Perhaps late to the game, oil, and gas companies face an all-new threat: flaring bans.
You can’t say that the oil and gas industry has had anything but a disappointing 2020. With economic shutdowns leading to plummeting prices for their products, many drillers have simply abandoned shop for the year.
Those that stayed in production or are now reopening due to a slight bounce back in prices face a challenge they’ve long avoided.
During the production of oil, in particular, excess gas is extracted. In a large amount of cases, the oil companies have two options.
They can either let that gas be released into the atmosphere or burn it off as it comes out of the ground, called flaring.
The problem, however, is that both actions create an enormous amount of greenhouse gas emissions. And now, states are really starting to notice.
California is set to completely ban the act of flaring starting in 2021. Releasing the CO2 and methane into the air is even worse. So, to do business in the state, oil and gas operators will need a solution to this problem.
And, as we live in the age of technology, there happens to be an emerging one coming at just the right time.
Profiting from Regulation
Waste gas combustion is a process that captures gases, stores, burns, and actually utilizes that energy to power other operations, all while reducing emissions from the gases themselves.
Questor Technology Inc. (TSXV: QST.V), (OTC: QUTIF) is a Canadian company that has a system with an emission reduction rate of over 99.99%.
Its Q-Series is the solution for many in the oil and gas industry looking to meet upcoming regulations and reduce their carbon footprint, all while still reaching profitability in a low-priced market.
This is crucial for companies hoping to continue production in California. But other states like Pennsylvania, Colorado, and New Mexico have pending legislation regarding waste gas that could directly benefit Questor.
Of course, petroleum products production isn’t the only place where this kind of technology can find a home.
Methane from landfills makes up a large amount of greenhouse emissions every year. Methane is roughly 30 times worse greenhouse gas.
Other industries too could use this kind of waste gas solution, which in and of itself can actually turn a loss or a fine into a net benefit through power generation. Take pipelines.
After years of protests and government, flip flops on new pipelines bringing Canadian as well as North Dakota petroleum products to market, the issue of leaks remains.
This affects older pipelines as well as newer ones. The fines for leaks, particularly natural gas leaks, have climbed of late.
Questor doesn’t just sell its waste gas combustion units on a permanent basis. It also rents them out in customizable sizes. In fact, this is the very solution where Questor is seeing the most growth.
The company recently rented its units to a company near the Chicago airport to “blowdown” a couple of segments of a pipeline in the area. In Napa Valley, California, Questor was recently rewarded with a contract for pipeline maintenance.
In many cases, just having Questor in place to prevent major or even minor disasters is far cheaper than risking the fines from such leaks.
The Q-Series is also capable of being a moneymaker first rather than just an environmental fine reducer.
It is actively selling its units to a wide variety of industries from glass recycling plants to the mining industry to process waste heat from operations.
At one such site, the company claims to produce 200kw of emissions-free power, which would offset 592 tons of carbon emissions.
Unfavored by Investors… But Not Accountants
Still, 2020 has been incredibly challenging for any company connected with the oil and gas industry. And for the time being, that’s still where Questor makes its majority of sales.
As you can see, when oil and gas prices slumped at the outset of the COVID-19 pandemic, Questor shares nosedived. They have yet to recover.
So did the company’s sales and earnings. During just the six months of the year, revenue dropped from $15.2 million to $5.5 million.
Earnings per share evaporated entirely from 16 cents to nothing.
Yet, there’s good news here too. The company has put its books in place for just such a disaster, even if no one could have guessed at it 10 short months ago.
It is still growing its cash position, now at $15.2 million. It has another $6 million in undrawn loans. And currently carries zero debt.
With the coming regulations no matter who wins the White House next month, these kinds of technologies and solutions for the oil and gas industry and others make tons of sense for investors.
Even if it takes another year or two for oil and gas prices to tick back up, the wide range of uses for products that can reduce emissions by 99.99% make this one to watch.
To your prosperity and health,
Joshua M. Belanger
Executive Publisher & Founder