by Fabrice Taylor

She wanted to be a doctor because she had the urge to help people. Instead she became a petroleum engineer working for some of the biggest names in the energy industry.

But Audrey Mascarenhas never lost her sense of compassion, which explains how she got to where she is today: running a little firm called Questor Technology Inc.

If her tenure so far has any predictive power, you’ll be hearing a lot more about Questor and Mascarenhas.

Calgary-based Questor (TSXV:QST) is in the cleanup business, specifically cleaning up in the oilpatch. The company designs and builds incinerators that burn waste gas. Sounds pretty boring, right? Well, it’s not. Waste gases in the oil industry are an appalling and unnecessary burden on the environment and on the profits of oil and gas producers, not to mention the reputation of the industry.

Waste gases are an unwanted byproduct of hydrocarbon production. They’re typically flared off on site, which is why you may have noticed huge flames burning on the horizon as you drive through the countryside of Alberta (and British Columbia and Saskatchewan, for that matter).

Flaring is grossly inefficient, especially if the gas being burned is too rich or too lean. It’s also brutal on the atmosphere. In the oilpatch, flaring is second only to refining in terms of greenhouse gas emissions, at 21% of the industry total versus 28%. You could easily argue that it’s higher, because even refining uses flaring. The same holds true of oil and gas extraction, which officially causes 13% of the industry’s GHGs but also flares.

Yet burning waste gas is crucial. More and more of the gas we produce is impure, heavy in contaminants like sulphur and benzene, nasty chemicals that in small amounts can be fatal. Even methane, the primary constituent of natural gas, is 21 times more harmful to the environment (in terms of global warming) when unburned.

That’s only one side of the equation, too. There’s also the wasted energy. Globally, flaring, venting or just doing nothing about wasted or stranded gas represents a waste of 6.4 trillion British thermal units of energy per year.

Finally, there’s the optics of flaring. You only have to look to the vandalism being perpetrated against the industry by extremists who are wary of gas production. That’s an extreme example, but it illustrates the importance of goodwill. There is a dollar cost to this too. Lawyers, public relations, call centres – in the oil sector they spend a lot on these things because of the visibility (and smell) of waste gases.

So how does Questor fit into all this? First, its incinerators are more efficient than flaring. They’re 99.9% efficient versus between 60% and 90% for flaring, according to one study. If you vent 19 million cubic feet a day of methane, you’ll get 7.6 tonnes of GHGs. If you flare it at 60% efficiency, you’ll cut that to 3.3 tonnes. Flare at 80% efficiency and you’ve got 2.6 tonnes. Incinerate at 99.9% and you’ve got a tonne.

Incineration is also cheaper as you don’t have to heat the waste gas as much. Heating waste gas means burning fuel gas, which would otherwise be sold. Questor’s incinerators are enclosed and therefore operators have more control over how the gas is mixed with air and fuel gas. Furthermore, unlike with flaring, the wind can’t wreak havoc on the burning process (if you’ve ever noticed a flare with particularly black smoke, it’s because it’s not burning efficiently, which can be caused by crosswinds).

Moreover, because of their efficiency and enclosure, Questor’s incinerators don’t have the lousy optics of highly visible flares.

But we don’t invest to feel good about ourselves. We invest to make money. Does Questor? You bet. Not only is it cleaning up the air, it’s cleaning up financially. In the six months ended June 30, Questor posted revenues of $2.3 million and profits of about half a cent a share. That represents a threefold increase in revenues over the year-ago period, when the company posted losses. Considering that a lot of Questor’s work is tied to drilling new wells, that’s not bad; think how badly the drilling business is doing.

Questor is well capitalized too, with $3 million of cash and book value of 21 cents a share. At the time of writing, the stock was quoted at 31 cents.

I spent an hour with Mascarenhas in her Calgary office to get a sense of where things are at. The outlook seems good. I asked about how you pitch the conservative oil industry on what’s essentially an environmental story (there is an economic case for using Questor but it’ll be a lot stronger if and when the firm finds a technological partner to help it recapture the heat lost in burning waste gas).

Mascarenhas’s body language speaks to optimism. She’s a very sought-after speaker, which is leading to solid business connections. These are showing up on the bottom line, for example in the form of a big deal with Chinese state-owned oil firm Sinopec. Her big problem? Figuring out how to best manage Questor’s growth. That’s a good problem to have.

Fabrice Taylor is the Prairie Trader. He is an award-winning journalist and equity analyst.

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