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Questerre’s oil shale assets include prospective acreage in Saskatchewan and Wyoming and the licensing rights to a proprietary process to produce oil from shale developed by Red Leaf Resources Inc. (“Red Leaf”). Questerre currently holds approximately 6% of the equity capital of Red Leaf. Red Leaf is a private Utah-based oil shale and technology company. Its principal assets are its proprietary EcoShale In-Capsule process to recover oil from shale in addition to oil shale leases in the states of Utah and Wyoming. Questerre has partnered with Red Leaf to develop its acreage in Wyoming and has an option to obtain licenses to utilize the Red Leaf process.
In 2014, Red Leaf continued its work with a US affiliate of the French-based supermajor, Total S.A. (“Total”), to jointly develop their oil shale assets in Utah. The joint venture began an Early Production System (“EPS”) phase to prove the technical and environmental attributes of the process at large scale in Utah. It follows the successful field pilot conducted by Red Leaf in 2009. Total will fund an 80% share of the EPS phase expenses estimated at US$300 million. Red Leaf and Total subsequently may launch an advanced commercial pilot on their jointly held acreage for oil shale in Utah.
During the year, the joint venture completed the front end engineering and design for the construction of the capsule and the associated mining and production facilitiies. It also approved a supplemental AFE for the EPS plase at an estimated total cost of approximately US$300 million. The final construction permit was secured and field work began in the third quarter of last year
In the currest oil price environment, the joint venture is scaling back field work in 2015. While this will delay the completion and firing of the capsule, the joint venture expects that the total costs of the EPS phase will remain within the original budget.