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Sunday
Dec062009

The Future of America’s Natural Gas

Natural Gas 07 Dec 09.JPG


By Dr. Marc Bustin, Editor, Casey Energy Opportunities

Marc Bustin Ph.D., F RSC, is the senior researcher for unconventional oil and gas for Casey Research.

Considered to be one of the top authorities in the world, Marc is the go-to expert for multinational oil and gas conglomerates, and is brought in to help evaluate finds around the world. Marc has reviewed more projects on his own than some exploration teams put together.

Recently, at the Casey Research Energy Summit – a two-day event showcasing the top minds in the energy industry – a small group of investors became privy to Marc's take on the future of natural gas... his prediction for where prices are heading next year... and some of the companies he believes will profit when natural gas takes off.

For an excerpt of Marc's presentation, read on...

What You Need to Know About Natural Gas

Natural gas prices have plummeted. Natural gas storage is at a maximum. Producible gas reserves are up 35% in the United States. Demand for natural gas is down because of the economy.

Then suddenly a new-found U.S. natural gas producible reserve is suggesting that the U.S. in fact will be self-sufficient or close to it as soon as 2030.

Why are all of these things happening?

A bit of it, of course, is due to the drop in the overall economy, but it has a lot to do with the concept of gas shale, and that's really what we are going to focus on today.

Where does all this gas come from?

The gas comes from organic matter that is within the rocks. It evolves, bacteria work on it, it generates gas, and most of that gas and oil end up in reservoir rocks, such as the sandstone.

But the rocks with which the organic matter is in the first place, are fine-grained rocks that we use the loose word "shale" for. These are the rocks that have the organic matter that's cooked, that generates the gas. The gas is generated from the fine-grained rocks and it migrates out into our reservoir rocks, which is our conventional gas production.

If we were to look at the shales in more detail with an electron microscope, you would see that it's very fine grained and the pores are small. If we look at sandstone, the porosity and permeability (the ability of gas to flow through the rock) is great, and that's why we can produce it at commercial rates. Traditionally we haven’t been able to produce any gas from shales because there are no pathways for the gas to go out at a very fast rate. Until recently
we've pretty much ignored these rocks.

If we blew up the pore in a sandstone to the size of the Eiffel Tower – by comparison, the pores in shales are about the size of an eyelet on the compound eye of a bee. In other words, they’re really, really small. There's a tremendous size/scale difference and that's why the gas tends to be retained.

The reason that gas migrates out of the rocks is that they’re surrounded by water. All the other pores are filled with water, and because gas or oil is lighter than water, there is a buoyancy effect. It migrates until it's trapped.

But shales are so fine grained, you don’t need a conventional trapping mechanism. The gas does not move out of these shales because of capillary pressures, and also because the gas is actually absorbed into the mineral and organic surfaces.

That means when we find these shales and these types of deposits, they are not localized. They are very, very laterally extensive, so you don’t really have any exploration risk in terms of finding the shale. The exploration risk is really in whether or not you can develop it.

The economically recoverable gas from the shale is now possible due to development and success of horizontal drilling technology – the development of fracking technology. Higher gas prices in the past gave us the confidence and allowed us to develop the technology. A huge factor is confidence. We know we can do it economically, so we are willing to spend the big dollars that are required to drill and frack one of these wells.

Technology has now made it possible to produce gas from rocks that we couldn't produce gas economically 10 years ago.

In the past we were drilling more and more wells that produced less and less gas. All of a sudden, things have changed with these shale wells. We are drilling fewer wells, and each well is producing more and more gas – because of the frack technology and the wells being horizontal. Things have changed completely.

Finding and development cost

How much it costs to produce the gas, of course, is going to be equivalent to the resource size – the producible resource size. The bottom line is, there's lots of gas that could be produced at relatively low prices. For example, EnCana’s projection of producible natural gas is absolutely enormous.


What's happening in the rest of the world?

The rocks are a little bit different in North America than everywhere else, but there certainly are similar shales in Europe. North Africa has wonderful-looking shales, and so do a few other places – Eastern Australia, for example. There is no reason to suspect they won't be equally successful producing gas from tight rocks in those areas, as we have been in North America.

There are certainly lots of gas shale potentials in Europe and many companies like Conoco, Exxon, Shell are there – Shell is drilling some gas shale wells in Sweden, for example. Other companies are working in England.

So all of a sudden we are looking at a world where natural gas is perhaps not in a shortage anymore.

Part of the problem is, we have been a little bit too successful – if you're a service company, a drilling company, or a producer in North America. We've been so successful in finding gas, we've driven the price way down. The price, in fact, has been too low to sustain drilling and, in some cases, production.

We've got a market, we've got demand, and we have supply. U.S. natural gas storage is at a maximum. We're filled up; no more natural gas, please... for the time being at least.

So what does it mean for the price of natural gas?

Since gas prices have taken a major dive, so has the rig count. The rig count is how many rigs are actually drilling. Currently in North America, we're probably at a 35% to 40% usage of the rigs. This is way down, and the implication is important for the gas price.

Low gas prices means, suddenly we're drilling a lot fewer gas wells. No one wants to drill anymore.

Currently, in order to maintain U.S. production, we have to add between 17, 18, 19 Bcf (billion cubic feet) additional gas per day. At the current rate of drilling, we're adding 9 Bcf a day production, so there's obviously a shortfall.

And a shortfall means eventually the price of gas has to start going up.

Right now, there are a huge number of drillable wells – prospects all ready to be drilled. As soon as the natural gas price gets up above a certain level, these wells will suddenly become economic, and people will start developing them.

So it's not like we are going to find new "stuff," we're just going to start producing the "stuff" we already know exists.
Which companies are going to lose and which are going to win with the new metrics of natural gas?

Losers:
Gas-weighted companies are in trouble today.
Small companies with debt, I think are finished – if they’re gas producers.
Companies only operating in North America are going to have a tough time. If you're offshore, you're probably in a lot better shape.
Companies with no technical expertise – producing gas from shale requires a team of people who actually understand what they’re doing.

Most small companies just can't play in that sandbox. When things go bad, they go bad. You have to be able to drill a number of wells successfully to be successful. If you can only drill one well and you have no operational experience, you should just take your wagon and go home. That leads me to the winners.

Winners:
Big companies with some capital to play with.
Companies with operational experience, or companies that have the depth to develop that operational experience.
Companies with early land position and low finding and development costs or finding and exploration costs.
Technically competent companies.
Small companies who have decent land and have big-company partners.

Some small companies got an early land position, opening the door for big companies to farm in on them. These are perfect situations. The big company is paying the load, and the small company will still get the advantage.

My prediction for gas prices

In my opinion, gas will be $6 or $7 next year. Prices will then soften down to $4 or $5 at the end of next year. Ultimately, the best buys for investors will be small-caps that are farmed out or big companies that have long-term positions.

As mentioned before, Dr. Bustin's expertise in unconventional gas and oil is unmatched in the industry. If you're interested in receiving Marc's entire presentation from the Casey Research Energy Summit... learning from his considerable acumen in natural gas... and getting the scoop on which stocks he believes are poised to profit from the inevitable increase in gas prices, here's your opportunity.

What's more, you'll also get the inside perspective of every energy expert at the summit – on subjects ranging from alternative energy to oil and natural gas, to lithium.
The information revealed at the Casey Research Energy Summit has been, up until now, only available to the small group of investors in attendance.

Now you, too, have the opportunity to arm yourself with the knowledge you need to prosper in the challenging years ahead. Click here for details.



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Thursday
Dec032009

Khan Resources Incorporated Update

Khan Chart 04 Dec 09.JPG


As we can see from the above chart an all cash offer of $0.65 per share could spell the end for Khan Resources Limited (KRI) as Russia increases the pressure to gain total control of this asset.

This snippet from Uranium News more or less sums up the situation as it stands:

Khan Resources has been embroiled in a dispute with ARMZ over who controls the exploration license for the deposit, which was formerly a Russian open-pit uranium mine, and now that dispute has turned into a hostile takeover with ARMZ making an all-cash offer valued at C$35.1 million or 65 cents per share.

ARMZ is the world’s fifth-largest uranium producer and a subsidiary of the Russian state-owned nuclear energy corporation, Rosatom. In August of this year, Russia signed a joint-venture agreement with Mongolia on the Dornod uranium deposit. This surprisingly bad news for Khan came after the Mongolian government enacted a new nuclear law giving more control of uranium reserves to the state.

In 2003, Russia forgave close to all of Mongolia’s outstanding Soviet-era debts. Moscow subsidizes the oil and wheat imports and earlier this year made a $300 million loan to Mongolia’s failing agricultural industry.


To read the article in full please click here.

We have fallen foul of geo-political circumstances on this one, something to consider when making future purchases, a great resource, behind a border we can do little about.


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Wednesday
Nov252009

Green’s Looking Lush to Lawrence Roulston

Lawrence Roulston.JPG

Source: The Energy Report; interviewed by Karen Roche, Publisher 11/25/2009
http://www.theenergyreport.com/pub/na_u/1222

Wherever you look, you can see evidence of growing momentum in the green energy movement. With interest in alternatives to traditional, non-renewable sources of energy picking up steam around the globe, GreenTech Opportunities' editor and publisher Lawrence Roulston says investors in the sector may realize spectacular rewards. As he tells The Energy Report in this exclusive interview, he particularly favors enterprises on the brink of bringing breakthrough technologies to market—technologies that hold the key to making alternative energy production more economical, more efficient and more reliable.

The Energy Report: Green energy is getting considerable attention in the U.S. and Europe. Judging from what you see in your travels, how much emphasis is the rest of the world placing on green energy?

Lawrence Roulston: It varies from country to country. Europe is years ahead of the U.S. Germany, for example, has developed a world-leading solar power industry. Many countries have set firm targets for green energy production and are working diligently toward meeting them. The result has been a great deal of new economic activity.

TER: What's your perspective on green energy in some of the countries that are expected to grow?

LR: That's a very important topic because there are some misperceptions out there. Take China, for example. Anybody looking at China in particular sees it as a country that makes massive amounts of electricity by burning coal. While that is certainly the case, it's an entirely different picture looking forward. China has a target of 15% of its total energy to come from renewable sources by 2020 and there is speculation that they're going to boost that to 20%.

That is actually very significant because they're not saying 15% or 20% of the current level of production, but of their total energy production as it will be by 2020. China is one of the few places that have set firm targets to actually increase the proportion that's coming from renewable sources. They're really aiming at a moving target, because the country is growing so fast and energy production is growing so fast.

They are well under way with projects that will produce solar, wind and hydro power. Certainly they won't reduce the amount of coal they burn any time soon, but at least a portion of their growth and in fact an increasingly large proportion of their energy will come from renewable sources.

TER: What about the other BRIC (Brazil, Russia, India, and China) countries? To what extent will their growth offset green energy advances in North America and Europe?

LR: Russia has proposed a target, although it hasn't been formalized yet, of 20% renewable by 2020. A large part of that is going to come from hydroelectric. There's a lot of untapped hydro potential in Russia.

India hasn't set formal percentage targets, but they have a target of generating 25,000 megawatts of power from renewable energy over the next four years, which is a big increase from their current level. That's going to be focused on solar and wind.

Interestingly, Brazil is already the world's largest renewable energy market, with massive hydro projects already in operation and a long-established ethanol sector. In fact, 40% of Brazil's energy now comes from renewable sources and 85% of their electric power production is renewable. So they're really going to continue to focus on that ethanol and hydro sectors in the near term.

So, even the BRIC countries, which are fast growing and have a reputation of being polluters, are well ahead of the United States' plans or at least at the worst case are going to be matching U.S. targets for renewable.

TER: Who's going to lead the game in technology advances or adaptation?

LR: As I mentioned earlier, Germany has developed a world-leading solar power industry. In fact, Germany has emerged as a leader in photovoltaics, which came about directly as a result of a government policy to increase production of renewables. They developed feed-in tariffs, which gave a preferential rate to renewable energy and spurred development of the photovoltaic industry. It led Germany to become one of the world's leading experts in photovoltaic technology, and some large production and installation companies have sprung from that effort.

China also is a major player in this sector. One of the largest photovoltaic manufacturing companies is a Chinese company. Right now their biggest market is Europe, but with the initiative that's getting under way in China, it will shift more and more to the domestic market. So big initiatives put forward by the governments in some of these countries have had a massive impact on developing the technologies.

TER: Your GreenTech Opportunities newsletter covers the technological advances worldwide that will provide either operating efficiencies or renewable sources?

LR: Absolutely. We're looking around the world. A lot of good work is happening out there. When the private sector is turned loose on projects like these, it's so much more effective than governments. Provided the price incentives, industry has risen to the challenge, technology is evolving very quickly and some very exciting enhancements are being commercialized right now in the renewable energy sector.

TER: Can you discuss some of those?

LR: Natcore Technology Inc. (TSX.V:NXT) is a tremendous example of what's happening. It has a market value of next to nothing, but if its work is successful, Natcore could be responsible for a breakthrough technology that could revolutionize the whole photovoltaic industry. Natcore was founded by two very accomplished scientists with different approaches who realized that there was huge synergy in combining their technologies. They set up Natcore and took it public to finance their development work.

TER: Could you tell us a little bit about their technology?

LR: A scientist at Rice University, Dr. Andrew Barron, developed a nanotechnology-based method to create thin films of silicon. His approach uses normal temperature and pressure and gets away from the high-temperature methods used now. The advantage is greatly reduced costs of production. In discussion with Dr. Dennis Flood, a world-leading authority in solar cells—who led NASA's programs in advanced photovoltaic systems development—they realized that Dr. Barron's Liquid Phase Deposition process could be used with commercial tandem solar cells as well. Their technology breakthrough has been validated at the laboratory level, and will reduce costs greatly and improve efficiencies if it can be applied commercially. Present technology captures only a limited range of light wavelengths and therefore only about 15% of the light is converted to electricity. The technology being advanced by Natcore could convert more than 30% of the light to electricity. The doubled efficiency would come from a cell that has a lower production cost than at present.

Natcore is working with a potential partner—an established photovoltaic cell producer—to establish an arrangement whereby the Natcore technology would be employed in a full-scale manufacturing facility within months. The initial application would be for one component of a conventional photo-cell. Research is continuing toward commercialization of the tandem cell application, with a timeframe of a couple of years.

When we first presented this company in GreenTech Opportunities, it almost seemed too good to be true. Over recent weeks, more investors have recognized the credibility of the technology and the people, resulting in a doubling of the share price. The company is still cheap in relation to the potential value if its technology can indeed be applied commercially.

TER: Solar and wind energy options often get dismissed as alternatives because the energy source (sun or wind) is unpredictable. What do you have to say about this?

LR: A grid needs a balance of such intermittent producers of energy with base load and peaking sources. The real problem with wind and solar is that they cost more than gas or coal. As I've indicated, technologies are evolving so that the alternative energy costs will come down over time. The intermittent nature of the energy production factors into the cost of these alternatives, but once wind or solar energy sources are in production, they are effectively free.

GreenTech Opportunities is looking at companies—such as Natcore—that are contributing to reduced capital costs and to higher efficiencies. Solar technologies in particular have enormous scope for improvements.

TER: What role do you envision nuclear power playing in the green energy picture?

LR: If all the new reactors that under construction, planned or proposed are built, we would see about 900 reactors in production over the next couple of decades. Of course, some of the 400 currently in operation will go off-stream. The net result will be an approximate doubling of the nuclear sector by 2030.

TER: Sounds pretty considerable.

LR: Yes, but it will just about keep pace with the projected growth in total energy production. At present nuclear represents a couple of percent of the total energy production, and it will not be much more over the next couple of decades.

TER: You have followed uranium in the past. If we're looking at doubling the reactors but net just keeping pace as a percentage of overall energy production, is there an investment play there?

LR: There isn't much of a play in terms of nuclear producers, because almost all of the production comes from either government-owned entities or small parts of very large companies. On the uranium side, though, there's definitely a play. Doubling the amount of uranium required over a couple of decades—finding and developing that much new production capacity—will be a challenge for the mining industry. Our Resource Opportunities newsletter definitely follows the uranium sector for that reason.

TER: Will uranium return to 2007 levels?

LR: Probably briefly, but I wouldn't count on that as a long-term price point. Even at the current level, though, there's tremendous potential for big profits for companies in the uranium sector that find and develop new production. I think we're going to see a long-term gain from where we are now.

TER: Can you speak to some of the uranium explorers or near-term producers that you're following?

LR: One that's been in the news is Hathor Exploration Limited (TSX-V:HAT), which has made an important discovery in the Athabasca Basin of Northern Saskatchewan, where about 30% of the world's uranium is produced. That's an example of a company that's seen a big increase in its share price over the last year or so, as it's evolved through discovery to outlining a deposit. And there's still a lot of growth in the size of that deposit. The market has yet to price in the full potential of the discovery that was made.

TER: Do you consider the trend toward consolidation of smaller geothermal producers into new entities—such as Magma Energy Corp. (TSX:MXY) and Ram Power Corp. (TSX: RPG) and to some extent Ormat Technologies Inc. (NYSE: ORA)—a positive one? And do you expect more consolidators to emerge?

LR: It is absolutely a positive trend. The larger entities will have far better access to capital than would any of the small players on their own. That will enable them to take on bigger projects and in general reduce total production costs. Furthermore, larger entities will have better access to talent and be better-positioned to develop new technologies. There will be more consolidation. Magma's investment in Iceland is one example.

There is a sweet spot in any industry, when an emerging company reaches a critical size enabling it to compete with major players yet still retain an entrepreneurial culture. Magma is certainly in that space. We introduced Magma just as it went public, and it has generated good returns.

TER: So if we're looking for additional consolidation in geothermal, does the opportunity lie in investing in the juniors with an eye toward acquisition? Or is it a better bet to go with the consolidators who are bringing technology and talent to the table?

LR: The smaller players that will eventually get rolled into the bigger players will provide a good return for the shareholders of those companies, but it's a matter of picking the companies that have viable projects that will actually get rolled into the larger players.

I think you have a good balance between the speculative exploration companies on the one end of the spectrum and the major producers the other end—in companies like Magma that are already evolving as consolidators and they're going to realize increases in value as they bring in smaller players and increase their own production levels.

As I alluded to a moment ago, Magma has made a very, very big play in taking a significant position in a major geothermal producing company in Iceland. Magma's going to become one of the larger shareholders in that company, which will provide not only a lot more opportunities in Iceland but also give Magma the critical mass to move into similar situations.

TER: Should green technologies be viewed as part of an investor's speculative portfolio and, if so, what can be done to mitigate the risk inherent in speculative investments?

LR: Any company in the research and development stage is highly speculative and one of the best ways to deal with a risk in a particular company is to hold a portfolio of companies so you get some diversification.

Even in the depths of a worldwide recession, the sector is still getting a lot of attention. Government policy and public opinion are still mounting in favor of these technologies. The momentum favoring renewable energy around the world is so strong right now that it's almost impossible to imagine that momentum being reversed, but there is an important caveat.

There's no assurance that renewable energy is going to emerge as it looks like it will at this moment. There's a systemic risk that people have to be prepared to live with. While diversification reduces systemic risk, investors still have to recognize that these are definitely speculative investments.

Investors also could participate in this sector by going into the producers. For instance, companies that are developing wind farms and solar power generating facilities are less risky. The trade-off is that you won't get the big upside potential, because you're looking at more of a utility type of reward potential from the sector's producing companies.

TER: But probably more upside potential with a wind farm and solar than a traditional utility?

LR: An investor has to look very carefully at the revenue potential. A company that builds a wind farm or a big solar facility right now is counting on subsidies or feed-in tariffs or some other form of incentive to make the whole thing commercially viable. An investor has to understand how long-lasting those incentives are.

The ideal situation would be where the developer gets an incentive based on a rebate of part of their capital cost—in effect, an up-front subsidy. And then if they can bring their cost of production down, they can increase the margin over time. So just a caution that investors have to look carefully at the structure of the subsidies or whatever other incentive makes it commercially viable.

TER: What green technologies will emerge in the short-term that represent good investment opportunities?

LR: The real excitement for us is in the little companies that are developing technology enhancements. We've talked about Natcore. We also are looking a little company that has a device that can improve wind turbine efficiency by 5% to 10%.

Green energy production companies have potential for good returns, too, but as I say, bear in mind that the larger producers are effectively like utilities in that they will generate a decent—but not spectacular—return on capital.

TER: Should investors also look at technologies that reduce current consumption such as lights, refrigeration and smarter appliances versus those that provide a source of energy such as solar, wind, hydro or geothermal?

LR: Absolutely, investors should look at conservation technologies as well as resource technologies. Conservation is far more important than most people realize. The savings are immediate. Further, there is a huge shift toward popular opinion that favors companies taking positive action to reduce energy usage. Consumers want to see more social responsibility. Shareholders like the impact on profits by cutting energy bills. Government policy hasn't come anywhere near reflecting the full benefit of conservation. When you save one unit of energy, you avoid burning coal with more than three units of energy. The difference is the inefficiencies all the way through the electrical system.

TER: Can you give us any examples of companies with the emphasis on reduced usage or other means of conservation?

LR: GreenTech Opportunities introduced a little company, SmartCool Systems Inc. (TSX-V:SSC), which has come up with a way to improve the efficiency of refrigeration and air conditioning systems by up to 15%. A little add-on device that costs a couple of hundred dollars can save thousands of dollars in electricity charges.

TER: Any other examples?

LR: Carmanah Technologies Corporation (TSX:CMH) is another one. It's marketing stand-alone lighting systems that incorporate leading-edge photovoltaics with LED lighting systems. We just talked about Natcore. We are about to put out the next issue of the newsletter that introduces more companies like these.

TER: So there's clearly a lot of opportunity in the conservation, but not a lot of general marketplace discussion compared to wind, solar, etc. How does an investor begin to learn about these conservation opportunities?

LR: That's a very good question. In fact, before we started GreenTech Opportunities, we didn't really have a clear understanding of how many companies were out there. But once we got in the middle of it, we're finding a very large number of companies doing really, really good work and developing some very interesting projects. A few of them trade publicly, but a great many more are still in the private company stage. Over time, some of those private companies will become publicly traded.

TER: What do you mean by a few?

LR: Relatively few. Worldwide, we're talking perhaps tens or low hundreds, in contrast to 2,000 publicly traded companies involved in mineral exploration. But you can go to stockwatch.com, for example, and search for mineral resource companies with market value in a particular range. We haven't found anything like that in the green tech sector yet. I'm sure it will evolve. In the meantime, part of the rationale for GTO was to provide a vehicle to offer that information to investors who are interested.

I don't have a good answer as to how a typical investor finds out about these initiatives. There's no directory. There's no database or website to give you a list of all the companies in the space, so we weed through hundreds and hundreds of companies, pulling out those that are actually doing worthwhile work. I have a staff of people now working full-time rooting out these little companies and they're coming up with some great, great ones.

TER: It seems that it's a wide-open area that's going to expand and there aren't a lot of places to get information on some of these plays.

LR: I don't want to sound like I'm pumping the newsletter here, but that's exactly the reason we got into the space. We saw a very important emerging market that had no real service. There are some very good sources of information in a general way about renewable energy and certainly the major companies in the sector are well-served by a number of sources of research. But the small companies, these evolving technology companies, really, there's no good source of information on those that we've been able to identify so far, so we think we're filling an important need there.

TER: Any additional comments on energy?

LR: Just a bit of a recap. Whether it's driven by concerns over greenhouse gas emissions or by concerns about ultimately running out of oil, a huge shift is underway that will accelerate the move away from carbon-based fuels to other sources of energy and enormous profit potential for investors looking out a year or two in that sector.

A passion for the environment, a strong affinity for emerging companies and a knack for picking winners led Lawrence Roulston to assemble a team of green technology experts and launch GreenTech Opportunities publishing the premier edition in February 2009. A geologist with engineering and business training and more than 20 years of hands-on experience as an analyst and manager in the resource industry, Lawrence previously founded Resource Opportunities, a newsletter that has been providing objective commentary on the resource industry and emerging resource companies since 1998.

DISCLOSURE:
1) Karen Roche, Publisher of The Energy Report, conducted this interview. She personally and/or her family own none of the companies mentioned in this interview.
2) The following companies mentioned in the interview are sponsors of The Energy Report: None.
3) Lawrence Roulston - I personally and/or my family own shares in the following companies mentioned in this interview: Natcore, Magma, SmartCool, Carmanah, Hathor. Neither myself, nor my family receive any payments from any companies in this interview or in GreenTech Opportunities.

Want to read more exclusive Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page.
Streetwise - The Gold Report is Copyright © 2009 by Streetwise Inc. All rights are reserved. Streetwise Inc. hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
The GOLD Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.
From time to time, Streetwise Inc. and its  directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.
Streetwise Inc. does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Inc. receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.
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Monday
Nov232009

The Best Energy Investments in the World

Oil pump.JPG

An interview with Marin Katusa, Casey Research

In the past three years, Marin Katusa, senior energy analyst at Casey Research, has become one of the most respected and listened-to authorities in the investment advisory business. He spends the bulk of his time on airplanes and in far-off places studying the future of energy... and the best ways to make money from it.

Brian Hunt, editor in chief of Stansberry’s free online investment digest, The Daily Crux, interviewed Marin to get his take on where oil prices are headed for the long-term... the regions where investors and traders should focus their dollars... and some of his favorite energy companies with massive upside.

The Daily Crux: Marin... we noticed you guys at Casey Research are bullish on energy. Can you explain to us why?

Marin Katusa: Well, as we've mentioned in our Casey Energy letters, we're short-term bears but long-term bulls.

I think there's a very good chance oil will be knocked back down along with other markets in the short term, but I'd consider that a rare opportunity to buy the best companies at a steep discount. Long term, I'm very bullish on oil because I think the supply of cheap oil is running out.

The days of cheap and easy oil are over. Oil is getting harder and harder to extract because most of the easy-to-find deposits have already been found and extracted.

The best remaining deposits are deep underwater like in the Gulf of Mexico or offshore of Brazil, in state-controlled or politically unstable areas like Iran and Venezuela, or experiencing dramatically falling production like Mexico. There are also huge oil-sands deposits in Canada, but these are more expensive to extract – anywhere from $35-$40 per barrel for existing production, up to $65 or more for new production.

The simple fact is oil prices will eventually rise due to the increased costs involved in meeting existing demand.

On top of that, you've got developing countries beginning to significantly increase their own demand. Right now, you've got just 30 or so of the world's most developed countries, known as the OECD, that consume about half of all the oil produced.

As emerging countries like China and India begin to increase their standard of living, they'll start using a lot more oil. As you guys know, oil consumption per capita is tied very closely to GDP per capita of the country. So this means these emerging countries could be using multiples of the oil that they use now.

Today, China uses just under six barrels of oil per day for every thousand people. In India, it's about two and a half barrels for every thousand. In the U.S., it's just under 70 barrels for every thousand. Even if you figure just a 20% increase in China and India per person – those are huge, huge numbers. China alone has over a billion people. This is going to add tremendous upward pressure on prices.

And of course, I'm sure your readers are aware of the long-term threats to the U.S. dollar. Dollar depreciation will only make the problems I just mentioned that much worse.

That said, in the short term, I think oil is very vulnerable to pullbacks in the general stock market. So we've been telling our subscribers to be very cautious. In fact, a year ago, I decided to use $40 oil as the basis for all of our analyses for our newsletter. If a company we were looking at wouldn't be profitable at $40 oil, then we wouldn't go any further. The logic behind $40 was to provide a real margin of safety should we get the correction in oil I'm expecting.

But it also pushed me to look a lot deeper and be more selective, and it's really paid off in our results – over 90% of my recommendations over the last year have delivered significant profits for our subscribers.

The funny thing is that by not using $70 or $80 oil, I started getting hate mail from people, saying, "Don't you know oil's at $73 and you're using $40?" It was hilarious, but that's exactly my point. If a company cannot be profitable at $40 per barrel of oil, it will underperform its peers even when oil is higher. When I use $40 oil and I like the financials – it's gold.

A good example of this is what we did with Nexen. When I first wrote it up, it was trading at C$23 per share. After doing my analysis, I thought its intrinsic value was less. I said, "Buy under C$16 per share." Of course, I got people writing in saying I was out of my mind for setting the buy price so low. Just over a month later, it was trading down below C$16 per share, and my subscribers ended up making about 50% within four months on a low-risk company.

So by using $40 oil, I get my true value, rather than the market value. There's a difference between intrinsic value and the market value, and I go with intrinsic value. I don't care what people are paying in the market right now. You might not get it today, you might not get it next week. You have to be patient. It's what I call "stink bid investing."

Crux: What else do you look for?

Katusa: Another factor I like to look at is what I call game changers. An example of a game changer is what has recently happened to the natural gas sector in the United States. Companies were victims of their own success, because they were so successful in using new technologies to retrieve gas from the shales, they drove the natural gas price down.

Using advanced technologies to discover big offshore deposits is an example of a game changer in oil. But what you're going to see is a lot of the big finds are going to be drilled by the major oil companies – what I call the super majors – because it's just so expensive to drill these targets.

Crux: Nobody else has the money.

Katusa: That's right. So the only frontiers left for conventional oil production that can be extracted easily and cheaply, like I mentioned before, are in politically unstable countries like Iran, Iraq, Libya.

These countries are fully aware of the potential of their resources locked within their borders. They're increasing the royalties they charge, including the gradual increase in the use of service fee contracts.

We spent a whole issue talking about this in our Casey Energy Report, in the October issue. In countries where the governments hold the ownership of the oil – such as south central Iraq, Kuwait, even potentially Mexico – these are places that you want to watch out for, because they are constitutionally barred from giving foreign oil companies ownership of the oil in the ground. They're not as positive as people think they are.

A reliable and friendly oil source to the United States, such as the Alberta oil sands, is not cheap to produce. The oil sands require at least $35-$40 per barrel at the very minimum to extract, compared to less than $5 per barrel in places like Saudi Arabia, Iraq, and Kuwait.

Proven reserves in politically stable parts of the world unfortunately will cost the U.S. consumer a lot more money per barrel. We spent a lot of time in our latest issue of Casey's Energy Opportunities looking at all of the national oil companies. Of those, you've really only got three you can possibly invest in, if you dare.

Crux: How about your take on the likelihood of big takeovers and buyouts? Do you see oil-hungry nations like China coming in to buy up a lot of reserves?

Katusa: Absolutely, but it's not just going to be the Chinese, it's also going to be big oil companies who want to replace their production with proven reserves in the ground.

An advantage the Chinese companies will have over the Western oil companies is the Chinese ability to leverage their political and economic muscle in places such as Africa, Venezuela, and Bolivia.

These countries potentially hold world-class oil deposits, but it's much riskier for a Western company to explore these regions than the powerful Chinese oil companies.

Crux: China is already in a bidding war with ExxonMobil for African oil...

Katusa: Right. What our angle is, if you're looking to invest in Africa, you're looking for elephant-size deposits – what they call "world class deposits."

The company needs to go in with a crew able to maneuver in politically unstable parts of the world. We had a big and fast win on a company called Tanganyika Oil, using just that concept. They went in, they built up production, then sold the company to the Chinese.

We're doing it again right now on a company called Africa Oil – ticker symbol is AOI on the Toronto Venture Exchange – that's partnering with the Chinese.

The man behind AOI is the same person behind Tanganyika Oil, Lukas Lundin.

Lukas Lundin, like his father before him, has a long record of going into politically unstable parts of the world and succeeding in developing world-class deposits and selling them at huge gains for the investors. So you're going to see a lot of this type of partnering going on where the Chinese want the North American expertise, and in return, the Chinese add value by political clout and financial clout, helping to pay the costs of development.

We wrote up Africa Oil as a buy under C$1, and when it popped up to about C$1.50, we told our subscribers to take a Casey Free Ride [a profit-taking strategy] when the stock was trading above C$1.30, and it subsequently went as high as C$1.70. Currently we have AOI as a buy under C$1, and it's trading at C$0.87, which we view as a very cheap cost for this stock.

Crux: Are there any other countries you're interested in right now? Are you interested in Iraq?

Katusa: In northern Iraq in the Kurdistan region, there are some good onshore blocks with decent royalty rates.

A company called ShaMaran (ticker symbol is SNM on the Venture Exchange) we think has huge potential. It's totally cashed up. I wrote it up as a buy under C$0.20 and put two buy signals on it. It's trading at C$0.57 now. It went as high as C$0.80.

And they've got about C$0.25 in cash per share. This was a company that was trading less than cash – they had more cash than the market cap. Our shareholders bought millions of shares, because we were the only ones writing it up. And it had zero interest – there was nothing going on with it. And they're now in northern Iraq in the area of Kurdistan, which has huge, huge potential.

I've also been looking at Colombia. I think that's a country that people have to pay attention to. In the last month, a lot of the smart money, the big, big players in Vancouver – Frank Giustra and Sam Magid – have been putting huge money, their own personal money, into a bunch of oil plays in Colombia. I would recommend your readers take a look at some Colombia plays. One that I really like is Petroamerica, symbol PTA on the Venture Exchange.

Crux: Great. Any parting thoughts?

Katusa: I think what you have to emphasize to people is to buy at a discount to intrinsic value when it's unpopular, and sell at market value when it's popular.

That's not just being a contrarian. A contrarian is just buying something that's unpopular. Buy something unpopular that has a great discount to its intrinsic value, and when you sell, sell when it's popular and trading at the market value, not at its intrinsic value. So those are the two rules that I have.

Crux: Thanks for your time.

Katusa: My pleasure.

As mentioned above, Marin's track record for profiting in resources like crude oil, natural gas, and uranium is unmatched in the industry.

If you're interested in reading a monthly analysis on the trends and stocks Marin likes, you can get on board as a Casey Energy Opportunities subscriber for only $39 per year. It's an incredible deal and completely risk-free, with our 3-month, 100% money-back guarantee. You can learn more about a subscription here.



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Friday
Nov202009

UK Gives Go-ahead for 10 Nuclear Power Stations

Nominated Sites for new nuclear power stations 20 Nov 09.JPG


The government has approved 10 sites in England and Wales for new nuclear power stations, most of them in locations where there are already plants. It has rejected only one proposed site - in Dungeness, Kent - as being unsuitable on environmental grounds.

A new planning commission will make decisions on the proposals "within a year" of receiving them, Energy Secretary Ed Miliband told MPs.

Nuclear was a "proven and reliable" energy source, he said.
Every one of the measures contained in this statement should have been brought forward ten years ago

Greg Clark, shadow energy secretary

Greenpeace said the "figures did not add up" for new nuclear plants to be built without public subsidies.

"You can't justify building more nuclear power stations when there is no solution to radioactive waste and when international regulators are saying there are huge uncertainties surrounding the basic safety of new reactor designs," said the organization's Ben Ayliffe.
To read the article in full, which appeared on the BBC World News recently, please click here.

So, it now appears that the UK are at first base in this process of building new plants. However there is still a long way to go before we will hear the news that ground has been broken at the first site.

The question of payment for the contractors, government incentives and guarantees have yet to be negotiated and as it is election year its a case of don't hold your breath, but it is a step forward.


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Thursday
Nov192009

Hyperion Launch Design of Power Module

Hyperion Logo 20 Nov 09.JPG


In todays mail bag is this missive from Hyperion regarding the progress that they have made in terms of the design of their mini nuclear power plant.

WASHINGTON, D.C. and LONDON, ENGLAND, November 18, 2009 - At the Annual Winter Conference of the American Nuclear Society in Washington today, and simultaneously at the "Powering Toward 2020" conference in London, England, Hyperion Power Generation Inc. revealed the design for the first version of the Hyperion Power Module (HPM) that it intends to have licensed and manufactured at facilities in the United States, Europe, and Asia.

Hyperion power plant 20 Nov 09.JPG

The HPM is a safe, self-contained, simple-to-operate nuclear power reactor, which is small enough to be manufactured en masse and transported in its entirety via ship, truck, or rail. Euphemistically referred to as a "fission battery," the HPM will deliver 70 megawatts of thermal energy, or approximately 25 megawatts of electricity. This amount of energy is enough to supply electricity to 20,000+ average American-style homes or the industrial/commercial equivalent.

 "In response to market demand for the HPM, we have decided on a uranium nitride-fueled, lead bismuth-cooled, fast reactor for our 'launch' design," said John R. Grizz Deal, Hyperion Power's CEO. "For those who like to categorize nuclear technologies, we suppose this advanced reactor could be called a Gen IV++ design." 

Should you wish to keep track on this development then click here to go directly to their web site.

Hyperion plant.JPG


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Saturday
Nov142009

Slow Down… or Else

By David Galland, Managing Editor, The Casey Report

On a whim following our Denver Summit – and despite truly abysmal weather – Casey Research CEO Olivier Garret and I cabbed it down to a local public golf course for a quick nine holes. Afterwards we were returning to the hotel through a neighborhood best described as poor, but not disreputable. While our cab made its way down a side street, a radar gun-wielding policeman leaped out of the bushes down the block, pulled the trigger, and waved our immigrant cab driver to the curb. The offense, we soon learned, was going five miles an hour over the speed limit in a school zone… well after school was out and with no other children in sight.

Waiting for our ticket to be issued, we watched as another of Denver’s finest jumped out of a hidey hole on an intersecting street, fired off his radar gun, and proceeded to pull over another slow-moving perp. With such a low tolerance for excess speed, it struck me that what the police were doing had a lot less to do with protecting the public and much more with revenue harvesting. And that the school zone was just a cover for a bonus penalty on the ticket.
Being naturally curious, I subsequently poked around and confirmed my impression. Studies have proven that, in bad economic times, municipalities look to replace flagging revenues by turning the dial up on ticketing.

These studies show that, in the year following a downturn in revenues, municipalities issue “significantly more” tickets. Specifically, a 10% decrease in revenue growth results in a 6.4% increase in the growth of traffic tickets.

In Red Ink in the Rearview Mirror by the St. Louis Fed, the authors make some astute observations about the nature of this sort of revenue harvesting. The following excerpt is worth a read and some further pondering, as it paints a clear stripe down the road leading to your wealth.

The notion that local governments may use traffic tickets as a revenue tool has received considerable attention in recent years largely because of the growing use of traffic cameras to enforce red-light violations. While most studies find that red-light cameras have reduced right-angle collisions and red-light violations, some studies have also noted a significant increase in rear-end collisions following the installation of the cameras, making their net effect on safety a point of contention.

Combined with the fact that local governments frequently share in the ticket fines with camera manufacturers, many observers have concluded that red-light cameras are revenue generation devices rather than tools to improve public safety. In a more general sense, this view essentially holds that local traffic enforcement policies, much like other government policies, may be a function of two (often opposing) motives of public officials – political interests and public interests (Becker 1986; Saffer and Grossman 1987; Mixon 1995).

Given the limited revenue-raising options, erosion of property and sales tax bases, and a general distaste for tax increases by the public, local policy makers are under increased pressures to find alternative revenue sources (Tannenwald 2001; Crain 2003; Brunori 2006).

[…] Traffic tickets provide an attractive revenue source for local governments because the amount of revenue that can be generated is often unrestricted, they provide a mechanism to capture revenue from non-residents and non-voters, and most traffic offenses possess a low strict-liability threshold to achieve a conviction (as opposed to the higher criminal intent standard).

That reminds me of the reign of Caligula and how he instituted rules allowing for the wealth confiscation of anyone found less than enthusiastic about his particular form of government. Over time, this became a major source of revenue for the increasingly bankrupt state.

As was revealed more recently in California’s budget wrangling, the states and municipalities are experiencing rapid declines in their revenues. With property tax revenues plummeting, local governments – and there are about 90,000 local taxing authorities in the U.S. – are scrambling to find new revenue sources, including levying income and sales taxes.

And by turning up the heat on cab drivers that go five miles an hour over the speed limit.
Then there’s this from the British, who may have a great sense of humor, but it seems to be balanced by their lack of irony, given they provided the stage for Orwell’s 1984. According to the Times of London…

People who emit more than their fair share of carbon emissions are having their pay docked in a trial that could lead to rationing being reintroduced via the workplace after an absence of half a century.

Britain’s first employee carbon rationing scheme is about to be extended, after the trial demonstrated the effectiveness of fining people for exceeding their personal emissions target. Unlike the energy-saving schemes adopted by thousands of companies, the rationing scheme monitors employees’ personal emissions, including home energy bills, petrol purchases and holiday flights.

Workers who take a long-haul flight are likely to be fined for exceeding their annual ration unless they take drastic action in other areas, such as switching off the central heating or cutting out almost all car journeys. Employees are required to submit quarterly reports detailing their consumption. They are also set a target, which reduces each year, for the amount of carbon they can emit.

Those who exceed their ration pay a fine for every kilogram they emit over the limit. The money is deducted from their pay and the level of the fine is printed on pay slips. Those who consume less than their ration are rewarded at the same rate per kilogram.
(You can read the full article here.)


The whole carbon footprint issue and the massive taxes associated with it are literally nothing more than a ploy to keep the government and its supporters in (taxpayer-provided) high corn. That it is a ruse is clear when you examine a recent Bloomberg poll on what the public is actually concerned with…



Bloomberg Poll casey 15 Nov 09.JPG


(Thanks to Whatsupwiththat.com for bringing that poll to our attention.)
This is all headed in the wrong direction, and for the decidedly wrong reason of not wanting to address the underlying problem of too much, and too expensive, government.

The list of slippery acts of officialdom trying to boost its revenues at the expense of those with low political coverage could fill a book, but I will leave off by sharing an eye-opening video from ABC News, about the government grabbing safe deposit boxes and selling the contents.


If you want to avoid being stripped of your wealth, it is time to stand up. Alternatively, the point where you’ll want to consider voting with your feet is rapidly approaching.

Doing nothing, on the other hand, will just leave you as a sheep to the shearing pen, or worse.

Keeping an eye on the big trends is the main job of the Casey Report editors – even on their time off. Following their keen instincts what’s ahead and translating their findings into actionable opportunities to profit is the formula that has made subscribers to The Casey Report double- and triple-digit gains on a regular basis. How do they do it, and what’s in it for you? Click here to learn more.


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Thursday
Nov052009

Ryan Davies Finds Hot Technology Produces Solar Power for Half the Price

Source: The Energy Report 11/05/2009
http://www.theenergyreport.com/pub/na_u/1187

Ryan Davies.JPG

A shining example of using the sun's energy to heat, cool and light the homes and businesses of a desert community in California is poised to power up next year. It's due in part to the emergence of a technology that uses refraction rather than reflection to produce solar power on a utility-size scale at half the price of photovoltaic technology. But major credit also goes to the pioneering efforts of REDCO, a privately held company, which Ryan Davies established last year to unite free-market concepts with sound environmental policy. The Energy Report caught up with Ryan in the midst of Solar Power International 2009, North America's largest B2B solar industry event. The event in Anaheim was about 250 miles from the forward-thinking community of Needles, where Ryan's company is awaiting permit approvals to build a solar thermal plant that will provide peak power to some 2,500 homes.

The Energy Report: Let's begin with a little thumbnail of REDCO—what your company is and what you do.

Ryan Davies: Sure. REDCO—the Renewable Energy Development Company—is a developer of renewable energy projects. We have a particular focus on wind and solar. We look for good pieces of land that have a strong wind and/or good solar resource and that have good proximity to transmission lines. Sometimes we do joint-venture projects, sometimes we sell projects; but, for the most part, we like to own and operate our own developments.

TER: What brought you to the solar arena? Why do you see solar as a great place for investors to be or for energy to be created?

RD: We have an abundance of sun, and our ability to harness the sun's energy and create electricity is a pretty remarkable opportunity. The primary demand for power generation or power consumption is during the peak hours of the day; it's called peak power. That's when usage of electricity is the highest and also when the cost of the electricity is the highest. So utility companies are constantly looking for ways to increase that peak supply of power.

Because it's an intermittent power source—wind, sun, etc.—solar is not the answer. But it is an important part of the answer. It doesn't provide 24-hour-a-day, 7-day-a-week power. What is unique about solar is not only is it renewable but it also provides power during the peak periods of the day, when the sun is shining, which is very valuable to utility companies.

TER: The government is encouraging utilities and individuals to use solar. Could you talk a little bit about that, particularly the cities or utilities?

RD: A number of different mandates and incentive programs are sponsored by both federal and state governments. The most common of which is called a "renewable portfolio standard"—the acronym is RPS. There is not a federal RPS at this point, but I believe about 24 or 25 states have adopted their own programs. Much of the growth in demand stems from these mandates.

With an RPS, a certain percentage of power produced must come from a renewable resource. So the utility companies have to either go out and buy green power on the open market or build their own facilities. Every state is a little bit different. In California, for example, the goal is to have 33% of power come from a renewable resource by 2020, and that initiative, that mandate, kicks in next year, starting at 10%. Then it increases by about 2.5%, 2.7% per year until it reaches that 33% mark.

TER: And aren't some consumer incentives offered as well?

RD: Yes, from an individual standpoint, there are federal and state tax incentives and benefits if you include solar in your development or if you retrofit a business or home to include solar.

TER: You're involved with two solar projects for Needles, California. Could you describe how that's working?

RD: At REDCO we really pride ourselves in being technology agnostic; in other words, as we see our opportunity as a developer is to find a good piece of land with a strong resource, find the right technology for that development, put the entitlements and financing in place, build a project and sell the power. As we did our due diligence and looked for the right solar technology, we came across International Automated Systems, Inc. (IAUS:PK) and have become quite enamored with their technology. It's very different from the conventional, traditional solar that you see in the marketplace today.

TER: How does it differ?

RD: The majority of the solar systems in the market today are photovoltaic—it's a reflective, mirror-type technology where the sun's rays hit a reflective surface and bounce off into a collector shield above it. The IAS technology is very, very different in that they've created a technology using simpler, less expensive materials. It's easier and cheaper to mass-produce. Another unique attribute is that it is a refractive technology, wherein the sun's light passes through the panels instead off of them. They collect heat, which then heats up a water source. The hot water turns into the steam that propels a turbine. The turbine spins a generator, which creates electricity.

As a result, it's quite different from conventional solar and it's much, much cheaper—quite a bit less expensive to purchase. We're in the process of building the very first commercial plant using IAS technology. All of our engineering reports and research data indicate that this technology will be significantly more efficient than PV. We're quite excited about it.

TER: Is this a patented technology that IAS has?

RD: There are a number of patents on the technology, covering various facets from proprietary panels to the bladeless steam turbine. Several different patents have been issued, and several are pending on various other aspects of the technology and process.

TER: What are some of the companies in the flat panel technology?

RD: Suntech Power Holdings Co., Ltd. (NYSE:STP), First Solar, Inc. (NASDAQ:FSLR) ‎and BrightSource Energy, Inc. are a few. A number of companies that have good technology are doing very well. But it's almost an apples-and-oranges scenario in the solar market because IAS is quite a bit different. In our estimation it's much better alternative for utility-scale use. In addition to being less expensive to build and more efficient, it has a longer life and requires less maintenance. Plus, this technology has a lot fewer restrictions. For example, the way it's constructed and developed, you can put it on various types of terrain. You don't need costly grading plans prior to construction. It's easier to permit because it has a very low impact on the environment. We see a number of advantages.

TER: You say it's less expensive. Could you give us a relative cost comparison between IAS and photovoltaic technology?

RD: When you look at costs, you have to look at the entire system—not just the solar panel but the overall development, including the turbine and all of a project's components. From a turnkey perspective, the majority of the PV technologies sell somewhere in the range of $4 to $6 per watt. That equates to about $4,000 to $6,000 per kilowatt or $4 million to $6 million per megawatt. In most cases, the IAS technology is about half the cost.

TER: Wow! And that's total cost, when you boil everything down?

RD: When you compare all aspects of the development, yes.

TER: What's the timeline on your Needles project with IAS?

RD: Phase 1 is a 5-megawatt project. We have executed a long-term Power Purchase Agreement (PPA) with the Needles Public Utilities Authority, wherein they have agreed to purchase the power we generate for 20 years. We're in the permitting stage and hope to be in construction early next year.

TER: Once you get the permit, how long will it take to complete the project and when will the city of Needles be able to start using that electricity?

RD: We're looking at construction period of about four to five months, and then maybe a month beyond that for testing before we go online. So, all in, it's a five- to six-month process from the beginning of construction to when we begin selling the power. It's a relatively short construction time.

TER: The key catalyst, then, is getting that permit

RD: That's correct. We don't have any reason to believe that the permit will not be issued. We have completed all of our studies—archeological, geotechnical, hydrology, water quality, drainage, environmental, biological. It's just a matter of working through the normal bureaucratic process. We hope to have the project completely operational sometime next year.

TER: And that would lead to your second project. Beyond having the 5-megawatt plant up and running, do any conditions or milestones need to be reached to facilitate that?

RD: No, not at all. In fact, we are working on not just one other project but several. There will be a second phase in Needles but the power purchaser is a different entity. We will begin that project shortly after the 5-megawatt project is completed. We're already working on all of the permitting for the project; we just haven't made any formal announcements yet.

TER: Assuming that the first 5-megawatts goes according to plan, what do you think this means for International Automated Systems?

RD: Once the IAS technology is proven, it will show the marketplace its potential and I anticipate that would be quite good for the company. Having the ability to introduce low-cost solar to the marketplace in an innovative way could be a real boon.

TER: A lot of other utilities would be looking at this, especially in light of the fact that government mandates may be requiring up to one-third of their power either purchased or produced green within 10 years.

RD: That's correct. And this really is a utility play. A lot of other technologies are better-suited for a shingled, residential home. IAS is not that, and from that standpoint, you're absolutely correct. I am sure the utilities are eyeballing this and are very aware of it. Obviously, their intention is to not only to buy as much solar and as much renewable as they can, but to do it as cost effectively as possible. So there's a tremendous upside for IAS if it can produce renewable energy 40% to 50% cheaper than its competition.

DISCLOSURE: Ryan Davies
I personally and/or my family own the following companies mentioned in this interview: N/A

I personally and/or my family am paid by the following companies mentioned in this interview: N/A

No stranger to new technology and emerging businesses, REDCO founder and CEO Ryan Davies has accumulated executive experience from entrepreneurial, nonprofit, community and political arenas. After earning his bachelor's degree in political science and business management at Brigham Young University, he managed Envision Utah, a progressive nonprofit organization that received a number of national awards for its development of a detailed 20-year growth strategy for Utah. He also assembled and directed a diverse partnership of 120-plus business, government, religious, civic and community leaders to help develop these strategies.

Ryan was one of the founding members of Found, Inc. where he helped raise nearly $50 million in venture capital, manage business development, form strategic relationships and provide strategic direction. The company, which grew from the 1997 original founding team to a multi-site enterprise of more 150 employees with offices in Salt Lake City, San Francisco and Chicago, was sold to CRS Retail Systems for $110 million. In 2001, he established an environmental commodities brokerage firm, O2 Blue, managing strategic relationships with industry and governmental regulatory agencies and creating technology solutions for the environmental commodity marketplace, and eventually merged with Prebon Energy, one of the world's largest OTC commodity brokerage firms. During his O2 Blue days, Ryan helped develop and implement the "Olympic Cleaner and Greener" program for the 2002 Winter Olympics. The program permanently retired more than 500,000 tons per year of emissions to offset pollution from the Olympic Games—and made the 2002 Winter Olympics the cleanest games in history.

Ryan has been active with the Oquirrh Institute, a nonprofit public policy organization whose mission is to create innovative market-based solutions for technology and the environment, and is an active member of his community. Ryan was elected to the Draper City Council in 2001 and during his tenure, CNN named his community one of the top 100 places to live (2003). (Draper, population 30,000, is located in the South Mountains about 20 miles south of Salt Lake City.)

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Wednesday
Oct282009

HITECH – Your Medical History in the Machine

Robot 29 oct 09.JPG


Its amazing just how much is known about us these days as covered in this article by Doug Hornig, Senior Editor, Casey’s Extraordinary Technology

In the future, a visit to your family physician, or any specialist, will begin with a quick scan of the computer screen, where a few keystrokes will tell the doctor everything he or she needs to know about you – all the way from how much you weighed at birth, to X-rays of that bone you broke when you flipped your motorcycle thirty years ago, to how much you spent on blood work last year, right up to the hypertension pills you took after dinner yesterday (and maybe even what you ate, although hopefully not).

Much of your medical info is already stored electronically, of course, but much more is stuffed into old paper file folders. Nor is there any centralized database that routes your records wherever they are wanted. That is going to change, and change dramatically.

The present system has too many embedded inefficiencies, and the industry wants them gone with yesterday’s used latex gloves. Whether you like it or not, someday soon there will be a collection of bits and bytes that stores all the most intimate details of your health history.
Making that happen is a daunting job, and a touchy one.

On the one hand, think of how much medical data each American accumulates each year. Multiply that by 300 million. The amount of paper currently required to track it all would stretch to the moon. Doctors want to set fire to that stack.

But on the other hand, they don’t want their patients’ records falling into the hands of every Eastern European hacker for whom such data would be a major arm shot to his fake Viagra business. Data security has to be tight.

Thus software solutions must be developed both to serve and to protect. Billions will be spent in the process of digitizing, maintaining, and guarding medical records, and guess whose pocket the money will be extracted from. Did you select mine?

Don’t care for this idea of white jackets anywhere in the world having access to your private info at the click of a mouse? Or don’t like the idea of footing the bill for the conversion? Well, tough. On both counts. You won’t be able to prevent the medical business from setting up the grand database, nor from using your own money to manufacture the electronic you.

In fact, the government has already installed the plumbing that will feed the big money shower. As in, very big.

That happened on February 17, when President Obama signed the Health Information Technology for Economic and Clinical Health Act (HITECH), which its sponsors had tacked onto the comprehensive American Recovery and Reinvestment Act (ARRA).

Everyone loves ARRA, right? Well, maybe. But citizens who cheered it might not have been quite so happy if they were aware of everything they were agreeing to fund with their hard-earned dollars. Buried inside HITECH is an allotment of $19 billion (yep, that’s billion with a B) just for the conversion of paper medical records into electronic.

Tell you who was cheering lustily, for certain: health care software developers. For example, maybe you read about the recent deal whereby Dell acquired Perot Systems, a premium software company, for about $4 billion. What that was largely about was HITECH. Dell didn’t have real access to it. Perot Systems – whose annual revenues derive 25% from government and 48% from health care – did. Sound the wedding bells.

Dell, of course, is by no means the only company eager to step into the generous governmental shower stall. You can bet that IBM, Hewlett-Packard, and the rest of the heavies in the field are all busily preparing proposals, if they haven’t already filed them.

And the big guys won’t have that field all to themselves. There’s a lot of cash to be spread around. Smaller competitors will nab their share.

Those are the kinds of companies Casey’s Extraordinary Technology searches for and recommends as longer-term investments. The ones whose bottom lines will profit the most from political largesse.

Subscribers learned about one such firm in the September issue. There will be others, and not just in the health care field. Because there is no surer thing. Anyone who has both a solid product and the savvy to play Washington’s money game, is going to prosper mightily in the years ahead.

Tech is the most vital industry in the United States, with the best opportunities to strike it rich if you know what to invest in. Just imagine finding the next Google and getting in while it’s still a startup… and the chances for that are quite good. Learn more about how to profit from technology – just click here.



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Wednesday
Oct212009

Debt Free Denison

DNN Logo.JPG


We caught this clip on BNN today and thought that you might be interested in what Ron Hochstein, President and COO of Denison Mines, had to say about the outlook for uranium and an update on Denison's projects. Its only six minutes but worth a listen.

Having been a high flyer Denison appears to have support at the $1.40 level and according Ron they are now a debt free company, the debt being one of the factors that weighed heavily on the stock price. Great store is being placed on the Wheeler River Uranium Project where a 7,500 metre drilling programme is underway. Results should be forthcoming by Christmas, hopefully bringing some good cheer to investors.

The current spot price for uranium has moved up of late and stands at $47.50/lb according to TradeTech with the longer term price being $70/lb.

Denison Mines Corporation trades on the AMEX under the symbol of DNN and on the Toronto Stock Exchange as DML.

Market capitalization is $591.11million, average volume is 2.0 million shares traded, 52 week high $2.75, 52 week low $0.54, closed yesterday at $1.74.

















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