After decades of exhaustive attempts to overcome the dirty reputation of oil sands, we finally have an environmentally-friendly and low cost method to tap into these vast resources in the state of Utah—good news both for Mother Nature and all oil and gas investors.
MCW Energy Group’s CEO, former Exxon President of the Arabian Gulf region, Dr. R. Gerald Bailey, tells Oilprice.com in an exclusive interview that his hunt for an innovative technology that simultaneously makes money and cleans up the environment is over. The race to capitalize on Utah’s vast oil sands resources is on, and only the ‘clean’—both financially and environmentally—will survive.
Coming hot off of the successful launch of clean oil sands operations in Utah, while other oil sands projects are under fire from protesters, Dr. Bailey discusses:
- The difference between Utah and Alberta when it comes to oil sands resources.
- How new technology can—and is—extracting oil sands without harming the environment.
- Why the new technology is as much about remediation as it is about extraction
- How to create new revenue streams and use the resulting clean sand for other purposes.
- Why it’s finally possible to make money extracting oil from oil sands cleanly—despite the current world’s depressed oil prices.
- What Alberta’s tailings ponds look like now, and what could be done to clean them up—eventually.
Interview by James Stafford of Oilprice.com
James Stafford: After many years of oil companies attempting to develop Utah’s vast oil sands deposits without harming the environment, where are we now?
Gerald Bailey: Right now, we’re experiencing an exciting moment in the history of oil sands technology. For the first time, we can finally extract oil from Utah’s oil sands without any environmental damage. And significantly, we can do it at a cost that makes sense, even in this depressed oil price environment. It’s taken decades for someone to come up with this technology and actually make it commercially viable; and it was these elements that attracted me to MCW Energy. I wanted to get involved in this project while it was still new and largely off investor radar—now it’s poised to explode as an additional source for independent American oil production.
James Stafford: So, oil sands don’t necessarily have to be dirty?
Gerald Bailey: No, oil sands in themselves are not dirty. It is quite simply sand that contains oil, just like sand underground in an oilfield contains oil. They are dark with oil. The word ‘dirty’ has been derived from the fact that most current extraction processes use hot water or steam, which results in an oily water stream that leaves behind toxic tailings ponds.
James Stafford: How is this new proprietary extraction technology developed by MCW Energy different? How does it work?
Gerald Bailey: It’s really quite simple. The technology works in the same way as soap takes grease off plates: The grease adheres to the soap and pulls it away and off the plate. Our technology—which focuses on proprietary solvents—works in the same way. It adheres to the oil and pulls it away from the sand.
James Stafford: What happens with the sand after this process?
Gerald Bailey: Well, that depends on what other local market uses there are. Generally speaking, we wash the sand with our solvents and then return it to the earth 99.9% clean. You can grow plants on it and it is no longer contaminated with oil.
James Stafford: And are there any other uses for this sand? Is there any kind of a market for this once it’s been cleaned up?
Gerald Bailey: As I mentioned, for now the sand is usually returned to the earth—clean and safe. But there are other potential applications that we are exploring. One possibility is to sell the cleaned sand as frack sands, which is a spin-off business that’s growing as fracking activities in America increase. Frack sands require certain quantities of silicon and not all sands are equal in this respect. Much of the desired frack sand comes from the Midwest—from Wisconsin and Michigan, for instance. For years Utah oil sands containing bitumen/asphalt have been used in Utah, Wyoming and Colorado to build roads and highways.
James Stafford: So the immediate term goal is to focus on ramping up production in Utah and then licensing the technology for global application?
Gerald Bailey: Yes. MCW has achieved commercial viability already through a fully operational oil sands plant in Asphalt Ridge, in the heart of the Utah oil reserves both in sands and in conventional reservoirs, near the town of Vernal. It’s termed “America’s first environmentally-friendly oil sands extraction project.” Since the beginning of this year, we have been cleaning Utah’s oil sands and selling the oil to the market.
James Stafford: Why Utah?
Gerald Bailey: Asphalt Ridge is one of Utah’s 8 major oil sand deposits. Asphalt Ridge alone is believed to hold some 1 billion barrels of recoverable oil. Utah has some 55% (Department of Energy Estimate: 32 billion barrels) of the United States oil sands deposits.
James Stafford: How much is the project producing now and what are the forecasts?
Gerald Bailey: The project is producing 250 barrels a day right now at a very reasonable production cost of $30 per barrel, with plans to build a 5,000/bpd plant, which could bring costs down to $20 per barrel. Even in this current world market, those numbers mean profit. While Alberta’s oil sands are expensive to produce oil using their existing technologies, and are very troubled right now, MCW can make a profit on Utah’s oil sands even with oil at $40 per barrel. And that’s what today’s market is all about—innovations that spell profit even in times of crisis. Finding a company that has no debt—such as MCW—in this atmosphere was a huge selling point for me.
James Stafford: How do you convince the public of the prospects of clean oil sands for Utah given the international outcry about Canada’s dirty oil sands?
Gerald Bailey: That is the challenge. Certainly, Canada has given oil sands a bad name and that is unfortunate, but the process and situation in Utah is entirely different and the two cannot be compared.
Utah oil sands are found in a different position—much of Utah’s oil sands deposits lie from surface to just 400 feet. You can just scoop up the oil sands with a front loader and then process it with MCW’s proprietary solvents. The oil comes out and you sell the oil and put the sand back in the environment.
In comparison, Canada’s oil sands have to be mined because they are several hundred feet deep and the oil needs to be extracted with steam. The resultant polluted water returns to surface with residual oil that cannot be separated. This dirty water and sludge is stored in huge tailings ponds, so large I understand they can be seen from space. Utah’s sands are oil wet, rather than water wet, eliminating the need for tailings ponds.
James Stafford: What does this really mean for the environment?
Gerald Bailey: We are here to clean up the oil sands business—for now, starting in Utah. And any savvy investor knows that technology that is environmentally friendly and commercially viable rules the day. This is already a proven, cost-effective technology. Our main technology process advantage is that we require no water to extract hydrocarbons from the oil sands. Almost all other technologies require