Friday, August 14, 2009

Pyrolysis with a Twist

Start-up Energy Quest, Inc. (EQST: OTC/BB) has developed a proprietary system roughly based on pyrolysis technologies to turn biomass, heavy crude, coal or petroleum coke into high quality hydrogen and carbon dioxide. They have branded it PyStR, which is pronounced “Pie Star.”

Energy Quest has a twist to the usual biomass-to-fuel through pyrolysis technology. The Company also has an “EQI Upgrader” process that relies on an electromagnetic field and ultrasonic energy waves to breakdown long chain hydrocarbon molecules without the need for external sources of heat and pressure used in conventional processes. Energy Quest’s EQI Upgrader uses less energy and is therefore expected to be a lower cost alternative to processing low grade and waste fossil fuels.

Energy Quest wants to be what the company calls a “green power house” when it grows up. It has a ways to go at least as far as minority investors are concerned. The stock trades irregularly for pennies on the Over-the-Counter Bulletin Board. This means that any investor taking a material position is taking considerable risk in a highly illiquid and probably quite volatile stock.

Such concerns have not dissuaded a major strategic partner from taking up with Energy Quest. Cancen Oil Processors (private) has entered into an agreement to provide the facilities and feedstock to test Energy Quest’s technology in the upgrade of heavy crude oil feedstock to light oil. The beta site will have a 1,000 barrel per day capacity.

Investment in EQST shares may be appropriate for only the most risk tolerant investors. That said stay tuned for progress with Pie Star and the Upgrader.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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