Oil exploration group Tomco Energy (LON:TOM) returned to the Alternative Investment Market this morning, nearly two years after cancelling its original listing. The re-admission follows a £3.5 million share placing and open offer earlier this month ahead of plans to try and breathe new life into an oil shale project in the US.
TomCo first made an appearance on AIM in late 2006 when chief executive and well known City investor, Thomas Komlosy, used the shell of stricken Netcentric Systems to buy up leases over approximately 2,918 acres of oil shale in Utah’s Uinta Basin. The company struggled to get the project off the ground, in part because of the early stage nature of developing shale resources and also because oil prices, by 2009, were sinking fast. The company opted to hang on to the leases as a long term investment. Meanwhile, efforts to buy stakes in alternative production assets, including a project in Israel, went sour and the company’s admission was suspended and later cancelled in August 2009.
Mr Komolsy is now lining up a second attempt at developing the shale, which has been independently assessed to contain 230 million barrels of potential recoverable kerogen oil. That includes 123 million barrels on the Holliday Block of ‘indicated resource’ targeted for development. With shale development technology a hot topic in the States, this time around TomCo has spent $2 million on a technology licence with Red Leaf Resources Inc, which it is hoping will give it the means to actually produce oil using what is known as the EcoShale™ In-Capsule Process.
The process involves mining the shale and putting it in a large clay lined ‘capsule’. The surface area ends up being approximately 12 acres with a depth generally less than 100 feet and the shale is then heated using expendable heating pipe loops powered by natural gas that are placed in the capsule. Heating oil shale to recover oil and gas is a long proven and reliable process. Collection pipes are located at the top and bottom of the capsule to recover gas and oil respectively. Once the shale is depleted, the pipes in the capsule are sealed to prevent water contamination and the capsule is covered with top soil and seeded with native vegetation. Red Leaf has already demonstrated the EcoShale In-Capsule Process at…
I'm not keen on this at all, and not just because it's being spammed all over ADVFN.
The acreage is small, the technology unproven and the capex/dilution will undoubtedly be high. Not to mention that there will almost certainly be vigorous environmental opposition due to the historically very high CO2 emissions associated with retorting oil shale. OK so TomCo's process may mitigate that but since when did facts matter to the extreme green lobby?
Perhaps more worrying is that there are probably gazillions of barrels of shale oil (as in fracking), natural gas, oil sands and coal to be used up before North America gets around to using this stuff, which is the least energy dense form of hydrocarbon around.
Also, once again I ask the question why does a North American or Australian story list outside its domestic continent? Is it because London is the only market ignorant enough to buy into it perhaps?
JMHO and of course I could be wrong.
What to my mind might be a more interesting and similarish story in Utah is US Oil Sands (USO.V) who are looking at the oil sands in the state and also claim to have a new "green" process along with a much more substantial acreage.
http://www.usoilsandsinc.com
Disclaimer: No positions either current or intended.
