SOURCE: Energy Quest, Inc.

September 08, 2009 09:30 ET

Energy Quest, Inc. CEO Issues Letter to Shareholders

Update on Status of Energy Quest (EQST) and List of Projects

HENDERSON, NV--(Marketwire - September 8, 2009) - Energy Quest, Inc. (OTCBB: EQST) announces today that the President and CEO, Mr. Wilf Ouellette, has released the following letter to shareholders:

Dear Fellow Shareholders:

It has been a while since we last communicated with you on the progress your company has made. The purpose of this letter is to provide you with an update on our business, the developments / achievements, some background and an update on each of our business units for the fiscal years 2009/2010 and year-to-date 2009.

Company Overview

I would like to restate our mission statement which is to become one of the leading new age alternative energy and fuel companies through the use of green technologies to support our environment worldwide.

The fiscal year 2009 has been a year where we have strengthened our position in all business units and continued to position ourselves strategically in the lucrative but often complex market place. During the last 12 months we have built on our existing opportunities and have secured additional opportunities that are complimentary to our current business which we anticipate will lead to greater wealth for all shareholders.

Our registered office is in the United States (Henderson, Nevada) and our principal operation is in Edmonton, Alberta, Canada.

Energy Quest's Principal Business and Technologies

Energy Quest, Inc. is active in the research, development and commercialization of "alternative energy" technologies. The term alternative encompasses green and/or renewable energies. Once considered "alternative" these technologies are fast becoming the future of energy as traditional sources become increasingly more expensive and scarce.

The Energy Quest, Inc. (EQI) technologies represent the culmination of years of persistent research to provide an environmentally sound alternative to current energy generation programs. EQI believes that caring for the environment must be one of its core values. "Our focus is on providing shareholders with above average returns, our customers with superior energy all the while respecting the environment in which we live."

Each System is independently tested, ensuring that it meets and exceeds the requirements of the newest North American regulations, the newest European Union regulations and all appropriate operations and the most stringent emissions standards of any client's jurisdictions. Energy Quest, Inc. believes that our obligation to the environment arises not only from an ethical responsibility to our fellow stakeholders on the planet, but also from our responsibility to safeguard the trust of our shareholders and employees. We believe that investors will choose to support companies that have demonstrated their ability to minimize their impact on the environment, and the wisdom to preserve the implacable Energy Quest Environmental Commitment.

We are dedicated to bringing about the following changes:


--  A clean, safe and healthy environment
--  To increase the use of waste materials as a form of clean fuel to
    provide cleaner energy
--  Reduce the size of and need for landfills
--  Reduce the use of fossil fuels
--  Reduce the use of greenhouse-gas producing technologies
--  Utilize where possible, recycled by-products
--  Improve our technologies to produce ever-cleaner ways to provide
    energy
--  Become a leader in the provision of clean energy
--  To become a champion for the environment
    

The Company's board and management are focused in 5sectors:

--  Alternate Energy -- Enhanced Modular Gasification
--  Hydrogen -- Low Cost Production -- PyStR Process
--  Oil and Gas -- Oil Upgrading -- No Waste Petroleum Coke -- Minimal
    Water Usage
--  Coal -- Coal Emulsion Process -- Converts Low Grade Coal to a High
    Quality Fuel
--  Water Treatment -- Cleaning And Purifying Using Ultrasound
    

Gasification Technology

During Fiscal 2005, the Company acquired Syngas Energy along with all rights and title to its advanced gasification process and gasification production system technology that combines modern gasification with gas turbine technologies to produce synthetic gas or electricity.

The technology uses gasification processes to convert any carbon based material into a synthetic gas. Gasification uses heat and pressure which converts any carbon containing materials into synthetic gas composed primarily of carbon monoxide and hydrogen which has a large number of uses. Gasification can add value to low or negative value feed stocks by converting them to marketable fuels. The feed stocks used to create synthetic gas depend on what is readily available. Throughout North America, forestry, pulp and paper waste and biomass can be converted into a synthesis gas and fed back into power plants. Various other industrial wastes can be fed back into plants to recycle "lost energy" that would otherwise go to landfills.

Since the acquisition of Syngas Energy EQI has completed a prototype of the gasification technology. During fiscal 2008 EQI plans to commercialize the advanced gasification unit.

PyStR™ Process -- Hydrogen Production

PyStR™ (pronounced, "Pie Star"), is a low cost hydrogen production technology. Currently, we are in discussions to put together projects which would use the PyStR™ technology to convert low-value biomass wastes feedstock, coal and petroleum coke to high-value products such as Hydrogen, Methanol and fertilizers.

In February 2006 we unveiled the PyStRTM technology at the Big Hydrogen Show in Calgary, Alberta. Since then, we completed a prototype and have plans to commercialize the PyStR™ hydrogen production process.

In February 2006 we further completed the carbon dioxide (CO2) capture unit for our PyStR™ technology. The captured carbon dioxide (CO2) can be injected into coal seams to recover methane in a similar fashion to injecting CO2 into depleted oil wells to enhance oil recovery. Traditional gasification technology lets the CO2 escape into the air, but the PyStR™ technology captures this green house gas that is commonly accepted to be responsible for global warming.

Carbon dioxide sequestration in coal beds can be more efficient than sequestering it in oil wells because CO2 injected into a coal bed seam displaces adsorbed methane (CH4) from the coal surface. Coal beds in North America represent a widely dispersed potential geological sink for CO2 storage while offering an opportunity to recover commercial quantities of methane for field uses or marketing in nearby natural gas pipelines. The U.S. Department of Energy and Canadian Government (Alberta Research Council) has been researching development of this sequestration concept for disposal of CO2 emissions.

CO2 is now being used throughout the oil patch to revive oil wells thought to be dry. Typical oil production leaves 70% of the resource in the earth. The process is used in wells that have already passed through primary production, where natural pressure in the well pushes out the oil, and in wells that have passed secondary production, using water or natural gas flooding. In primary and secondary production well pressure eventually falls to levels where output is so thin it is not profitable. Use of CO2 allows an opportunity to take a third run at the reservoir to tap a potentially large amount of remaining oil.

The CO2 is pumped deep below the earth's surface into thick, stubborn oil deposits, and significantly decreases the oil's viscosity easing its flow to the surface. CO2 is expected to double or triple previous oil production levels from wells once thought unfeasible. Once in the ground, the carbon dioxide takes the petroleum's place, becoming trapped beneath an impermeable stack of limestone, sandstone, and shale.

Through its PyStR™ hydrogen production process, EQI can capture CO2 that is produced either as a primary or bi-product. Some coal resources in North America cannot be mined by today's mining standards, but carbon dioxide sequestration technology has the potential to change that. Surface coal can now be mined and gasified in the Company's advanced gasification and PyStR™ systems, with the CO2 injected (sequestered) into coal beds to bring out the methane. Through the PyStR™ hydrogen production process EQI can capture CO2 that is produced either as a primary or bi-product.

Heavy Crude Oil Ultra Sound Upgrader

The Upgrader process can upgrade oil without producing waste petroleum coke and uses a minimum amount of water. The essence of this technology is that an electromagnetic field is used to cause an alignment of the long chain hydrocarbon molecules, which are then subjected to ultrasonic energy waves to create cavitation bubbles within the working fluid -- crude oil, heavy oil, tank bottoms, or bitumen. Unlike conventional processes that require an external source to apply the required heat and pressure to force the hydrocarbon molecules to break into lighter fractions, the bubbles created by the system's periodic cavitation are caused to collapse at great temperatures (+5000 Celsius) and pressure (+10,000 psi). It is this collapse that causes the breaking of the long chain hydrocarbon molecules WITHOUT the need for external sources of heat and pressure.

The system is capable of upgrading oil from 8 API to 38 API gravity or even a higher API. All processes are carried out within a temperature range of 0o to 70 o C and pressure within 0.8x105 to 5x105 Pa. Due to these lower temperatures and pressures, energy consumption is nominal and operating costs and maintenance costs are significantly reduced in comparison to other methods.

Coal Water Fuel

CWF is a fuel of the new generation, an artificial kind of compound fuel from coal and water without any plasticizers. The basis of its production process is: cavitational grinding of coal in aqueous medium; cavitational destruction of carbon molecules; cavitational activation of carbon particles; cavitational homogenization; hydrocracking, etc., in the processes of which the structure of coal as a natural body of rock is destroyed. Coal is decomposed into separate organic constituents, but already with active surface of particles and a big number of free organic radicals.

The initial water also goes through a number of transformations. As the result of cavitational impact, the four main products appear: monatomic hydrogen H, hydroxylic radical -- OH; hydrogen peroxide H2O; and water in the excited state H2O -- their chemical activity assists the emergence of active dispersion medium saturated with components of fine and cat ion type.

As the result of cavitational grinding, the carbon particles have the size less than 71 µm 60-70%, the rest 71-250 µm, and the mass ratio of carbon in CCWF is 62,0-70,0%.

The coal-water fuel CCWF) acquired in this way is stable during many months (to 24) and plastic without use of any chemical additives.

CWF has greater reactivity as compared to the initial fuel, lower temperature in the flame kernel (1200 degreesC); higher degree of burnout (to 99,5%) in comparison to conventional coal fired plants who can only burn to 65% to 70% of the fuel energy available in the raw input fuel.

Water Technology

This newly developed technology utilizes ultrasonic technology in a different configuration to separate solids and dissolved solids from liquids, liquids from liquids and any combination of solids and liquids (organic and inorganic). An ultrasonic transducer is mounted in a 360-degree configuration that emits high-energy sound waves creating cavitation focused to the center of input stream. The process creates an irreversible separation of elements in input water stream, destroys bacteria and viruses within the stream and removes any nitrates, nitrites, sulfates, etc. The water after the treatment is of potable quality for reuse in industry, agriculture, etc. The new ultrasound process not only reduces the salinity levels in the water but also is one of the best water treatment processes for purifying water. The water produced is of superior quality than that required by Drinking Water Standards in Canada & USA.

Energy Quest intends to focus on developing and marketing of its current technologies while researching new methods of clean energy production. EQI intends to subcontract fabrication to outside sources that have a proven track record of efficiency, reliability and competitive quality and pricing.

The Company's Domestic and International Markets

Gasification is a mature, moderate growth business, with generally reasonable margins. But within this large and complex industry there are a few areas of high growth and attractive profitability, most notably the production and distribution of low-cost cookie cutter 1/2 to 10 megawatt waste to electrical power units or small liquid fuel (diesel) systems. EQI's focus is to concentrate its business on these more attractive niches of the industry.

In order to build an entrenched, defensible position against new and existing competitors, EQI has differentiated itself--in ways that buyers will value--in order to stand out from the crowd. EQI believes that its ability to move quickly and selectively in choosing projects and partners should help the Company to build a unique, recognizable image.

Worldwide Economic Forecast -- Gasification, 2009 and Beyond

The Industry believes that sustained high-energy prices resulting from growing global demand and constrained supply have spurred governments, developers, technology providers and financial institutions -- worldwide to back the development of alternative energy sources, especially the gasification of coal, petroleum coke and biomass. This trend combined with global warming concerns has accelerated the acceptance and commercialization of gasification technology that will incorporate the capture and sequestration of carbon dioxide.

The need to increase supplies of synthetic gas from clean sources to generate electricity and produce clean transportation fuels, hydrogen, petrochemicals, fertilizers and substitute natural gas has never been greater. The development of these coal-based plants are moving ahead now with incentives from the Energy Policy Act of 2005.

Energy Quest is negotiating several opportunities for gasification projects in Italy, Romania, Chile, Brazil, India, United States and Canada.

Energy Quest Inc. is an emerging leader in the development and marketing of low-cost alternate fuels. EQI believes its technologies will catapult the company into a GreenPowerhouse™. With energy prices at high levels and the global focus moving rapidly towards addressing pollution, the need for sustainable, zero emission energy is vital. Our technology is based on clean renewable energy. We foresee our company poised to benefit from global trends.

Major Projects / Acquisitions / Investments

The Company has been busy on a number of initiatives and projects. Listed below are some of the projects that the Company is currently working on that we anticipate will be further advanced in the remainder of 2009:

--  Entered into a Memorandum of Understanding with Crude Petroleum for
    Oil remediation equipment to investigate the opportunity of establishing a
    joint venture company in Abu Dhabi focusing on the oil remediation and
    cleanup.
    

Business Unit: Hydrogen Generation

--  Have commenced negotiations with a major gas supplier for the
    converting coal to methane using the PyStR and Sabatier processes.
    Hydrogen and CO2 produced from coal using the PyStR are recombined to
    produce 600,000 thousand cubic meters per day of methane gas.
    

Business Unit: Gasification

--  Willow Industries -- 6 MW wood waste to electricity power plant.  This
    plant will be using the M2 gasifiers to convert wood waste to a low BTU gas
    which in turn will be burned in engines to produce electricity.
--  COFAMM -- 24 MW Municipal Waste to electricity power plant.  This
    project will convert municipal waste (MSW) into refuse derived fuel (RDF)
    which will be fed to the M2 gasifiers.  Gas from the gasifiers will be
    burned to produce heat for the electric power cycle.
    

Business Unit: Heavy Crude Oil Ultra Sound Upgrader

--  Cancen -- signed an agreement with Cancen Oil Canada Corp. to provide
    testing facilities and feedstock for the testing phase of the construction
    of a 1,000 barrels per day heavy crude oil upgrader. The upgrader will
    convert Heavy Crude Oil feed-stock to 32 API and above light oil.
--  NAOL -- signed an agreement with Northern Alberta Oil Ltd, (NAOL), a
    wholly owned subsidiary of Deep Well Oil and Gas, Inc., to construct a
    5,000 barrels per day heavy crude oil upgrader. The upgrader will convert
    Heavy Crude Oil feed-stock to 32 API light oil.
    

Business Unit: Coal Water Fuel

--  India -- Submitted a proposal to a major coal producer to convert 1000
    tons per day low grade coal to a high quality fuel.
--  North Dakota -- Waste coal remediation.  Submitted proposal for
    converting 250 tons per day of waste coal to a high quality fuel and humic
    acid.
    

Business Unit: Water Technology

--  Submitted proposal for a 15 gallon per minute water treatment plant.
    

Closing Remarks

The management team and our Board of Directors are committed to building a strong brand in green technologies and we believe the investments and steps we have made will help build greater wealth for all shareholders in the years ahead. As can be seen by the opportunities above there is a significant amount of potential and we are committed to delivering positive results to our shareholders.

In the coming year, based on the level of resources at our disposal, we will continue to focus on building our business operations, increasing our sales efforts and increase our profile within the investment community.

Much progress has been made in our Company this year and as always we would like to thank our employees for their commitment and our investors for their continued support.

Sincerely,
President and CEO

About Energy Quest, Inc.

Energy Quest, Inc. (OTCBB: EQST) is an emerging leader in alternative Energy. The company was incorporated in Nevada June 20, 1997. The Company is currently in the fast growing alternative energy and fuel industry worldwide and plans to expand its offices in key international cities such as Mumbai, Dubai, Santiago Chile, South Africa and Shenzhen. The Company will also cooperate with strategic partners in other cities to serve our clients nationally with Green Technologies developed and to be developed.

Additional information concerning other areas and topics of Energy Quest, Inc. can be found on our web sites at http://www.nrgqst.com and http://www.wavechem.com

A number of statements contained in this Report are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Certain written statements in this press release constitute "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Words or phrases such as "should result," "are expected to," "we anticipate," "we estimate," "we project," "we intend," or similar expressions are intended to identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. These risks and uncertainties include demand for our services, product development, our ability to maintain acceptable margins and control costs, the impact of federal, state and local regulatory requirements on our business, the impact of competition and the uncertainty of economic conditions in general, including the timely development and market acceptance of products, competitive market conditions, successful integration of acquisitions, the ability to secure additional sources of financing, the ability to reduce operating expenses, and other factors. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made, and we undertake no obligation to publicly update these statements based on events that may occur after the date of this document.

Contact Information

  • Contact:
    Energy Quest, Inc.
    Ron Foster
    780-488-6022
    404-478-9845 Ext 102