credit available to them – and unlocking the collateral-value of literally billions of barrels of stranded-oil that can now be recovered by implementing portable Gas Injection EOR in 1000s of EOR-worthy oil fields in the USA that are currently closed, inactive but still EOR-worthy.
Mineral Rights owners who have been paid virtually no Royalty revenues for years since their oil leases stopped producing and got shut-down will now be able to earn new EOR royalties that they otherwise would not have received without the availability of such portable gas injection equipment and processes to revive oil production in their old oil leases.
This is why independent and major oil companies should be eager to enter into portable Exhaust Gas Injection EOR Agreements -- because doing so will substantially increase the value of these oil companies by legally booking literally millions, and even billions, of barrels (and dollars) in new EOR-enabled Proved Reserves from currently-worthless or under-valued oil leases they already own.
Fossil Bay Energy co-founder and chairman, Mike McGhan, was co-founder and CEO of Hanover Compressor in 1990 (now “Exterran”) and Valerus Compression Services in 2004. McGhan will oversee the Company’s manufacturing and exploitation of its N2+CO2 Exhaust Gas Injection EOR equipment in EOR-worthy oil fields throughout the U.S.
Check out my other portable CO2 EOR Technology Company Projects blogs and articles at: