Legislature(2011 - 2012)BUTROVICH 205

01/18/2012 03:30 PM Senate RESOURCES


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03:35:12 PM Start
03:36:26 PM Presenation: Heavy Oil Solutions, Stephen Yarbro of Los Alamos, New Mexico
04:16:09 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Presentation by Heavy Oil Solutions
Power Point Presentation by Stephen Yarbro of
Los Alamos, New Mexico
-- Testimony by Invitation Only --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                        January 18, 2012                                                                                        
                           3:35 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Joe Paskvan, Co-Chair                                                                                                   
Senator Thomas Wagoner, Co-Chair                                                                                                
Senator Bill Wielechowski, Vice Chair                                                                                           
Senator Lesil McGuire                                                                                                           
Senator Hollis French                                                                                                           
Senator Gary Stevens                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bert Stedman                                                                                                            
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Senator Cathy Giessel                                                                                                           
Senator Joe Thomas                                                                                                              
Senator John Coghill                                                                                                            
Senator Charlie Huggins                                                                                                         
                                                                                                                                
Representative Lance Pruitt                                                                                                     
Representative Alan Austerman                                                                                                   
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENATION: Heavy Oil Solutions; Stephen Yarbro, SNT Ventures,                                                                 
of Los Alamos, New Mexico                                                                                                       
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
STEPHEN YARBRO, SNT Ventures                                                                                                    
Los Alamos Laboratory                                                                                                           
Los Alamos, New Mexico                                                                                                          
POSITION STATEMENT: Gave presentation on SNT Ventures' new heavy                                                              
oil technology.                                                                                                                 
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                              
3:35:12 PM                                                                                                                    
CO-CHAIR  JOE  PASKVAN  called   the  Senate  Resources  Standing                                                             
Committee meeting  to order at 3:35  p.m. Present at the  call to                                                               
order were  Senators Wielechowski,  French, McGuire,  Paskvan and                                                               
Wagoner.                                                                                                                        
                                                                                                                                
^Presenation: Heavy Oil Solutions,  Stephen Yarbro of Los Alamos,                                                               
New Mexico                                                                                                                      
Presenation: Stephen Yarbro, Los Alamos National Laboratory and                                                             
         owner of SNT Ventures LLC; Heavy Oil Solutions                                                                     
                                                                                                                                
3:36:26 PM                                                                                                                    
CO-CHAIR  PASKVAN announced  a presentation  about new  heavy oil                                                               
technology, an  area that  has opened  up a  lot of  resources in                                                               
North America  including the  shale gas  revolution in  2006 that                                                               
has  led  to increased  throughput  from  individual wells  using                                                               
fewer drill rigs.  He invited Dr. Yarbro to  present his thoughts                                                               
to the committee.                                                                                                               
                                                                                                                                
STEPHEN  YARBRO,  Los  Alamos  National  Laboratory  (LANL),  New                                                               
Mexico, said  he is also an  owner of SNT Ventures,  LLC. He said                                                               
he  would  describe a  new  technology  that  he thinks  will  be                                                               
beneficial for the State of Alaska,  but before that he wanted to                                                               
review his credentials.  He first started working  in natural gas                                                               
processing  with Phillips  Petroleum and  then went  to work  for                                                               
Rockwell International's  Hanford Atomics Products  Operations at                                                               
their  plutonium  facility. From  there  he  went to  Los  Alamos                                                               
National Laboratory  (plutonium facility) and has  been there for                                                               
the past 28 years. Explaining the  series of events which lead to                                                               
the current  technology, he said  10-15 years ago  the laboratory                                                               
was  working on  recovering  radioactive  waste from  underground                                                               
tanks  on  the  Hanford  site  and   he  was  part  of  a  multi-                                                               
disciplinary  team that  was developing  a "super  critical water                                                               
oxidization process"  to remove the  organics from the  waste, so                                                               
that the waste could be sent for vitrification.                                                                                 
                                                                                                                                
After several years that project  was completed and he moved from                                                               
the plutonium facility to a part  of the laboratory where he used                                                               
his  experience to  analyze  foreign  countries' nuclear  weapons                                                               
programs. As  such, he is  part of  an organization that  has the                                                               
nuclear  emergency  search  team  that looks  at  various  issues                                                               
worldwide.  As part  of  that charge,  they  developed very  high                                                               
energy radiography.  During the British Petroleum  (BP) 2010 Gulf                                                               
of Mexico  oil spill, LANL  was asked to deploy  that radiography                                                               
to look at the underwater well  casing, so if they had to develop                                                               
explosive closure  devices they would  know where to  place them.                                                               
He looked  at lot  of the  real-time feeds  from under  water and                                                               
began to consider how the  high pressures (5,000 psi) depth could                                                               
be  used  to  process  the  oil.  He  reflected  upon  his  early                                                               
experience with super  critical water; the two  came together and                                                               
now he has developed this  "super critical water treatment" which                                                               
takes heavy oil  with the consistency of peanut  butter and makes                                                               
it the consistency of water.  This process could have application                                                               
to Alaska's  vast heavy oil  deposits which is difficult  to pump                                                               
into the TAPS because of its high viscosity.                                                                                    
                                                                                                                                
3:40:56 PM                                                                                                                    
He recounted  how conventional oil  production is going  down and                                                               
that drilling  to find more  is expensive. Huge amounts  of heavy                                                               
oil  are available  globally, but  it has  been hard  to exploit.                                                               
It's  hard  to transport  because  of  its high  viscosity;  it's                                                               
typically  $10 to  $20 a  barrel less  than conventional  oil and                                                               
only about one in four US refineries can process it.                                                                            
                                                                                                                                
MR.  YARBRO  said  Alaska  is  very  fortunate  in  that  it  has                                                               
somewhere between 24 to 33  billion barrels of heavy oil deposits                                                               
split  between the  Schrader  Bluff, West  Sak  and Ugnu  Fields.                                                               
Heavy oil  is fairly  shallow so  overcoming the  viscosity issue                                                               
would make it relatively easy to  get and it doesn't require very                                                               
expensive offshore drilling.                                                                                                    
                                                                                                                                
3:42:38 PM                                                                                                                    
The issue around  development of heavy oil is  its viscosity. So,                                                               
more  wells  must  be  drilled  to recover  heavy  oil  than  for                                                               
conventional light oil and some  type of thermal technique has to                                                               
be  used, such  as steam  recovery,  to get  the oil  out of  the                                                               
ground. In California that is not  a problem, but it is in Alaska                                                               
with  its permafrost.  Also he  said that  heavy oil  is somewhat                                                               
depleted in  hydrogen compared  to light  oil, so  fewer products                                                               
can  be derived  from it.  It also  sells at  a lower  price than                                                               
conventional oil. Typically the economics  is what have held back                                                               
heavy oil development.                                                                                                          
                                                                                                                                
3:43:31 PM                                                                                                                    
Alaskan oil is  somewhat unique in that between the  West Sak and                                                               
Ugnu  Fields  there  is a  "grading  viscosity"  everywhere  from                                                               
syrupy oil in  the West Sak all  the way up to  honey and almost-                                                               
like-peanut butter in the Ugnu  Fields. However, BP, for example,                                                               
is beginning  to successfully  develop and  produce heavy  oil at                                                               
its Milne Point S Pad using  the CHOPS (Cold Heavy Oil Production                                                               
with Sand) process.                                                                                                             
                                                                                                                                
3:44:03 PM                                                                                                                    
He  said his  solution to  the problem  is to  use "supercritical                                                               
water  extraction  and refining"  (SCWER)  that  uses the  unique                                                               
properties  of  water at  very  high  pressures and  temperatures                                                               
beyond  its  critical  point  to   dissolve  the  heavy  oil.  He                                                               
explained  that oil  dissolves completely  when water  passes its                                                               
critical  point  (applying  high temperatures  and  pressures  to                                                               
thermally  crack the  oil).  This process  takes  long chains  of                                                               
complex oil molecules  (c12, c50, c 60 and  higher) and thermally                                                               
cracks  them down  to smaller  c-chains (like  c5s and  c6s), the                                                               
higher-value components  of conventional oil. The  high energy of                                                               
the  water  essentially  just  tears it  apart.  Water  at  those                                                               
temperatures also provides  some of the hydrogen  needed in order                                                               
to get the hydrogen value up. It's very unique in that respect.                                                                 
                                                                                                                                
CO-CHAIR  PASKVAN  asked if  he  used  the  SCWER to  remove  the                                                               
hydrocarbons from the  source when he worked  with plutonium. How                                                               
did that process relate to this one?                                                                                            
                                                                                                                                
MR.  YARBRO  answered that  super  critical  water oxidation  can                                                               
completely  destroy  organics.  It  can  take  a  fairly  complex                                                               
organic   to  carbon   dioxide,  so   you  get   almost  complete                                                               
conversion.  You just  don't run  the conversion  all the  way to                                                               
complete. You  use it to  break up  the molecules just  enough to                                                               
get the  ones you  want (the c5s  and c6s) and  then stop.  Or if                                                               
needed, you  can go  all the  way to the  end and  produce carbon                                                               
dioxide. In  fact it's  so complete the  military has  licensed a                                                               
variant of  this type of  process for chemical  weapons disposal.                                                               
He said  they have carefully looked  at the conditions to  get to                                                               
the point of  getting just enough thermal degradation  to get the                                                               
products of value.                                                                                                              
                                                                                                                                
SENATOR WIELECHOWSKI asked if heavy oil  is 5,000 ft. down in the                                                               
ground, do you  inject water into the ground or  bringing the oil                                                               
up first.                                                                                                                       
                                                                                                                                
MR.  YARBRO  replied  that  they intend  to  integrate  with  the                                                               
current  BP process,  CHOPS, that  uses large  progressive cavity                                                               
pumps  down-hole to  pump the  material  out with  the sand.  The                                                               
advantage  to that  is  that  it has  been  thoroughly tested  in                                                               
Canada's oil  sands. The disadvantage  is that you don't  get all                                                               
of the oil; a lot is left in  place. Going the next step of using                                                               
the thermal  recovery technique  (like California  has developed)                                                               
of  injecting steam  into the  reservoir that  melts the  oil and                                                               
then  pumping  it out  provides  for  much higher  recovery.  His                                                               
process can use  either the steam that is pumped  down-hole as it                                                               
comes out or  the waste heat that is generated  in the production                                                               
process to inject down-hole to help recovery.                                                                                   
                                                                                                                                
3:48:14 PM                                                                                                                    
SENATOR WIELECHOWSKI asked if they can  pump up all the heavy oil                                                               
they can  get and then  pump in  steam to separate  the remaining                                                               
oil and water and to make the oil less viscous.                                                                                 
                                                                                                                                
MR. YARBRO  responded that when the  oil comes off the  well head                                                               
is when it gets mixed with the  steam and that is when it becomes                                                               
less viscous. It  enables transport to and  through the pipeline.                                                               
If  they want  to inject  steam down-hole,  they could  integrate                                                               
with that  process or with  CHOPS that doesn't use  that process.                                                               
They are  flexible, but the plan  is to integrate with  CHOPS and                                                               
inject the steam at the well head as it comes up.                                                                               
                                                                                                                                
3:49:05 PM                                                                                                                    
SENATOR  FRENCH  said it's  a  fascinating  idea and  asked  what                                                               
becomes of the injected water.                                                                                                  
                                                                                                                                
MR. YARBRO replied that this is  the unique part of this process.                                                               
The oil  and water  becomes a single  phase because  when dropped                                                               
below the  critical point, water  behaves like water and  the two                                                               
separate very cleanly.  Then all you do is use  a gravity settler                                                               
to skim the oil off.                                                                                                            
                                                                                                                                
SENATOR FRENCH  asked if the  water would stay combined  with the                                                               
oil through its shipment down TAPS.                                                                                             
                                                                                                                                
MR. YARBRO answered that they intend  to recycle the water at the                                                               
well head  to keep water  usage low.  That way the  low viscosity                                                               
oil can be transported without  the water; whatever trace amounts                                                               
are left can easily be removed at the refinery or later on.                                                                     
                                                                                                                                
3:50:37 PM                                                                                                                    
SENATOR WIELECHOWSKI asked how much  water is used per barrel and                                                               
assuming they  are heating the  water with natural gas,  how much                                                               
of that would be used.                                                                                                          
                                                                                                                                
MR. YARBRO answered  that it depends on the oil  feed. It will be                                                               
somewhere between  two to  three barrels of  water per  barrel of                                                               
oil; but the  water gets recycled, so the overall  water usage is                                                               
low. They intend to use electric  heaters to heat the water up to                                                               
get the reaction  going and then the reaction itself  gives off a                                                               
fair  amount  of  heat.  So,  again the  overall  energy  use  is                                                               
relatively  low.  Comparing  this  to energy  use  in  a  typical                                                               
refinery, this  is probably in  the middle  to low end  of energy                                                               
use per barrel produced.                                                                                                        
                                                                                                                                
SENATOR WIELECHOWSKI asked  how many megawatts of  power would be                                                               
needed.                                                                                                                         
                                                                                                                                
3:52:12 PM                                                                                                                    
MR. YARBRO replied  for 25-barrels per day, the  heaters would be                                                               
225 kilowatts  to get the  temperature up; but once  the reaction                                                               
is started it generates about 220 kilowatts of power.                                                                           
                                                                                                                                
3:52:39 PM                                                                                                                    
SENATOR FRENCH asked  if oil stays light as long  as the water is                                                               
still in it.                                                                                                                    
                                                                                                                                
MR. YARBRO  replied that once the  water has been added,  the oil                                                               
has been upgraded to conventional  oil. It starts off like peanut                                                               
butter and  ends up  with "light  phase" floating  on top  of the                                                               
water. Once  the two are  separated, the oil is  essentially like                                                               
water.                                                                                                                          
                                                                                                                                
3:53:24 PM                                                                                                                    
SENATOR FRENCH  said the  reaction upgrades the  oil at  the well                                                               
head; so the water is almost a waste product.                                                                                   
                                                                                                                                
MR. YARBRO  replied yes;  it's a re-agent  that they  recycle and                                                               
use  to react  the  oil  from the  consistency  of sticky  creamy                                                               
peanut butter to oil-like water.                                                                                                
                                                                                                                                
3:55:09 PM                                                                                                                    
CO-CHAIR WAGONER  asked what happens  to the oil  chemically that                                                               
makes it lighter and still allows it to continue being oil.                                                                     
                                                                                                                                
MR. YARBRO replied  that the large heavy  oil molecules sometimes                                                               
have up  to 100 carbon  molecules in  chains and rings.  Water at                                                               
high temperatures and pressures  is a very aggressive environment                                                               
and it  literally "just  tears these things  apart." As  it tears                                                               
them  a  part and  fractures  them,  one  can  think of  a  glass                                                               
breaking into  fragments that can  keep being broken down  to the                                                               
sizes wanted. So, you break it  down to the distribution found in                                                               
conventional oil.  As the chains  and rings are broken,  ends are                                                               
exposed  and they  combine with  the available  hydrogen that  is                                                               
produced in  the heated  water. This  process produces  a product                                                               
that looks like conventional lighter oil.                                                                                       
                                                                                                                                
CO-CHAIR  WAGONER asked  if  that  uses up  the  hydrogen in  the                                                               
water.                                                                                                                          
                                                                                                                                
MR.  YARBRO answered  yes; so,  they  bleed off  a small  make-up                                                               
stream.  The  water can  continue  to  be  purged of  sulphur  or                                                               
metallic impurities and used.                                                                                                   
                                                                                                                                
3:57:46 PM                                                                                                                    
CO-CHAIR  PASKVAN  asked  him  to expand  on  the  extraction  of                                                               
sulphur as part of this process.                                                                                                
                                                                                                                                
MR.  YARBRO explained  that it's  very dependent  on the  type of                                                               
oil.  The  complex structure  of  the  oil molecule  has  sulphur                                                               
compounds bound up in it. Those  bonds tend to be weaker than the                                                               
carbon-hydrogen  or  carbon-carbon  bonds  and  can  actually  be                                                               
broken  quicker than  the other  bonds; then  it reacts  with the                                                               
water to make  a variety of different compounds  that are soluble                                                               
in  the water  phase  and not  in  the oil  phase.  So, when  you                                                               
separate them,  you get this nice  clean water and oil  phase and                                                               
the sulphur  compounds are in  the water.  You can bleed  a small                                                               
amount  off and  take that  to waste  treatment and  disposal and                                                               
then bleed a small amount in.                                                                                                   
                                                                                                                                
He said that  because the molecules are very  complex, they don't                                                               
completely understand  all the reactions,  but they know  that as                                                               
long as  they run  the process within  the right  conditions they                                                               
get pretty good sulphur removal (50 to 60 percent).                                                                             
                                                                                                                                
MR. YARBRO  said a  dramatic reduction in  viscosity is  what you                                                               
want, because  BP is now doing  a great job of  producing heaving                                                               
oil at the  Milne Point S Pad, but they  have to use conventional                                                               
oil to  essentially dissolve the  heavy oil to get  the viscosity                                                               
where  it  needs  to  go.  And this  technology  will  take  them                                                               
directly to that  at the well head without having  to do blending                                                               
which leads  to more volume in  the pipeline. He added  that this                                                               
process right  now doesn't  use exotic  equipment and  they don't                                                               
need proprietary catalysts.                                                                                                     
                                                                                                                                
4:00:09 PM                                                                                                                    
SENATOR STEVENS joined the committee.                                                                                           
                                                                                                                                
MR. YARBRO  said the processing  equipment fits in an  8X8X20 ft.                                                               
common transfer container  (25 barrel a day  base industrial size                                                               
that they intend to put in  the field). It has typical valves and                                                               
high  pressure pumps  and things  that are  very familiar  to the                                                               
petrochemical industry.                                                                                                         
                                                                                                                                
Their  proposed  pilot project  from  the  bench scale  to  being                                                               
industrially  ready   uses  two  standard  8X8X20   ft.  transfer                                                               
containers, one  to house the  individuals that would  be working                                                               
with the equipment and the other for the equipment itself.                                                                      
                                                                                                                                
MR. YARBRO  said they intend  to develop collaborations  with the                                                               
University   of  Alaska   (UAA),  tapping   into  its   petroleum                                                               
development  laboratory,  and  use  the  facilities  at  the  UAF                                                               
Pipeline Training Center.                                                                                                       
                                                                                                                                
CO-CHAIR PASKVAN  asked if  he had  contacted the  University and                                                               
the Pipeline Training Center yet.                                                                                               
                                                                                                                                
MR. YARBRO replied  yes. He has had an ongoing  dialogue with Dr.                                                               
Patel  and his  associates, and  his associate,  Jerry Myers,  is                                                               
meeting with the  individuals running the pipeline  school to get                                                               
a plot plan to finally place  the five-barrel per day unit on the                                                               
facility so they can begin work there.                                                                                          
                                                                                                                                
4:02:45 PM                                                                                                                    
He  said  their path  forward  and  the collaborations  that  are                                                               
important  for  the  project's success  are  clearly  to  develop                                                               
collaborations with UAA and UAF  Pipeline School because of their                                                               
enormous  experience and  knowledge about  how to  integrate this                                                               
process  with  the production  process  and  about how  it  would                                                               
interface with the  actual oil field operations.  They would like                                                               
to build  and test a five-barrel  per day unit, which  would give                                                               
them a  lot of the  industrial skill experience. Then  they would                                                               
like to go to  a 25-barrel per day unit, which  they think is the                                                               
smallest industrial block that could  effectively be fit together                                                               
depending on  the production assets  in the field.  Because those                                                               
blocks could be built in the  Fairbanks area, a lot of jobs would                                                               
be  associated with  their fabrication  and deployment.  They can                                                               
build any size needed, but it is a standardized process.                                                                        
                                                                                                                                
4:04:36 PM                                                                                                                    
CO-CHAIR  WAGONER asked  what temperature  the oil  is after  the                                                               
water is separated out.                                                                                                         
                                                                                                                                
MR. YARBRO replied  about 350 to 400 F. Waste  heat might need to                                                               
be removed  or it may need  to be blended at  those temperatures.                                                               
When you  reduce the viscosity  and remove the  sulphur, metallic                                                               
impurities  and  neutralize  the  naphthenic  acids,  it  reduces                                                               
corrosion in  the pipeline  and increases the  value of  the oil.                                                               
Originally they thought about developing  this for the California                                                               
heavy  oil fields  that  already  have extensive  infrastructure.                                                               
California  has steam-assisted  gravity  drainage  and a  special                                                               
high-speed heated  train to transport.  If they can  increase the                                                               
value of a  barrel of oil by  $15 or $20 and  keep the processing                                                               
costs  within that  delta,  that  would be  a  real  boon to  the                                                               
California market because they could  make more per barrel of oil                                                               
for the  same infrastructure cost.  They also discovered  that as                                                               
the molecules are  broken up, the volume is increased  by about 9                                                               
percent.                                                                                                                        
                                                                                                                                
SENATOR  WIELECHOWSKI asked  if he  had financial  models of  the                                                               
estimated cost per barrel for extraction.                                                                                       
                                                                                                                                
MR. YARBRO replied yes, but  it depends on the production process                                                               
that  is  used; but  a  fully  developed infrastructure  that  is                                                               
already  injecting  steam  down-hole  would run  around  $10  per                                                               
barrel up to $14 per barrel without that.                                                                                       
                                                                                                                                
SENATOR  WIELECHOWSKI asked  if that  cost would  be added  on to                                                               
what it costs already.                                                                                                          
                                                                                                                                
MR. YARBRO replied yes.                                                                                                         
                                                                                                                                
SENATOR  WIELECHOWSKI asked  if he  knew the  cost for  heavy oil                                                               
extraction  in  Canada using  conventional  methods  and how  his                                                               
price compared to that.                                                                                                         
                                                                                                                                
MR.  YARBRO replied  that he  didn't have  a very  good cost  for                                                               
that, but he  knew they invested about $10 billion  recently in a                                                               
new  facility for  a retorting  process  that dissolves  material                                                               
out; and they are still  economically effective at that price. He                                                               
envisions a smaller more distributed  processing that allows more                                                               
tailoring to  the field  and the  production process  rather than                                                               
these massive  billion dollar  facilities that  are in  one place                                                               
and the oil needs to be transported to keep the facility viable.                                                                
                                                                                                                                
4:09:56 PM                                                                                                                    
MR. YARBRO said they believe there  is a real positive impact for                                                               
the state  with successful development  of this  technology. They                                                               
believe they can  maintain and perhaps increase  revenue from the                                                               
TAPS  along with  the associated  benefits  of the  jobs and  oil                                                               
field development.                                                                                                              
                                                                                                                                
He said Jerry Meyers, Heavy Oil  Solutions, has been a partner in                                                               
helping understand  the Alaska  part of  this and  Michelle Huft,                                                               
also with Heavy Oil Solutions, has  been helping with some of the                                                               
business  development along  with the  UAA Petroleum  Development                                                               
Laboratory and the UAF Pipeline Training Facility.                                                                              
                                                                                                                                
4:11:30 PM                                                                                                                    
In conclusion, he said they  believe this technology, if properly                                                               
developed and  successful, could provide  more oil for  the TAPS.                                                               
They know  they can  reduce the  viscosity of  oil from  honey to                                                               
water; and now  they want to take  it to the next  step of higher                                                               
throughput. This  would leverage  the investment  in conventional                                                               
pipeline  trucks  and  refineries  allowing  them  to  last  much                                                               
longer.  The   design  itself  is  based   on  industrial  proven                                                               
technologies;  it  uses   standard  petrochemical  equipment  and                                                               
standard commodity chemicals and  they think the development will                                                               
be relatively straightforward from the bench scale.                                                                             
                                                                                                                                
CO-CHAIR  PASKVAN asked  what he  would like  the legislature  to                                                               
consider about this new technology.                                                                                             
                                                                                                                                
4:12:54 PM                                                                                                                    
MR.  YARBRO  answered  that  he would  like  the  legislature  to                                                               
consider a capital investment in  the development of the process.                                                               
It  would  be  good  for  the state  because  rather  than  going                                                               
directly  to an  oil company  that  would own  the technology  or                                                               
believe they  owned it,  that investment from  the state  at this                                                               
point would allow  a diverse licensing structure  and a diversity                                                               
of applications for the state and therefore be a good return.                                                                   
                                                                                                                                
CO-CHAIR   WAGONER   asked   his  estimate   for   building   the                                                               
demonstration unit in Fairbanks.                                                                                                
                                                                                                                                
MR.  YARBRO replied  that  they are  working  on getting  precise                                                               
numbers within the week.                                                                                                        
                                                                                                                                
CO-CHAIR  WAGONER asked  if the  state became  involved with  the                                                               
licensing and use of technology,  did he plan to retain ownership                                                               
of the process.                                                                                                                 
                                                                                                                                
MR. YARBRO  replied that the current  plan is to form  an Alaskan                                                               
company  and  then to  essentially  pass  the  license to  it  to                                                               
exercise on behalf of the company.                                                                                              
                                                                                                                                
CO-CHAIR PASKVAN thanked Mr. Yarbro for the presentation.                                                                       
                                                                                                                                
4:16:09 PM                                                                                                                    
Finding no  further business  to come  before the  committee, Co-                                                               
Chair Paskvan  adjourned the Senate Resources  Standing Committee                                                               
meeting at 4:16 p.m.                                                                                                            

Document Name Date/Time Subjects
Alaska Heavy Oil Sen Resources 011812.pdf SRES 1/18/2012 3:30:00 PM