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Dallas, TX / ACCESSWIRE / July 29, 2014 / Synodon Inc. [TSXV-SYD] announced on July 17 the renewal of its services from one of its major clients in British Columbia. Synodon, based in Edmonton, is a company that uses advanced technology to detect methane leaks from natural gas pipelines, with clients throughout the oil and gas industry.

Its client in British Columbia had an initial contract in 2012, which will now be extended to cover 2,600 kilometers of pipeline throughout the Canadian province.

Synodon uses aircraft and remote sensing technology to detect small leaks in pipelines. Using its realSensTM technology, the Canadian company says it can find small leaks before they turn into big ones.

"This signing reconfirms the typical sales cycle which Synodon has been using in its forecasting models where an initial contract with a pipeline operator of between 5 - 20% of their network is usually followed by one covering close to 100% of the system within 1 to 2 years", said Adrian Banica, Synodon's CEO in a press release. "In fact, as was presented in our company's most recent Management Discussion and Analysis document, 85% of this year's signed revenue kilometers so far come from repeat customers who have increased their contract amounts by nearly 4 times. The new customers that Synodon announced this year are expected to follow a similar pattern in the future."

The debate surrounding leaking methane is only heating up. As major transmission pipelines age, they tend to leak more. Synodon excels over other leak-detection technology because it uses remote sensing technology originally developed for the space program. A helicopter flies over and can detect small leaks using infrared spectroscopy and GPS technology.

Remote sensing has become more popular as technology has improved and costs have come down. It is used for a wide range of industries, such as measuring deforestation, tracking sea ice, or oil and gas exploration.

Synodon says its realSensTM is far better at detecting leaks relative to what oil and gas companies traditionally use.

Normally, most pipelines are equipped with sensors that measure flow rates, and when there is a leak, the sensors pick up the drop in pressure. But, a U.S. Department of Transportation report found that these sensors only find leaks about 40% of the time. Synodon's technology, on the other hand, is much more precise and reliable, the company says.

This positions Synodon well in an era of growing concern about methane leaks. In the U.S., which is expected to see significant growth in natural gas consumption as environmental regulations kick in, methane leakage will come under increasing scrutiny in the coming years, leading to a huge opportunity for leak-detection technologies.

The challenge the company will have moving forward is convincing pipeline companies to pay for the services.

Pipeline operators often view the elimination of methane leaks as too expensive - plugging holes costs money, and the lost natural gas doesn't necessarily have a huge effect on their bottom line.

On the other hand, Synodon argues that its technology could in fact save pipeline companies money. That is because the damage caused by leaks and accidents to public property adds up, and using Synodon's remote sensing technology could prevent small leaks from getting bigger.

A 2012 study from the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) found that pipeline accidents can cause $5 billion worth of damage in a given "bad year." As a result, pipeline companies could spend up to 10 times more than they already are to reduce leakage, and make up the savings in fewer accidents.

Synodon's latest announcement that one of its biggest clients in British Columbia is extending its contract suggests that they are pleased with Synodon's remote sensing technology.

Synodon is still in the early phases of commercialization, but has signed up an impressive list of clients, which include Access Midstream, Suncor Energy, SourceGas, and Enbridge Energy Partners, among others.

By: James Burgess of Oilprice.com



SOURCE: Synodon Inc.