QS Energy Inc (QSEP)

[As I See It]

After reading the recent QSEP press release detailing a relationship with a " High Volume Offshore Marine Terminal Facility" and reading subsequent ihub posts I would like to make a few observations.

This quote has totally missed the purpose of the AOT-XL:

I love the part about how existing Aot's would require too much space and cost too much!......... But the TCP was not a standard AOt it was one specially configured to handle 500K bpd with 4 stacked on top. So we are to believe the specially designed rig for TCp worked great but the footprint was too big for midstream pumping station??? Rock station was really congested with all that flat open space!

The XL is being designed specifically for facilities located offshore that offload tankers transporting large volumes of crude oil to gulf coast refineries. Space on these platforms is at a premium.

Jaymark made an excellent observation:

It is very good news to have confidence from a company or consortium of companies wanting us to design a new system for such a large flow

It is important to add, that this "consortium of companies" and the "large vertically integrated Canadian Oil Company (COC)" have moved forward with their plans for the AOT while observing the progress of the TransCanada and Kinder Morgan projects. This would lend credence to the conjecture that the AOT has shown positive results in their eyes.

armour65 correctly observed that the press release indicates that much of the work to develop the XL may be paid by the customer.

This collaborative project involves a trial assessment and then full and potentially customer sponsored final engineering of the AOT-XL.

If funding is approved by the "consortium" by the end of this quarter the first phase will likely entail the testing, of an already available (little or no cost), standard AOT on one of the offshore platforms.

Among the provisions of this installation is that QS Energy will capture real-time measurement of viscosity and temperature values which will provide data necessary to the ongoing design process of a very complicated full-scale AOT-XL deployment across the customer's marine and land-based assets.

I think it is important to bear in mind that the introduction of the XL does not mean a long wait before any AOTs can be sold. Different size AOTs will fit different customer needs.

One final point regarding the 5 day test with the large "COC". I think the value of this "field test" is being under estimated.

Originally fabricated for a series of in-depth efficacy tests conducted at Southern Research in Alabama, the specially constructed AOT benchmarking unit provides for a variety of testing protocols which simulate the functionality of a full-size AOT system installed on a commercial crude oil pipeline.

"Our goal is to streamline the process of gathering the necessary engineering parameters and hydraulic analysis data to more efficiently transition the customer from an evaluation phase to a permanent deployment," ........ having the advantage of an on-site demonstration capability may result in a shortened AOT adoption time by eliminating the need for a full-scale test installation to establish the effectiveness of the AOT technology.