PCI Developing Downhole Catalytic Combustor Steam Generator for Heavy Oil Production

NORTH HAVEN, CT -- (May 2, 2006) -- Precision Combustion, Inc. (PCI) announced it is developing a downhole catalytic combustor steam generator for use in heavy or viscous oil production. The Company is adapting its demonstrated gas turbine catalytic combustor for use in this new energy-efficient, high heat rate downhole steam generation system.

Specific heavy oil products under development include 8 MM BTU/hr and 50 MM BTU/hr devices. PCI's direct-fired downhole steam generator offers substantial energy savings compared to current surface steam generators, delivering the entire BTU content of the fuel (including the higher heating value, and avoiding boiler losses as well as surface distribution and wellbore losses). In addition, the combustion products (CO2 and nitrogen, in addition to water) are injected into the reservoir rather than being released to the atmosphere, and additional CO2 could be added for sequestration purposes. Surface facilities deliver air, fuel and water to the downhole steam generator.

"The world needs more oil to support growth and developing economies, and heavy oil is a largely untapped resource. But heavy oil is viscous and difficult to produce," said PCI President Kevin Burns. "Currently heavy oil contributes only some 2 billion barrels to total world oil production of some 31 billion barrels. As international reserves of conventional light oil get depleted, there will be increasing focus on the 5 trillion barrels of reserves of viscous or heavy oil (including bitumen), much of it in the Western Hemisphere. Surface steam generation for injection downhole is generally now required to produce large fractions of these reservoirs. The energy and environmental costs of surface steam injection are substantial. Energy costs of production can consume 15 to 30% or more of the BTU value of the produced oil, costing energy while also generating substantial greenhouse gas emissions."

"In contrast, we expect our downhole steam generator to use substantially less energy and substantially cut the per barrel cost of heavy oil production, while reducing air pollutant and CO2 emissions and increasing total recovery of original oil in place," Burns continued. "In addition, our downhole combustion strategy offers unique production capability for some key reservoir types, such as those in the permafrost, underwater or in deep wells. The world is going to need to produce a lot more heavy oil, and our technology offers oil producers a powerful, economic and environmentally-friendly tool for accomplishing this. This will benefit everyone - oil producers, consumers, and consuming countries will all enjoy greater production, lower costs, and reduced air pollution and greenhouse gas effect."

"The high level of flame stability and fuel flexibility of our compact, high pressure catalytic combustor technology allows us to resolve key limitations that faced previous oil industry attempts to develop a viable downhole steam generator," said PCI Chief Scientist William Pfefferle."We expect high heat rates at pressure from compact cross-sections and with good control, and good reservoir response. All the heat in our fuel will be delivered to the reservoir oil, substantially boosting energy efficiency. More broadly, we believe this process will substantially boost total recovery of the oil in the reservoir. It will also offer a viable heat source for certain reservoirs where surface steam is problematic. By developing these new products using our capable catalytic combustor technology, aided by advanced gas turbine controls, we’re minimizing product development risk, allowing us to focus development on tool functionality and utility, on system-level opportunities, and on meeting the needs of our partners."

"We’re currently looking to form a joint development relationship with one or more oil industry partners, to complete development and carry the technology through to field trial and commercial application," continued Mr. Burns. "Our partners will enjoy competitive advantage in the heavy oil field, influencing revenues, costs and environmental impact. We’re in advanced discussions with oil industry participants relating to this product development. Our approach is innovative and system-focused, and is leading some in the industry to start rethinking some basic assumptions. The impact on heavy oil production economics could be substantial. With appropriate partner support, we expect to have a prototype in field trial and producing commercially in 2008. I expect this technology will help drive a coming boom in heavy oil production, and will ensure that our partners have the leadership position."

Precision Combustion, Inc. (www.precision-combustion.com) is a clean energy technology company developing catalytic devices and systems for clean and efficient combustion, fuel processing, and catalytic reaction. PCI has customers across the energy sector, including oil production, gas turbine, aerospace, automotive, fuel cell, and fuel reformer manufacturers, as well as the U.S. government.

For more information, contact: Tony Anderson
Manager, Marketing and Business Development
Phone: 203-287-3700 ext 290 This email address is being protected from spambots. You need JavaScript enabled to view it.