Sparks' SulphCo: Deal with emirate is a breakthrough

The president of SulphCo Inc.

says his company's contract with a nation in the United Arab Emirates marks SulphCo's breakthrough.

SulphCo Inc.

signed a deal with the Government of Fujairah in the United Arab Emirates to form jointly a new company to introduce and implement SulphCo's Sonocracking technology.

The Sparks company said last week the new entity will be 50 percent owned by the Government of Fujairah and 50 percent by SulphCo.

Peter Gunnerman, president of SulphCo, said the contract comes after three years of marketing in the Middle East.

He called it "a pretty big deal." "We're a company that's coming out of five years of research and development and are just entering the commercialization phase," Gunnerman said."We don't have a revenue stream from the product in the field.

But with this contract,we'll be working in some of the significant oil markets that will speed up the ability to generate that revenue."

Sonocracking technology uses ultrasound to pre-treat crude oil prior to refining, reducing sulfur and nitrogen.

That, in turn, helps produce more gallons as much as seven, the company claims of usable oil per barrel.

The processing cost using SulphCo's technology is "somewhere between 18 cents and 20 cents a barrel,"Gunnerman said, and a 30,000- barrel-per-day sonocracking unit would cost under $5 million.

"It's just not an environment friendly technology, but it's also a fairly large economic driver," he added.

The company has been knocking on doors throughout the Middle East for two years, and set up its wholly owned subsidiary SulphCo Saudi Arabia Inc.

in 2004.

The final contract scheduled to be signed this week will spell out the responsibilities of the partners.

SulphCo will be responsible for providing the equipment and implementing the process.

The Government of Fujairah will supply the land, undertake construction and of course, get SulphCo the contacts it needs within the region, according to Gunnerman.

While dealing with Kuwait Oil Company, Kuwait National Petroleum Company and Saudi Aramco the oil majors in Kuwait and Saudi Arabia SulphCo executives learned that a foreign concern couldn't simply go and market directly to the oil companies.

"You need an in-country partner, a trading company that will do your introduction and will be the interface," Gunnerman said."And the contact in UAE spawned out of the initial contacts in Kuwait and Saudi Arabia where we also established our own subsidiary."

The company has various levels of contacts to spread word about its technology in Europe, Asia and South America.

In September, it installed a sonocracking plant in Seoul, South Korea.

In October it signed a test agreement with Total France to evaluate the technical viability of its technology.

In Venezuela and Mexico, contacts with oil companies are in the early stages, Gunnerman added, though they're more advanced in Mexico.

U.S.

companies' reception to SulphCo's technology has been reserved.

The company had a collaboration agreement with Chevron Texaco for several years but no deal resulted.Other companies in the country have shown no interest, and Gunnerman is not sure why.

"Perhaps it's just the market conditions," he said."The U.S.

refineries are finally making money after many years of not making money.

So they don't want to be bothered.Or may be it's just a cultural issue.

International companies appear to be more open to new technologies and working with a small company."