Replies to post #38123 on QS Energy Inc (QSEP)

[zerosnoop]

INCORRECT. This is why TRANSCANADA is showing "CONTINUED INTERESTS" in the PROVEN AOT. This is ABSOLUTELY TRUE. From the Business Plan. AOT Case Study. This is clearly in reference to TransCanada & the PROVEN AOT.

http://content.stockpr.com/sec/0001019687-15-004373/0001019687-15-004373.pdf


AOT CASE STUDY

QS Energy / ATS RheoSystems Joint Testing of
Commercial Beta Deployment on Mid-Continent High Volume Pipeline

In September 2014, a four-vessel AOT system was installed on a newly constructed, high-volume North-South, mid-continent pipeline under the terms of an Equipment Lease-Option to Purchase Agreement. Fabricated by QS Energy supply chain partners in 2013, the solid-state, 110-ton AOT system was shipped by freight truck and positioned on a gravel substrate on the equipment’s self-contained steel skid-mount at a pumping station of the customer’s choosing.

This commercial deployment and beta test opportunity was the result of extensive collaboration between QS Energy and executives and engineers from multiple producers, pipeline operators and supply chain partners. Following installation, pressure testing and calibration, the AOT system was interfaced with the extant SCADA (supervisory control and data acquisition) to provide a detailed overview of the system’s performance, including real time monitoring of flow rates, back flow pressure and other relevant metrics. Preliminary tests were conducted over a period of several weeks, under a variety of operating conditions and multiple grades of crude oil and diluent mixtures.

During the preliminary test cycle, it was determined that the electric field within the AOT pressure vessel was insufficient to fully treat heavy crude oils at flow rates expected under full-scale operating conditions. The power supply provided with the AOT device had been specified and approved by Temple University based on infrastructure and operating parameters, as well as on laboratory tests performed on crude oil samples provided by the pipeline operator. Detailed investigation verified the AOT power supply had been manufactured to, and was operating at, specifications as provided by Temple University, but was generating an electric field approximately 10% of that required to optimize treatment under full-scale operating flow rates 16 . It was further determined that replacing the AOT power supply with a more powerful unit would likely correct the situation. However, due to time constraints, all parties agreed to go forward with the testing using the installed power supply.

In its most extensive testing during this deployment, the AOT was operated under full-scale commercial operating conditions over a two-day period. Operations were overseen by the pipeline operator and QS Energy engineers, while engineers from ATS RheoSystems, a division of the CANNON Instrument Company (“ATS”), were on-site collecting data for subsequent analysis. Oil samples were taken from the pipeline both before and after treatment by the AOT. Viscosity measurements were conducted on three grades of heavy crude oils over the two-day testing period. Data collected and analyzed before and after AOT treatment demonstrated a decrease in viscosity of approximately 23 percent 3 hours after treatment, and a decrease in viscosity of approximately 11 percent 13 hours after treatment; 22 hours after treatment, the crude oil had returned to its original pre-treated viscosity.

[zerosnoop]

NOT TRUE according to the EVIDENCE in the RECENT PR below. NEXT

http://ir.qsenergy.com/press-releases/detail/2031


QS Energy Completes AOT Testing on Alberta Bitumen, Establishing Benchmarks for Opex Savings and Environmental Benefits in Oil Sands Market

SANTA BARBARA, CA -- (Marketwired) -- 02/10/17 -- QS Energy, Inc. (the "Company") (OTCQB: QSEP), a developer of integrated technology solutions for the energy industry, today announced the successful demonstration of a modified AOT (Applied Oil Technology) system to measurably reduce the viscosity of Canadian synthetic crude oil, offering pipeline operators the potential to improve flow volume, reduce reliance on diluents, meet carbon emission reduction goals, and other measurable operational efficiencies. The field tests were conducted on Alberta oil sands dilbit using a miniaturized AOT system which replicates QS Energy's full-scale vessels designed for use on high volume commercial crude oil pipelines.

"Through collaboration with an upstream customer we've established a strong performance benchmark for AOT on oil sands products, achieving results on par with laboratory testing conducted at Temple University by Dr. Rongjia Tao, a leading researcher in the development of technologies based on the use of electrorheological principles," commented Greggory M. Bigger, QS Energy Chief Executive Officer and Chairman. "In the lab, we have routinely attained viscosity reduction of similar degree on super heavy, heavy, and ultra-light crude oils ranging from 15% to more than 40%. Though we are restricted from disclosing specific details of this in-field test, we can report that they correlated well with laboratory results and full-scale testing performed on closed-loop and commercial pipelines."

Developed in collaboration with crude oil producers and transporters to optimize the performance of the global pipeline infrastructure, AOT was originally field tested on a closed-loop pipeline by the U.S. Department of Energy at the Rocky Mountain Oilfield Testing Center during which viscosity reductions greater than 56% on a medium crude oil product were recorded. A more recent commercial deployment of a four-vessel AOT Midstream system on a high-volume, mid-continent pipeline achieved viscosity reductions better than 20% on heavy crude oils, results that were independently verified by third parties.

"This month's successful benchmark test on diluted crude oil from oil sands sources demonstrates strong potential for reducing operational overhead costs for our customers and helping them meet CO2 and methane reduction goals which is particularly relevant with the availability of tax credits, rebates, and other financial incentives through carbon levy and carbon pricing programs," Mr. Bigger stated. "Because AOT is designed specifically to increase pipeline efficiency and throughput and reduce reliance on diluent and other additives, it can deliver substantial savings by lessening the degree by which these thinning agents displace feedstock and take up valuable pipeline capacity. This factor alone can drive tens of thousands of dollars a day to the bottom line of producers when AOT is in use on a high-volume pipeline transporting 100,000 to 200,000 barrels per day."

Mr. Bigger added that with the introduction of Alberta's Carbon Levy on January 1st of this year, the retrofitting of AOT for use in treating Alberta oil sands could not be more timely.

"By improving flow, countering pipeline pressure drop, and increasing pipeline capacity, AOT can potentially lower pump station power consumption and thereby reduce greenhouse gas (GHG) emissions," he stated. "Based on the support of Alberta's Climate Leadership Plan by the largest producers active in the oil sands, we agree that revenue generated from market-driven carbon pricing programs will encourage the development and use of GHG-reducing technologies and position Alberta as a recognized global leader in the application of clean technologies in the oil and gas industry."

Home to the third largest oil sands deposits in the world, the Province of Alberta and the companies active in the region have made finding solutions to improve the flow of the thick, asphalt-like bitumen a central focus of research and ongoing capitalization. Despite a reduction in new projects following a drop in spot prices in 2014, oil sands output is still projected to reach 3,000,000 barrels per day by 2020. The growing use of new extraction and processing technologies also hold the potential for bitumen production to become profitable at the current oil benchmark prices of $50 USD per barrel, according to a report issued last month by CIBC World Markets, the research arm of the Canadian Imperial Bank of Commerce.

Covering an area of roughly 54,800 square miles in northern Alberta, the Athabasca, Peace River, and Cold Lake oil sands deposits contain an estimated 315 billion barrels of recoverable oil, approximately 80% of which is extracted through drilling and other forms of in-situ production. The bulk of the bitumen and dilbit produced in the region and diluent used as a thinner are primarily transported by the Cold Lake, Corridor and Polaris pipeline systems. With AOT's efficacy now tested on a variety of oil sands samples, its ability to significantly reduce the viscosity of bitumen and its derivatives could help maximize the intended benefits of carbon-pricing within the Alberta energy sector which contributes in excess of $50 billion annually to Canada's gross domestic product of $1.5 trillion

For further information about QS Energy, Inc., visit www.QSEnergy.com, read our SEC filings at http://ir.stockpr.com/qsenergy/all-sec-filings and subscribe to Email Alerts at http://ir.stockpr.com/qsenergy/email-alerts to receive company news and shareholder updates.

Safe Harbor Statement:
Some of the statements in this release may constitute forward-looking statements under federal securities laws. Please visit the following link for our complete cautionary forward-looking statement: http://www.qsenergy.com/site-info/disclaimer

About AOT (Applied Oil Technology)
Developed in partnership with scientists at Temple University in Philadelphia, AOT (Applied Oil Technology) is the energy industry's first crude oil pipeline flow improvement solution using an electrical charge to coalesce microscopic particles native to unrefined oil, thereby reducing viscosity. Over the past four years AOT has been rigorously prepared for commercial use with the collaboration of over 30 engineering teams at 19 independent oil production and transportation entities interested in harnessing its demonstrated efficacy to increase pipeline performance and flow, drive up committed and uncommitted toll rates for pipeline operators, and reduce pipeline operating costs. Although AOT originally attracted the attention of pipeline operators motivated to improving their takeaway capacity during an historic surge in upstream output resulting from enhanced oil recovery techniques, the technology now represents what we believe to be the premiere solution for improving the profit margins of producers and transporters during today's economically challenging period of low spot prices and supply surplus.

About QS Energy, Inc.
QS Energy, Inc.(OTCQB: QSEP), provides the global energy industry with patent-protected industrial equipment designed to deliver measurable performance improvements to crude oil pipelines. Developed in partnership with leading crude oil production and transportation entities, QS Energy's high-value solutions address the enormous capacity inadequacies of domestic and overseas pipeline infrastructures that were designed and constructed prior to the current worldwide surge in oil production. In support of our clients' commitment to the responsible sourcing of energy and environmental stewardship, QS Energy combines scientific research with inventive problem solving to provide energy efficiency 'clean tech' solutions to bring new efficiencies and lower operational costs to the upstream, midstream and gathering sectors. More information is available at: www.QSEnergy.com

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Source: QS Energy, Inc.

Released February 10, 2017

[zerosnoop]

INCORRECT. The below is a very thorough Q&A and overview PR released by QS Energy RECENTLY. NEXT

http://ir.qsenergy.com/press-releases/detail/2019/qs-energy-issues-chairmans-letter


QS Energy Issues Chairman's Letter

SANTA BARBRA, CA -- (Marketwired) -- 05/23/16 --

Chairman's Letter

The Value Proposition of Our Patented AOT™ Technology in Today's Efficiency-Minded Energy Industry

What technology is QS Energy seeking to commercialize within the global energy industry?

QS Energy is the only vendor in the world selling and leasing industrial hardware based on the principles of "electrorheology", or the use of electrical fields, to optimize the performance of crude oil pipelines. Our flagship product is called AOT, for Applied Oil Technology, and was jointly developed by Temple University's Department of Physics/College of Science and Technology in Philadelphia and is protected by 47 worldwide patents and patents pending. When installed at pumping stations on commercially-operated pipelines, AOT increases flow volume and thereby improves the economics of the operation of virtually any size or configuration of pipeline.

How does QS Energy plan to make money? What are the revenue streams it has available as an entity active in the energy sector?

QS Energy is establishing a strong leadership position within the $6 trillion global energy industry with a tight focus on hardware which uses electrical charges to change the mechanical behavior of crude oil. In simple terms, our AOT system subjects crude oil to a high-voltage/low-amperage electrical field to reduce its viscosity, which permits it to flow in higher volume. By lowering the "thickness" of crude oil and its resistance to flowing freely, our technology improves the performance of pipelines. Our revenue model is two-fold. The Company's proposed primary income is based on AOT Equipment Lease/Option to Purchase Agreements. Due to our ability to configure customized AOT deployments to deliver optimal results to our customers, we are seeking to structure AOT installations pursuant to lease agreements with an initial term of no less than 4 or 6 months, and an option to extend the agreement for 84 months. As documented in an 8-K filing on August 2, 2013, the first such agreement for a four-vessel AOT system, installed to test the commercial efficacy of our technology, generated $240,000 USD revenue for the Company and included an option to purchase the equipment outright at any time for $4.3M USD.

A second similar contract entered into on July 15, 2014, provided an initial term of 4 months and an 84-month extension option based on a monthly lease revenue model of $20,000 per month. This single-vessel AOT installation on a primary condensate line serving the massive Eagle Ford Shale formation provided an option to purchase the system for $1.2M USD during the initial term. QS Energy intends to provide each customer with AOT deployment proposals based on their highly specific technical requirements and other issues before we determine final pricing on an installation, including and up to potential return on investment (ROI) for our customer. Therefore, per unit pricing, lease terms and option to purchase price points may vary significantly depending on pipeline characteristics, type of oil being transported, operating pressure, number of units, etc.


Photo of an AOT Viscosity Reduction System in the field during a beta installation on a pipeline in Udall, Kansas. This primary mid-continent line feeds into Cushing, Oklahoma, often referred to as the “Pipeline Crossroads of the World” and is home to a tank farm with a 90-million-barrel capacity, making it the world’s largest crude oil storage facility.

What is the problem that AOT solves?

Our technology seeks to create measurable bottom line opportunities for our customers. First, AOT mitigates the pipeline bottleneck by improving flow, enabling crude oil producers to get their output to market more quickly. Secondly, AOT delivers enormous value to transporters (pipeline operators) by lowering the operating costs (Opex) associated with running their pipelines. We hope to deliver yet more value by increasing their tariff revenue due to the higher volume of crude oil they can move on a daily basis. As an example, an AOT deployment on a 100,000 barrel per day crude oil pipeline with the operator charging a tariff rate of $3.00 per barrel realizing a 2% flow rate increase, would theoretically yield an additional $6,000 in daily tariff revenue, or approximately a $2.19M net gain per year.

What role does Temple University play in testing crude oil and predicting the efficacy of AOT in the field?

Since Temple University's active involvement as a research and development partner of QS Energy began in 2007, both organizations have jointly offered in-depth crude oil composition analysis and viscosity reduction testing based on the latest AOT performance capabilities. Crude oil samples submitted by energy companies to Temple University's College of Science and Engineering in Philadelphia are done so under a material transfer agreement (MTA) or non-disclosure agreement (NDA). The three- or five-gallon samples are subjected to a controlled electrical field to suspend the naturally occurring impurities in unrefined oil, which re-creates the effect achieved by AOT.

Over the past four years QS Energy has underwritten the testing of dozens of such samples from most of the primary oil production regions of the world. Analysis conducted under the supervision of Dr. Rongjia Tao, the chair of the Department of Physics at Temple University and a leading researcher in the development of technologies based on the use of electro-rheological principles, results in a series of assessments which include a room temperature baseline and an impurity content (asphaltene and paraffin) study. Once a determination is made of the viscosity reduction level possible through the use of the AOT technology, further data is collected in an AOT On Site Questionnaire provided by the prospective customer and reviewed on a strictly confidential, non-disclosure basis. Using proprietary software to accurately predict maximum flow rates, probable pump station energy savings, and possible increased toll rate revenues, QS Energy engineers and technicians perform a hydraulic analysis based on length, diameter and other specific characteristics of the target pipeline. The resulting AOT Preliminary Case Study Analysis, typically delivered within 30 days of the submission of the crude oil sample, provides a detailed proposal showing the pipeline system efficiencies and economic benefits which can be expected from the deployment of a customized AOT installation.

How does laboratory testing at Temple University compare with what AOT can deliver on pipelines?

Starting from the fabrication and deployment of the first commercial AOT unit, it has always been our goal to optimize the target pipeline as closely in line with results achieved on crude oil sample analysis in the laboratory at Temple University. We're pleased that the optimized "next generation" AOT system appears to improve our ability to predict the viscosity reduction level possible in a commercial deployment based on the tests conducted using a controlled electrical field under optimal laboratory conditions. However, results from forecasts contained in the hydraulic analysis reports we provide to prospective customers can differ due to scalability and other variances. In such cases, the economic and operational gains derived from an AOT installation can still be reasonably expected to result in Opex and tariff revenue benefits sufficient to achieve a meaningful return on investment. We recently documented the improved performance capabilities of the value engineered AOT technology in a February 8, 2016 news release. As disclosed in an SEC filing on March 31st, 2016, this is a re-deployment of AOT on a high volume condensate pipeline which afforded us an opportunity to prove our efficacy on ultra-light oil, the fastest growing segment of production from the nation's shale formations. AOT's improved ability to reduce viscosity, maximize flow volume, and reduce operating pressure in the treatment of condensate may also expand our reach to a broader range of feedstock and accelerate our time to market.

Why are crude oil pipelines so important to the industry and the economy?

Pipelines are universally acknowledged to be the most efficient, environmentally friendly and cost-effective way to move crude oil. As you would expect, there is a massive pipeline infrastructure crisscrossing North America, Europe, Africa, the Middle East and virtually everywhere crude oil is produced. Alternative transportation methods such as rail and freight truck are significantly costlier and obviously cannot match the sheer capacity of the daily flow carried by pipeline. The industry's largest, or primary pipelines, are engineered to transport hundreds of thousands of barrels of oil daily from the oil field to downstream refineries.

Why is QS Energy focused on improving crude oil pipeline performance?

The bulk of the world's pipelines were constructed in the 1960s and 1970s, with additional lines becoming ever more expensive and difficult to construct due to obstacles in gaining approval and permitting. With the advent of highly advanced drilling techniques, or Enhance Oil Recovery (EOR) methods, starting in the mid-1990s and continuing until the present day, the amount of upstream production being extracted from shale formations in the U.S. and internationally has skyrocketed. The result is that existing pipeline capacity is woefully inadequate, causing costly delays, loss of revenue, and forcing the use of road and rail as far less safe and practical transportation methods. It is this massive global challenge of insufficient pipeline capacity that has provided QS Energy with the opportunity to greatly improve the performance of pipelines which are the lifeblood of the industry.


Over 200,000 miles of pipeline transport liquid hydrocarbons across North America, delivering in excess of 13,000,000 barrels of crude oil annually from well hole to refineries. Map courtesy of Canadian Association of Petroleum Producers.

What is the problem that AOT solves?

Does AOT technology have competitors?

None of which we are aware. QS Energy's AOT Viscosity Reduction System is the energy industry's only solid-state equipment using electrical fields to reduce the viscosity of crude oil, enabling a wide spectrum of grades to flow more efficiently and economically through pipelines. Our intellectual property portfolio includes 47 domestic and international patents and patents pending, which have been developed either independently or in conjunction with and exclusively licensed from Temple University. The challenge of keeping the world's ample supply of crude oil moving efficiently from well hole to market via pipeline is daunting. Producers and transporters spend enormous sums on chemical additives (diluents and drag reduction agents) and the use of heat (trace heating, bulk heating). While the use of additives and heat can reliably achieve the desired viscosity reduction (resulting in a higher Reynolds number(1)), lower friction factor and reduced pump station power requirements, additives are costly, displace a large percentage of the volume of feedstock being transported, and must be removed during the final refinement process.

Typically, additives dilute the oil by as much as 25 to 30 percent, effectively reducing pipeline capacity by the same ratio. With diluents accounting for upwards of $13 per barrel of additional cost for bitumen (heavy-weight crude oil), reducing the amount of additives used to transport heavy crude oil provides an easily defined net savings. We believe AOT has gained the interest of producers and transporters globally due to its unique positioning within the industry as a solution that uses electrical charges to improve flow whether the feedstock contains diluents or not. SCADA (supervisory control and data acquisition) data gathered during closed loop and commercial pipeline usage suggests that by reducing the amount of diluent used in pipelines, AOT can reasonably be expected to deliver the dual benefit of lowering operating expense while increasing tariff revenue. Prior to installing AOT systems on two domestic commercial pipelines, QS Energy performed extensive ROI analysis on behalf of our clients based on their existing operational overhead, volume of flow, and revenue growth potential based on their published tariff rates to predict the extent of these benefits.

Has the effectiveness of AOT been independently tested and proven?

Independent third-party testing by organizations which include the U.S. Department of Energy, PetroChina/The China Petroleum Pipeline Bureau (CPP), fluidics consulting firm ATS RheoSystems, and our R&D partner Temple University, have consistently and repeatedly proven the efficacy of AOT to: 1) improve flow, 2) increase the volume of transported oil, 3) mitigate bottlenecks, 4) reduce the amount of energy used to operate the line and, 5) decrease pipeline pressure drop. Appendix I: 'Published Papers and Studies' on page 14 provides testing analysis reports for your review.

What is the science behind AOT?

Through a process known as dielectrophoresis, the electrical charge AOT generates causes a conformational change to the molecular structure of the naturally occurring paraffin and asphaltene content in the crude oil. These randomly distributed particles bundle together into tight packets aligned in chains. By aggregating the suspended particles into short chains traveling in the direction of flow, AOT decreases viscosity and increases pipeline flow rate, optimizing performance for operators and transporters while lowering their capital requirements. In addition to decreasing viscosity along the direction of flow, this unique chain formation also increases viscosity perpendicular to the direction of flow. Currently the Company is studying this effect to determine AOT's ability to potentially suppress the onset of turbulence. Suppressed turbulence reduces turbulent friction and substantially increases flow rate, far beyond the benchmark set by reduced viscosity alone. These factors combine to minimize costs and increase throughput, while mitigating energy loss.

The impact of viscosity reduction for pipeline transportation systems is well known and, in fact, a large portion of the products serving the midstream sector seek to achieve this goal. Fluid viscosity plays an important role in the function of any hydraulics system. It is one of the main sources of internal fluid friction which is responsible for major pressure loss, a factor that must be overcome by a strong pressure gradient created by a pump. Diluents, DRAs, flow assurance additives, and the application of heat via trace heating and bulk heating systems are used aggressively to reduce viscosity and encourage a laminar (smooth, predictable) flow. AOT can play an important role in supplementing these methodologies, enhancing their benefits and further maximizing pipeline performance. By contributing to the reduction of friction, AOT has shown an ability to counter pipeline pressure drop which slows flow, thereby improving the efficiency of the system as a whole. The reduction of power required for flow also reduces demand on pump station motors, directly reducing the amount of carbon dioxide (CO2) emitted.

How does AOT seek to meet the operational goals of pipeline companies?

Many companies choose to operate their pipelines at a constant pressure or power level. In that case, viscosity reduction will effectively increase pipeline capacity. Decreases in viscosity will, if strategically deployed, increase throughput and revenues significantly, both of which have been proven during test deployments of AOT. Lower viscosity also relieves bottlenecks, and provides companies with the ability to unload crude storage more quickly. This allows for a more flexible schedule, and shorter load times. Reduced wax deposition and suppressed pour point, two effects currently being studied and confirmed in laboratory testing, may also provide substantial ancillary benefits to certain customers.

During the eight years of research and development of AOT, what stages of design modifications have occurred to bring it to full commercialization?

Following the development of a series of prototypes of the AOT technology during the R&D phase at Temple University, we conducted a succession of field tests of full-scale units, both on closed loop pipelines and later on fully operational, high volume commercial pipelines. Earlier this year, in collaboration with one of the largest pipeline operators in North America, we completely value engineered AOT to improve the overall efficiency of electric field generation, which in turn has resulted in the most efficient performance of AOT to date. Although we undertook this re-design of AOT to better enable it to treat condensate, an ultra-light grade of crude oil, we believe this new level of viscosity reduction will improve its performance across a broad range of grades of crude oil and we believe also make the economics of deploying our technology even more compelling.


Following the recent value engineering of an AOT Viscosity Reduction System, a vertically-oriented single-vessel unit was installed on a primary line providing takeaway for the Eagle Ford Shale, the most active shale formation in the world.

Does AOT produce results on a wide spectrum of crude oil pipelines?

Absolutely. By design, we believe AOT is capable of maximizing the performance of virtually any pipeline infrastructure, regardless of length, diameter, flow rating, volume, or grade of crude oil carried. Each AOT system consists of a 36-inch diameter ASME-approved pressure vessel, connector pipes, inlet and outlet nozzles, and a skid platform for positioning on a gravel and concrete substrate. Once installed at the chosen pumping station, AOT's modular design allows for deployment in one or multi-vessel configurations. Multi-vessel installations are connected in parallel to adapt to the necessary pipeline capacity. As a result of our research and development program with Temple University and 8 years of collaboration with corporate executives and petroleum engineering teams at over 20 top-tier energy companies, we believe AOT is uniquely positioned as a cost-efficient, low maintenance solution with documented efficacy. Lower flow, smaller diameter pipelines can expect similar flow volume and performance improvements as higher volume, larger diameter lines. The first commercial use of AOT used four pressure vessels in parallel for a cumulative capacity of 500,000 barrels per day.

Can QS Energy provide a compelling case for the use of AOT throughout the industry?

Yes. In addition to providing our AOT systems to the Midstream, the largest sector in the energy supply chain, we are in discussions with transporters in the gathering and upstream sector, operators of downstream refinery, rail and marine offloading facilities, as well as tank battery recirculation systems where lower viscosity would be desirable. The Company also has an innovative crude oil heating technology in the development phase, targeting the needs of E&P entities active in the Upstream. Designed specifically for feeder lines, gathering lines and other field-to-transmission line infrastructure, JHT (Joule Heat Technology) is a highly energy-efficient heating system that applies an electric current directly to crude oil within an ASME-certified pressure vessel. Due to factors such as high viscosity, density, poor mobility and cold ambient temperatures, the energy industry invests heavily in trace heating and other electrical and natural gas powered systems to ensure the safe, reliable and cost effective transport of crude oil. Our patent-pending JHT system is electrically powered, compact and adaptable to a variety of applications, from extreme cold weather to corrosive saltwater environments, on pipelines, in oilfields and marine, rail and truck offloading facilities.

Why is the Midstream the most valuable market for AOT?

Midstream operators represent a strong and ready market for AOT here in North America and overseas. Collectively they transport the bulk of the world's crude oil output via the 400,000 miles of ever-expanding global crude oil pipeline infrastructure. Domestically, midstream companies deliver a large percentage of the U.S. daily production of 9.2 million barrels per day through 160,000 miles of crude pipelines. The pipeline operators' business model is to charge a tariff to transport each barrel of oil through their pipeline. Due to the high daily volume of oil being transported and its value as a commodity, even incremental performance efficiencies of 10 to 15 percent viscosity reduction are of high appeal from both an overhead reduction and tariff revenue standpoint. Among the use case factors taken into consideration in determining the benefits of AOT deployments are expected flow rate increases within the context of the operator's tariff rates. In conjunction with Temple University's in-depth crude oil composition analysis/viscosity reduction testing, and our hydraulic analysis measurements, a projected ROI for our industrial hardware is generated and provided to the customer. With a growing history of SCADA (supervisory control and data acquisition) gathered from pipeline tests and commercial installations, the Company is continuing to study the combined benefits of increasing flow volume and reducing of the use of diluents to more accurately calculate the ROI of proposed deployments. For further data specific to the domestic pipeline system, the Association of Oil Pipe Lines offers a summary on page 5 of their U.S. Liquids Pipeline Usage & Mileage Report (November 2015).

Which are the largest Midstream companies?

The North American and overseas Midstream sector form the backbone of the global energy industry. Industry data shows abundant evidence that upstream producers are often caught with oversupply in relation to the takeaway capacity available to them. Although primarily engaged in the operation of crude oil and natural gas pipelines, many are becoming vertically integrated and are involved in the processing, storage and marketing of oil, gas, condensates and natural gas liquids. A list of the Top 15 Midstream/Infrastructure companies compiled by Bloomberg and HIS Global on December 31, 2013 is available in the IHS Energy 50 report (page 6).

What is QS Energy's AOT inventory and where has AOT been deployed commercially?

The Company currently owns five AOT pressure vessels; one of which was recently deployed in South Texas under an AOT Equipment Lease/Option to Purchase Agreement with provisions to extend the lease or purchase the equipment. The remaining four AOT pressure vessels will be re-deployed either separately or together depending on the target pipeline infrastructure. In the period following fabrication of the first AOT prototype in May 2013, two lease agreements have resulted, each to test the commercial viability of AOT. One was an installation on a 500,000 barrel per day mid-continent pipeline operated by a $36 billion company, and the second, a deployment on a 100,000 barrel per day pipeline serving the Eagle Ford Formation and operated by a $39 billion entity.

The first field deployment was a beta installation to test the efficacy of AOT on a high volume commercial pipeline. The current South Texas test deployment is a vertically positioned AOT system specifically optimized for condensate, the fastest growth category of shale formation output today. With the lifting of 40 years of federal export restrictions governing unprocessed crude oil, the energy industry anticipates strong demand for U.S. condensate from foreign buyers. Demonstrating our technology's effectiveness to more efficiently and economically transport condensate in pipelines, at condensate splitter plants, and within offloading facilities represents an enormous opportunity for AOT and is one we intend to pursue vigorously.

Are additional installations of AOT in process?

QS Energy is currently in non-disclosure level discussions with pipeline operators in six of the world's primary oil transportation corridors. The Company has also furnished detailed engineering proposals to two transporters in the U.S. and leading energy entities in the Middle East, Europe, Africa and Canada, which have resulted in highly specific use case deployment discussions. Custom configurations of AOT systems are only formally proposed following laboratory testing of crude oil samples and sharing of sensitive operational metrics provided under non-disclosure agreements. Among the opportunities in the engineering design phase as prospective collaborative endeavors is the use of AOT technology for subsea deployment at marine offloading facilities in the United States and Norway. The operators of two critical crude oil distribution and storage hubs are seeking performance improvements of their network of feeder lines supplying flow into storage tanks and high volume takeaway pipelines.

What is included in a typical proposal to a pipeline operator and how does QS Energy quantify the expected economic benefits to a potential AOT customer?

After a preliminary analysis of a crude oil sample provided by prospective customers, QS Energy and Temple University conservatively estimate the volume increases we can achieve in the capacity of the targeted pipeline. We also forecast the increased daily tariff revenue of the pipeline and the percentage by which we can improve efficiency following the installation. Furthermore, we then calculate the monthly reduction in Opex and the net financial gain possible for our customer based on this data.

Where is your patent-protected AOT hardware fabricated and are your supply chain partners under non-disclosure agreements?

Industrial Screen & Maintenance, Inc. and Power Service, Inc., both located in Casper, Wyoming, currently serve as our fabrication arm, with various suppliers providing smaller assemblies such as power supplies and electrical (NEMA) enclosures. All are covered with non-disclosure agreements which remain in force indefinitely. In the event of larger purchase orders, additional supply chain partners have been identified. For international orders, initial builds will be American made, however we may need to eventually establish supply chains in various qualified areas.

As CEO of QS Energy, how do you manage the quality assurance and performance standards necessary to commercialize AOT within one of the most demanding industries in the world?

QS Energy takes its responsibility to ensure the highest degree of safety, quality and reliability seriously. As a recognized supplier of technology to pipeline operators, we are an ISO/TS 29001 compliant entity and strictly adhere to U.S. and international engineering standards and practices, including ASME (American Society of Mechanical Engineers), ISO (International Organization for Standardization, AISC (American Institute of Steel Construction), and our equipment has been certified for use in Canada under a CRN (Canadian Registration Number) for pressure vessel quality assurance. Each AOT vessel and all piping, connectors and electrical components are fabricated according to exacting specifications and undergo rigorous pressure testing and other performance protocols prior to transport to the client location. Installation of AOT systems is performed by top-tier civil and petroleum engineering contractors under the direct supervision of QS Energy and our customers' internal technicians.


Industrial design schematic of a four-vessel AOT Viscosity Reduction System. Following fabrication and pressure testing, this 110-ton unit was ASME-certified, approved for use in hazardous location Class 1, Div. I. rated areas and installed on a 500,000 barrel per day mid-continent pipeline operated by a $36 billion North American energy company.

What is the process involved in transporting 30,000 pounds of hardware to customers active in remote locations or overseas?

Primary fabrication and pre-installation preparation of AOT systems are performed by our supply chain partners in Casper, Wyoming. This central, Mountain Time Zone location provides delivery capability within two-to-three days by freight truck to leading oil production regions such as North Dakota, Montana, Utah, Colorado, Alberta, Oklahoma and Texas. The inaugural beta deployment of a four-vessel AOT system was trucked on six flatbeds to Udall, Kansas for installation on a 500,000 barrels per day pipeline, representing a payload of 110 tons. QS Energy's distribution of AOT hardware extends to Europe, Asia, Africa, the Middle East and South America through the ports of Houston, South Louisiana and Long Beach, via container and cargo vessels.

Many thanks for your interest in QS Energy.

As Chairman of QS Energy I receive hundreds of requests from investors and brokers each month. Due to SEC regulations and selective disclosure rules, I am very restricted on what information I can provide to individual shareholders and the investment community. However, it has always been my objective to be as forthright and transparent as possible. I invite you to contact us anytime with your questions, comments or suggestions at [e-mail] or [e-mail] and to review our SEC filings, news releases and other documentation on our website www.QSEnergy.com.

For further information about QS Energy please read our SEC filings at www.sec.gov, and, in particular, the risk factor sections of those filings.

Safe Harbor Statement:

Some of the statements in this release may constitute forward-looking statements under federal securities laws. Please visit the following link for our complete cautionary forward-looking statement: http://www.QSEnergy.com/site-info/disclaimer.

Sincerely,

Greggory M. Bigger
CEO & Chairman
QS Energy, Inc.
www.QSEnergy.com

Investor Relations & Media Contact:
QS Energy, Inc.
Tel: [phone]
E-mail: [e-mail]

Source: QS Energy, Inc.



APPENDIX I:

Published Papers and Studies

AOT Video Overview

http://www.qsenergy.com/technology/technology-reports?file=54


Technical papers published by Dr. Rongjia Tao, co-developer of AOT and Chairman of Temple University's Physics Department:

'Reducing viscosity of paraffin base crude oil with electric field for oil production and transportation', Published in FUEL, The Science and Technology of Fuel and Energy. Elsevier B.V. (October 25, 2013)

https://qsenergy.app.box.com/v/Jfuel-crude-oil

'Neutron scattering studies of crude oil viscosity reduction with electric field', Published in FUEL, The Science and Technology of Fuel and Energy. Elsevier B.V. (June, 2014)

http://qsenergy.box.com/v/Neutron-Fuel

'Suppressing Turbulence and Enhancing the Liquid Suspension Flow in Pipeline with Electromagnetic Fields', presented at the Tenth International Conference on Flow Dynamics,

November 25-27, 2013, Sendai, Miyagi, Japan.

https://qsenergy.app.box.com/v/turbulence-2013-tohoku

AOT CASE STUDY



U.S. Department of Energy Field Test:

Save the World Air, Inc. Viscosity Reduction Technology, Casper, Wyoming

Abstract: The Rocky Mountain Oilfield Testing Center (RMOTC) conducted a field test on a prototype of the QS Energy in-line viscosity reduction device at the Naval Petroleum Reserve No. 3 (NPR-3) located 35 miles north of Casper in Natrona County, Wyoming. The in-line viscosity reduction device is designed to reduce the line-loss and increase the flow rate of crude oil traveling through a commercial pipeline, thereby reducing the energy required for crude oil transportation. Reductions in line-loss and gains in pump operation efficiency (i.e., reduced power consumption) were observed on the 4.4 mile 6" schedule 80 metal buried pipeline test loop.

Test Results:

Viscosity Reduction The original viscosity was 81.6 cp. After the AOT device was turned on, it was reduced by 56.12 percent down to 48.95cp. After the AOT device was turned off, the crude oil in the section was gradually replaced by untreated crude oil and the viscosity returned to the original value.

Pressure Loss When the AOT device is turned on, the pressure loss is reduced by 56.12 percent, from 24.8 psi/mile (pounds per square inch per mile) down to 14.87 psi/mile. After the device turned off, the crude oil in the section was replaced by untreated crude oil and the pressure loss returns to the original value.

Conclusion:

Test results indicate that the viscosity reduction device operated successfully and that the AOT 1.2V prototype delivers improved performance over the original AOT prototype tested in October 2011. Pipeline line-loss and pump motor power consumption were reduced for a given flow rate during the observed test. The device may hold potential for energy savings and increased pipeline flow rates for the oil production and transportation industry.

Disclaimer

All statements and expressions are the sole opinion of the company and are subject to change without notice. The Company is not liable for any investment decisions by its readers or subscribers. It is strongly recommended that any purchase or sale decision be discussed with a financial advisor, or a broker-dealer, or a member of any financial regulatory bodies. The information contained herein has been provided as an information service only. The accuracy or completeness of the information is not warranted and is only as reliable as the sources from which it was obtained. Investors are cautioned that they may lose all or a portion of their investment in this or any other company.

Information contained herein contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical facts and may be "forward looking statements". Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements may be identified through the use of words such as "expects", "will", "anticipates", "estimates", "believes", or by statements indicating certain actions "may", "could", "should" or "might" occur.

(1) In fluid mechanics the Reynolds number (Re) is used to define the ratio of resistant (inertial) forces to viscous forces to help predict flow patterns and drag.

Released May 23, 2016

[zerosnoop]

ABSOLUTELY FALSE according to all the GEMS & FACTS in latest 10Q filing which is a legal document filed with the sec. This is more ACCURATE & FACTUAL about the PROVEN AOT & KINDER MORGAN.

During the third quarter 2016, the Company developed a new onsite testing program designed to accelerate the AOT sales cycle. This program utilizes a fully functional laboratory-scale AOT device designed and developed by the Company in 2015, and tested at the Southern Research Institute. Under this new program, Company engineers will set up a temporary lab at the customer’s site to test a full range of crude oils. Fees charged for providing this service will be dependent on scope of services, crude oil sample to be tested, and onsite time requirements. This program has received a positive response from potential customers. We plan to initiate this onsite testing program in the fourth quarter 2016, with first tests performed in December 2016 or early 2017.

In 2014, the Company entered into a lease agreement with Kinder Morgan Crude & Condensate, LLC for the manufacture and delivery of our AOT Prototype Equipment. The AOT Prototype Equipment is currently undergoing testing at a Kinder Morgan facility.

In February 2016, the modified AOT equipment was installed at Kinder Morgan’s facility. Pre-acceptance testing was performed in April 2016, culminating in more than 24 hours of continuous operations. In-field viscosity measurements and pipeline data collected during this test indicate the AOT equipment is operating as expected, resulting in viscosity reductions equivalent to those measured under laboratory conditions. Supervisory Control And Data Acquisition (“SCADA”) pipeline operating data collected by Kinder Morgan during this test indicated a pipeline pressure drop reduction consistent with expectations. Kinder Morgan has provided the Company with a number of additional crude oil samples to be tested in the laboratory for future test correlation and operational planning purposes. Subject to final review, Kinder Morgan and QS Energy will determine next steps which may include integration of Kinder Morgan’s SCADA system with the AOT control system, 30 days of continued operation during batched pipeline flow, and final installation and acceptance of the equipment under the lease.

Southern Research Institute (SRI) was engaged by QS Energy in 2015 to investigate the root cause of the crude oil condensate impedance issue by replicating conditions experienced in the field utilizing a laboratory-scaled version of the AOT and crude oil condensate samples provided by Kinder Morgan. In addition, QS Energy retained an industry expert petroleum pipeline engineer to review the AOT design and suggest design modifications to resolve the crude oil condensate impedance issue. This engineer has studied design details, staff reports and forensic photographs of each relevant AOT installation and test. Based on these investigations, specific modifications were proposed to resolve the impedance issue, and improve the overall efficiency of the AOT device, resulting in a new value-engineered design of certain AOT internal components.

Subsequent analysis and testing led to changes in electrical insulation, inlet flow improvements and other component modifications. These design changes were implemented and tested by Industrial Screen and Maintenance (ISM), one of QS Energy's supply chain partners in Casper, Wyoming. Test performed by ISM at its Wyoming facility indicated significant improvements to system impedance and efficiency of electric field generation.

The Company is actively seeking new deployments of its AOT technology. In August, 2015, QS Energy was invited to an offshore oil transfer platform in the Gulf of Mexico. This offshore platform was assessed by QS Energy personnel for a potential deployment of the AOT viscosity reduction technology as a solution for super-heavy crude oil flow assurance issues. Following the site visit, subject to non-disclosure agreements executed by all parties, laboratory testing was performed on crude oil samples provided by the operator, which demonstrated significant AOT viscosity reductions. Detailed hydraulic analysis based on laboratory results and pipeline operating parameters was presented to the operator demonstrating potential benefits of AOT technology within the operator’s specified infrastructure. Based on this analysis, the Company was directed by the operator to prepare a preliminary configuration for AOT units optimized for the operator’s high-volume, space-constrained operations. Company engineers and supply chain partners have prepared an optimized configuration and production budget. Based on this optimized configuration, the operator is considering an onsite pilot test with full scale AOT equipment for deployment in late 2017.

In June 2015, the Company formed a strategic alliance with Norrønt, AS (“Norrønt”), located in Oslo, Norway. Through its affiliation with Norrønt, the Company is currently in the process of negotiating a collaboration agreement with three Norwegian based oil companies as well as a potential research grant with the Norwegian Research Council. Under a strategic alliance formed in 2013, Energy Tech Premier Group is actively marketing AOT technology in Africa and the Middle East. During the first and second quarters of 2015, oil samples from a Middle Eastern oil company were provided to Temple University for testing. These tests demonstrated AOT viscosity reductions of 20% to 35% in a laboratory setting. Discussions with this Middle East oil company are ongoing. Effective May 2016, the Company executed a non-disclosure agreement with a second large Middle East oil company in consideration and evaluation of potential transactions and joint development activities. Effective July 26, 2016, the Company executed a non-disclosure agreement with a significant crude oil pipeline manufacturing and installation company located in Beijing, China, for the purpose of developing a potential sales and distribution relationship targeting the China market.

In October 2014, QS Energy entered into a Joint Development Agreement with Newfield Exploration Company (“Newfield”) to test a prototype of QS Energy Joule Heat equipment, and combined Joule Heat and AOT technology, on a crude oil pipeline serving the Greater Monument Butte oilfield located in the Uintah Basin of Utah. This test of the Joule Heat technology provides ideal conditions to demonstrate efficiency and efficacy. The Uintah Basin is 5,000 to 10,000 feet above sea level with average low winter temperatures of 16ºF. Crude oil pumped from the region is highly paraffinic with the consistency of shoe polish at room temperature. Uintah's black wax crude must remain at a minimum of 95ºF and yellow wax above 115ºF and therefore requires a substantial amount of heat to keep it above its high pour point. Operators in the upstream market often run at temperatures of 140ºF to 160ºF. Newfield, like many other companies in the region, incurs significant operating expense in the form of fuel and power used to heat the waxy crude and counter the cold climate conditions characteristic of Utah. The Company’s first Joule Heat prototype was installed for testing purposes at the Newfield facility in June 2015 and the system is operational; however, changes to the prototype configuration will be required to determine commercial effectiveness of this unit. During the third and fourth quarters of 2015, we worked with Newfield and Dr. Carl Meinhart to modify the prototype configuration based on observed pipeline and Joule Heat operating factors. In addition, QS Energy provided a scaled-down version of the Joule Heat unit for static and flow-through testing at SRI. Testing performed by SRI in September 2015 on a laboratory-scale Joule Heat unit demonstrated the ability of the Joule Heat technology to deliver temperature increases in the laboratory setting.

In 2015, the Company worked in collaboration with Newfield, SRI, Dr. Carl Meinhart, and our manufacturing partner to design and build an AOT prototype unit, for operations in the upstream crude oil pipeline market (“AOT Upstream”), specifically configured for pipeline operating factors observed at Newfield’s Utah site. Our original plan was to retrofit an earlier prototype device previously tested at RMOTC; however, after multiple site visits and discussions with Newfield, it was determined a new, smaller unit, specifically optimized for Newfield operations would be more appropriate for this field test opportunity. We plan to jointly test the AOT Upstream prototype unit under typical upstream commercial pipeline conditions on Newfield’s pipeline in conjunction with the previously installed Joule Heat unit.

QS Energy's primary technology is called Applied Oil Technology™ (AOT), a commercial-grade crude oil pipeline transportation flow-assurance product. Engineered specifically to reduce pipeline pressure loss, increase pipeline flow rate and capacity, and reduce shippers’ reliance on diluents and drag reducing agents to meet pipeline maximum viscosity requirements, AOT is a 100% solid-state system that reduces crude oil viscosity by applying a high intensity electrical field to crude oil feedstock while in transit. The AOT product has transitioned from the research and development stage to initial production for continued testing in advance of our goal of seeking acceptance and adoption by the midstream pipeline marketplace.

QS Energy develops and commercializes energy efficiency technologies that assist in meeting increasing global energy demands, improving the economics of oil extraction and transport, and reducing greenhouse gas emissions. The Company's intellectual properties include a portfolio of domestic and international patents and patents pending, a substantial portion of which have been developed in conjunction with and exclusively licensed from Temple University of Philadelphia, PA (“Temple”). QS Energy's primary technology is called Applied Oil Technology™ (AOT), a commercial-grade crude oil pipeline transportation flow-assurance product. Engineered specifically to reduce pipeline pressure loss, increase pipeline flow rate and capacity, and reduce shippers’ reliance on diluents and drag reducing agents to meet pipeline maximum viscosity requirements, AOT is a 100% solid-state system that reduces crude oil viscosity by applying a high intensity electrical field to crude oil feedstock while in transit. AOT technology delivers reductions in crude oil viscosity and pipeline pressure loss as demonstrated in independent third-party tests performed by the U.S. Department of Energy, the PetroChina Pipeline R&D Center, and ATS RheoSystems, a division of CANNON™, at full-scale test facilities in the U.S. and China, and under commercial operating conditions on one of North America’s largest high-volume crude oil pipelines. The AOT product has transitioned from laboratory testing and ongoing research and development to initial production and continued testing in advance of our goal of seeking acceptance and adoption by the midstream pipeline marketplace.

[zerosnoop]

NOT TRUE. Sales of the PROVEN AOT are FAST APPROACHING. SMILE the PROVEN AOT will be going to SOUTH AMERICA as per the EVIDENCE below. NEXT

http://ir.qsenergy.com/press-releases/detail/2023

Following an initial presentation to a major Columbian oil pipeline company's leadership, we are currently in the process of discussing the potential deployment of customized AOT systems in support of their plans to favorably affect the flow of crude oil through existing lines and deliver overall better efficiencies of their sprawling infrastructure. The opportunity for improving the performance of their operations with strategically placed AOT systems provides an ideal application of our patented technology. The bulk of crude produced in Colombia ranges from heavy to heavy sour to intermediate, most of it requiring diluents such as naphtha to encourage acceptable flow rates. Among the heaviest grade of Colombian production are Castilla Blend from the plains region which is transported by pipeline to Coveñas port in the Gulf of Morrosquillo on the Atlantic Coast; Magdalena Blend, a heavy sour crude produced in the Magdalena Medio basin; and Vasconia crude, produced by mixing output form the plains region and the Upper Magdalena.

Due to this Columbian company's status as a vertically-integrated energy entity, controlling vast aspects of exploration and production, transportation and refining, they present us with the potential to use our industrial hardware in a variety of configurations to deliver greater efficiencies throughout their operations.

In pursuit of additional opportunities within the Colombian energy sector, we have established an agreement with Finamco SA, an asset-based lender active in high-growth and emerging markets in Columbia. Working with Finamco management we expect to continue to benefit from introductions to senior management at several of the other 12 private sector crude oil producers active in this market, beyond the one that they have already provided. As in other pending overseas AOT projects, our goal is ensuring the most favorable terms possible for our shareholders and maximum return on investment for the customer.

QS Energy Issues Update on AOT Opportunities in South America

SANTA BARBARA, CA -- (Marketwired) -- 08/01/16 -- QS Energy, Inc. (OTCQX: QSEP)

Global Energy Markets

Regional Update: South America

This is the second installment of our overviews of the world's most important oil producing regions. We provide these updates to share with investors our insights on today's highly dynamic global energy markets and to highlight strategic deployment opportunities for our AOT technology in these high-output areas.

South America is the fourth largest continent (6,890,000 square miles) and is rich in natural resources which include gold, silver, copper, iron ore, tin, natural gas and oil. Collectively, the nations of South America produce some 6,000,000 barrels of oil daily and several of these producers have emerged as important exporters to the United States and other global markets.

Although the peoples and nations of this part of the Western Hemisphere are often referred to as Latin America, our worldview is better informed by geology and the hydrocarbons underfoot and subsea, rather than by language and culture. At a later date we will be providing a separate regional update on Mexico, currently the 10th largest producer in the world. We believe Mexico represents an exceptional market opportunity for us as it is on the brink of massive new upstream production. After 75 years of state control, our neighbor to the south is auctioning off access to its most desirable deep water production blocks in the Gulf. Global energy powerhouses such as Shell, Chevron, ExxonMobil, British BP, French Total SA, Spanish Repsol, Norwegian Statoil and Mexican Pemex are expected to bid on the drilling rights which will likely yield 90,000 barrels per day according to Mexican officials.

South America: Poised for Growth

A subcontinent of the Americas, South America consists of twelve sovereign states, plus French Guiana and the Falkland Islands, bordered by the Pacific Ocean, the Atlantic Ocean, and the Caribbean Sea. Among these nations, oil production is highest in Brazil, Venezuela, Argentina, Colombia and Ecuador. Known reserves in South America make up roughly 20 percent of the world's provable underground and subsea oil deposits. The greatest concentrations of oil and natural gas on the continent are found in the Orinoco Belt and Maracaibo Basin, both in Venezuela, and the area adjacent to El Tigre, a 75-mile, north-south trending fault in Argentina. Two significant basins located in deep water offshore Brazil's southeast coast provide that nation with close to 3,000,000 barrels of daily output, placing it first among South American countries and ninth in the world.

The wealth brought by the wide range of export commodities found throughout the continent has resulted in both prosperity and economic stability as well as corruption, strife and political upheaval. Most of the energy resources in South America have historically been controlled entirely by state-owned petroleum entities. Emblematic of the nationalized nature of the oil and gas industry in this region is the history of Petrobras. Created in 1953 when the Brazilian government granted Petróleo Brasileiro S.A. (Petrobras) a legal monopoly over all its hydrocarbon resources, the company has grown substantially beyond its primary production regions of the Recôncavo and Carmópolis oil fields and offshore Campos and Santos Basins.

Today Petrobras is ranked 58th on the Fortune Global 500 List and owns or controls oil and gas assets in 16 countries which include Africa, North America, South America, Europe, and Asia. However, this semi-public multinational corporation has endured periods of mismanagement and corruption and is currently $128 billion in debt. A highly publicized $3 billion corruption scandal in 2014 rocked its leadership and entangled several highly placed government officials, the fallout of which continues to destabilize Brazil's leadership.

The second largest producer of hydrocarbons on the continent, Venezuela (ranked 12th globally), nationalized its oil industry in 1975, creating Petroleos de Venezuela S.A. (PDVSA). Ecuador's Petroecuador is also state-owned, created from the original national petroleum company Corporación Estatal Petrolera Ecuatoriana (CEPE) formed in 1972. Colombia's national oil company, Empresa Colombiana de Petróleos, was chartered in 1948 and subsequently launched in 1951 to supersede the Tropical Oil Co., the nation's first producer. In 2003, the Colombian government restructured it as Ecopetrol S.A., a public stock-holding corporation. On April 1, 2013 the pipeline and other transportation-related assets of Ecopetrol were transferred to Cenit (Cenit-Transporte y Logistica de Hidrocarburos S.A.S.) a wholly owned subsidiary.

Fortunately, after generations of heavy-handed nationalization of hydrocarbon resources, a wave of investment-friendly privatization is sweeping through South America. Many of these governments are now opening up access to their resources by partnering with foreign energy companies and auctioning off mineral rights to their largest deposits of oil and gas. Venezuela's PDVSA has entered into joint ventures with Chevron, China National Petroleum Corporation, Repsol and others to initiate several major projects that will require over $100 billion in capitalization.

AOT Infrastructure Optimization Projects

As one of the most liberalized of the formerly completely state-owned energy entities, Bogotá-based Ecopetrol is now intently pursuing foreign capital and joint venture partners. Earlier this year the company announced Ronda Campos 2016, an open auction of 20 of its most prized production assets, kicking off its five-year strategy for "creating sustainable value and more efficient operation of assets" in an effort to generate maximum profitability for its shareholders.

Producing over 60% of its national crude oil output and owner of Reficar, its biggest refinery, Ecopetrol is the largest company in Colombia one of the top 50 largest oil companies in the world. However, the nation's 5,200 miles of primary and secondary crude oil of pipelines are woefully inadequate to transport its daily output of roughly 1 million barrels per day. An overreliance on tanker trucks to transport crude has been a costly drag on margins and resulted in reduced competitiveness, especially in today's supply surplus global market.

In response to the government's commitment to improving energy infrastructure, Ecopetrol's subsidiary Cenit, operator of the bulk of the nation's oil and gas pipelines and hydrocarbon storage facilities, spent $732 million (USD) in 2014 to increase pipeline capacity. As a result, daily takeaway was expanded by 150,000 barrels per day to a total of 954,000 bpd (crude oil) and 231,000 bpd (naphtha and other hydrocarbons). To continue this aggressive expansion of the Colombian pipeline infrastructure

To reach the Ministry of Mines and Energy's goal of a national pipeline capacity of 1.4 million bpd, Cenit plans to invest approximately $4 billion (USD) by 2019. In addition to optimizing the performance of existing pipelines, takeaway capacity will be expanded through ambitious construction projects in each of Colombia's primary crude oil production regions.

Following an initial presentation to a major Columbian oil pipeline company's leadership, we are currently in the process of discussing the potential deployment of customized AOT systems in support of their plans to favorably affect the flow of crude oil through existing lines and deliver overall better efficiencies of their sprawling infrastructure. The opportunity for improving the performance of their operations with strategically placed AOT systems provides an ideal application of our patented technology. The bulk of crude produced in Colombia ranges from heavy to heavy sour to intermediate, most of it requiring diluents such as naphtha to encourage acceptable flow rates. Among the heaviest grade of Colombian production are Castilla Blend from the plains region which is transported by pipeline to Coveñas port in the Gulf of Morrosquillo on the Atlantic Coast; Magdalena Blend, a heavy sour crude produced in the Magdalena Medio basin; and Vasconia crude, produced by mixing output form the plains region and the Upper Magdalena.

Due to this Columbian company's status as a vertically-integrated energy entity, controlling vast aspects of exploration and production, transportation and refining, they present us with the potential to use our industrial hardware in a variety of configurations to deliver greater efficiencies throughout their operations.

In pursuit of additional opportunities within the Colombian energy sector, we have established an agreement with Finamco SA, an asset-based lender active in high-growth and emerging markets in Columbia. Working with Finamco management we expect to continue to benefit from introductions to senior management at several of the other 12 private sector crude oil producers active in this market, beyond the one that they have already provided. As in other pending overseas AOT projects, our goal is ensuring the most favorable terms possible for our shareholders and maximum return on investment for the customer.

In our next Regional Update we will discuss the Chinese and Russian energy industry and our collaborative efforts to adapt AOT technology to subsea infrastructure in the North Sea and other offshore applications.

We invite you to contact us anytime with your questions, comments or suggestions at [e-mail] or [e-mail]. For QS Energy news and articles concerning the energy industry, follow us on Twitter and LinkedIn.

For further information about QS Energy please read our SEC filings at www.sec.gov, and, in particular, the risk factor sections of those filings.

Safe Harbor Statement:

Some of the statements in this release may constitute forward-looking statements under federal securities laws. Please visit the following link for our complete cautionary forward-looking statement: http://www.qsenergy.com/site-info/disclaimer.

Sincerely,

Greggory M. Bigger
CEO & Chairman
QS Energy, Inc.

www.QSEnergy.com

Disclaimer

All statements and expressions are the sole opinion of the company and are subject to change without notice. The Company is not liable for any investment decisions by its readers or subscribers. It is strongly recommended that any purchase or sale decision be discussed with a financial advisor, or a broker-dealer, or a member of any financial regulatory bodies. The information contained herein has been provided as an information service only. The accuracy or completeness of the information is not warranted and is only as reliable as the sources from which it was obtained. Investors are cautioned that they may lose all or a portion of their investment in this or any other company.

Information contained herein contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical facts and may be "forward looking statements". Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements may be identified through the use of words such as "expects", "will", "anticipates", "estimates", "believes", or by statements indicating certain actions "may", "could", "should" or "might" occur.

Image Available: http://www.marketwire.com/library/MwGo/2016/7/31/11G108752/Images/qs_energy-625aa51aa52daafaa7536a6375889b74.jpg

Company Contact
QS Energy, Inc.
Tel: [phone]
E-mail: [e-mail]

Investor Relations
QS Energy, Inc.
Tel: [phone]
E-mail: [e-mail]

Source: QS Energy, Inc.

Released August 1, 2016