UPDATES

Breaking news — our mobile lab (see photos) is going to Texas!

A road trip for the mobile lab

We plan to take the CLEAN-FRAC™ trailer-mounted system to San Antonio and Houston, to demonstrate our high-speed water recovery process.

San Antonio is where the action is, near the Eagle Ford Shale, the most profitable oil field in the world, with dozens of “monster wells” producing up to 5,000 bpd.

In San Antonio, we will be showing how our system takes in that dirty frac flowback water and continuously removes up to 98% of the carbon contaminants.

And Houston is where most of the industry press is located. Those will be smaller-scale "parking lot" demos that don't require a huge amount of contaminated water. We think the visuals will be compelling.

We'll be documenting the expedition with photos and videos, so stay tuned.

The game-changing cost savings

Why the excitement? It's in the estimated industry numbers:

• Treating water for reuse typically costs 21 to 26 cents per gallon of water treated.
• Even the "cheap" option of trucking the water offsite costs 11 cents per gallon or more.
• By combining our high-speed process with other innovations, producers might see the cost of treatment go to seven cents per gallon!

Cheaper than trucking? That is quite an exciting possibility.

Meanwhile, water treatment is emerging as a major national strategic priority. Here's why.

The fracking revolution

What an amazing stat this is: the US will overtake Saudi Arabia to become the world's biggest oil producer before 2020, and could be energy independent by 2030. And with that, our country's CO2 emissions have fallen dramatically, to a 20-year low.

All this driven by the fracking revolution.

All good, right?

How the boom is fragile

But all this could be undermined by rapidly declining production elsewhere.

For example, Alaskan production has declined about 74% off its peak of two million barrels per day in 1988. There is talk that the Trans-Alaska Pipeline might have to be shut down if the volume gets too low.

So the US is really relying on the fracking revolution! But that could stall on environmental concerns. That's why water treatment is only going to become hotter and hotter as an issue.

How we're doing

So how are we doing in meeting the challenge? I asked Bill Charneski, General Manager of our Oil and Gas division, to catch you up. He says:

We are definitely making progress with our plans to license our CLEAN-FRAC™ technology.

Our first licensee, PEARL H2O, is completing a multi-stage system to allow the recycling of frac water. They expect to install a first paid system in the Bakersfield area in the first half of the year, resulting in our first licensing revenue from oil and gas water cleanup!

Our second licensee in Calgary, LH Opportunity Group, is being very proactive in oil sands and fracking opportunities in Canada. We think we'll see some agreements with companies on the ground, also in the first half of this year.

We are in discussions with a number of other potential OEM accounts that are excited about using CLEAN-FRAC technology as a pre-treatment to their own technology.

I'm very proud of the job that Bill, a career veteran of the petrochemical industry, is doing in developing this brand-new line of business.

We'll continue to report on our progress as frequently as we can.

Have a great weekend! (Honoring Martin Luther King in the USA.)

Riggs and team

Riggs Eckelberry
President & CEO
OriginOil, Inc. (OOIL)

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