SulphCo Inc. (OTCBB: SLPHE)

Editors Note:

On March 29th, Stockupticks brought you a snapshot of a company that was ahead of the curve (click here). It's technology is field tested and is gaining recognition from oil producers and governmental customers.  SulphCo (OTCBB: SLPHE) has a unique desulfurizing process that could save oil producers millions on upgrades as they try to meet new stricter EPA standards. Since our initial report, SulphCo has made major strides toward new sales of its technology.    Similar diesel and fuel oil requirements by the European Union (EU) are required of NATO allies and their vessels. This has opened a door for SulphCo that could lead to a vast worldwide market.

The business formula is really quite simple. Oil contains sulfur when it is brought up out of the earth. When the oil is burned inside an engine, sulfur emissions poison the air.  The EPA and the EU have set clean air standards that must be met on a strict timeline. Many oil producers have waited to convert their plants because of the expense. Along comes SulphCo with a field-tested, patented process that strips the oil of most of its sulfur.  This provides an exciting opportunity for SulphCo while offering cost savings to the oil producers and cleaner air for us all. 

We think you'll find this story worthy of  your consideration. Very few company's hit the market at the right time and have a needed environmental product that benefits everyone in the long run. SulphCo has managed to accomplish both of those tasks. 

Read on ! ... 
 
 

Company Overview

In the late 1990's, Dr. Teh Fu Yen, Professor of Civil and Environmental Engineering at the University of Southern California conceived of a novel process for the removal of sulfur from petroleum products that did not involve the high temperatures and pressures required by traditional technologies. In 1998, one of the Company's founders, Dr. R.W. Gunnerman, an internationally acclaimed scientist and businessman who has devoted his life to developing and implementing solutions to global environmental issues, established SulphCo (formerly "GRD, Inc."). SulphCo was created to fund Dr. Yen's research under an agreement between Dr. Gunnerman and University of Southern California.  This funding enabled Dr. Yen and his students to develop a technology that addresses the worldwide dilemma of noxious sulfur emissions ("SulphCo Technology") in a practical and cost effective way. Under that research agreement, SulphCo became the owner of the SulphCo Technology, for which a patent has been applied. 

Dr Gunnerman conducted research and development on the "Yen" process, developing and commercializing that technology to a point where it now has far wider application than simply the desulfurization of petroleum products. SulphCo has now developed a unique technology to hydro-treat petroleum streams with ultrasound. This process operates at atmospheric pressure and modest temperatures. The process transfers hydrogen from water by sonification to create H+ and OH- radicals as well as Hydrogen gas that: 

1) saturates aromatic rings 
2) removes sulfur by breaking carbon/sulfur bonds
3) removes nitrogen by breaking carbon/ nitrogen bonds. 

SulphCo's technology reduces sulfur up to 80% from crude oils and up to 98% from lighter distillates.  Diesel sulfur levels of 10 - 15 ppm are achievable with the SulphCo system.  These levels meet existing and proposed Environmental Protection Agency (EPA), mandates for the years 2002 and 2006 today! 

Dr. Rudolf Gunnerman, Chairman & CEO of SulphCo was given the Albert Einstein Award in February of this year for his scientific accomplishments. Dr. Gunnerman is a 73-year-old entrepreneur who has devoted his life to developing products to help the environment and mankind.  After studying mathematics and physics at the University of Munich, Germany he immigrated to the United States.  Dr. Gunnerman has invented a series of successful technologies, including fireproof building materials and wood pellets.  Thereafter, in his quest to reduce Nitrous Oxide, a major source of ozone depletion, Dr. Gunnerman invented A-55 Clean Fuels  Technology and is currently Chairman and CEO of Clean Fuels Technology, Inc.  Dr. Gunnerman holds three honorary doctorate degrees.  Dr. Gunnerman's credentials verify his business acumen and scientific skills. 

The SulphCo Technology Center features the latest in sulfur detection technology: Agilent Gas Chromatograph 6890 Series, equipped with an Antek Chemiluminescence Sulfur detector and an Agilent auto injector Two Horiba Sulfur-in-oil Analyzers, SLFA- 1800 Series LECO Sulfur and Carbon Analyzer, SC- 444 Series Sievers 350S Chemiluminescence Sulfur detector.  In addition, the Technology Center also has four rooms dedicated to the analytical laboratory and the pilot plant testing equipment.

What SulphCo Does 

SulphCo has developed a unique technology to ultrasonic hydro-generation treat petroleum streams with ultrasound. Our new patent-pending technology has been verified to consistently desulfurize refined petroleum, while also increasing the volume and quality of refined products from a barrel of oil. 

Why SulphCo Exists 

SulphCo technology is aimed at increasing refining efficiencies, improving product quality, lowering cost, and meeting year 2006 U.S. Environmental Protection Agency (EPA) regulations for on-highway desulfuring diesel. 

The Market SulphCo Is In 

All nations depend on the combustion of vast amounts of petroleum fuels to generate electricity and to power their industrial and transportation sectors.  Worldwide energy consumption is forecast to continue its dramatic growth.  The US Energy Information Administration of the Department of Energy (EIA) has forecast petroleum products consumption worldwide to increase almost 42 percent by 2020. Currently, 800 world wide refining operations refine 75 million barrels of crude per day. 

Fossil fuel costs are some of the most significant factors affecting the world's economy.  Sulfur removal in crude oil will have profound economic advantages by equalizing price differentials between high sulfur crude oils and residual fuel oils and allowing greater use of domestic reserves that are currently underutilized because of their high sulfur content.  An example of the "spread" between high and low sulfur fuel oils is illustrated by the following graph. 

Currently, more than 50 crude oil producing countries fill the 75 million barrel per day worldwide petroleum demand, over 75% of which is produced from sour crude. The United States accounts for 81% of all North American oil consumption.  U.S. consumption is 18,572,00 barrels per day (b/d), 66% of which is imported. Domestic production of crude oil is 6,252,000 b/d with 21 Billion barrels left in reserve. Currently, there is a 16,540,990 b/d refining capacity in the U.S., with a 3.5 million b/d production of middle distillates, which includes diesel fuel. 

SulphCo's Benefits and Products

                     Desulfurization 

SulphCo's technology reduces sulfur up to 80% from crude oils and up to 98% from lighter distillates. Diesel sulfur levels of 10 - 15 ppm are achievable with the SulphCo system. 

                    Product volume and quality upgrading 

SulphCo's new patent-pending technology increases the volume and quality of refined petroleum products from a barrel of oil. By transferring hydrogen from water to various petroleum streams, SulphCo Technology is able to desulfurize those streams, increase product volume, increase cetane index, and improve hydrocarbon fractions, in part through the saturation of aromatic rings. 

The process works well, not only for diesel and diesel stocks such as light cycle gas oil, but for gas oil and slurry as well. It is a very efficient complement to and/or replacement of expensive hydrogen generation and hydrotreating, yielding a higher volume of better quality product. The SulphCo Technology will yield significant capital and operating cost savings. 

                     Products

SulphCo's principal product is a self-contained unit that transfers hydrogen from water that saturates aromatic rings, removes sulfur by breaking carbon/sulfur bonds, and removes nitrogen by breaking carbon/ nitrogen bonds. These proprietary closed-loop "hydrogenation" units can be scaled to treat large or small volumes of petroleum product. They operate at ambient temperature and atmospheric pressure and have a relatively small "footprint" compared with existing hydrogenation equipment.  The capital cost of these units will depend on their specific capacity but is expected to be significantly less than traditional hydrotreating technologies. 

Depending upon customer requirements, the company intends to manufacture its ultrasonic units to petroleum refineries to receive fee revenues from through put product as processed. In addition, the company will also outsource construction of of its units to engineering and construction firms in the petrochemical industries to receive production royalties from through put products as processed.

The company has already made its first ultrasonic installation to the IPLOM petroleum refinery near Genoa in Italy. The units installed are continuously, and successfully, de-sulfuring diesel fuel at a rate of up to 350 bbl per day. Luigi Profumo, President of IPLOM and Dr. Gunnerman, President of SulphCo, recently announced a larger unit able to process from 2,000 to 3,000 bbl of diesel fuel per day will be installed and operational before this year end. It is expected three more of the larger units will be installed and operating during the first quarter of next year. With four operating units, the daily will have an operating capacity of 12,000 bbl of diesel fuel per day.
 

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