As we continue to be intrigued by opportunities related to the energy sector on the back of the Trump Trade and the potential increases in defense spending in the US, we’ve been examining other companies in North America as well. We’ve been following one such Canadian microcap company that may have a better mousetrap for the oil industry.

Twenty years ago, BASF (Deutsche Börse XETRA: BAS; OTCQX: BASFY), the German chemical conglomerate, had a memorable ad campaign whose tagline was, “At BASF, we don’t make a lot of the products you buy. We make a lot of the products you buy… better.” We were reminded of this as we’ve been digging deeper into Bayshore Petroleum (TSX Venture: BSH) it’s not just an oil company, but it’s a company that can make all oil companies better.

Bayshore is focused on a technology that increases the productivity and
profitability of heavy crude oil and bitumen. Heavy oil is significantly more viscous and dense than its conventional light oil cousin, while bitumen is an even more viscous and dense form of petroleum found in oil sands.

Global resources of heavy oil and bitumen greatly exceed light oil, with very high concentrations located in Canada and Venezuela. There are difficulties in extracting, refining and transporting heavy oil and bitumen, however, that render the conventional methods used for light oil, ineffective.

This is where Bayshore comes in. The company has exclusive rights to technologies that reduce refining costs, reduce the need for diluent (diluting or thinning agent) and other measures to transport the oil and expedite the end-to-end process of delivering
fuels to the downstream user.

Source: Bayshore Petroleum

Bayshore does have two small exploration and production properties in Alberta, but they’re non-producing and the company will be divesting these sometime this year. The key for Bayshore are the two technologies that it has licensed, both of which promise a less expensive, less energy intensive way of processing key products in the petroleum chain.

Cold Catalytic Cracking for Converting Heavy Crude Oil and Bitumen

This process converts raw heavy crude oil and bitumen into light oil suitable for fuel, synthetic gas and clean sand and petroleum coke for fuel and other carbon-consuming industries, using a proprietary catalyst. Unlike current commercial methods, Bayshore’s proprietary process can be operated at normal pressure and low temperatures. Laboratory tests on Canadian heavy crude oil and bitumen, and oil sands from the Athabasca region of Alberta and from other countries have produced commercially viable oil and gas yields.

Sonocracking for Hydrocarbon Desulfurization

This process involves passing a hydrocarbon stream through an ultrasonic wave chamber with an added proprietary catalyst to separate sulfur impurities from the hydrocarbon in an economic manner. Traditional methods of reducing the sulfur content in hydrocarbons is expensive and energy intensive. The patented ultrasonic wave process with catalyst is much more efficient and does not require high temperature, high pressure or hydrogen.

Peter Ho, Bayshore’s President and CEO, has over 30 years of oil and gas industry experience in North America,
China, the Middle East and Asia. He’s a registered professional Engineer and has
worked for multinationals including BP, Texaco, Kerr McGee and
TransCanada Pipelines. Mr. Ho has been involved in setting up public companies in Hong Kong and Canada and has strong relationships with PetroChina, China United
Coalbed Methane and many other international oil and gas companies. He
has also been involved in numerous conventional and heavy oil and gas and coalbed methane projects in Canada and globally over the past 15 years.

Like many companies at the microcap end of the spectrum, the major hurdle that Bayshore and Mr. Ho face is raising enough money to finance the commercialization of the company’s technologies. The stock is very thinly traded, and a meaningful infusion of capital or a known investor – or both – may be required for the rest of the market to stand up and take notice. We’ll be keeping a close eye on Bayshore, as we believe the company’s technologies could dramatically change the refining, processing and transportation businesses for oil companies globally.

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