Company touting chemical-free fracking faces fraud accusations

Company touting chemical-free fracking faces fraud accusations by Nathanial Gronewold, September 12, 2012, E&E News
HOUSTON — A new company based here says it is developing a breakthrough technology to replace hydraulic fracturing for oil and gas extraction. But the same firm is also facing accusations by bloggers that its claims are false and that it is engaged in a possible fraud. For weeks, a company called Chimera Energy Corp. has been issuing news releases touting the emergence of its “exothermic non-hydraulic extraction” technology. The firm says the process eliminates the need to use chemically treated water to extract oil and gas locked in tight underground formations, and in releases Chimera says it’s moving to test the technology in Mexico through a contract with that nation’s state-owned energy giant, Petróleos Mexicanos, or Pemex. However, communications with Pemex officials turn up no record of any such contract with any company named Chimera Energy, or with that company’s sole executive, listed on Chimera’s website as Charles Grob. Investor advocates, through online forums, are now warning against doing business with Chimera, whose stock is trading in the penny stock market under the ticker CHMR. The online investment information portal Seeking Alpha has been the most active in attacking the firm’s claims. An anonymous contributor there has so far published two comprehensive reports.

Though the anonymous writer acknowledges that he or she is betting on the stock’s decline, the author lays out a detailed argument for why investors should steer clear of Chimera’s stock, including points such as a lack of any record of a contract with Pemex and an inability to reach a representative at Chimera. Giving its address at a virtual office provider in Houston’s Williams Tower, Chimera says it is moving swiftly to perfect and begin marketing a new “dry fracturing” technology that the company says eliminates any threat of water contamination or use of dangerous chemicals. Chimera says on its website that its process can be traced to methods first developed in China as a means to enable enhanced oil and gas extraction in colder climates, where hydraulic fracturing fluids can be expected to freeze. In a video overview, the company explains that its method uses “extreme heat metal oxide exothermic reactions in conjunction with ultra-expansive evaporants to open both old and new oil and gas producing fissures.”

The process claims to use heat created from the chemical reactions of various metal compounds to cook shales and other tight oil- and gas-bearing rocks under pressure, forcing natural cracks in the rock to expand or creating new ones. Chimera’s overview says its metal oxide compound, the composition of which the company doesn’t disclose, is forced into the cracks created by heat and pressure to act as a proppant, keeping the fissures open and allowing hydrocarbons to flow around them and to the well. Chimera says the method enhances extraction volumes by up to 65 percent and can be employed at any pre-existing well anywhere in the world for enhanced oil and gas recovery. But does this technology even exist?

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