Fuel tech play Quadrise Fuels (QFI:AIM) is a step closer to achieving commercial revenues from its patented MSAR fuel.
The £103 million cap is up 8.5% to 12.75p as it confirms a MSAR unit will be installed at Spanish multinational oil and gas firm CEPSA's refinery near Gibraltar.
This will allow fuel to be produced for a final seaborne trial in the first quarter of 2016 which, in turn, should lead to letters of no objection from the manufacturers of the engines on Danish container shipping giant AP Møller Maersk's (MAERSK-A:CO) vessels. Maersk will then be able to use MSAR to power its fleet.
For those unfamiliar with the Quadrise story, its technology converts heavy oil residues into a patented low-emission ’emulsion fuel’ dubbed MSAR. This product is an alternative to heavy fuel oil (HFO) – used in marine transportation and for internal power generation within refineries.
In a conventional refinery HFO is manufactured, like MSAR, from residues but these have to be combined with more valuable distillates such as diesel. This penalises the refinery because diesel can typically be sold at a premium to crude oil prices while HFO usually sells at a discount.
MSAR is produced by combining water with a small dose of speciality chemicals and this translates into enhanced margin per barrel of oil which can be shared between the refiner, Quadrise and the end user.
Because it operates with much larger partners Quadrise has limited control over the timetable for the development of its key projects and this has undermined the share price as the chart below indicates.