₪ David Pescod's Late Edition February 29, 2008
WAVEFRONT ENERGY (V-WEE) $2.27 -0.13
GREENTREE GAS & OIL (V-GGO) $0.12 n/c
For those who go to the many Cambridge House conferences
and other conferences around North America, a frequent
speaker and an affable chap you could meet at his own
booth is Jim Letourneau, who publishes the Big Picture
Speculator.
For a long, long time he has been writing about Wavefront
Energy and its potential new technology for recovering oil and
gas in depleted fields, and he has also been mentioning other
potential uses for their process.
After reading his letter again and again over this last 18
months with this stock doing sweet-tweet, sooner or later you
just get bored and ignore it. Now all of a sudden the market
is paying big time attention to this story so we thought why
not go to Jim and ask him to explain in baby talk what the
heck this story which is suddenly becoming so significant, is
all about.
Below are his own words and explanation for their new
technology:
“Whenever you see a prime piece of real estate fenced off
and vacant more often than not it was the former site of
a retail gasoline station. The underground storage tanks
that contained the gasoline had a nasty habit of leaking into
the underground aquifers where we get our drinking water
from.
Describing this can turn into sea of jargon very quickly
but the key terms are LUST (leaking underground storage
tanks), BTEX (benzene, toluene, ethylbenzene, and xylenes)
and MTBE (methyl tertiary butyl ether). BTEX and often
MTBE contain carcinogens that we don't want to be drinking.
The "safe" concentration levels for BTEX and MTBE are
measured in the low parts per billion (ppb) range. So a small
spill of gasoline can contaminate vast quantities of drinking
water.
MTBE is especially nasty. In even trace amounts it makes
water smell and taste like turpentine. It is highly soluble in
groundwater and a MTBE contaminant plume will it will
travel up to 10 times further than the BTEX compounds.
Why do we use this nasty chemical at all? MTBE is used
in gasoline throughout the United States to reduce carbon
monoxide and ozone levels caused by auto emissions.
MTBE replaces the use of lead as an octane enhancer since
1979.
MTBE contamination has been detected in all 50 states,
and a recent study indicates that it could cost between
$12 and $63 billion to clean up. This is a big market, in
Long Island alone there were 359 spills of MTBE being
investigated and over 1200 gasoline spill sites or leaking
tanks.
Some sites are harder to clean up than others...
Prior to Primawave, the site had been subjected to four
previous attempts of limited success to inject the remedial
fluid intended to neutralize MTBE impacting groundwater
quality. In the four previous injection attempts, delivery of
the remedial fluid met with difficulty where the fluid could
not be contained in the subsurface. In the recently completed
injection, Primawave outperformed conventional
injection approaches, permitting the entire fluid volume to
be injected, while at the same time containing it to the
subsurface.
It sounds like the contaminated sediment had a low
permeability to the remedial fluid which made it impossible
to pump it into the ground... until they used Primawave.
Back in April Wavfront used its Primawave Process at
Vandenberg Air Force Base in California. The objective of
the project is to use Primawave, specifically the Hornet
tool, to achieve pin-point placement, and more uniform
distribution of a remedial fluid into a tight sand formation
exhibiting extremely low flow characteristics. Previous
attempts to pin-point inject the remedial fluid using other
injection approaches met with limited or no success.
Based on previous positive results of Primawave where
fluids have been injected with pin-point accuracy, up to
five times faster and with ten times the distribution distance
compared to traditional injection approaches, the
client has systematically identified the process as the only
alternative to successfully introduce the remedial fluids
into the subsurface to meet its targeted goals.
Wavefront President and CEO Brett Davidson commented,
"The Vandenberg site is one of, if not the most
difficult, geological settings that Primawave has been utilized
on. Although we hold great confidence in the Hornet
tool, the uncertainty of the overall flow characteristics will
present a unique challenge to which other technologies
have already met with disappointment. If we can achieve a
measure of success where others have failed or were at
best marginal, Primawave will have clearly distinguished
itself from all other injection approaches, which should
result in further market penetration and licensing revenue."
At some point Wavefront may decide to spin out their
environmentally focussed Primawave business into a
separate company. That would let the plethora of newly
minted "Cleantech" hedge funds to buy in without having
to explain away Wavefront's involvement in the oil and
gas business.
The environmental market sees $US 4.5 billion/year spent
on the injection of chemicals in the ground to treat contaminants.
The science indicates that Primawave works
better than anything else on the more difficult (and more
expensive) projects. If Primawave can get a 1% share of
that market that makes for $45 million annual revenue in a
high margin technology licensing scenario.
On the oil and gas side Wavefront laid out a hypothetical
opportunity at their recent AGM:
• An oilfield with 3000 injection sites at a 40% penetration
rate = 1200 Powerwave systems
• Revenue potential of $3.6 million/month, or $43.2 million/
annum
• Gross profit potential of $3.2 million/month, or $38.9
million/annum
Payback on tool capitalization within 2 to 6 months
There are 2 paths to reaching ~$40 million in revenue. It
won't happen overnight and there will be some big price
swings along the way but I still see it as a multi-year hold.
I was buying shares at 88 cents in February.
Also watch for news coming from the Rodney South project
in Ontario. Greentree Gas and Oil (GGO.V) is in a joint
venture with Wavefront where they have 6 Powerwave
injectors straddling 2 horizontal producers. There were
lots of delays getting the project up and running but they
turned it on in early January. Good news from this project
could create considerable interest in Greentree.”
Thanks Jim!
If you would like to see Jim Letourneau’s work, just go to www.bigpicturespeculatorblog.com.
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