Field Demonstration of a Membrane Process to Separate Nitrogen from Natural Gas: Nineteenth Quarterly Progress Report (Second Quarter 2006)

The original proposal described the construction and operation of a 1 MMscfd treatment system to be operated at a Butcher Energy gas field in Ohio. The gas produced at this field contained 17% nitrogen. During pre-commissioning of the project, a series of well tests showed that the amount of gas in the field was significantly smaller than expected and that the nitrogen content of the wells was very high (25 to 30%). After evaluating the revised cost of the project, Butcher Energy decided that the plant would not be economical and withdrew from the project. Since that time, Membrane Technology and Research, Inc. (MTR) signed a marketing and sales partnership with ABB Lummus Global, a large multinational corporation, and is working with the company's Randall Gas Technology group, a supplier of equipment and processing technology to the natural gas industry. Randall's engineering group found a new site for the project at a North Texas Exploration (NTE) gas processing plant, and we continue, but have as yet been unsuccessful in our attempts, to negotiate with Atmos Energy for a final test of the project demonstration unit. In the meantime, MTR has located an alternative testing opportunity and signed a contract for a demonstration plant in Rio Vista, CA. Several commercial sales have resulted from the partnership with ABB, and total sales of nitrogen/natural gas membrane separation units are now approaching $2.6 million