Mr. Peter Ho reports

BAYSHORE PETROLEUM INITIATES BITUMEN UPGRADING PROGRAM USING CATALYST-BASED TECHNOLOGY

Bayshore Petroleum Corp. has started a development program with partners that combines research and a commercial application to upgrade Alberta bitumen at surface and in situ. The objective of this program is to prove and demonstrate technologies that upgrade bitumen using a proprietary catalyst and other process mechanisms not associated with traditional upgrading and refining technology.

At the conclusion of the first phase of the development program, it is anticipated that the upgraded bitumen will meet pipeline specifications without the need for diluents usually required for transportation and sale of bitumen. Several chemical, mechanical and electrical technologies will be used in the program, including elements of the CCC technology. Bayshore is the exclusive marketing agent of this technology in this research and in the commercial applications that shall follow. Bayshore will also employ licensed technology from International Ultrasonic Technologies Inc., which in the past has used ultrasonic technology to partially upgrade heavy oil. The research will be conducted by company technical experts in a non-arm's-length private company that has received approval and funding from National Research Council of Canada.

Initially, there will be two phases of research, which will include: (i) laboratory verification that the combined technologies are working together to achieve the improvements to increase API and meet basic pipeline specifications; and (ii) downhole (in situ) programs experimenting with lower-temperature thermal recovery schemes. Both phases, when successful, will affect the efficiency of field oil sand and heavy oil production and transportation, since these technologies are focused on reducing the viscosity and density of the produced bitumen both in situ and at the wellhead. Bayshore will work closely with its partners after successful testing to construct and operate a full upgrader plant that produces diesel fuel from low-API bitumen and heavy oil.

We seek Safe Harbor.