Energy Quest’s Principal Business and Technology

Energy Quest principal business, which is gasification - marketing and manufacturing development, involves the development and production of hydrogen enriched alternative fuels. Their two main technologies are its gasification unit which they acquired from Syngas Energy and PyStR™ technology that was developed by Richard Sadowski.

Gasification Technology

During Fiscal 2005, the Company acquired Syngas Energy along with all rights and title to its advanced gasification process and gasification production system technology that combines modern gasification with gas turbine technologies to produce synthetic gas, hydrogen or electricity.

Their technology uses gasification processes to convert any carbon based material into a synthetic gas. Gasification uses heat and pressure which converts any carbon containing materials into synthetic gas composed primarily of carbon monoxide and hydrogen which has a large number of uses. Gasification can add value to low or negative value feed stocks by converting them to marketable fuels. The feed stocks used to create synthetic gas depend on what is readily available. For example, in Alberta, tar sands provide an abundant fuel source. An application in India under consideration utilizes cane stock from farming waste. Urban applications can include garbage and tires. Throughout North America, forestry, pulp and paper waste and biomass can be converted into a synthesis gas and fed back into power plants. Various other industrial wastes can be fed back into plants to recycle “lost energy” that would otherwise go to landfills.

Since their acquisition of Syngas Energy they have completed a prototype of the gasification technology. During fiscal 2007 they plan to commercialize their advanced gasification unit.  

PyStR™ Process – Hydrogen Production

In 2005, through their wholly owned subsidiary, Syngas Energy, Energy Quest acquired a worldwide exclusive license to develop, produce and market PyStR™ (pronounced, “Pie Star”), a low cost hydrogen production technology.  Currently, they are in discussions to put together a project which would use the PyStR™ technology to convert low-value farm wastes feedstock to high-value products such as Hydrogen, Methanol and fertilizers.

In February 2006 they unveiled the PyStR^TM technology at the Big Hydrogen Show in Calgary, Alberta. Since then, they completed a prototype and have plans to commercialize the PyStR™ hydrogen production process during 2007.

In February 2006 they futher completed the carbon dioxide (CO₂) capture unit for their PyStR™ technology.  The captured carbon dioxide (CO₂) can be injected into coal seams to recover methane in a similar fashion to injecting CO₂ into depleted oil wells to enhance oil recovery. Traditional gasification technology lets the CO₂ escape into the air, but the PyStR™ technology captures this green house gas that is commonly accepted to be responsible for global warming.

Carbon dioxide sequestration in coal beds can be more efficient than sequestering it in oil wells because CO₂ injected into a coal bed seam displaces adsorbed methane (CH₄) from the coal surface.  Coal beds in North America represent a widely dispersed potential geological sink for CO₂ storage while offering an opportunity to recover commercial quantities of methane for field uses or marketing in nearby natural gas pipelines. The U.S. Department of Energy and Canadian Government (Alberta Research Council) has been researching development of this sequestration concept for disposal of CO₂ emissions.

CO₂ is now being used throughout the oil patch to revive oil wells thought to be dry. Typical oil production leaves 70% of the resource in the earth. The process is used in wells that have already passed through primary production, where natural pressure in the well pushes out the oil, and in wells that have passed secondary production, using water or natural gas flooding. In primary and secondary production well pressure eventually falls to levels where output is so thin it is not profitable. Use of CO₂ allows an opportunity to take a third run at the reservoir to tap a potentially large amount of remaining oil.

The CO₂ is pumped deep below the earth's surface into thick, stubborn oil deposits, and significantly decreases the oil's viscosity easing its flow to the surface. CO₂ is expected to double or triple previous oil production levels from wells once thought unfeasible. Once in the ground, the carbon dioxide takes the petroleum's place, becoming trapped beneath an impermeable stack of limestone, sandstone, and shale.

Through its PyStR™ hydrogen production process, they can capture CO₂ that is produced either as a primary or bi-product. Some coal resources in North America cannot be mined by today's mining standards, but carbon dioxide sequestration technology has the potential to change that. Surface coal can now be mined and gasified in the Company’s advanced gasification and PyStR™ systems, with the CO₂ injected (sequestered) into coal beds to bring out the methane. Through their PyStR™ hydrogen production process they can capture CO₂ that is produced either as a primary or bi-product.

According to management, Energy Quest intends to focus on developing and marketing their current technologies while researching new methods of clean energy production. They intend to subcontract fabrication to outside sources that have a proven track record of efficiency, reliability and competitive quality and pricing.  During the past year, they have upgraded a model unit that demonstrates the application of the PyStR™ technology.

The Company’s Domestic and International Markets

According to Energy Quest’s management, gasification is a mature, moderate growth business, with generally reasonable margins. But within this large and complex industry there are a few areas of high growth and attractive profitability, most notably the production and distribution of low-cost cookie cutter 1/2 to 10 megawatt waste to electrical power units or liquid fuels. The Company’s focus is to concentrate its business focus on these more attractive niches of the industry.

In order to build an entrenched, defensible position against new and existing competitors, the Company has differentiated itself—in ways that buyers will value—in order to stand out from the crowd. Management believes that its ability to move quickly and selectively in choosing projects and partners should help the Company to build a unique, recognizable image.

Worldwide Economic Forecast - Gasification, 2007 and Beyond

The Industrybelieves thatsustained high-energy prices resulting from growing global demand and constrained supply have spurred governments, developers, technology providers and financial institutions - worldwide to back the development of alternative energy sources, especially the gasification of coal, petroleum coke and biomass. This trend combined with global warming concerns has accelerated the acceptance and commercialization of gasification technology that will incorporate the capture and sequestration of carbon dioxide.

The need to increase supplies of synthetic gas from clean sources to generate electricity and produce clean transportation fuels, hydrogen, petrochemicals, fertilizers and substitute natural gas has never been greater. The development of these coal-based plants are moving ahead now with incentives from the Energy Policy Act of 2005.

Governments and private companies - worldwide are coming together to learn how to produce hydrogen from coal to generate electricity and to provide it to refineries to produce clean low-sulfur fuels and to eventually fuel hydrogen-based transportation infrastructure.

The combustion of coal has also been traditionally used for power generation and steelmaking. Now coal-derived Energy Quest also has the potential to provide relief to small-to-medium-scale industrial facilities that rely on natural gas with its volatile pricing. Energy Quest (referring to the industry and not the Company) can be the stable energy source that will allow flourishing businesses to grow by being able to expand and modernize manufacturing plants and factories.

"Planning, financing, expanding and guaranteeing the overall profitability of a manufacturing business for example would be much easier if the company owner could depend on having predictable long-range energy prices based on Energy Quest’s derived from coal, petcoke or biomass," explains Tim Cornitius, syngas analyst, Zeus Development Corporation, an energy research and publishing firm. "Retail electricity prices could also become stable if they were based on clean coal as a fuel instead of natural gas. Imagine the profitability and dependability of the airlines industry if it could depend on coal-based jet fuel that was no longer tied to the price of crude oil."

Energy Quest is negotiating several opportunities for gasification projects in Brazil, India, United States and Canada.  Energy Quest through its subsidiaries, Syngas International Corp and Syngas Energy Corp., is an emerging leader in the development and marketing of low-cost alternate fuels worldwide. We believe our superior technology will catapult our company into a GreenPowerhouse(TM). With energy prices at high levels and the global focus moving rapidly towards addressing pollution, the need for sustainable, zero emission energy is vital. Our technology is based on clean renewable energy. We foresee our company poised to benefit from global trends.