Oil Shale Continues to Grab the Attention of Investors
TomCo Energy re-joins AIM with plans to develop US oil shale project
Oil exploration group Tomco Energy (LON:TOM) returned to the Alternative Investment Market this morning, nearly two years after cancelling its original listing. The re-admission follows a £3.5 million share placing and open offer earlier this month ahead of plans to try and breathe new life into an oil shale project in the US.
TomCo first made an appearance on AIM in late 2006 when chief executive and well known City investor, Thomas Komlosy, used the shell of stricken Netcentric Systems to buy up leases over approximately 2,918 acres of oil shale in Utah’s Uinta Basin. The company struggled to get the project off the ground, in part because of the early stage nature of developing shale resources and also because oil prices, by 2009, were sinking fast. The company opted to hang on to the leases as a long term investment. Meanwhile, efforts to buy stakes in alternative production assets, including a project in Israel, went sour and the company’s admission was suspended and later cancelled in August 2009.
Mr Komolsy is now lining up a second attempt at developing the shale, which has been independently assessed to contain 230 million barrels of potential recoverable kerogen oil. That includes 123 million barrels on the Holliday Block of ‘indicated resource’ targeted for development. With shale development technology a hot topic in the States, this time around TomCo has spent $2 million on a technology licence with Red Leaf Resources Inc, which it is hoping will give it the means to actually produce oil using what is known as the EcoShale™ In-Capsule Process.
The process involves mining the shale and putting it in a large clay lined ‘capsule’. The surface area ends up being approximately 12 acres with a depth generally less than 100 feet and the shale is then heated using expendable heating pipe loops powered by natural gas that are placed in the capsule. Heating oil shale to recover oil and gas is a long proven and reliable process. Collection pipes are located at the top and bottom of the capsule to recover gas and oil respectively. Once the shale is depleted, the pipes in the capsule are sealed to prevent water contamination and the capsule is covered with top soil and seeded with native vegetation. Red Leaf has already demonstrated the EcoShale In-Capsule Process at its own pilot project in Seep Ridge, also in Utah, and is targeting first oil from commercial operations by late 2013.
TomCo now intends to begin technical studies aimed at determining the technical and economic viability of exploiting the mineral resource. The work planned for the remainder of 2011 and for 2012 is preparatory work for a development project and comprises mining/geotechnical work, infrastructure studies and environmental and hydrological baseline studies. In addition SRK Consulting has recommended, and TomCo has allowed for, a more detailed airborne topographic survey, a programme of check assaying at a second laboratory and the detailed outcrop mapping of the Mahogany Zone within the Holliday Block lease area. In addition TomCo will need to obtain a number of regulatory permits including, among others, a Large Mine Permit, the air quality, water quality, storm water and hazardous water permits, ground water rights and buildings, roads and conditional use permits.
Mr Komlosy said: “With 123m barrels of indicated mineral resource already established, and the Red Leaf Licence in place, the company will focus on the development of Holliday Block with a view to creating a 9,500 bopd production facility following on from the Red Leaf project at Seep Ridge where they are targeting first oil in late 2013. The EcoShale In-Capsule Process has been tested and is more environmentally friendly than other oil-shale extraction techniques and the pilot results from Seep Ridge are extremely encouraging.”