QEM reports high oil yield during test program, emphasis on a balanced Vanadium-Oil shale recovery

Summary

• Oil extraction testing using a solvent, reports yields up to 181 kg Oil per ton, 2.18 times that of Modified Fischer Assay (MFA) levels, with oil yields consistently over 175% of MFA.
• Oil yield varied less significantly with the size of the feed particle, improving economic aspect of the extraction process
• Oil extraction tested under varying conditions to ensure the practicality of the outcomes
• Extraction efficiency for vanadium anticipated, further updates awaited

Oil shale and Vanadium explorer with 100% interests in the Julia Creek Project, QEM Limited (ASX: QEM) announced excellent results for the independent oil extraction tests from the wholly owned Julia Creek vanadium and oil shale project in North Queensland.

The Julia Creek project stretches over 249.6 square kilometres in the presence of existing infrastructure in north western Queensland. Further in October 2019, the JORC mineral resources of the Julia Creek project was upgraded to 2,760Mt with an average grade of 0.3% V₂O₅ and a 3C Contingent Oil Resource of 783 MMbbls with an average oil yield of 53 litres per tonne.

Following the resource upgrade, QEM’s Julia Creek has emerged as one of the largest Vanadium deposits globally along with the substantial oil shale volumes.

Oil Extraction Test Work

The test program was targeted to assess and evaluate the potential to increase the oil yields from the oil shale portions of the Julia Creek deposit through the addition of a solvent during the extraction process. The test program resulted in substantially higher oil yields when measured against typical extraction processing in the absence of a solvent, such as direct retorting.

The excellent outcomes provided clarity as well as flexibility for QEM to utilise a balanced Vanadium versus oil shale recovery method. A balance recovery strategy could assist in minimising capital expenditure, operating costs, and maximising profit margins.

Oil produced from Solvent Extraction of QEM oil shale Source: QEM Limited

QEM is utilising specialised services of HRL Technology Group (HRL) to conduct the extensive testing program which includes the oil extraction testing using a solvent. HRL is a NATA-accredited laboratory company with critical knowledge and extensive experience of executing projects with various oil shale players across Australia.

The hydrocarbon solvent utilised in the extraction testing may be derived straight from the produced oil stream. The solvent acts as a donor of hydrogen, converting the kerogen into the oil product with higher yield and better quality than conventional extraction technologies. The solvent can be regenerated to be re-used and recycled within the process, improving the economics of the extraction process.

Sample Collection - The test included samples from a centralised location within the oil shale resource grounds. Crushed samples weighing 10 kilograms from the upper and lower shale bands (OSU and OSL). The samples were further ground to a nominal top size of 212μm via a vibratory mill facilitating subsequent chemical analysis and oil extraction testing.

Testing Method: The solvent extraction test involved heating a slurry of oil shale and solvent in a batch autoclave reactor at high pressure and temperature (400°C to 450°C). At these supercritical conditions, the kerogen in the shale is converted to liquid and gaseous products. The solvent plays a vital role by donating hydrogen, which assists with the conversion.

Different factors investigated in the test work Source: HRL

The oil yield varies with a range of factors including temperature, residence time, particle size, feed material properties, solids loading and solids-solvent ratio.

Outcome of the Oil Extraction Testing

The oil recovery testing showcased the improvement in oil extraction using a solvent for both the OSU and OSL oil shales.

Here are the few specific outcomes of the oil extraction test -

1. Oil yields recorded at 16.7 to 18.1 % dry basis for the OSU shale and ~14.7% for the OSL shale as per the base case solvent extraction tests at 450°C
2. Oil yields for the solvent extraction tests stood almost twice those for the Modified Fischer Assay Tests for both OSU and OSL shale
3. Oil yields were relatively consistent upon varying testing conditions

Oil yields consistently over 175% of Modified Fischer Assay oil yield for a range of varying test conditions

Oil Recovery test using a solvent as a % of the MFA oi yield source: QEM

The current 3C contingent oil resource of 783 MMbbls at an average oil yield of 53 litres per tonne is reported by applying a Modified Fischer Assay. This assay methodology (MFA) is the standardised laboratory testing procedure used to determine the oil yield from oil shale. It simulates the amount of oil yield possible through the application of high temperatures in pyrolysis or retorting, with no use of a solvent.

Additionally, another significant outcome from the test work was that the coarse feed did not affect the oil yield significantly, further improving the commercial potential of the project.

The Company is extremely pleased with the results of the test work to date, which clearly demonstrate the effectiveness of utilising this solvent in the extraction process.

Advancing quickly

With the highly encouraging results of the oil extraction testing, QEM is immediately seeking to complete further test work including: -

• Assessment of the oil quality from the solvent extraction tests
• Additional testing of a larger varying samples from across the Julia Creek resource
• Optimisation trials for detailed investigation of processing parameters
• Engineering and costing activities to further evaluate, develop and optimise the extraction process with special attention to economic viability

Vanadium Extraction Testing

QEM is awaiting final results for Vanadium extraction efficiencies using acid leach tests of shale ash feeds produced at varying conditions and these results will be available shortly

On 23 July 2020, QEM was trading at $0.105 a share, with a market capitalisation of $11 million (AEST: 12:14 PM).

All financial information pertains to Australian dollar unless stated otherwise.