First off, apologies for the long interval between blog postings, I really have no excuse other than these are interesting times for a small oil and gas technology company. Thanks to those of you thoughtful enough to remind me, repeatedly in some cases, of my lapse.

Anyway, the price of oil. I don’t pretend to understand the reasons behind the recent collapse in the price of oil, I naively suspect it is a result of overproduction of expensive oil in the face of slowing demand growth. Having said that, I often wonder why certain day to day price movements occur – why does a framework for a nuclear deal with Iran (which threatens to increase supply) result in a price increase? As I write this there is active debate about whether the API can accurately forecast US crude inventory levels, causing major fluctuations in the price of WTI. I am comfortable with the notion that eventually demand will increase, supporting a higher price and therefore making more expensive production economic again. When? I wish I could tell. The good news for Acceleware is that our technologies can make expensive to produce oil cheaper. It is said that the most expensive to produce oil resources are shale oil, oil sands, and deep water. Acceleware has solutions for at least two categories. Our seismic products reduce the cost of exploration in deep water by reducing the risk of drilling expensive dry wells. This is exactly why the largest companies continue to invest in cutting edge seismic imaging. Included in this group are Turkish Petroleum and Repsol, who have already invested in Acceleware RTM technology in 2015. Our RF heating technology may dramatically reduce the cost of producing oil from oil sands. Not to mention the environment impact – a recent report compiled by the Council of Canadian Academics and commissioned by Natural Resources Canada concludes that the application of technologies such as RF heating can and should be used to reduce the environmental footprint of oil sands development. A summary of the report’s key findings were reported by the Globe and Mail last week. So in the long term I like where we are. In the short term, it’s going to be challenging.

The collapse in the price of oil has not been positive for Acceleware in the short term, that’s clear. But how negative it will be is less clear. Over the first few months of 2015, we have seen a wait-and-see attitude with seismic customers – The Repsol agreement suggests this is selectively turning around. The question will be whether the broader delay turns semi-permanent. Our customers for RF heating are re-evaluating research and development budgets, so we have seen delays there, too. However, recent events suggest both geophysical (seismic) and R&D (RF heating) spend is largely intact for 2015, at least among our biggest customers. So we will focus on making our products and services appealing to cost conscious oil and gas companies, opportunistically diversify beyond oil and gas, rationalize our cost structure, and find innovative ways to finance the development of our technology.

As we announced late last year at SEG 2014, we have developed and released AxFWI – an innovative, modular full waveform inversion application. We already have an initial customer for AxFWI and are seeing a lot of interest. AxFWI allows oil companies to make the most out of its geophysical resources by automating a currently manual process while improving the quality of the output.  In time for EAGE 15 in Madrid we will release a new improved version of AxFWI.

The RF heating team has been very busy over the last nine months. In the second half of last year we started developing proprietary RF heating technology to go along with our AxHEAT simulation software and services. We received funding from National Research Council – Industrial Research Assistance Program to address technical issues that we feel may limit the applicability of RF heating technology. That R&D effort has been successful to the point where we have begun working on related development with a major oil and gas technology. Another client is planning a field test of an RF heating prototype this summer.  In addition, we designed and constructed a bench-scale prototype of an RF heating system to test the effect of RF heating on various media. We presented a paper on Electromagnetic Heating: A SAGD Alternative Strategy to Exploit Heavy Oil Reservoirs at the World Heavy Oil Congress in Edmonton this spring.

In 2015 we intend to design, construct and test a prototype of our proprietary technology – hopefully with the assistance of industry and government partners. As always our partners are intrigued with the promise of RF heating – lower cost production, very little external water use and therefore water treatment requirement, and the ability to use renewable sources of electricity to dramatically reduce the carbon footprint of oil sands production.

So, despite the challenging times, Acceleware is moving forward on all fronts, and we should be well positioned once the oil price does rebound. Hopefully it’s sooner rather than later. In the meantime I’ll try to keep you posted more often.