Petrobank's THAI system gets initial approval

At test locations in Alberta and Saskatchewan, Petrobank Energy and Resources Ltd., has been developing a new oil-extraction technology it calls THAI ("toe to heel air injection"). Yesterday, the company announced an important stamp of approval: Engineering firm McDaniel and Associates Consultants Ltd. has studied the technology, which uses underground combustion to melt oil from surrounding rock, and verified that it works. The firm also verified that companies can access 15 to 21 per cent more oil in a given reservoir using THAI than the current method, called SAGD, which involves underground injections of high-temperature steam. The report is not the final thumbs-up; McDaniel has yet to certify reserves based on THAI, since Petrobank has struggled with production issues, and doesn't yet have a reliable enough system to bring the oil to the surface. But Petrobank, which is installing new equipment that it believes will solve some of its issues, called the initial approval an important development. PBG (TSX) rose 2 cents to $54.49.