First slide on screen:

02/12/2008

Micro/Nanotechnology SolutionsMicro/Nanotechnology Solutions

Miniaturizing The Bottle Test:Miniaturizing The Bottle Test:Revolutionizing MedicineRevolutionizing Medicine

A Business Opportunity inA Business Opportunity inMicro/Micro/NanobasedNanobased Product R&DProduct R&D

Dennis Chute and Artsinteg Team

November 24th, 2008

Artsinteg

Hello. I'm Dennis Chute, the Business Development Officer for Artsinteg:

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ArtsintegArtsinteg’’ss MottoMotto

Enabling Nano-Integration

Product Research and DevelopmentProduct Research and DevelopmentTechnology CommercializationTechnology Commercialization

What does our slogan really mean?

Artsinteg has found a unique niche. Simply put, if you have a great idea that lends itself to miniaturization but don't know how to do that you come to us. We build a prototype that works in the real world. We are prototypers. We don’t create intellectual property we create commercially viable devices from other peoples intellectual property. As an example we have an ongoing relationship with Sci Med.

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Artsinteg'sArtsinteg's Current AccomplishmentsCurrent Accomplishments

How Did Artsinteg Help Scimed? Provided consulting technical teams to

build the Nutri-Chip platform technology based on Lab-on-a-chip technology

Explored other applications for this technology including clinical

Coordinated grant proposals to bring this technology to fruition.

Artsinteg will now apply these principles to new problems.

Sci-Med (Dr. Gupta) also presented here and showed pictures of the technology we worked on. Copies of that presentation are available. In our work with Sci-Med you see Artsinteg's classic approach. The client has a problem that we can help solve through nano-technology. We build a prototype and also try to help them find as many uses for this new technology as possible. We also collaborate in raising funds. We'll help in any way we can. In an attempt to increase the value we can add to clients’ projects we have begun re-tooling the company

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Artsinteg'sArtsinteg's Mission Statement Mission Statement

To help clients solve real problems using micro and nano-technology.

Our focus is on better, faster, and cheaper.

Our advice and devices improve our clients’ bottom line.

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Current Key MembersCurrent Key MembersHuy Nguyen: Project Consultant, Founder Dipl-Ing., MScEE, BScCS, P.Eng. 20+ years of product R&D in

micro/nanosystems (microfluidics, lab-on-a-chip, MEMS based), precision device engineering, optics, photonics and software.

Dennis Chute: Business Development Officer CEO of different companies including Natural and Liquivets. Trained numerous entrepreneurs how to start a business, how to stay in business, and how to thrive in business

Grant lovig: Business Advisor President of Company's Coming Publishing Limited, member of the Board of Advisors for the Centre for Entrepreneurship and Family Enterprise, Chair of the Alberta Business Family Institute, both affiliated with the University of Alberta School of Business

Dr. Robert Ippolito: Technical Advisor 30 years of industrial chemistry in process and analytical development, medicinal and applied chemistry, managed groups as large as 20 scientists, knowledge of biochemistry, immunology and experience in immobilizing materials on solid surfaces

Bruce Johnson: Strategy Advisor a director of TEC Edmontonchairman, CEO of Semanti as well as chairman of the Board of Directors of HeadCount Corporation (a retail traffic and conversion analysis company), retired CEO of Intuit Canada and Intuit UK (500 full-time and 200 seasonal employees), active in the angel investor community and advises a number of companies on strategy

Allen Yee: Operation Advisor Senior VP Operations at Semanti, Formerly the vice president of Operations for Intuit Canada and UK, active in the angel investor community both as an investor and as an advisor.

In order to do more for our clients we needed to expand our team and we've begun doing that. We are still building. The goal is to have group of people that can maximize the return for our clients.

One of the things that happened as a result of expanding the team is we began to redefine our process for finding clients. We realized if we found problems that plague an entire industry where nano-technology could lead to an improvement then we would have many clients. However, we didn’t want to be in the business of developing new intellectual property, we see our role as making existing technology better. Bluntly, we like to build things that can be sold. We produce commercially viable nano-devices.

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Business StrategyBusiness Strategy

• Find a real world problem• Search for pre-existing nano or micro technology

solutions• Find a client who would be interested in

commercial application of the technology• Commercialize the technology by building

prototypes that work in the real world and then project manage the manufacturing of the device

• Sell, in conjunction with the client, commercial device to other users

Following this model the first project we are tackling is replacing the bottle test. To understand what a bottle test is you need to know a bit about what happens when oil and water mix. You get an emulsification.

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A Few Facts About EmulsificationsA Few Facts About Emulsifications

When oil and water meet they can (and do) form emulsions.

When you pump oil out of the ground you get three layers:

oilwateremulsification at the interface

Salt, pH, pressure, temperature, crude oil composition influence the degree of emulsion, different in all reservoirs

In applications like steam assisted gravity drilling which has become a big part of recovering oil sands you get large amounts of emulsifications and many different kinds. While emulsifications fall into broad classes each reservoir, and even each well produces a unique emulsification. Within a reservoir or well they can even change over time. They also change as the oil ages once it is out of the ground.

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The Problems With EmulsionsThe Problems With Emulsions

They make it hard to pump oil up out of a well They clog up the equipment at the well head They corrode pipelines they are pumped down They increase the cost of transporting the oil

either down line or in truck At the oil storage facility they cause sedimentation

in tank and make pumping very problematic At the refinery they reduce the value of the oil

stock as they mess up the equipment and impair the quality of the finished stock

The oil industry spends billions of dollars each year deploying demulsifying agents to break up these emulsifications. However, no one demulsify agent works in all situations. In fact, there are thousands of possible demulsify agents. So what happens is a specialist company sends an engineer to where the problem is occurring and they determine which demulsifier works on your problem. They do this by performing a bottle test. This is a technology that is more than a century old and has been the industry standard since the early 1950s.

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How A Bottle Test WorksHow A Bottle Test Works Put live crude in test tube Add water Add possible demulsifying agent Shake Let sit for 12 hours Visual result is subjective and based on

operators experience (add heat or pressure or electricity or more shaking as engineer deems appropriate)

13% of emulsifications don’t get resolved=slop oil

As I said it is trade craft, an art. It doesn't always work. In fact, it seldom works perfectly. The result is slop oil. This is oil the industry has to throw out since it can't be dewatered and can't be refined. That is what ends up in tailing ponds. This is where Artsinteg comes in. Researchers at the University of Alberta have recently come up with a novel way of testing emulsification stability.

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A Brief HistoryA Brief HistoryWork done on demulsifying agent assesment:• Petrowski, 1973 – emulsion stability predicts what

demulsifying agent might work• Nigerian team, 1993 – can measure stability using

dielectric constant • Sentech/Reider Barford Schuller, 2003 creates

single electrode capacitance technology which reduces time for bottle test to 1.4 hours and allows multiple tests to be preformed at same time

• University of Alberta research team, 2005 –successfully demonstrates proof-of-concept applying micro-fluidics to predict emulsion stability

In 1973-74 Gary Petrowski of Carnation research Laboratory in Van Nuys, California realized that the stability of an emulsification is a good predictor of what demulsifying agent might work on that emulsification. He also realized that the conductivity of the aqueous phase, which is a function of oil concentration, can be used to evaluate destabilization. However, he couldn’t figure out how to measure that reliably. In the early 1990s a team from Port Harbour University in Nigeria solved part of the problem. They figured out how to measure the dielectric constant of the aqueous phase. Their solution was clunky and time consuming but showed it could be done. The problem was the measuring device kept shorting out. Beginning in 2003 Sentech, a Norwegian company, began building single electrode capacitance testers. This cures the shorting out problem. However, it still takes quite a long time per test and is expensive. It has not been widely deployed in the oil patch. The team at the University of Alberta, led by Farshid Mostowfi, used a completely different approach. They etched tiny channels on glass. The channels met in the middle. Down one channel they would send water, down the other oil. A thin film forms where they meet. An electrical charge can then be applied to that film. The amount of charge that it takes to disperse the film is a great predictor of what demulsifying agent will work on the emulsifications present in the oil sample. They actually built a working prototype. This is the technology that we are trying to take and use to produce a commercially viable prototype.

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MicrofluidicMicrofluidic Based AdvantagesBased Advantages Miniaturizing this process makes it easier

to take out into the field The test can narrow the search range Within that narrower range a large number

of demulsifiers can be tested very quickly (in seconds per test, not hours)

The cost per test drops from hundreds of dollars per test to under $10

More testing means fewer unresolved emulisifications and less slop oil

Where are we going next.

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Where Where ArtsintegArtsinteg Is Going Next?Is Going Next?

We are going to take the UofA technology and build a prototype that works for one well in one reservoir. The prototype will then be tested more broadly to determine how accurately it can predict solutions for other reservoirs.

We will seek funding from both government and companies that would most benefit from this technology, including those involved in the original project at the University of Alberta

Thank You!…and Questions?

Artsinteg is very much a one step at a time kind of company. So proceeding without a client to this point has been a radical departure from our classic business model. We only undertook the project because there is a spectacular possible payoff. It should be possible, given the time, money, and human capital to hook our monitor up to an expert software program running a database of all known emulsifications and demulsifiers and their interactions and not just replace the bottle test but the engineer. The savings to the oil patch would be in the billions of dollars every year. The long term goal would be to turn all the slop oil into a usable product thus saving not just money but the environment. No longer would migratory birds be killed by landing on tailing ponds, and no longer would the people of Fort Chipewan have to fear for their health as a result of leachate from these tailing ponds. The day might well come where we could mine the existing ponds for oil, water, and heavy metals. Thank you for your time. SUPPORT DOCUMENTS: From a presentation by Shawn Taylor Made in 2003

Thin Liquid Films: Water-in-Bitumen Emulsions

Shawn Taylor

NSERC Industrial Research Chair in Oil Sands Engineering

Department of Chemical and Materials EngineeringUniversity of Alberta

Edmonton Alberta

Motivation

• Water-in-oil emulsions commonly occur in the oil industry

• Components of bitumen:Saturates, aromatics, resins, asphaltenes,

and solids• Asphaltenes are primarily responsible

for emulsion stability

What is a Thin Film?

Dilutedbitumen

Water

Water LiquidDrainage

LiquidDrainage

Motivation

• Emulsion stability depends strongly on the properties of the thin liquid films formed between two approaching water droplets.

• Study a single thin film using Thin Liquid Film-Pressure Balance Technique Investigate emulsion stability at the

nanometer scale

Experimental Concept

WaterDiluted

Bitumen Film

Microscope View

Thin Film Experiment

Emulsion

Filmdrainage

FilmDrainage

Dilutedbitumen

Water

Water

Microscope view

Schematic of TLF-PBT

Chart Recorder

Thermocouple

Hg-Arc orHalogen LampCCD

Camera

Eyepiece

PhotoDiode

VCR

Monitor

Micrometer Syringe

Reflective Light Microscope

ThermostatingDevice

Anti-Vibration Table

Syringe Pump

Valve

Manometer

This is the process the team (Mostowfi, Czarnecki, Masliyah, and Bhattacharjee) at the University of Alberta was looking at miniaturizing. As we can see it is still pretty clunky.

Outline of Experiments

• Determine the effect of solvent:bitumen ratio on: Disjoining pressureFilm Lifetime

• Solvents: Toluene & heptane

• Simulated industrial water

Diluted Bitumen Film

Water

These are the actual experiments the team ran in 2003. There was no reason that every known demulsifying solvent couldn’t also be run.

Typical Film Behaviour(3:1 toluene:bitumen)

Initial formationof film

Film drainage Equilibriumgray film

Equilibrium gray film is what you want to see if a solvent is working on the emulsion.

Typical Film BehaviourToluene:Bitumen

3:1

Measured Parameters: Equivalent Film Thickness

Two surfactant layers + liquid core

Accuracy:• Ideal films 0.1 nm• Bitumen films ± 0.5 nm

h

Water

Water

Oil

Here we see the first problem with this approach. It works best on films that are in the 0.1nm width range. Bitumen films tend to be much thicker. The second problem is that no 2 bitumen samples are likely to be identical chemically.

Measured Parameters: Disjoining Pressure Isotherms

• Excess pressure due to molecular interactions between the interfaces:

• Acts normal to the interface

( )h electrostatic structural

steric van der Wa

als

Water

Water

Oilh

You must allow for the molecular interactions when calculating the degree of “force” it takes to break the emulsion.

Disjoining Pressure Isotherm:Toluene Diluted Bitumen

0

100

200

300

400

500

600

0 10 20 30 40

Film Thickness (nm)

Dis

join

ing

Pres

sure

(Pa) Toluene:Bitumen (1:1)

Toluene:Bitumen (5:1)

Toluene:Bitumen (10:1)

Here we see some of the complications in action. It can be seen that the relationship between film thickness and disjoining pressure is only linear through a narrow range of film thickness. That said we can also clearly see that Toluene:Bitumen 5:1 reduces the disjoining pressure at any given film thickness. Toluene:Bitumen 10:1 has no additional effect. So we can also see the

power of the technique. Not only is it clear that Toluene works as a demulsifier for this sample of Bitumen but also that the optimal concentration is somewhere between 1:1 and 5:1. In the real world we would not be using Toluene on this problem. First of all a good demulsifying agent works at 1 part demulsifier to 10,000 parts bitumen. Secondly, governments around the world are cracking down on the use of solvents as demulsifying agents owing to environmental concerns.

Measured Parameters: Film Lifetime

Time

Film

Thi

ckne

ss

FilmRupture

FilmFormation

Time

Film

Thi

ckne

ss

FilmRupture

FilmFormation

• Time from film formation to film rupture.

• A stable film will have an infinite lifetime.

Film Lifetime:Heptane Diluted Bitumen

Solvent:Bitumen (wt:wt)0 10 20 30 40

Film

Life

time

(s)

0

100

200

300

400

Toluene:Bitumen

Heptane:Bitumen

Here using film lifetime analysis (not how much solvent it takes to alter disjoining pressure but rather how long the film lasts in the presence of two different demulsifying agents of the same concentration) we see Heptane makes a better solvent for this bitumen and destabilizes the emulsification quickly.

Conclusions• Emulsion stability depends strongly on

the properties of the thin film• 1:1 Toluene:Bitumen

Stable film• 5:1 and 10:1 Toluene:Bitumen

Film destabilized with dilution

• Heptane:Bitumen Destabilized film by using aliphatic solvent

The true take home message is that we can through an analysis of thin liquid films examine the effectiveness of solvents and other possible demulsifying agents on bitumen. There is no reason that this then wouldn’t work on Bitumen injected with steam as happens in Steam Assisted Gravity Drilling. By 2005 this had led to the production of an actual device for replacing the bottle test (patent pending) created by the U of A team cited above. This technology was made available through TEC Edmonton. This is from their website.

What the University of Alberta did!

They created:A Novel Microfluidic Device for Rapid Selection of De-emulsifying Agents

It is a way of using the technology I just described to reduce the number of bottle tests done in the oil patch

It could ultimately replace the bottle testIt might even replace the engineers who do the testsThey filed for patent protection

Advantages

• Rapid measurement of emulsion stability. • Compact design is cost effective and

portable. • Uses a reduced film area that leads to more

accurate and reliable measurements. • Measures emulsion stability using the actual

micron-sized droplets found in emulsions.

What that makes possible

• experimental platform for measurement in research laboratories, for onsite measurement in remote areas, or online in processes such as a feedback control system for a de-emulsifier feeder.

Potential markets

• This measurement platform may be used in the Petroleum, Food, Cosmetic, and Bio-engineering industries, as well as environmental remediation of oil spills. Oil-in-water emulsions have also been proposed for use as drug delivery vehicles.

Where the technology is today

• The effectiveness of the device has been verified in a fully-functional prototype.

• The prototype works in a limited range of applications on the bench top in the lab.

• It is in no way ready for deployment in the field.

Lets review

• They performed the experiments on the lab bench by creating thin liquid film in the channel using micro-pump to input the samples.

• Then they measured the electrical voltage at which the film was ruptured.

• This data can be used to analyze the emulsion stability that in return can be used for classification of demulsify agents.

So how do we get from where they were to where we want to be

• First of all we need to do a series of experiment on the lab bench to characterize the performance of the set up to find out what parameters are possible for the prototype. This work normally takes about 6 months of team work of 2 people.

• After that the team can start additional theoretical simulations to predict the design data for the prototype (~6mons). This data will be used to start the design of the prototype.

• Once the design is complete we have to put together a prototype consortium to build it (~3months).

• Finally, Artsinteg will start managing the prototyping manufacturing prototype (~1year))

How does it turn into a business?

• Okay, this is really neat technology and we can probably get grants to work on it but if we are going to attract investment there needs to be a payoff some day.

• The oil patch certainly has a real problem.• However, the deployment of demulsifying agents is

currently contracted out to specialists firm who provide technicians and engineers to solve the problem.

• There is a comparably small number of these firms and possibly as few as 14,000 demulsifying engineers world wide.

• The market is obviously tiny and very conservative.

The solution, go down well

• There is existing down well testing technology for measuring organic chlorides and heavy metals

• This is called the flowpump and was developed at Ames national laboratory in the early eighties

• As they pointed out at the time there is a great deal to be said for going down well

Down well advantages

• Real-time screening and/or analyses • Reduced characterization costs and dependence on

laboratory analysis and risks associated with sample transport

• Waste minimization resulting from small sample volumes and reagent consumption

• {To that we can add far better selection of demulsifying agent and the ability to adjust demulsifying regime in real time}

Down well is where our competitors don’t go

• This means there is an opportunity to overcome some of the reluctance and built in cultural barriers to implementation

• On the other hand the technical problems multiply.

• First and foremost you have to solve the so called elctro-valve problem

The problems preventing use of University of Alberta technology down well

• Not robust enough• Uses micro pump to deliver fluids into channels

• It has to be hardened using PDMS as the manufacturing material

• The micro pumps have to be replaced with electro-valves

• The batteries will have to be very heat and pressure resistant but already exist

If you can solve these problems for this environment there are other applications

• Cosmetic industry to test large numbers of emulsifications for stability

• Food industry (milk – where we are already working)

• Medical testing (the field where we plan to deploy the technology) in the micro fluidic immunoassay

The micro fluidic immunoassay

• There is little question that microfluidic immunoassay systems would be a great improvement over their benchtop counterparts, but is it possible to produce a handheld device based on the same technology? While the chips themselves may be quite small and light, it would be challenging to shrink the electrical macrovalves and optical system that control and read them. A better idea would be to discard opticaldetection in favor of electrical detection (like that of the i-Stat) while retaining the microfluidic separation that is critical for multiplexed immunoassays. Miniature pneumatic-valve actuation would also have to be developed. However, because such a system would contain nooptical elements, and all moving components would be elastomericmembranes, it would be highly shock resistant.

• Dr. Emil Kartalove, Keck Medical School, University of Southern California

To wrap everything up

• By taking existing technology designed to replace the bottle test and commercializing it and making it robust enough to go down well we accomplish the following things.

• We open up a new field (monitoring drilling fluids) for our prototype design and manufacture consulting services. We’ve already been approached by possible clients.

• We remove some of our barriers to accessing the oil patch market place.

• Because the nanodevices at most will be able to perform 500 tests down well and some won’t survive we will have a constant market for new production.

Most importantly

• We’d enable the deployment of hand held micro-fluidic immunoassays.

• That means millions of hand held devices. Every doctor would have one, eventually every household.

• They would have disposable chips. • This means an industry that manufactures

microfluidic chips. • A multi-billion dollar industry based here in

Alberta.