2018 is poised to be a turning-point for QS Energy. We made progress on many fronts over the past year and are now positioned to complete our evolution from research and development to commercialization.
and expanding our capital structure to provide a foundation to fund our final push to commercial markets in the U.S. and beyond. Throughout 2017, the company worked to improve both the efficacy and efficiency of our AOT technology, implementing a retrofit program based on lessons learned while operating our equipment on midstream pipelines under commercial operating conditions, and initiating a value engineering program targeting a 30% to 40% reduction in cost of goods.
Over the past few months, we have been working diligently on what I believe to be the company's final key to success -- the installation and operation of one or more pilot projects; projects that will operate under relative transparency, allowing limited access to test facilities and open access to data with independent third-party validation.
After discussing this issue with oil executives and potential customers, I am confident that access to pilot project facilities and independently-validated operating data will provide the catalyst needed to accelerate adoption of our AOT technology.
BUSINESS DEVELOPMENT
Our efforts to secure one or more pilot projects are currently focused on specific prospects in three primary markets: U.S., South America, and Asia. Each of these prospects operates heavy crude oil pipelines with an identified system-wide need likely to benefit AOT viscosity reduction.
In November, Shannon and I had a very productive trip to South America, meeting with eight companies in Ecuador, Colombia, and Peru. After communicating remotely with engineers and executives of these companies over the past few months, this trip provided an opportunity to meet face-to-face, tour facilities and operations, and see first-hand how and where AOT would likely provide benefit to their operations. Each of these companies expressed both interest and need for our AOT technology and discussions are continuing at a variety of levels.
Our most interesting prospect in South America has a defined need to increase capacity on a pipeline transporting a very heavy crude typical throughout South America. This operator is weighing AOT against installing more pump stations while adding more diluent to its blend to meet its needs. Preliminary analysis indicates AOT could decrease viscosity by more than 50%, allowing for increased flow rates and decreased reliance on diluent, with the potential to increase pipeline capacity by 20%. We are now in negotiations on terms of a Letter of Intent (LOI) detailing the preliminary scope and terms of a pilot project subject to crude oil sample laboratory testing and analysis to improve on our preliminary estimates and optimize the pilot site AOT configuration. A heavy crude oil sample has been provided, and is now in transit from South America and is scheduled to arrive at Temple University in the next 7 to 10 days after clearing customs later this week. The LOI will also detail the expected system-wide deployment of AOTs subject to 30 to 60 days of pilot testing. Importantly, we intend to maintain a high level of transparency on pilot test data collected for future use and dissemination by QS Energy. Overall, we are looking forward to a very busy 2018 in South America.
We are also very excited by opportunities in Asia, having recently reopened discussions with an Asian crude oil company with prior experience testing AOT equipment in the field. Although these discussions are early stage, we have provided a draft LOI and hope to move quickly based on their experience and familiarity with QS Energy and our technology.
Of course, North America continues to be a market of major focus. After operating AOT on a condensate (ultralight) pipeline in Texas, we continue to work with this midstream operator to locate a new test site on a pipeline transporting heavier crude to demonstrate greater benefit from AOT viscosity reduction. We are also in active discussions with several other U.S. and Canadian midstream companies regarding a pilot project allowing for data transparency. We are working closely with one midstream operator with an expressed interest in using AOT to alleviate pipeline bottlenecks in the Southern United States. A crude oil sample from the prospective site arrived at Temple University this week for laboratory testing. Preliminary test results and analysis should be completed next week, with final results to follow shortly thereafter. After working with this company for the past five months, we have confidence that AOT can provide a cost-effective solution to their bottleneck issues. Subject to laboratory test results at Temple University, we intend to move forward with an AOT pilot project with potential for system-wide deployment.
While our efforts are tightly focused on executing our pilot program strategy, conversations continue with prospective customers in the Gulf Coast, Canada, and the Middle East.
CLOSING THOUGHTS
All of us at QS Energy continue to work diligently in our efforts to move our Company forward towards full commercialization, revenues, and profitability. Since joining the team, I have enjoyed visiting with many shareholders and have come to appreciate your insights and our shared dedication and excitement for our Company's future. I believe we are moving in the right direction and are laser-focused on heavy crude oil markets in which we can thrive. We all look forward to seeing the AOT operating in the field worldwide, solving many of the problems that oil pipeline operators face today. In closing, I would like to thank you all once again for your confidence in myself, my team, and the Company and I look forward to bringing you all definitive news as it happens in the very near future.
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