A Titanic Advance in Oil Production
I’ve been an investor and followed closely an interesting company in the oil recovery business for the best part of ten years. For the longest time being a shareholder made watching paint dry seem like having an unlimited daily pass at Disneyland. I’ve been to funerals that were a lot more exciting.
That just changed.
I doubt many investors understand the size of the oil business. It took an image from the brilliant VisualCapitalist.com to give me an idea of the perspective. For example, the $1.72 trillion dollar oil business is more than ten times bigger than the 2nd largest resource market, gold.
(Click on image to enlarge)
Interestingly enough given all the oil ever produced in history, we know where there is twice as much oil today and we ignore it. Conventional oil recovery only extracts 35% of the OOIP (Original Oil In Place). That means two thirds of all the oil ever discovered is still sitting in the ground at the bottom of the wells. Given a $1.72 trillion size market yearly, it seems pretty obvious to me that even a tiny increase in oil recovery would mean billions of dollars in revenue and profit. Estimates put the trapped oil at 6 trillion, with a T, barrels of oil. At today’s prices, that is $420 trillion potential in recovered oil.
Titan Oil Recovery has an oil recovery system that works. It has been tested on 81 injector wells with a 98% success rate. A paper written for the SPE (Society of Petroleum Engineers) by Husky Energy showed production increases of 225%, 450%, 100%, and 533% on different wells. Another SPE paper by Venoco, Inc demonstrated increases of 300%, 15%, 27% and 752%. Tests in over 100 wells showed average increases of 127% with an 89% success rate.
The process is both simple and totally patented by Titan. Oil is produced under conditions of heat, pressure and biology. Bacteria consume vegetation buried tens of millions of years ago under exactly the right circumstances and produce oil. Where it is trapped, it becomes an oil field just waiting to be discovered.
The Titan process requires a water flood where water is pumped down wells to pressurize the OOIP so it will come up the well. Titan takes samples of the water and oil and tests the bacteria. Certain bacteria will break down the surface tension allowing smaller droplets of oil to flow. All Titan does is feed exactly the right bacteria food down the injection well. That encourages the growth of exactly the right bacteria lowering the surface tension of the oil and providing for easier extraction of the oil.
For years Titan has been testing the process, proving to oil companies that it works and accomplishing nothing. They were dealing with the wrong people in the companies.
The grunts of the oil business are the production engineers. Both smart and overworked, at any given time they have dozens of proposals from various companies suggesting something new, better and lower cost than what they are using.
But no one teaches Biotech in engineering classes so the Titan process was totally outside their areas of expertise. When finally they test it and find the numbers are off the chart, their bosses aren’t interested because nothing is quite as boring as an engineer trying to make a sales pitch. In every oil company the people who count are the exploration and drilling guys. No one cares about the production people and basically they are ignored. The finance guys at the very top are never engineers so the people who understand the process don’t make the decisions.
Titan finally wised up and realized they were approaching the problem in the wrong direction. They had been talking to the guys who didn’t particularly need the process. Yes, it would be nice to have a 127% increase in production but why bother when you can just drill more wells?
There is another segment of the market that desperately needs secondary recovery and because of the lack of deck space, simply cannot even test other recovery processes. That would be the guys on the offshore platforms. Titan got into bed with Hunting Energy Services, a 100 year old billion dollar company, in 2017 to represent them in the North Sea oil fields. The link is already paying off.
You see, it costs between $100 million and $2 billion just to close down an oil platform. There are 25 platforms closing yearly in the North Sea right now. The offshore platforms are facing strong production declines all over the world. They need the Titan process now.
Hunting Energy has commitments for testing seven North Sea wells right now with 12-15 wells. There are an additional 4 wells being lined up in Indonesia, 5 in India and 5 in Australia. Titan might do $5 to $20 million in income from each North Sea platform per year. There are 550 platforms in the North Sea with no other secondary recovery processes possible other than the Titan process.
In onshore tests written up by Husky they determined it cost about $6 per additional barrel of oil produced. That figure has dropped in later tests to about $3 per incremental barrel. Offshore costs more for everything so Titan figures it will cost about $10 a barrel in the offshore wells. If it cost $30 per incremental barrel offshore, the oil companies would be thrilled. Titan has a new delivery system that can get the nutrients to ten times the sand matrix in the past.
Titan believes the new delivery system could bring performance to 300% to 500% for wells with sufficient pressure. You might want to call that a giant game changer.
The good news is that Titan has wells being tested as you read and results may be out in the July-August timeframe. When they come out under the stamp of approval of Hunting Energy it is going to sound like popcorn popping in a microwave. For a period of time, nothing happens and then one corn pops, then another and all of a sudden everything is popping at the same time. When one oil company in the North Sea makes the decision to make Titan the standard of secondary production, everyone else is going to have to as well.
The bad news is that I own shares and you don’t. Titan Oil is not yet a public company. Chairman Ken Gerbino is considering a private placement in order to buy some oil fields. If you are an accredited investor and have a potential interest in the Titan Process, you should contact Ken Gerbino, the Chairman of the Board at:
You have to prove that you are accredited before he [Ken Gerbino] can discuss a private placement with you so don’t bother contacting him if you aren’t.
And for the rest of the world, when Titan has been accepted by the industry and revenues are there in a serious way, they will be going public.
I am an investor, I am biased. When Titan goes public there will be fireworks.
Titan Oil Recovery