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Forum - The Best Of Gonabe (Sulphco - SUF)    Brain Teasers To Trade By

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From: bucyrus (Rep: 3466) reply to blacksheepDate: 09/04/2007 21:45
Forum: The Best Of Gonabe - Msg #1 - List SUF msgs No Thread (Rec: 0)
Outstanding that you would collect these.. one genius recognizing another..fitting

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Life is not measured by the number of breaths we take; but by the number of times our breath is taken away....

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Reply to blacksheep - Msg #0 - 09/04/2007 21:40

Producing more gallons of usable oil per barrel

It's even more important than>>>>
"...upgrades sour heavy crude oils into sweeter, lighter crudes, producing more gallons of usable oil per barrel."

That alone obviously makes SLPH's process very lucrative.
Actually there's even More to that aspect than is commonly known.
It's whole 'nother rant..but briefly,,,it offers it's Users an opportunity for earnings growth at a time when that's getting more difficult to find.
Reality is--there's a practical limit to how far/fast crude prices can rise.
Co's cannot expect to produce sequential growth on price increases.
Other avenues are thin & Scarce,,,,such as increased Mkt Shr,,increases in demand,,improved operating efficiencies,and so on.

Cap-ex invested in stuff like SLPH yields a Profitable improvement in efficiency & a reduction in overhead,,,which goes straight to bottom line.

They Spend LESS,to produce More.

Imo,,that's a no-brainer & easy to understand the potential to SLPH's sales.

................
Furthermore,,and IMO even more important is this>>

US Refineries are designed and built primarily fora SPECIFIC range of Crude Grades/Types.

(Not ALL crude oil is created equal,,it's actually a chemical "Soup" bearing a wide variety of various compounds /mixes)

Our refineries were developed to process the types of Crude which WAS abundant,,cheap...
and MOST important--RELIABLY available.

I cant overstress that point.
RELIABLE SUPPLY of feedstock is vastly More Crucial to the OPERATION of Refineries than Price,,or abundance of reserves.

A REFINERY Cannot be started and stopped like a mirowave oven.
It is actually a MAJOR operation to do that.
And it cannot be throttled Up or Down in a very wide range.

They work Best,SAFEST,and most efficiently when run Steady-State,,uninterupted,,and in a Narrow range of thruput.

A silly analogy would be a Car on a long road trip,,flat highway,,,and running on Cruise control.
Compared to Daily Commuting,errand running,,stop&go traffic,multiple start-up & shut-down,,frequent braking,,frequent shifting,etc,etc
One environment is Gentle--the other Harsh & Demanding.

In several respects ,Refineries CANNOT accomodate such a range of operating conditions.

They simply run Best when run like Clockwork,,steady-state,,,and "rewound" on a schedule.

Disruptions in FEEDSTOCK supply obviously interfere with that rhythm.

Disruptions in supply stem from 2 basic conditions.
1,,availability of necessary Quantity
2,availability of necessary GRADE/TYPE

The Appropriate grades/type required by US refineries is what's under pressure.
INTERMITTENT shortages caused by several factors is One prob...not necessarily "absolute UNavailability"

The EFFECT of that is that Refineries are Increasingly compelled to use a wider-range of their Capability.
In terms of both CAPACITIES and Chemistry(to accept wider range of crude types).
That INTERFERES with Steady-State Operation,,and generates a DROP in Efficiency.

The ADJUSTMENTS are NOT merely "turn a knob" or "push a button",,,it takes substantial effort AND time.

There is NO WAY for a Refinery to re-coup the costs & losses....
It's just EXPENSE,,Overhead.

Management strives to stay Profitable against a Chart of OPERATIONAL EFFICIENCY as an Annual Average.
A Chart which Swings Up and Down.
A Spike in Expense,,a Drop in Efficiency or Output WILL work Against Bottomline Profits.
They CANNOT change Pricing to cover costs on a daily/weekly/monthly basis.

Refineries operate on VERY thin margins,,just a few percent from being in the red.
Most are BIG bizzes,,and have a Lot riding on that very thin black line.
Shareholder value,Board Positions,Promotions,Options,Benefits,Bonuses,Retirements,,etc,etc,,all the things tied to corp performance.

SLPH's process has a very distinct potential to BUFFER,,or Smooth the range of OPERATIONAL PERFORMANCE.

It can allow a Refiner to accomodate a wider range of Crude Grades.
NOT simply by Widening the Range of the actual refinery process...
But by sorta PRE-TREATING the Feedstock and converting it into what the Refinery would NORMALLY run.

That's a SIGNIFICANT distinction.
Let's use a Letter Grading for Example.with 3 degrees of each major grade.
Suppose a Refinery is Built to Run on Grade A1,A2,A3.

To Modify the actual Refinery to accept Grade B demands a certain level of specs.
Additionaly,,B2 and B3 might require MORE specific changes.

Even then,,,it CANNOT run the A's and B's simultaneously,,Mixed together.
It only has gained the Capability to CHOSE a wider range of Grades it CAN run

Still stuck in that "CHANGE the SETUP" situation,,even though you're then at least Able to do so.

With SLPH's "PRE TREAT"/Conversion type of attributes,,consider the difference.

Simplified>>
Leave The REFINERY AS-IS.
Add SLPH Gizmo on The InPut Line.
Pump "ANYTHING" INTO SLPH's gadget...
Get the REFINERY's FAVORITE ,,,OUT of SLPH and Availble to the Refinery.

See the Difference?
The Refinery DEMANDS Specifics,,and Prefers to Run Steady
Change IT's capabilities,,Ya STILL have to Manipulate it's operation to Accept the Variables.

Or,,use SLPH's process to prepare the Feedstock and produce what the Refinery is Designed to accept.

That Pre-Treatment aspect allows a Wide Variety of Grades to be used interchangeably and indiscriminately.

Pump IN whatever ya can get...
Get OUT Exactly what you need...

And the Refinery chugs away Oblivious,,,cuz all it sees is that it's getting what it Needs.

Got Grade A today?Great
Grade B tommorrow?Who Cares!?Toss it In
Next week only C?..Not a Prob
Next Month,,Plenty A,,Fine
Half B& Half C,,,sure

Refinery Chugs away and never misses a lick.
All it cares is that it's getting Feedstocks in GRADE and VOLUME that satisfies it's Design requirements.

This is not Canada
Blue Coat Jungle Soldiers


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