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LWP oil and gas “proppant” tests show lower than expected manufacturing costs

LWP Technologies’ joint venture in India to manufacture fly-ash-based proppants for oil and gas producers has received a major boost with new test results showing lower-than-expected production costs.

Proppants are a sand-like commodity used to ‘prop’ open tiny fractures that are created in shale rocks by “fracking” the ground. They allow oil and gas to flow to the surface by holding the tiny fractures open.

Proppants are traditionally a ceramic material made from clays and/or bauxite and they are often the single largest cost item in the fracking of a petroleum well. LWP have invented a process to make low-cost proppants from the largely unwanted by-product of coal fired power stations known as fly-ash.

The company announced this week the results of lab tests on their fly-ash-based proppants made with raw materials that were readily available from sites near the proposed manufacturing plant in Pune, India.

Testing by Retsch Technology in Germany showed the sample proppants were excellent quality, light weight, low cost and high strength.

Furthermore, the proppants had been made without any bauxite, substantially reducing raw material costs and at a lower sintering temperature, indicating even bigger savings in energy costs compared to traditional proppants.

In a statement to the ASX, LWP reported that the proppants tested were lighter than any clay-based or bauxite-based product and had a “remarkable” compressive strength of 11,000 PSI.

Proppants must be light to prevent them from falling straight to the bottom of a well and yet strong enough to withstand great pressures in order to hold open the tiny fractures created down hole from fracking.

“These test results should lead to increased interest in LWP low-cost proppants from oil and gas companies and contractors in India and around the world,” the statement said.

The German test results build on last week’s news that LWP had been awarded a patent for its technology by the US Patent and Trademark Office.

The company also reported this week that plans to upgrade the proppant manufacturing plant as part of a joint venture with Hallmark in India were making satisfactory progress. An evaluation of the equipment needed was expected to be complete within 30 days.

LWP’s Americas CEO, Dr David Henson, said “These are very positive test results and further validate the commercial appeal and cost competitiveness of proppants that can be produced at the Hallmark JV facility.”

Chairman, Siegfried Konig, added that the recent US patent and the latest test results put LWP in a stronger position to commercialise their product.

He said, “We are also pleased to confirm that we are increasing our marketing efforts, as commercial negotiations with licensees and oil and gas contractors continue across a number of markets, primarily in the US. The increased stability in oil and gas prices is driving greater enquiry and accordingly, we are stepping up our business development efforts in North America.”

LWP appears to be well funded with total cash and liquid investments of $2.3m and they have a pending claim for another $2.3m in federal Government tax offset grants for their research and development efforts.

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