Economics

The FAS technology has significant upside as it provides large profit potential in these key areas:

  • Extraction of high-value liquid commodities which are fractionated and separated through the FASForm™ process and are market-ready with only nominal additional refining:This technology converts coal, oil sands or other high-carbon resources into a “new discovery” of hydrocarbon products which potentially can replace a large portion of the imports of several countries.   The FASForm ™ process does not produce synthetic crude oil like past pyrolysis or conversion processes.   High-value liquid products are fractionated and separated out as a propane/butane mixture (LPG precursor), naphtha (gasoline precursor), kerosene (jet fuel precursor), and diesel.   Worldwide use of FASForm ™ has the potential to create a new hydrocarbon fuel source of more than 10 billion barrels per year. The revenue stream from these liquid products far exceed the more difficult-to-measure and controversial financial benefits of conventional generation emissions reduction.   The higher liquid fuel yields and removal of high inherent moisture for low-rank coal and lignite will also substantially improve the economics of those resources.
  • Production of a clean-burning solid fuel that meets, and often exceeds, the strictest proposed US EPA targets currently threatening the coal and utility industries:   The technology promises significant profits for the current mining, transportation and generation asset base without any government subsidies, carbon-credits or other “green benefits.”   In fact, significant profits may be derived from the sale of carbon or emissions credits and their derivatives.
  • The ability to “re-configure” many still-viable coal-fired power plants in the United States using FASForm™ technology:   These re-configured plants, which are threatened with shutdown due to environmental politics and the emission profiles of their current fuel, would have compliant emissions and could be owned, leased and/operated by FAS, its investors and/or customers.
  • Processing of oil sands to increase oil yield by an estimated 300%, while reducing operating costs by up to 50% and eliminating significant amounts of toxic residue and contaminants:The FAS technology has the potential to use the same chemistry and process configuration for oil sands as that used for coal and lignite.   It would yield a solid fuel for power and steam generation, liquid fuels and fuel gas.   Emissions would be reduced and conversion of the typically high sulfur content of this resource into a more usable, environmentally-acceptable form would be possible.
  • Significant international potential beyond the immediate opportunities in North America: Germany and Japan plan to significantly increase clean coal and lignite use (7 and 5 GW of new plants are proposed) to replace existing non-compliant baseload facilities and nuclear plants.  New coal-fired generation activity in India and China is increasing at even larger rate.   If the use of coal can be cleaned up, international markets are not as limited by the politics of coal use in the US. In fact, the current concern on security around energy imports into the European Union is a significant opportunity for FAS with the indigenous coal and lignite-using energy companies.

Processing plant capital/operating costs and product revenues will be refined in the development phase.   However, the following financial analysis is offered for comparative purposes:

  • Baseline liquid hydrocarbon product revenues have been based upon US DOE/EIA and investment bank forecasts for finished, wholesale-grade fuels factored to West Texas Intermediate (WTI) crude prices.   Sensitivity assessments down to $30 and up to $70/bbl crude have been done.   FAS expects its product unit prices to be higher than crude prices once FASForm™ is proven.   FASForm™ liquid product prices are computed at spot WTI crude price plus the conservative Gulf Coast cracking spread less a discount for additional refining such a hydro-desulfurization (12%) and, for naphtha, reforming (additional 10%).
  • FAS is assuming that its first plant semi-refined liquid products will be sold to regional refiners at the discount for transportation and additional refining.   As an example, products from a planned commercial prototype in Arizona may be sold to Western Refining’s Gallup, New Mexico and EI Paso, Texas refineries.   It is also possible that refining of the liquid products can ultimately be done at the FASForm™ plant site and sold directly as finished fuels at market prices.   This could be a future expansion and profit opportunity for larger plants.
  • Natural gas consumed in the process is based upon Henry Hub Spot Prices.   Sensitivity assessments up to $6.00/MMBTU have been done.   As fuel gas is generated in the process and external energy is only required during startup, this is not a significant  FASForm™ cost.
  • Raw coal and lignite prices are based on published data delivered for all three cases assessed. Sensitivity assessments up to $45/st ($40/mt) have been done.   This is a significant cost, but it is offset by revenues from the high energy, clean solid fuel produced.
  • FAS has assumed that its FASFuel™ from the first plant will be sold to buyers at the same price per ton as the raw coal.   FASFuel™ from subsequent larger plants will be sold at a BTU- based rate (at least 30% higher on a per ton basis).   There is currently no upcharge on FASFuel™ for the environmental advantages of the solid fuel produced by FASForm™, but FAS expects a 20-30% premium may be possible once FASFuel™ is a proven combustion fuel. EPA-mandated conventional emission controls on coal in the US are expected to add 50% to current coal costs.   A sensitivity assessment for a 20% upcharge has been done.
  • FAS has projected annual income statements for its technology using multiple assessed cases and crude price fluctuation. These are available under an NDA.
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