Kelso Technologies Inc.

Kelso Technologies Inc.

January 10, 2005 11:30 ET

Major Manufacturing/Marketing Agreement Signed Between Kelso & One of the World's Largest Lessors of Railway Tank Cars




JANUARY 10, 2005 - 11:30 ET

Major Manufacturing/Marketing Agreement Signed Between
Kelso & One of the World's Largest Lessors of Railway
Tank Cars

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 10, 2005) - Kelso
Technologies Inc. (TSX VENTURE:KLS)

Agreement with Rail Leader Sets Stage for Commercialization

Kelso Technologies Inc. has entered into a five year Joint Marketing and
Development Agreement (JMA or Agreement) with Union Tank Car Company
(UTLX) and its affiliate, McKenzie Valve and Machining Company

The JMA combines Kelso's revolutionary, patented JS SRV line of pressure
relief valves with the world class marketing and manufacturing expertise
of two major companies, UTLX and McKenzie. The agreement concludes the
technical, manufacturing and commercial due diligence undertaken by UTLX
and McKenzie and confirms the commercial merit of Kelso and the JS SRV
product line. McKenzie will bring to this alliance the volume
manufacturing base needed for rapid penetration of the market. UTLX, a
major manufacturer and lessor of rail tank cars, will purchase the JS
SRV line for various cars in their fleet, assist Kelso in promoting the
valve to both government and industry and in the formulation and
execution of the marketing programs needed to convert the North American
market to the JS SRV.

Kelso's 21st century advanced valve technology provides several benefits
over today's technology including improved reliability and worker
safety, basic elimination of product contamination, lower maintenance
and shipping costs, and potentially lower insurance costs.

The Kelso/UTLX/McKenzie Agreement will enable the North American tank
car market to take advantage of Kelso's unique pressure relief valve
technology. It will also shorten the time it takes Kelso to begin
Association of American Railroads (AAR) Service Trials. UTLX has agreed
to provide the necessary tank cars when any newly-designed valves are
required to undertake AAR Service Trials.

"This agreement is an important first step in Kelso's larger strategy of
revolutionizing the worldwide pressure relief valve market, not only for
the rail industry but for other industries too. With patent protection
in most major countries around the world, Kelso's JS SRV technology has
many applications. There are lucrative opportunities to establish market
share internationally in the trucking, marine and air transportation
industries and the petroleum and petrochemical storage and pipeline
segments. It is our goal to capture a very significant portion of the
$650 million annual revenues from this addressable market with our
proprietary technology," stated Stephen L. Grossman, President and CEO
of Kelso.

In 2005, Kelso, with the assistance of UTLX and Mackenzie, will initiate
marketing and sales programs addressing the North American Rail Tank Car
Market. The NA Rail Tank Car Market has been projected to represent in
excess of US$130 million over the next five years. Kelso looks forward
to securing a significant share of the market over the term of the

Building on AAR certification of the Kelso JS SRV and the commercial
validation rendered by way of the Kelso/UTLX/McKenzie agreement, Kelso
will eventually build similar market channels for the offshore rail tank
car market, a market in excess of US$500 million (over the next five
years). The primary offshore markets will include China, Russia and
India; markets heavily dependent on their rail systems. Kelso will
commence these programs by making the appropriate representations to
governments, regulatory agencies and corporations.

As Kelso starts commercializing the JS SRV in the rail sector, the
robustness of the technology developed and investment made by Kelso in
R&D will enable the company to address other sectors with significantly
reduced development cycle times.

Building on the revenues from the NA and Offshore Rail Tank Car Markets,
Kelso will turn its R&D to developing products for sectors where the
need for JS SRV technology has been documented and minimal modification
to existing JS SRV technology is required. The trucking and petroleum &
storage sectors most closely meet these requirements. Over the next five
years, the trucking industry represents a market of US$590 million and
the petrol-chemical & storage industries represent markets of US$2.05

Most of today's pressure relief valve technology has remained unchanged
for decades despite increasing demand from regulatory agencies requiring
more-stringent material-handling protocols as well as heightened public
and private sensitivities to hazardous and non-hazardous spills.


Kelso Technologies Inc. is a public company which trades on the TSX
Venture Exchange in Canada under the symbol KLS. Headquartered in
Vancouver, BC, Kelso Technologies' mandate is to develop industrial
technology including its JS SRV valve technology which is patent
protected in many major countries around the world.

During 2004, the AAR certified Kelso's first application for the North
American railroad tank car market, the external JS75 SRV pressure relief
valve. Kelso's JS75 SRV is generally safer, more reliable, easier to
install, and less costly to maintain than conventional internal pressure
relief valves used on railroad tank cars today. Kelso's technology has
the potential to capture a fast-growing share of the addressable
worldwide market for safety devices which, over five years, is estimated
to total $3.2 billion. Potentially, the market for Kelso includes not
only the rail industry but also the trucking, petroleum, petrochemical
storage, pipeline and marine and air transportation industries.

John L. Carswell, Director


Contact Information

    Kelso Technologies Inc.
    John L. Carswell
    Investor Relations
    (604) 878-7600 or Toll Free: 1-866-535-7685
    (604) 899-1144 (FAX)
    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this Release.