Quadrise Fuels International Plc share price, company news, analysis and interviews

Quadrise Fuels International plc (LON:QFI) Chief Executive Officer Jason Miles caught up with DirectorsTalk for an exclusive interview to discuss new Chairman Andy Morrison, the significant for bioMSAR as a transition fuel, the impact of the Aquafuel results on plans for commercialisation, other tests planned at Aquafuel, discussions with MSC, other active projects and what we can expect in the coming months.

Q1: Quadrise Fuels International have appointed a new Chairman today, can you just tell us more about Andy Morrison?

A1: We’re obviously delighted to have Andy actually join us today, it’s his first day today, following a very comprehensive recruitment process led by the Nominations Committee and Phil Snaith. We’re very sure that Andy will add significant value to the company and experience the Board.

He’s a very experienced fellow chemical engineer with some 40 years of experience, starting his career at Royal Dutch Shell where he had an international oil trading, marketing, shipping and speciality chemicals experience which captured our attention. Of particular interest to us is actually his life after Shell, the development of his career was moved to more strategic and then portfolio roles and since 2007, he’s been working with a variety of different publicly-listed smaller junior companies such as ours. His role recently in Spinnaker Acquisitions as an investor, again, cemented his experience to be very city-facing and an ideal fit really with what we are looking for from a Non-Exec Chairman.

So, yes, we are delighted and hopefully he’ll be looking forward to speaking to shareholders soon.

Q2: Now, regarding the positive results of the bioMSAR testing at Aquafuel announced Monday, can you just explain for us the significance for bioMSAR as a transition fuel?

A2: It gets a bit complicated so I’ll try and keep it a high level and not too technical.

When companies are evaluating transition fuels, there are three things that are important. There’s the fuel composition and therefore the potential reduction in greenhouse gas emissions that include obviously CO2, black soot and methane but there’s also the efficiency of the transition fuel when it’s actually used in converting the energy that’s in the fuel actually to power. Then the resulting emissions are important too so obviously CO2 is important, but also other things such as NOx emissions and smoke emissions are also important. So all of those things you need to make sure your product complies with and ideally excels at.

So, prior testing of bioMSAR at Aquafuel last year, which we published last year, indicated that with the standard settings for the Cummins engine, which is a standard two litre truck engine, that’s linked to a generator so it’s a high speed engine, not really designed for running on heavy fuels, got some very positive results. We got better efficiency, by about 3%, but it also got over 20% lower NOx so that indicated we were onto something and we repeated those tests this year, again, to confirm that those results were repeatable.

The recent round of testing really was to look at then how could we adapt the engine to more closely simulate what we expect to see on the larger engines, specifically notably the larger two stroke engines, where you are able to advance the injection of the fuel, which is important for fuel such as ours, which take a little bit longer to combust.

So what we did is we modified the engine to allow early injection, we retrofitted it with a pressure sensor so we can very closely and accurately monitor what’s happening inside the engine. What we saw was that by advancing the injection of the fuel, you’re able to increase the efficiency of the engine and that was a case with bioMSAR, It was also the case with diesel as well. However, what you also see when you increase the efficiency is that the emissions of NOx go up so efficiency goes up, so does NOx, and obviously with diesel engines, that’s a limiting factor.

What we were able to do with bioMSAR was we were able to reduce the inlet air temperature down to very low levels, which are akin to diesel, and that meant that we could achieve high efficiency, but also low NOx. Whereas with diesel, what you see is you see high efficiency but you have high NOx so you can never achieve that high efficiency, which is why the engine’s detuned.

That’s very important, that gives you lots of flexibility in an industrial application and the higher efficiency obviously reduces the cost, but it also reduces the absolute amount of CO2 that emit as well. So, if you can comply with emissions limits or even better them which we did in the recent testing, but also get that higher efficiency in the engine, that’s an extremely compelling factor which really separates the bioMSAR with other potential transition fuels.

Q3: What impact will these results have on your projects and plans for commercialisation?

A3: We certainly think that the results will support and hopefully accelerate the plans we have on the larger scale trials, which I can tell you about it in a minute. I think in terms of the non-engine applications, all of these results are very helpful to convince people that the fuel burns extremely effectively.

Q4: What can you tell us about other tests that are planned at Aquafuel?

A4: So, at Aquafuel, we weren’t able to completely do all of the runs that we needed to do to optimise efficiency versus emissions so the final bit of the testing, based on what we’ve just recently seen, is to carry out some additional tests in just to exactly quantify how much better efficiency we can achieve versus diesel and what the optimum settings is for the emissions. That will then be very helpful to feed into the other testing that we have planned.

We also have some other formulations of fuel that we are looking at as well and the Aquafuel engine can be used for that type of testing, it’s a perfect little setup we have and obviously a UK base as well so it makes life very easy logistically.

Q5: Just coming away from that, how are talks with MSC progressing and what are the next steps for vessel testing and overcoming OEM resistance?

A5: The MSC discussions of progressing well and obviously, the recent Aquafuel results are definitely supportive in progressing actually to vessel testing, what we’d like to do is go straight to vessel testing without having to wait for the stationary engines to be available from the OEMs. So it’s utilizing these results now to obviously support the step to move straight to BioMSAR testing on the vessel without having to wait for the stationary engine test to happen first.

So, those discussions are progressing and obviously we’re looking forward to updating shareholders in due course.

Q6: Jason, can you just update us on the status of your other active projects in Morocco and Utah and how the timetables are looking since you last updated to the market?

A6: Obviously January has passed by and there’s been lots of things going on.

In Morocco, we’re still working on updating the material transfer corporation agreement that we have with the client, there’s a new client team that we’re working with so we’ve been working with those guys to really get things ready to carry out site trials. Morocco has been quite tricky because until very, very recently, there’s been no means of accessing Morocco, all of the borders have been shut. That’s now been opened up as of this month, next week, so  our team are able to access the site again.

So, once we have the agreements signed off and the plans finalised in terms of the testing, which we still target for this quarter, then we’ll be providing an update in due course, but work is ongoing.

Q7: What else can we expect over the next few months with regards to progress and announcements from Quadrise Fuels International?

A7: With Utah, we’re still working with TomCo and Heavy Sweet Oil as well, they’re in the middle of a down hole drilling program at the moment together so we’re working with those guys to really dovetail their production plans for down hole oil with the potential production of bioMSAR and MSAR at site for trials that we’re looking at doing there. Obviously, it’s a future supply point for bioMSAR and potentially MSAR for our future plans with MSC, once a vessel trial is ongoing, hopefully it’s completed. So, all of those things are progressing well.

In terms of the next few months, we’ve obviously got two senior appointments announced within a month of each other which will definitely assist me in some of the heavy lifting. Phil Hill’s already hit the ground running and we expect Andy to do the same so we’ve obviously got two people to bring up to speed, we’ve got lots of other things going on.

In the Americas, we have some refinery and power plant trials, which we are working on with the clients there in Mexico and Panama and also, we are working on some other new projects, looking at new aspects to the technology that we hadn’t thought about before. Also, our net zero fuel project to move bioMSAR to the next level and achieve a fuel that potentially has very compelling features compared to other blue and green type transition fuels.

Quadrise Fuels International plc (LON:QFI) Chief Executive Officer Jason Milescaught up with DirectorsTalk for an exclusive interview to discuss the test results for bioMSAR™ on a medium 4-stroke engine, decarbonisation in the shipping sector, other advantages of bioMSAR™, Aquafuel and how bioMSAR™ fits in with the company net zero plans.

Quadrise Fuels International is the global innovator and licensor of disruptive heavy oil technology that also produces MSAR^® fuel. Today, the company has provided test results of bioMSAR™ on a medium speed 4-stroke diesel engine at the VTT facility in Finland. Joining me today to discuss the results is CEO, Jason Miles.

Q1: First off, can you just explain what bioMSAR™ is and the significance of publishing these results today?

A1: bioMSAR™ is a renewable version of our conventional emulsion fuel MSAR^®, which is made using the same technology. With bioMSAR™, we’ve incorporated renewable glycerine into the fuel as a transition solution to immediately reduce carbon emissions for our clients. Other than this, the two fuels are very similar and essentially interchangeable.

The beauty with bioMSAR™ is we can adjust the glycerine amount in bioMSAR™ to match the de-carbonisation requirements of our clients which helps during their transition to net zero.

These latest results are an important forward step in commercialising bioMSAR™.

Q2: Why did you select this engine and VTT as the test partner?

A2: This engine, a Wartsila engine, and the VTT test facility have been used for many years as a Wartsila 4-stroke development and fuel testing facility. It’s the same engine that’s used in diesel power plants and cruise ships and ferries so it’s an important reference base. It was used extensively in the past for emulsion and MSAR^® developments as well, leading to over 150,000 hours of successful commercial operation. So, for bioMSAR™, it was important to get that reference.

Importantly, it’s also used to inform industry when there are regulatory changes. So there was work done as an example for IMO 2020, sponsored by Neste, to look at the impact of low sulphur fuels prior to that regulation coming into effect. So, it’s used by industry as a test facility to inform the marine sector.

For us, third party verification for bioMSAR™ at a reputable facility was key for us and our clients, which is why VTT was selected.

Q3: Now, you mentioned shipping, why is it going to be so hard to decarbonise?

A3: Well, decarbonisation of the marine sector is relatively new and there are a number of solutions available today, with no clear winners at the moment.

A large amount of investment is needed for this shipping sector to decarbonise but regulation is really only just catching up with the consumer demands, as opposed to say the automotive sector where they’re already mandating the use of the percentages of biofuels, so it’s relatively new for the marine sector.

Having said that, the sector itself is actually quite an efficient means of transportation. Maritime transport emits about 940 million tonnes a year of CO₂, that’s only about 2.5% of global greenhouse emissions, and that’s been reduced by about 30% over the last few years by efficiency measures to try and decarbonise the sector.

So they’re already making the right transition but decarbonisation is obviously taking effect now and a number of different options are being considered.

Q4: Just going back to the results, how good were the bioMSAR™ results and were they in line with expectations?

A4: They actually exceeded our expectations. We formulated the bioMSAR™ with about 40% renewable glycerine, which essentially meant that would provide at least 20% CO₂ reductions and on average, we actually obtained 26% CO₂ reductions, which is a much higher than we thought. That was a combination of the renewable glycerine and the higher engine efficiency that was obtained.

Other emissions such as smoke and particulates were very low in line with previous results with MSAR^®, but even lower than that because of the presence of glycerine, which doesn’t have any ash in the fuel. Also, those low emissions indicate the expected emissions of black carbon, which we think will be legislated in the future for the marine sector, they were extremely low with bioMSAR™ as well. Emissions for the other components such as NOx and CO were also low, although we certainly believe that further optimisation is possible. This initial test was fairly limited in scope, but we believe that we can get some much better NOx emissions as well.

Q5: Does bioMSAR™ offer other advantages?

A5: Yes, it does, specifically we believe it would be available to a lower cost than conventional biofuels per unit energy, which is important. The fuel itself is also a drop-in, so it can be used with existing fuel tanks and fuel systems, and also the engines themselves.  We’re doing all the testing with conventional engines so the engines don’t need to be modified at all.

So, any changes that may be made for MSAR^® are also applicable for bioMSAR™, and vice versa, so the two fuels offer an excellent option for the marine client looking to both reduce their emissions, but also reduce their costs as part of their operating regime.

Q6: Now, today’s announcement also mentions further testing at Aquafuel. Can you just expand on that and any other plans?

A6: So, with Aquafuel, we’re working on further optimising bioMSAR™ performance on a smaller scale diesel generator, we have a 40 kilowatt Cummins engine that we’re using for testing.

We’ve already obtained for some really good results which we’re very happy with, including high efficiency and low NOx. We think, with this further testing we’re doing and the modifications we’ve made to the engine for the performance monitoring systems, that we can really further optimise the performance of bioMSAR™ on these small engines, and also provide data which will support the optimisation of larger engines as well.

So, it opens up new opportunities in terms of the market for us, but it also helps to support our current market sectors such as power and marine.

Q7: Finally then where does bioMSAR™ fit in with Quadrise Fuels International’s net zero plans for 2030?

A7: So, it’s an important step, obviously with this initial testing we’ve already obtained what we believe is 26% reduction in CO₂ emissions, and that’s on a ‘well-to-wake’ basis it’s important to stress. So, that’s essentially looking at the emissions all the way from the ground through to end use, which is where the sector appears to be going, which is a very important way of looking at all the different fuel options.

So, we believe today we’ve got 26% less emissions measured already or calculated from the testing, we have an option to increase the glycerine content already, and we have that already ready to go for testing, to 50%. So, we can essentially reduce CO₂ emissions by a third.

We’re then looking at other fuels where we can essentially incorporate those to fully decarbonise the product and we’re working on that obviously as a development pathway to meet our target for the net zero solution by 2030.

Quadrise Fuels International plc (LON:QFI) Chief Executive Officer Jason Miles and Chairman Mike Kirk caught up with DirectorsTalk for an exclusive interview to discuss the increasing interest in bioMSAR, accelerated testing with MSC, Morocco & Utah updates and the outlook for the company going forward.

Q1: Now, Mike, if I can just start with you. You’ve announced earlier that you’re seeing increasing interest in bioMSAR, where’s the interest coming from and what’s driving it?

A1: I think there are are a couple of things that are happening here actually that are, we think, really positive for Quadrise Fuels International.

I think first of all, we’re seeing, we think, a much more rapid energy transition, this is not going to be business as usual so people have a real interest in actually driving down CO2 emissions. That’s really helpful for us alongside the work that we already deliver for customers in terms of driving down both sort of knocks and particulate emissions as well.

We’ve seen this as sort of across the piece, but in particular, we’re seeing the driving coming from our pipelines in the shipping sector. Again, I think it’s one of those where we’re seeing a confluence of events there, but pretty much across the piece, but some really helpful tailwinds in the shipping sector, in terms of really bringing forward our testing and development work on bioMSAR.

Q2: Now, just turning to you, Jason. I see that the testing with the Mediterranean Shipping Company has significantly accelerated, can you just tell us more about that?

A2: The acceleration is really specific to bioMSAR, with MSC, they’re strong proponents of use of biofuel in the future so they’ve been utilising already quite large quantities of biofuel in the marine fuel pool.

So, what we’re looking to do with with MSC, and what MSC are strong opponents of, is actually accelerating the plans to bring testing of bioMSAR forward onto the vessels, which is obviously a strong sign in the right direction for bioMSAR.

We’ve got testing that we’ve just very recently completed in Finland on a Wartsila 4-stroke engine, where we’re looking to get the report through from testing there, next month. That will then lead to discussions with the OEM’s concerned, with Wartsila and MAN Diesel, on the use of a BioMSAR, also in the engines, where we expect the performance of bioMSAR to be very similar to MSAR.

So, what we see is that we can accelerate the commercialisation of bioMSAR much more rapidly than we first thought and that will obviously be helpful for getting the MSC trial underway sooner rather than later.

Q3: It looks like things are ramping up in Morocco and Utah too?

A3: Yes, absolutely.

So, in Morocco, we’ve had somebody onsite this week already so we’re basically preparing to get the trial underway. We have all the equipment that’s being fabricated and is ready to be shipped, we have fuel being manufactured in Norway during the coming weeks to be shipped down. So, early part of Q3, we, we expect to complete the industrial trial and then leading on to that, then we have another trial, a commercial trial, planned for later this year. The equipment that we’re sending down to Morocco can actually be utilised as well for the second trial so that fast tracks the subsequent phase, and then looking to then conclude the commercial supply agreement for the fuel which you will see will hopefully be one of our first contracts.

Having said that, with Utah, we’ve also got samples that are ready to be shipped, being shipped to QRF, once received, we will be able to turn around testing of MSRA within about three weeks, we’re also planning to include bioMSAR in that testing as well.

So, again, by the early part of Q3, we’ll have completed all the testing we need for the Utah project with Greenfield and then, obviously engaging in discussions in terms of license agreements and if needed, then the commercial trial that we had planned as well, subject to their plants.

We also see other opportunities in the Utah area as well which we’re obviously progressing in parallel.

Q4: Mike, obviously a lot of progress has been made and is being made. How do you see the outlook now for Quadrise Fuels International?

A4: I think what we’ve tried to do in terms of providing the update today is actually just reinforce what we said if we look back sort of two or three months ago, of the successful fundraise.

We’ve now got the resources to progress to sustainable cashflow from our operations, we expect to have just under £7 million of cash as at 30th of June this year and, as Jason has outlined, we’re really excited by the pool that we’re seeing for the market on bioMSAR.

So, that has meant that we’ve had to rejig some of our thoughts in terms of our investment during the course of this year, but what I would want our current and potential shareholders to be absolutely clear about is we are being really careful with our cash. We want to ensure it is used in the best way possible to achieve our mutual aims of delivering sustainable value to shareholders. What we are doing is ensuring that that gives us the scope to actually accelerate some of the areas that Jason has outlined in terms of bioMSAR testing and development alongside progressing our active trials in Morocco with Utah in Utah, and an MSC.

We’re really excited about what 2021 and 2022 has got for us and what we’d be looking to do is actually ensure that we’re in a position to provide regular updates as and when we go through that. It’s not something we were able to do as clearly as we hoped during the first two or three months after the fundraise but we are very mindful that getting information out there into the market is helpful for us. It provides that reassurance to our shareholders, and we’ll be doing our best because we know we’ve got some very active programmes that is going to give us the ability to do that on a regular basis.

We look forward to doing that through yourselves and through other channels as well.