Iodine extraction specialist Iofina (LON:IOF) has bought a new site to beef up its presence in the oil and gas producing stronghold of Oklahoma.
Iofina, which extracts iodine from the waste brine produced from oil and gas wells, is paying US$1 mln for the facility from an undisclosed seller.
It has also acquired all rights to the brine leases of the facility. Costs will only relate to the extraction the iodine from the brine stream and not for the disposal of the brine.
Lance Baller, chief executive, said: "The purchase of these assets is strategically important in establishing Iofina's production base in Oklahoma. There are multiple iodine rich brine streams in the region. By purchasing an existing facility and brine unit, Iofina significantly compresses the time to first production while reducing cost.”
The extraction plant, consisting of a forty foot by one hundred foot production building and a thirty foot by one hundred twenty foot tank farm, had been under-utilised by the previous owner and was not making a profit.
Iofina said it has decided to upgrade the facility by adding one of its WET IOsorb plants, which is expected to yield higher efficiencies, lower operating costs and can process larger brine volumes.
The brine to be processed is being produced as a by-product of existing oil and gas wells similar to Iofina's existing third party sites.
The brine is gathered into a single saltwater disposal site. Iofina has contracted with the oil and gas operator to extract iodine from this location as well as two additional sites.
Estimated production from the new site is expected to be over 200MT per annum once fully operational.
The oil and gas operator plans to drill additional wells in the area, which will produce more brine for processing, Iofina said.
All US domestic iodine production besides Iofina's is from iodine-rich natural brines in the deep subsurface of the Anadarko basin of north western Oklahoma.
At present, three other companies operate facilities for the recovery of iodine. The large plants are all owned by Japanese investors and companies Iofina said.
Baller added: “We are excited to add additional sites with a new operator in this region.In addition we are securing additional elemental iodine solution at very favourable pricing that Iofina will recycle and turn into iodine derivatives."