Having announced somewhat disappointing interim results earlier in August (Revenues £0.05m, net loss £2.41m with no major revenues received from JIP partners), Corac Group (LON:CRA), the AIM quoted developer of energy efficient compressor technology has announced a new agreement with an independent exploration production company with gas interests in the United States â Texas based? The project is to develop, build, test and field trial the Group’s Downhole Gas Compressor (“DGC”) in a depleting well in North America with the aim of accelerating gas flow through artificial lift, thereby increasing production and extending the life of the well. The development phase is expected to take approximately twelve months followed by a six month field trial. The agreement has a maximum value of $1.5m, based on achieving milestones over a period of eighteen months, with an upfront payment of $750,000 which will help cashflow.
The project will allow Corac to build on the development work already underway with Eni SpA in Italy, as well as provide another means to test the DGC technology in an important geographical market. Corac, which is based in the Brunel Science Park, West London, has supplied industrial ‘no-oil’ air compressors to industries such a PET plastic bottle manufacturers and other related markets. Working with Joint Industry Partners they have developed and now supply the DGC to the oil and gas market. Aggregate revenue for the past 5 financial years to 31st December 2009 is only £5.9m with accumulated losses £12.1m so this remains early stage!
The DGC is currently the Group’s key product and facilitates the removal of gas from wells which, under normal drilling compression conditions, would be considered uneconomic. As far as we understand it adds extra pressure to the well to force the gas up to the surface. Several so called ‘artificial lift’ systems are already in use around the world today already including Electrical Submersible Pumps (ESPs), Progressing Cavity Pumping (PCPs), Horizontal Pumping Systems and Gas Lift systems. None of these utilise the process of increasing the well’s internal pressure to force more gas to the surface. As to how they all work, the pumps are pretty self-explanatory; they utilise an electric pump in the well to push the products to the surface. The gas lift system utilises gas from the well, injected into the products to reduce its density and ease its flow to the surface.
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