april 2010 flare gas monetization greg loewen, president & ceo
TRANSCRIPT
April 2010
Flare Gas Monetization
Greg Loewen, President & CEO
BURNING GAS is BURNING CASH!
2
The Problem
The problem is many companies are burning
their valuable resources.
$$$$$RGT
TURNING GAS into CASH!
New Saskatchewan Flaring
Guidelines
Requires flare gas conservation by Jan
2011. 3
The Problem
Why will operators change?
We want to help companies that burn the gas they produce from oil wells turn their resources into
revenue.
The Solution - Rich Gas Transportation (RGT)
Transport the gas from the source to a plant, pipeline, or end user.
Scaleable, portable and uses conventional oilfield equipment.
Oil Well Solution Gas
Gas Plant
3RD party Transport
UnloadingFacility
4
LoadingFacility
Install our proprietary skid mounted Loading Facility.
Load the container. Use 3rd party transport
to take it to the Gas Plant.
Unload the container and then return it to the wellsite to be filled again.
Currently gas is being flared.
Flare Gas Market
N. America
Canada
Sask
320 mmcf/day$470 MM/yr
130 mmcf/day
$180 MM/yr
50 mmcf/day$75 MM/yr
Worldwide flare gas 15,000 mmcf/dayOUR GOAL
5% of Canada Market in 3 Yrs
$6 MM/Yr
5
2.4 million tonnes of
Carbon Credit potential per
year from flared gas in Canada
6
Producer
pipelines
The Competition
Cost
Revenue
Rich Gas Transportation provides the best combination of cost and revenue
generation.
+
_
Betterflare
stacks
Status
quo
RGT
Remove liquids& burn
methanePower
Generation• Capstone Tech
• AGRI
Some of the competition falls off the table right away because of regulatory
changes.
In most cases, the gas is being flared because pipelines are not economic.
Power only works if the gas can be used as fuel
and the electrical demand is in the same
location as the gas.
Our Process
Local engineering expertise.
Compression partner with market presence and equipment to handle flare gas.
7
RGT3 x Volume4 x Heat
Content
W. Claire proprietary RGT process uses the unique characteristics of flare gas to make the transport economical.
The Approach to Market
Initially, sell direct to Saskatchewan producers flaring gas from oil wells.
W. Claire has signed a Letter of Intent
with PetroBakken Energy Inc. to implement a field demo of our
process on one of their well sites.
Compared to Alberta, there are more opportunities in Saskatchewan because of the significant flare
volumes, limited infrastructure, high activity levels, and proposed new
flaring regulations.
Once established, we will channel sell through compression and/or
equipment suppliers.
Direct to Large Producers
8
Business Model
9
WCE Breakeven Point
Currently producer is making no revenue from flaring the gas.
Capturing the gas can generate significant revenues. Up to 60% of the revenue is from the liquids in the gas.
*150 mcf/d Well, 70 bbls/mmcf Liquids, after royalties and processing fees
Now $3/mcf $4/mcf $5/mcf$0
$1
$2
$3
$4
$5
$6
$7
$8Potential Revenue per mcf with Different Gas
Prices
Revenue from LiquidsRevenue from Gas
Gas Price
Revenue p
er
mcf
WCE Proposed Fees
Business ModelGas Plant
Monthly Fee + $/Volume shipped
MARGIN = 48%
10
Producer
$1.00 Revenue
$0.75 to$0.90W. Claire will charge the
producer a flat monthly fee and a fee based on the volume
shipped.
For every dollar of revenue the producer receives (after
royalties and plant processing fees), $0.75 to $0.90 goes to W.
Claire for these fees.
Business Model
11
Typical System (thousands)
Well Revenue*/year $340
W. Claire Fees $306
W. Claire Exp $148
W. Claire Profit $158
Capital $425
Payout <3 years
Economics for a typical system installed at a wellsite. Added benefit not included in the revenue is increased oil
production as a result of installing compression on the wellsite and reducing the wellbore pressure.
*150 mcf/d Well, $4 Gas Prices, 70 bbls/mmcf Liquids, after royalties and processing fees
The Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Number of Wells 15 30 40 50 60
Yearly Well Revenue* $5.1 $10.2 $13.6 $17.0 $20.4
Yearly W. Claire Share $4.6 $9.2 $12.3 $15.4 $18.4
Yearly W. Claire Expenses $2.9 $4.8 $6.1 $7.5 $8.8
Yearly W. Claire Profit $1.7 $4.4 $6.1 $7.9 $9.6
*150 mcf/d Well, $4 Gas Prices, 70 bbls/mmcf Liquids, after royalties and processing fees
Millions except wells
12
Will ramp up quickly after field demo. 2000+ Bakken wells in SE Sask and many more thousands
to drill. Estimate 100+ sites could use system now and 50+ more
new sites per year. Expansion will come through lease financing and equity
offerings.
13
First 15150
mcf/d projects
500 mcf/d project
Milestones
5 mmcf/d project
2011
Private offering
$1.0 million
Growthoffering
$3 million
Growth offering
$15 million
2010
Present
F & Foffering
$0.5 million
Demodesign
Field demo
Growth thruLease
Financing
2012
Previous offering used for demo design. Current offering used to construct a field demonstration of
process to be on stream by June 2010.
Sign LOI with
PetroBakken
14
Management
Greg Loewen, President & CEO 29 years in industry. Company start-up experience.
Contract
Robin Westin, V.P. Finance & CFO Transportation company experience. Worked for several start-ups.
Don Fraser, CNG Consultant 17 years compressed gas bulk transport
experience.
The People
Board of Directors
John Mroch, Executive Chairman 35 years in industry. Several prior company start-ups.
Ray Gertz 26 years of running his own company. Director of two other public companies.
Greg Loewen
Jay Zammit Corporate Secretary. Partner at Burstall Winger.
Will add to our board right away and to technical staff as operations ramp up.
The Deal
Current offering is for $1 Million.
Money in:Founders $340 thousandFamily and friends 780 thousandOther assets 220 thousand
Coming Govt. grants 700 thousandTotal $2.0
million
Government R&D funding conditionally approved - IRAP and SR&ED.
Breakdown of spending:
Intellectual property protection $150 thousandField demo in SE Sask 650 thousand Marketing, G&A 200 thousand
Total $1.0 million
15
Design the Product
Calculate a Forecast We Have The Team
To Sum Up
Offering - $1 Million
We need your help to take our company to the next step.
16
$6 MM
3 YEAR FORECAST
RGT
Identify the Problem Provide a Solution The Market
17
W. Claire Energy Corporation401, 100 – 4th Avenue SW
Calgary, ABCanada T2P 3N2
Phone: 403-452-7787
Mr. Greg Loewen, President & [email protected]
www.wclaire.com
Contact
GAS to CASH!