Xfuels Inc. has signed a joint venture agreement with Converde Inc. which holds producing natural gas assets in southern Alberta currently has 300 producing natural gas wells connected to the pipeline with purchase and established operator contracts already in place.
The property has its own compressor station located at the main pipeline resulting in low transport costs. The JV, named Area 2 Energy, is 51 per cent for Converde, which purchased the wells early May with the intent to build a pilot gas to liquids (GTL) plant on the site.
Xfuels’ portion is 49 per cent and is contributing its hydrogen recovery technology (HRT) and will also use the site for a pilot project for its combined carbon/hydrogen fuel cell technology.
The shallow gas play produces an average of 1.1 million cubic feet per day and an established capital plan to increase the volume to over 2.1 million cubic feet per day by September. The site has approximately 80 bcf (billon cubic feet) of reserve, which equates to growth opportunities for decades to come.
Xfuels’ Michael McLaren states, "We are very pleased to bring this asset into Xfuels and utilize the project to showcase our technologies. Having regular cash flow from the traditional gas sales with the upside potential of the GTL and HRT revenues makes a very lucrative combination for the company." He further stated, "We have begun working on the capital plan to increase production in July and are expected to reach stated volumes after various swabbing and bridge plug knockout programs are complete."
Converde and Xfuels have already begun implementing the GTL technology and are sourcing government funds to build and produce a 500 gallon per day plant on the site. Using current gas prices and its own vertically integrated feedstock its GTL technology is producing product at 65 per cent per cent lower than the national refining costs, the company said.
Portland, Oregon-based XFuels was established to design, build and operate regionally-integrated, small-to-midcap electricity and petroleum production facilities. The company's patented and patent-pending IP delivers high energy yields (electricity at sub-five cents per kWh, and diesel fuel profitable at $25 a barrel oil without government subsidies), from a broad range of carbon-bearing inputs (forestry, agricultural and urban waste including municipal solid waste and plastics).