Was there ever going to be a Stoughton refinery?

Estevan – In early 2017, two refineries were proposed for Saskatchewan. One, a 30,000 bpd asphalt refinery at Lloydminster was proposed by one of the largest oil companies in the country, and one that already had an asphalt refinery and an upgrader at that community. The second refinery, proposed for Stoughton, was proposed by a company few people had ever heard of, unless you were one of five towns in North Dakota and Montana where that company had also proposed refineries.

In both cases, nothing was built. In the Lloydminster case, it was in large part because Husky Energy was successful in buying the 50,000 bpd refinery at Superior, Wisconsin, for US$435 million. But in the Stoughton case, the story goes much deeper than that. It’s a story Pipeline News has been investigating since February 2017, and it’s one of big promises, but nothing delivered. But more importantly, these were promises made at the time by a company with one employee, and a head office you could rent by the hour.

This second refinery has been alternately referred to as either a 40,000 bpd or 42,000 bpd facility by its proponent.

The proponent of the proposed Stoughton refinery was Quantum Energy, Inc., of Tempe, Arizona. (at the time, late 2016, early 2017). It said it was setting up a wholly-owned Canadian subsidiary, Dominion Energy Processing Group, Inc., to build the refinery in Saskatchewan. At the time, Stanley F. Wilson was the president and CEO of Quantum Energy, Inc., and Lorne Keith Stemler was the CEO of Dominion Energy Processing Group, Inc. But at the time Stemler was talking to packed rooms in Stoughton, Weyburn and Estevan, Quantum filed its S-1 statement, its registration statement, with the Securities and Exchange Commission (SEC) in the United States.

And that S-1, filed March 6, 2017, had plenty to tell. As detailed in depth throughout this edition, we reveal that Quantum, in its filing, said it had one singular employee, Stanley F. Wilson, and at the time, he was the sole person allowed to sell its stock, and its largest shareholder. We found that its head office was a virtual office that you could rent by the hour. We did, and we have the receipt. You can too, because there’s an app for it.

These meetings in southeast Saskatchewan, including a contractor meeting in Weyburn which attracted around 300 people, came after Quantum had proposed, but failed to build, similar refineries in a total of five different locations in North Dakota and Montana.

Since that time, no visible work has appeared at the site, immediately adjacent to the Crescent Point Viewfield gas plant. There is not a survey stake to be found, not even a sign.

Neither Stemler, the man on the ground in southeast Saskatchewan, nor Wilson are apparently with the company anymore. An April 12, 2018, press release said, “Effective February 28, 2018, Stanley F. Wilson resigned as a director and officer of Quantum and its subsidiaries. Effective February 24, 2018 Lorne Keith Stemler resigned as a director and officer of Quantum and its subsidiaries.”

Wilson had been the largest shareholder at the time of the S-1 filing, and Stemler was the fourth-largest. The share structure was revamped in January 2018.

The current president, Jeff Mallmes of Sicamous, B.C., had been listed in the S-1 as one of Quantum’s largest shareholders, when combined with his wife, Janice and his company, The Big Barge Company Inc. Mallmes, a Sicamous district (municipal) councillor, built his business in British Columbia building docks.

The other director of Quantum, listed on its press releases since the middle of 2017, is no stranger to the company. Andrew J. Kacic had been the CEO several years ago.

At the time the company had several proposals in North Dakota and Montana supposedly at play.

In the interim, Quantum’s corporate head office now started listing a location in Chicago. And in keeping with its previous pattern, that precise address, like the Tempe one, was the exact same suite listed as the office for roughly one-dozen independent law firms.

In recent weeks, on April 12, 2018, Quantum announced via press release it would be merging with Inductance Energy Corporation (IEC). The release stated, “They have entered into a binding letter of intent, pursuant to which upon satisfaction of certain conditions, IE Arizona, Inc., an IEC affiliated company (“IE Arizona”) a Wyoming corporation, a privately held company, would be merged with Quantum.”

And, like before, this new player, Inductance Energy Corporation, also apparently shares its corporate head office with numerous other companies, since its address listed with the Wyoming Secretary of State is also that of Wyoming Mail Forwarding Service, a virtual office, whose services can be had for “only $50 per month!” according to the mail forwarding company’s website.

In the meantime, another company has been working on building a similar scaled 27,500 bpd refinery at Belfield, North Dakota called the Davis refinery. On April, 16, 2018, Meridian Energy Group, Inc, signed a letter of intent with an engineering procurement and construction firm, for its front-end engineering and design. Their project is relatively similar in scale to the one proposed by Quantum, so it provides a real-time comparison of what a similar project entails in scale and resources. Expect to see a story on this refinery in our July edition, following the Williston Basin Petroleum Conference, where they will have made a presentation (but after our press time.)

When we checked with Husky, they did not use a virtual office for their corporate headquarters, and they employed more than one person when they made their refinery proposal.