TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH ZEEP PRESIDENT OF AUSTRALIA AND NEW ZEALAND OPERATIONS, GRANT SCOTT
Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me for the first time from Zeep Australia is director, Grant Scott. Grant welcome to FNN. Can you start by telling us about Zeep? Who’s involved? How long have you been going? And what success have you had so far?
Grant Scott: Zeep is actually the worldwide commercialisation company for the Pratt & Whitney Rocketdyne technology. Zeep basically got involved in this technology through our Chairman, who actually used to consult to Boeing, actually directed them down this alley of gasification as a potential trillion dollar industry in the energy sector. So basically he got some money from the CEO, at the time, at Boeing to start investigating this direction and naturally where things went, that’s where Zeep has a connection into this technology. They’ve developed it to a level now that it’s ready to be commercialised, and really that’s where Zeep comes into the picture. And our Chairman actually, because he was a consultant in bringing that technology forward, they got back a hold of him and said hey we want you to get involved in helping us commercialise this technology. So that’s really where Zeep has come into the picture.
Clive Tompkins: Ok, can you tell us about the type of applications this technology makes possible?
Grant Scott: Sure. Like I mentioned earlier, gasification is a technology that has been around for a hundred years almost. So it’s a well know technology for producing a lot of varieties of products, I mean you can produce transport fuels, you can produce chemicals - I mean its used in the chemical industry quite aggressively. Nowadays you can produce electricity because you can create a Syngas that can be run through natural gas turbines. So basically you’re converting a coal in the short term process into a multi-product type of possibility. Now what it does is it actually gasifies, it actually instantaneously in our gasifier converts the coal into a gas, and those gas components are broken up and can be directed in certain directions. One of big positives out of gasification with our technology is the fact that it captures the CO2 at pressure so you can control and manage the CO2 and handle it how you want. It captures and the CO2 is at an industrial level, so you can use that CO2 for other purposes rather than try and figure out where you’re going to inject it into the ground. The other thing about our technology, and I have really pointed it out, is that it’s an advanced technology over anyone else out there today. We’re talking Rocketdyne is the one who builds the space shuttle engines, is the one who builds the Apollo engines, is the company that brings hydrogen into space. There the ones that have brought a lot of the technology that we see on earth nowadays from that space side of things. When they do their works they take it to quite a higher level, so what we’ve got as a technology is something that’s 10 per cent the size of our competitors, so it’s modular, it’s 99 per cent efficient, reliable. So in that respect our competitors are 80-85 per cent, so when they’re producing one day a week you don’t know which day it is they’ll be down. So a lot of times they’ve got to have redundant units and so on. That 10 per cent size reduction results in a 50 per cent cost reduction, and it results in our units being able to be produced in factories because the unit is only about a metre in diameter and about 9 metres long. So it can be produced in a factory, fabricated in a factory and then put on a flat bed and shipped out to site.
Clive Tompkins: And do you have a demonstration plant or a pilot?
Grant Scott: Yes we have a pilot plant that’s being finalised at the Gasification Technology Institute outside of Chicago in Des Plaines. And that will be up and running in October. It’s an 18 tonne per day plant, it will be used primarily to test our partner’s coals and get an understanding of the composition of the Syngas and so on just as we move forward on building the pants and so on. We’re also putting in a demo plant in China, we’ve got a strategic partner up there now that we’re engaged with now who manufacturers dimethylethyr, which is a diesel comparative, diesel substitute – clean fuel. We’re putting in a gasifier, and that will be in at the end of 2010, beginning of 2011. Up and running it will be 400 tonnes per day, and that will be testing things at lets say a commercial level.
Clive Tompkins: Are you speaking to electricity producers and government about your technology?
Grant Scott: We’ve actually talked to the most senior level in government with the commonwealth government. We’re actually members, foundation members of the GCCSI, so we’re very aware about the need for sequestration and things like that. But we have at a top level in Victoria, top level in Queensland, engaged with the governments and they’re very excited about the potential. When I talked about the modular nature, the efficiency, I mean when you talk about lets say coal gas efficiency, if you start putting these things in on a power station you’re all of a sudden already reducing your carbon footprint by about 50 per cent. That’s without doing any sequestration or anything like that, just because the efficiency of this technology in regards to turning over coal into energy. So we have some power partner’s that we’re working with, we’re testing some of their coals. So that’s moving ahead pretty robustly in Victoria and in Queensland.
Clive Tompkins: At this stage you’re looking to raise capital or form a joint venture. How much are you looking for?
Grant Scott: At this point in time we’re looking at somewhere in the range of $2 million to $5 million just to cover a bit of the administration costs that are ongoing and some preliminary feasibility studies in the works that we’re doing for some of these parties. So it’s really someone getting in on our side of the picture, and we’ve got our partners you know on the power side that are spinning their monies and being involved as well. So it’s really a chance to get involved in that type of consortium to move some things forward. So $2 million to $5 million is what we’re looking for. We’re looking for strategic partners as well, we’ve got some that we’re working with right now and working through some MOU’s and so on, but we are for example looking for partners that might be interested in the power side or chemical side in certain locations – NSW for example or up in certain basins in Queensland that we’re not engaged in, the other basins and things like that. So yeah that’s what we’re looking for.
Clive Tompkins: And is the intention to go public? And if so when?
Grant Scott: I guess we’re a global entity so basically we are looking at building ourselves to a strength before we go public, and so really we’re engaged, there’s a lot of excitement around the technology. I guess I should have mentioned that Pratt & Whitney Rocketdyne of course is part of United Technologies Corporation which, is you know, the leading aerospace company in the world. Actually ExxonMobil is now engaged as a development partner on this technology as well, so we’ve got the largest oil company in the world and the largest aerospace company in the world working on this technology. So basically we want to build the business and strength before we go IPO because we want to maximise returns for any shareholders that might come on board.
Clive Tompkins: Last question. You’re forecasting dividends as early as 2011, are you cashflow positive now? And if not where is the revenue coming from in the next 18 months?
Grant Scott: Well we’re almost there. The cashflow is really going to come from license fees as well as strategic partners aligning with us and becoming investors. And that is part of our model, part of our plan, so it’s moving ahead pretty well. Like I mentioned earlier we’re finalising some negotiations some contracts right at the moment that bring this all forward in regards to the investment from strategic partners.
Clive Tompkins: Grant Scott thanks for introducing Zeep.
Grant Scott: Thank you.
