Guys,
Sorry to breakout into a new thread, but I have a few important questions, that I would like to surface;
The addressable market of LWP Proppant.
All references to date seems to be around LWP taking on the Ceramic's market, however if we look at the cost base - thank you stotes for the detail - reference - http://hotcopper.com.au/threads/brief-summary-of-light-weight-proppants.2534092/#.VZ2ch1zR_dQ
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LWP at the company presentation rate of 18c/lb comes in at $397/ton which should be exclusive of delivery. This means we are only around a 5% premium to resin coated sand.
At a cursory glance, this would therefore position LWP very closely to the 2013 cost of Resin Coated Sand, I am unsure if the costs above include delivery. This seems like a VERY small premium to get a product which pending trials looks to improve the recoverability.
Perhaps a more illustrative way to depict this, is via the demand curves; Again, thanks Stotes;
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Given only a 5% premium, you have to ask the question of whether our product could actually address the red line, as well as the green line in the above.
Carbon Sequestration
My next question which is linked to the question above regarding the economic aspect is around whether or not redepositing (fly ash) coal/carbon byproducts in the ground would be considered Carbon Sequestration. Carbon Sequestration to the uninitiated is defined by Wikipedia as follows;
- Carbon sequestration describes long-term storage of carbon dioxide or other forms ofcarbon to either mitigate or defer global warming and avoid dangerous climate change. It has been proposed as a way to slow the atmospheric and marine accumulation of greenhouse gases, which are released by burning fossil fuels.
Referencing an older article http://greenliving.lovetoknow.com/How_to_Measure_and_Price_Carbon_Credits the carbon credit's are measured for every 1 tonne of Carbon eliminated from the Earth's atmosphere in 2007 this was $13.21 per credit. Today, referencing http://www.ecofys.com/files/files/world-bank-ecofys-2014-state-trends-carbon-pricing.pdf - the credit per ton is more likely as follows;
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The core questions and reasoning for my post are as follow;
1. Is our addressable market larger than just Ceramics?
2. Is LWP in Shale a candidate for Carbon Sequestration?
3. What is the actual weight per Ton of LWP's Proppant in actual Carbon?
4. What would be the pricing offset impact be per Ton of pricing, in the event that we are a candidate?. What does this do to our cost base per Ton, furthermore what does this mean in terms of addressable market size?, furthermore what does this to our profile wherein we could be considered a marginally more environmentally friendly way of fracking. (excusing my opinion that I don't think we fully comprehend the real issues involved in Fracking - although this is a case of if you can't beat it, join it).
Disclaimers - A. This is not intended as a ramp, more-so some topical questions that I think could have a significant uplift in the addressable market for LWP. B. References to Tonne and Ton are included in the above, I am happy for someone with more time to normalise these numbers. C. The question of whether we are a candidate for CO2 sequestration is a very difficult one, but one which I would like to have the company comment on.
All the best to all, all detail IMHO, DYOR!
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Guys, Sorry to breakout into a new thread, but I have a few...
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