Here’s another comment by an apparent knowledgeable shareholder about the new product, Encapso. If anyone interested is following this stock on SA, I will stop copying these comments here. Saul, let me know.
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5 Things To Know About Solazyme’s Encapso [View article]
Kevin,
Once again I appreciate your work of keeping us well informed. I have taken the liberty of reposting this comment here, because it really applies to this discussion. Thanks for this new article, I hadn’t seen the graphic on the drilling results across North America. It shows the benefits.
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After reflecting on the Encapso video, I have become steadily more amazed by this achievement. Bear with me, read the following. I think you’ll like it.
The technology is amazing in its own right. A microscopic, hard shelled Encapso capsule, filled with lubricating oil, is added to drilling mud. Millions of these capsule begin their journey at near ambient temperature and pressure and then in a few milliseconds as the slurry passes through the drill rig’s mud pump the pressure is raised to perhaps 5,000 psi (mud pumps are driven by locomotive-sized engines - 2,000 hp is common). The capsules remain intact. The mud spends a few minutes traversing a tortuous, violent path through the drill pipe as the temperature rises to a few hundred degrees F and the pressure increases to perhaps 10,000 psi (for context, the allowable load on structural steel is 36,000 psi). There is a near instantaneous pressure drop as the mud blasts out through the holes in the tri-cone bit, picking up rock chips and beginning its journey back to the surface. A good portion of the 2,000 hp is dissipated at the drill bit – picturing a locomotive pumping its entire output through three 1/2 inch nozzles helps one visualize the chaotic violence at the bit. Apparently the Encapso capsules remain intact to this point - there is little need for lubrication until the mud exits the bit. Then, somewhere along the return around the bit and up the annulus, the steel rubs against the surrounding rock and squeezes some capsules enough to break their shell, whereupon the lubricant is released just at the point where it is needed. The oil locally reduces the friction, which in turn reduces the wear, reduces the torque and allows faster drilling. This is an amazing technological achievement – shells filled with oil, which are robust enough not to soften in the heat and/or split open when subjected to violent pressure changes, but then split open when needed.
The technology is amazing enough, but for me even more astonishing is how the Solazyme researchers came to produce such a product at all. It is not an obvious usage. I doubt if a mud engineer called Solazyme and asked if their oils could help speed down hole drilling. With a broad, strong sleuthing effort on a Solazyme’s researcher’s part, one can envision down hole lubrication might have been identified as a potential application, but Encapso is much more than another drilling mud oil additive – it is an ENCAPSULATED additive. Encapsulation is definitely not obvious.
Somewhere along the line, Solazyme’s researchers must have identified the benefits of encapsulation and sought a way to make the hard shell. Inevitably following this line of research would take time and money, perhaps even a lot of time and money. The product demonstrates that top management provided the necessary budget and time for that research to occur. The budget could not have been small, because testing prototypes was done in multiple wells for multiple companies across the country.
So for me the most astonishing insight is that those of us who are long, own a sliver of a company with a research team who somehow could identify this very non-obvious product in an non-obvious field, and who were given management’s support to follow the research trail necessary to develop to this apparently highly successful product.
For me this suggests that company is extremely well managed, and after a couple of days of reflection, I conclude I have never owned a company which has been so well managed, that could develop such a unique product. We don’t have enough information to guess the cost per ton of this material or the total potential sales of Encapso, but we have enough information to know this invention has a huge potential. Now, let’s ask ourselves, what are the chances there are other non-obvious markets out there that Solazyme’s researchers have been invisibly working on?
I have literally run out of words to describe how astonished, amazed and pleased I am with this company. Enough words, here’s what I am doing: Thanks to Gilgit’s head’s up, I am steadily moving SZYM shares from IRAs to Roth IRAs. It just seems like the thing to do. I believe with the hindsight of ten or twenty years it may well seem brilliant.
Geosteam
Just one guy’s opinion. Long Solazyme. No one paid me to write this.
Mar 31 09:15 AM|9 LikesLike|Report Abuse|Link to Comment Revisiting Solazyme, Part III: Putting The Plan In Motion [View article]
Kevin,
Thanks for this report. I appreciate the management team taking the time to discuss the company and its plans with you. While I am believer, I REALLY appreciate hearing from management periodically. The emerging ability of humanity (via Solazyme) to harness the power of algae to help solve humanity’s problems is so large, I cannot imagine all the impacts.
As a side note, I am in the process of reading all your SA posts beginning with the first. I’m up to your comment made on September 2, 2012. You have put a extraordinary amount of work into writing about Solazyme and I have found the writing to be exceptional well done.
Here’s a very hardy and sincere: Thank you.
GeoSteam