Breakthrough Oil Shale Technology?

A relatively unknown company, Digital Gas has signed an agreement with an undisclosed private company (PRIVATCO) to use high temperature fuel cells (HTFC) to recover a variety of unconventional hydrocarbon resources, especially shale oil.  The following is their press release announcing the agreement:

Dec. 9, 2005--Digital Gas, Inc. Ann Arbor, MI (OTC Pink Sheets: DIGG - News) announced today that it has signed an agreement to partner with a private US-based company (PRIVATCO) that owns the exclusive rights to a high temperature fuel cell (HTFC) method which is expected to dramatically reduce the cost for oil and gas recovery from a variety of unconventional hydrocarbon resources.

The broadly-patented HTFC approach is designed to make it possible to economically produce oil and gas from unconventional resources, such as oil shale, tar sands, heavy oil deposits, and coal bed methane, while producing electricity as a byproduct. Under the terms of the agreement, Digital Gas intends to make an equity investment in PRIVATCO, be responsible for drilling contract and funding matters on PRIVATCO-controlled properties, and will have the right to use the HTFC method on properties it acquires independent of PRIVATCO, subject to a royalty payment. Digital Gas expects initial HTFC units to be operational during 2006.

PRIVATCO is currently accumulating mineral interests in the vast oil shale reserves within the Green River Formation of Colorado, Utah and Wyoming. Their proprietary HTFC technology will subsequently be deployed to produce oil, other hydrocarbon products and electricity for sale into North American energy markets. PRIVATCO has already informed Digital Gas that on just one property of less than 2,000 acres that it owns the mineral rights to, 800 million to 1.1 billion barrels of oil are expected to be recoverable.

The environmental benefits of this breakthrough HTFC method are compelling when compared to other retorting, strip mining, energy and water consuming techniques for unconventional oil recovery. By producing oil and other hydrocarbons from a resource "in-situ", without significant air emissions or water usage, while simultaneously producing "green" electricity, this HTFC technology will be well received by those who seek to balance the growing demand for energy with environmentally friendly processes.

The contrast between the HTFC and previous geothermic approaches to unconventional oil production is clear: the Net Energy Ratio (NER), measuring the energy output in comparison to energy supplied, of the HTFC approach is superior to other approaches being pursued for unconventional oil recovery. For example, the estimated NER of the HTFCs for oil shale production is approximately 7 (i.e., 7 units of energy are produced for every unit used), whereas the in-situ production approach currently being investigated by Shell in the Piceance Creek Basin shale resource is claimed to have an NER of 3.7.

A leading national research laboratory of the U.S. Department of Energy has reviewed and endorsed the PRIVATCO HTFC approach, and is following through on its interest by working to form a partnership with PRIVATCO to develop the commercial versions of the HTFC technology. In addition, PRIVATCO is currently involved in detailed discussions with several major energy industry sector companies interested in using this advanced technology for enhanced oil recovery for oil shale, oil sands, coal formations, as well as depleted oil fields.

According to PRIVATCO, their HTFC technology will not only be developed to liberate oil from shale, a resource estimated to contain two trillion oil-equivalent barrels in the US alone (equal to about eighty years of world oil supply at current annual consumption rates), but can also be developed to allow the major oil-producing companies to take a second look at properties now considered to be non-commercial. Depleted oil fields in the US and elsewhere still contain more than half of the hydrocarbons originally in these fields, because the residual hydrocarbons are too viscous to extract with conventional technology.

The HTFC technology can also be developed for application to accelerate and enhance recovery of coal bed methane, which has suddenly experienced a spurt in interest and production volume because of historically high natural gas prices. Digital Gas expects the HTFC system to dramatically accelerate production for coal bed methane companies. Since the HTFC produces electricity without any air emissions, their deployment will create the equivalent of emission free power plants. The electricity produced by the HTFC wells can be used to power pumps used in pumping water out of coal bed methane fields as well as powering compressors required to feed coal bed methane into feeder pipelines. The fuel cells produce a very pure carbon dioxide exhaust gas stream that can be either sequestered underground or harnessed for industrial or agricultural applications, such as the farming centers to be commercialized by a Digital Gas subsidiary.

With respect to the Canadian oil & gas market, which Digital Gas intends to enter, the HTFC system will allow for the commercialization of oil sands and oil shale formations that have too much overburden for open pit operations.

My attempts to find additional information about Digital Gas were not too successful.  Digital Gas, Inc. is apparently organized as a business development company. They have a website,  www.digitalgas.com/, with only a cover page that gives their address and lists fuel cells, ultracapacitors, natural resources, waste to energy plants w/farming, nanotechnology, waste processors and environmental remediation as if they were the businesses they are in.  Their closing stock price was $0.23 on December 9.

I found the following description of DIGG on the equitygroups.com website, which has a message board for DIGG:

Digital Gas ("DIGG") is structured and operated as a business incubator in the energy and related fields. Based on our initial review of the company, it is presently well on its way to becoming a full-service energy, strategic materials and energy savings device company. DIGG appears ready to provide a range of consumers with methane gas, natural gas, electricity, thermal energy, farming products, coal, synthetic coal, and other commercial substances, such as carbon nanotubes. The company's energy savings devices, such as electricity conservers, solid oxide fuel cells and ultra-capacitors, are designed to be used in homes, small businesses, and in a wide variety of commercial and government venues. Based on reading the press releases and discussing with management its corporate plan, investors in Digital Gas may very well get one or more shares in spin-out companies that management indicated it plans to take public on the AMEX on or before the end of the 2nd quarter, 2005.

Yahoo finance and equity finance have lists of their press releases which name some of their subsidiaries: Digital Energy & Farming (DEF)--waste to energy projects, landfill reclamation, tire recycling, and distribution of consumer products from Vietnam; Digital Sofcell--solid oxide fuel cells;  Digital Ultracap--ultracapacitors; Green Harbor Energy & Farming an aggregate company; CBM--coal bed methane.

Their press releases indicate that they have formed joint ventures and/or business relationships with some very reputable companies, some of them fairly recently.

Their is also a message board on the Silicon Investor website which is quite negative about the company and thinks it may be a scam.

This is another announcement that sounds too good to be true.  A process that could do what they imply would revolutionize how we think about our energy reserves.  They did not explain the HTFC technology to recover unconventional hydrocarbons well enough to evaluate whether it has a sound technical basis.  This is typical of all their press releases and their website--their is simply not enough content to make a judgment on what they are doing.  That is OK for a company that has a track record and is all to common with start-up companies.  Only if you indicate you have some money to invest with they offer you a NDA so you can evaluate their technology.  I worked on the development of new process for 27 years and saw all shades of transparency in the companies I worked for and owned.  A few of their other projects in which they have partnered with reputable companies sound promising.  Some of their other projects sound as desperate attempts to make a quick buck.

Resource: Technology, Press release, December 9, 2005

More blogs about fuel cells, oil shale, energy, technology

Comments

[Stockholm Syndrome]

If this were all true, the price of the stock would be 1000 times higher than it is. Imagine investing $1000 in a stock and finding it worth $1,000,000 a few months later. That would be the case, if this report were factual.

[JesseJenkins]

This does sound a bit too good to be true. If it is true, it could blow the lid off of any current peak oil projections as it would open up siginificant quantities of unconventional oil resources previously believed to be uneconomical to recover. I'm not sure if that's a good thing or not...

If you find any more info on these guys, please, please post it. My curiosity is certianly peaked by this post but there is certainly not enough info here to tell whether or not this is the real deal.

[Ricky Ricardo]

This is without question a scam compnay. I mean seriously...just look at their website.

http://www.digitalgas.com

Do a whois lookup on the domain and you get some proxy service out of Scottsdale, AZ not a real company.

Google on "Digital Gas" and scam and your first hit is someone calling them a scam from back in 1999. It's bogus. Why even print this crap?

[graboid]

The technology is real. If you look hard enough you will be able to find who PRIVATCO is. The CEO is not concerned about the stock price, he is concerned with building his company. DIGG is also involved with the DOE, do you think the DOE would get involved with a company if they thought it was a scam? The SEC would have shut them down a long time ago. Please go to:

http://www.pqlresearch.com/digg.htm

for more info on DIGG.

[oilfield equipment]

this technology is so good. this is so cool how this works.