Oil
is arguably the most important resource in the world, but acquiring it has
always been a messy business. Oil contamination, therefore, is a past, present,
and rapidly growing problem which continues to worsen as new wells are being
drilled, crude oil is being refined, and petroleum is being shipped. In this
environment, companies with viable, practical and effective solutions to oil
contamination are presented with lucrative business opportunities within the
petroleum industry. As a full cycle oil waste management solution provider, Canadian Oil Recovery and Remediation
Enterprises Ltd. (CORRE) (TSXV: CVR) is at the heart
of this sector.
CORRE’s
technologies focus on reversing environmental damage caused by oil
contamination, as well as on recovering oil and rehabilitating soil. Most
competing remediation technologies, including bioremediation, thermal desorption
and incineration cause pollution by producing emissions and require long
periods of time to do the job. These competing processes result in the destruction
of the oil. By contrast, CORRE’s soil washing technology recovers the valuable
oil while cleaning the soil well below the internationally accepted standard of
1% hydrocarbon content.
CORRE’s
line of services include remediating contaminated soil and recovering oil,
treating a variety of drilling wastes including drill cuttings and oil based mud,
and providing other industrial waste management solutions. Through its
engineering joint venture partnership, CORRE engages in oil and gas engineering
for equipment optimization and project management, and through its satellite
detection joint venture partnership, identifies and quantifies subsurface oil
contaminants. The many diverse business lines allow the company to work with
customers in both the upstream petroleum sector (oil production and drilling
operations), and the downstream petroleum sector (oil refining, transportation
and distribution).
The
Middle East and North Africa Region (MENA), which includes several of the
world’s largest oil producing nations, serves as CORRE’s primary market. Due to
their heavy oil production, the Gulf states have persistent oil contamination
problems including sludge pits, slop oil, drilling wastes, groundwater seepage,
and the well-known “Oil Lakes” of Kuwait that were formed during the Gulf War.
“During
the Gulf War, Iraq set fire to countless Kuwaiti oil wells. The damage was
massive, and the United Nations stepped in and allocated $3.5 billion for the
clean-up. Naturally, we saw an opportunity there and began to pursue these
high-value Oil Lake contracts, starting with the first demonstration tender we
submitted on December 1st of 2013,” said CORRE’s Vice President of
Corporate Development David Freeman, in an interview with SmallCapPower.com.
“The initial $3.5 billion for the clean-up is just the beginning. The
total costs will be substantially higher, and the clean-up will take
decades.”
All
of the oil waste management contracts that CORRE’s operating partnerships,
primarily SAR-CORRE MENA, are pursuing are of high value and involve
super-major private and national oil companies. In order to win these contracts
in the Middle East, companies need to have a strong local presence with sound
knowledge of the cultural and economic climate. CORRE chose to establish its
presence with key strategic, alliances with major companies in the fields of
construction and oil services. Chairman & CEO John Lorenzo has a long
history of operating successfully in the Gulf region, and the partnership
agreements that have been put in place under his guidance and direction have
allowed the company to minimize its cash burn rate, streamline logistics and
competitively bid for new project opportunities.
Mr.
Freeman explained that CORRE is currently competing for three contracts that would
put the company “in a firm and profitable state during the next six to twelve
months”. Mr.
Freeman added “These anchor contracts will provide the foundation for
long-term profitability, and the company will look to secure one or two new contracts
every year thereafter.”
On
February 7, 2014, CORRE provided an operational update for its 2014 program, which
included an announcement that its Norwegian operating partner had recently
achieved prequalified status as a service provider in several new countries,
including the United Arab Emirates and Oman, most notably with the Petroleum
Development Board of Oman (PDO) and ZADCO of Abu Dhabi.
Additional
areas of growth for CORRE will come from its satellite detection joint venture,
which provides ground-penetrating radar images obtained via satellite and
rendered using geological detection software. This technology can detect and
quantify materials up to 150 meters in depth using a comprehensive wavelength
database. Being able to determine the location and size of oil contaminated
sites, as well as being able to identify more localized and potentially
dangerous problems such as water and oil pipeline corrosion, could result in
licensing opportunities in a number of different industries. The partnership
recently concluded a successful satellite detection pilot project in Kuwait,
and its potential customer is presently reviewing the results.
CORRE
has approximately 120 million fully-diluted shares outstanding. Although the
company may go back to the markets if presented with an attractive acquisition
opportunity, its partnership agreements have been structured in such a way that
it will not need to issue additional equity to raise funds in order to compete
for, and execute on, any potential oil service contracts.
