US Oil Sands Inc. (USO-TSXV)
June 25, 2012 Issue
The Most Powerful Name In Corporate News and Information
Using its Unique Proprietary Extraction Process for Separating Bitumen from Oil Sand that Requires Less Water, Surface and Energy, while Creating Less Green House Gasses than Other Projects, US Oil Sands Inc. is Now the First Commercial Oil Sands Project to Get Underway in the United States
Cameron Todd – CEO US Oil Sands
Cameron Todd has been CEO of
US Oil Sands since April 2011. Previously Mr. Todd in various executive
capacities with Connacher Oil and Gas, a leading integrated Canadian
independent oil sands development and production company, Pioneer Natural
Resources and Chauvco Resources. He began his career with Amoco Canada
Mr. Todd has worked in
Canada, Argentina and Texas and has over 30 years’ experience in all facets
of the domestic and international oil and gas industry, is the author of a
number of papers, and a member of various professional societies. Mr. Todd
graduated from the University of Calgary with a B.Sc. in Mechanical
About US Oil Sands
US Oil Sands is engaged in
the exploration and development of oil sands properties. The Company,
through its wholly owned US subsidiary, has a 100% interest in bitumen
leases covering 32,005 acres of land in Utah. The Company estimates that
this land contains a large resource base which, when developed, will provide
a significant benefit both to the Utah economy and in meeting US domestic
US Oil Sands plans to develop its oil sands properties using its unique proprietary extraction process. This process is a very efficient and environmentally responsible approach to oil sands development. Using a unique bio-solvent the Company is able to separate bitumen from oil sand without the need for tailings ponds. The process requires low energy input, recycles 95% of the water used and uses best practice mining methods to rapidly reclaim mined areas. US Oil Sands has received a permit to construct the project on its Utah property and is currently in final design stage targeting first production in 2013.
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – June 25, 2012
Mr. Todd: US Oil Sands is a bitumen resource development company focused on developing heavy oil resources in Utah. We have a unique proprietary technology for extracting bitumen from oil sands, and we plan to put this to work on the project in Utah to further develop our resources.
Mr. Todd: US Oil Sands technology is an adaptation of existing technologies for extracting bitumen from mined oil sands, existing technologies use hot water and our process uses hot water and a solvent. As a result of the efficient extraction of bitumen, we are able to get clean separation of bitumen or heavy oil from the oil sands and that means we do not need a tailings pond. This is quite a break-through in the extraction business and that means that not only can we do it more environmentally friendly, but we can also do it much more economically.
Mr. Todd: The water that we use is reused again and again. We require a little bit of make-up water by basically recycling 95% of the water that we use.
CEOCFO: That is substantial!
Mr. Todd: Environmentally, the project has great advantages over the way that oil sands are extracted today, it does not require tailing ponds, as we mentioned, so that greatly reduces the amount of surface area that is disturbed. We are able to take clean sand at the end of our process as soon as we process the bitumen out of it and put that sand back into the bottom of the mine. That allows us to reclaim the mine quickly and leaves a small surface area disturbed. There is no interaction between the tailings that you normally see up in the Canadian processes, so it reduces the amount of water used, the amount of energy used, and the impact on surface and wildlife as well as the air emissions.
Mr. Todd: Our process is protected, we use a commercially available bio solvent for our process, which is available and lots of people have used it for other industrial applications as well as household cleaning. It is a solvent that comes from orange peels. Nobody has ever thought of or perfected the process for using a solvent like this in extraction of bitumen, but that is what our company has perfected over the last fifteen years, and what we own the proprietary rights to.
Mr. Todd: US Oil Sands started working Utah in 2005, at that time we acquired our first land in the state, and since then, our land position has expanded to approximately 32,000 acres which is the largest oil sands lease position in the US. On those lands, we have done a significant amount of exploration and we will continue to do so. To date, we have discovered approximately a hundred and ninety million barrels, oil in place from which we expect to develop a number of locations. Currently we are working in our first location in a project called PR Spring. That project is on state lands, and has been approved by the State of Utah for development of a mine and the associated extraction facilities.
Mr. Todd: The oil sands of the world are resources that have not previously been well developed because of the need for improved technologies. Oil sands contain bitumen which is a heavy oil that does not normally flow as conventional oil does, which means that you need to come up with a different way of getting it out of the reservoirs. If it is found deeply, then you need to put in heat or a solvent, and if it is found near the surface, you can mine it, but you still have to extract it from the sand using heat and/or a solvent. As technologies have developed, people have come to recognize how valuable a resource it is because the resources are very large. In the State of Utah estimates range from eighteen to thirty billion barrels of bitumen resources, none of which have yet been commercially developed to produce oil. Ours will be the first. The enormity of that is quite valuable. Total proved reserves of the US for conventional oil are only about twenty billion barrels, so to have a similar amount that is not yet recoverable but potentially recoverable in the future, Utah can make a very large difference to the US energy equation.
Mr. Todd: That has been a challenge that has existed for many of the resource lands of Utah. Most of Utah lands are administered by the federal government under the Department of Interior and Bureau of Land Management. That means that the federal jurisdiction requires a solid energy policy which really does not exist for development of bitumen on federal lands. Today, there is very little work going on, on federal lands. It is very difficult or impossible to lease the lands or approve a project. The belief expressed by the Department of Interior is that commercial project technology does not exist today, so they are not very well informed, because obviously, we have one. All of our development project is on state lands, all 32,000 acres that we hold are state lands. We have been working under state jurisdiction. The state is certainly a very development-friendly state. There is a strong incentive for the State of Utah to encourage development of its resources whether it is bitumen resources that are found in the tar sands, oil shale, or conventional oil and gas or timber, because all of the royalties that come from the production of those resources go into a trust to support public education. The direct beneficiaries of development in Utah are not only the people that benefit from the jobs but also the people that have children, school kids, and teachers. That is something that rings dear to most people in the country, and in Utah, it is an important part of their public system. We have been encouraged by this state, and both the governor, and his office, as well as the various regulatory bodies, which has meant that together, it is a very transparent process, and one that is easy to understand. They are prepared to help companies be successful by helping them comply with the environmental regulations, which is quite different from the federal government where it seems that their primary objective on federal lands is to discourage development.
Mr. Todd: Our company is pre-production company, which means that it is all investment and there is no cash flow yet. We expect to bring our first project on later next year in 2013, and at that time, we will be very pleased to start generating the revenue that comes from this very exciting project. Our first production is targeted at two thousand barrels a day, and we expect to see some portion of that starting in about September or so in the fall of next year. The company has invested close to $25 million to date, developing technology, doing the environmental reviews, designs, and the permitting process, acquiring lands and doing exploration, and all of the key elements of a project necessary before you can start production. We expect to invest an additional $30 million in development of the project through the end of next year. We have recently raised approximately $11 million, which will be the investment that is required through this year and we will be seeking a potential joint venture partner to carry the project through next year.
Mr. Todd: Everybody is watching closely. We are the first commercial oil sands project to get underway in the United States. There will be others to follow, and many searching for other approaches. Our project is the first for development in Utah, which as we mentioned earlier is the state that holds over half of the bitumen and tar sand resources of the United States, so it will likely be a leader in the area for a long time. The business community, other potential operators, the government, and certainly environmental groups are all paying close attention. We use less water, less surface area, less energy, and we create less greenhouse gasses than any project to date in the oil sands, as well as much less than most conventional oil developments. In that regard, I think everyone is watching, and we have many people cheering on the sides. We have employed a good number of people in Utah as we have developed the project to date. We will expect to employ a hundred people to start off with on our project as we develop it next year, and expand each potential phase of development of, which we see potentially another twenty-five, looks to employ a similar number of people.
US Oil Sands is opening up a tremendous development resource. Oil is the
primary source of motive fuels, and transportation fuels in the world today,
and certainly in North America. While many other energy sources companies
are in pursuit of alternatives, the fact is that there is a strong demand
for oil and energy to provide motor fuels. Our product that we produce will
feed into an existing market and a burgeoning demand. As a result, there is
an opportunity through our company to invest in a new way of developing
energy that is both sustainable and highly attractive economically. Our
project has very high returns; we expect to achieve pay-out on our initial
investment in a little bit more than a year. There are not very many
businesses that can undertake that and then have the opportunity through a
very large resource base to repeat it again and again. We expect to see a
lot of growth and create a significant amount of shareholder value in doing
We are the first commercial oil sands project to get underway in the United States. The business community, other potential operators, the government, and certainly environmental groups are all paying close attention. We use less water, less surface area, less energy, and we create less greenhouse gasses than any project to date in the oil sands - Cameron Todd
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