QS Energy's AOT Crude Oil Pipeline Optimization Technology Under Consideration by Middle East Oil Producers

QS Energy, Inc. is engaged in discussions with two of the world’s largest crude oil producing nations in the Middle East to provide deployment strategies for the Company’s AOT Viscosity/Pressure Drop Reduction technology. Under a non-disclosure agreement with one of these entities, QS Energy will be testing customer-provided crude oil samples at Temple University’s Department of Physics laboratory and performing feasibility studies to determine the potential benefits of AOT installations on a specific number of pumping stations on several pipeline systems.

“There are a number of large infrastructure modernization programs underway in the Middle East to increase crude oil output and significantly expand the pipeline systems that transport upstream production to refineries and marine offloading facilities,” stated Greggory M. Bigger, Chairman and CEO of QS Energy. “Due to the efforts of our distributor Energy Tech Premier Group and our own business development activities, we have provided a non-binding Letter of Intent (LOI) to the second of these entities which is now going through Arabic translation and is under review by their leadership. Our objective is to forecast how the use of AOT technology might improve the efficiencies and Opex performance of their respective pipeline systems.”

Mr. Bigger added that the opportunities stem from upstream projects undertaken by two of the Middle East’s most prominent oil producers to step up production and improve delivery to market. Recently, several oil-producing nations including OPEC members Saudi Arabia, Iran, and Iraq have announced ambitious plans to increase output and streamline their ability to transport production to refineries and seaports for delivery to foreign markets.

In July OPEC’s second largest producer Iraq announced their intention to increase crude oil production by 250,000 to 350,000 barrels per day by 2017, up from its current level of 4.6 million bpd. As of last month the output of Middle East nations reached record levels of over 31 million barrels a day during each of the past three months, according to data from the International Energy Administration. Overall, Middle Eastern global market share has now grown to 35%, the highest since the late 1970s.

During the first and second quarters of 2015, crude oil samples from a major Middle East oil producer were provided to Temple University for laboratory testing to simulate the potential benefits of AOT on a commercial pipeline. The test results demonstrated viscosity reductions of 20% to 35% using AOT technology. As a result of these performance benchmarks, we have moved to discussions with this Middle East entity regarding a project-specific AOT Viscosity/Pressure Drop Reduction system. QS Energy has also provided a detailed benefit analysis case study for their review and provided recommendations for outfitting a certain pipeline with the AOT equipment.

Following similar laboratory testing with another top-tier Middle East oil producer, in May 2016 QS Energy executed a non-disclosure agreement in consideration and evaluation of potential transactions and joint development activities.

“Based on our continuing interactions with these organizations, we believe that they are dedicated to implementing strategic, multi-pronged engineering programs to improve the existing pipeline infrastructure and deliver hydrocarbons more efficiently and cost-effectively to global markets,” Mr. Bigger stated. “Our feasibility testing and AOT Case Study proposals will focus on the projected measurable performance efficiencies we believe we can bring to the extensive pipeline systems of these nations and how AOT may increase flow rates and reduce pipeline pressure drop, thereby minimizing delivery delays and bottlenecks.”

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