Solv-Ex Corporation Announces Positive Audit Report for Oil Sands Production Facility

Solv-Ex Corporation, an Albuquerque-based company, has released a positive audit report on its oil sands production facility in Alberta, Canada. The report, conducted by The Pace Consultants, projects an operating cost of $5.21 per barrel for the first stage oil extraction plant, with a planned capacity of 14,000 barrels a day. The facility is expected to yield production in excess of design capacity, with a netback price for oil at the plant gate varying with West Texas Intermediate crude oil prices.

Key Takeaways:

• The operating cost of the oil extraction plant is projected at $5.21 per barrel at planned capacity.
• The capital cost of the plant is estimated at $97.4 million.
• Shell's soaker visbreaker technology has been adopted for upgrading the bitumen into marketable oil.
• Solv-Ex has a 10 percent interest in two oil sands leases near Fort McMurray, Alberta, and a 10 percent interest in the Solv-Ex Technology and related profits.
• The project is expected to have a positive cash flow of $7.50 per barrel before debt service, with pipeline capacity expected to increase cash flow by an additional $2 per barrel.
• The facility is expected to be commissioned by late 1996, with a minerals extraction circuit to be added for co-production of alumina, by-product sulfates, and synthetic minerals.

Statistics:

• $5.21: The projected operating cost per barrel for the oil extraction plant.
• $97.4 million: The estimated capital cost of the plant.
• 14,000: The planned capacity of the oil extraction plant in barrels per day.
• $19: The assumed West Texas Intermediate crude oil price.
• $7.50: The projected cash flow per barrel before debt service.
• $2: The incremental increase in cash flow per barrel with pipeline capacity availability.

Sources:

• Business Wire, September 26, 1995.
• The Pace Consultants, "Final Audit Report" (January 1995).
• Solv-Ex Corporation, News Release, September 26, 1995.