[This post comes from our Inside Value newsletter boards. Click here to take a free trial.] Geothermal Energy: PETROLEUM INDUSTRY CHALLENGES AND CHANGES Become a Complete Fool
We have a problem near future and that is the availability of natural gas. Peter Dea, former Anadarko CEO, "With existing gas wells in steep decline, Dea goes on to say that by 2012, 50% of current US domestic gas demand will have to come from not yet discovered gas fields (or imports). . . This imminent steep decline in the availability of Natural Gas will bring a sharp halt to the construction of gas fired power stations and put pressure on electricity production. " The average rate of production decline for a natural gas well has gone from 17 percent to 31 percent and is expected to continue in this direction. (From slide presentation referenced in this link) http://www.odac-info.org/guest_articles/documents/...
The thought of decreasing gas fired power stations brings to mind using nuclear electric power and that can be very scary for many people. The long ago incident in Chernobyl, the Three Mile Island and the recent earth quake in Japan continues to feed the minds of critics. Nuclear power plants provide about 17 percent of the world's electricity
Energy has been the theme of these posts. Before going forward with an oil/gas stock worth watching in my view, it seems important to mention something that has been around longer than the ethanol use that was first developed by Henry Ford or the fossil fuel powered turbines for electricity. And that is geothermal energy available deep in the recesses of the earth, now providing electrical power for France at 75 percent according to IAE and many more countries.
Most power plants need steam to generate electricity. The steam rotates a turbine that activates a generator, which produces electricity. Many power plants still use fossil fuels to boil water for steam. Geothermal power plants, however, use steam produced from reservoirs of hot water found a couple of miles or more below the Earth's surface. There are three types of geothermal power plants: dry steam, flash steam, and binary cycle. http://www.renewableenergyaccess.com/rea/tech/geoe...;jsessionid=6F5626CCA787D04CA567E054E36F2C31
Geothermal energy, a clean renewable source that just keeps giving
Oil and gas wells have gone sufficiently deep to encounter high temperatures for the use in a binary-cycle or hybrid-cycle power plant system. This is a part of the energy future. Now that oil and gas prices are high, geothermal is back in business, the once dropped interest from the oil and gas industry. United Technologies (UTX, an old favorite of mine) is into working with this technology and has plants up and running.
Another use of geothermal resources is found in Klamath Falls, Oregon, where more than 30 other communities have been developing systems to use geothermal heat for direct- heat applications. A geothermal district heating system keeps the sidewalks clear and dry at the Basin Transit Station after a snowfall. Other states (California, Nevada, Utah, Idaho, Hawaii, etc.) and countries (Italy, France, Germany, Scandinavia, Switzerland, Turkey) have access to geothermal heat for water and buildings.
Three applications power plants, direct use, and
Geothermal Energy http://www.eere.energy.gov/states/alternatives/geo...
What is geothermal? This is the company loaded with engineering expertise, ThermaSource, LLC. http://www.thermasource.com/content/geothermal.php
Cost, $$$ and environment
A 2007, comprehensive MIT-led study of the potential for geothermal energy within the United States. Findings are that mining the huge amounts of heat that reside as stored thermal energy in the Earth's hard rock crust could supply a substantial portion of the electricity that the United States will need in the future. They foresee a probability at competitive prices and with minimal environmental impact. http://news.mongabay.com/2007/0122-geothermal.html
The worldwide number one risk might be considered to be the best are located in regions subject to earthquakes and volcanoes.
Comments on geothermal projects have not changed substantially from 1979 to 2003 according to a Geothermal report. The key comments most often addressed effects on air quality,
water quantity and quality, recreation, visual resources, noise, and biological resources.
Well blowouts and pipeline breeches have been consistent public concerns over the last 20 years. Operating geothermal projects over that period, however, have resulted in only a handful of well blowouts and breeches. http://www.geocollaborative.org/publications/Geoth...
US Map and Texas Access
Geothermal energy is accessed by drilling for water or steam, similar to drilling oil and gas wells. Texas has a great advantage in drilling for geothermal resources as the state has access to detailed subsurface analyses of heat resources, reservoirs, and deep water availability due to the oil and gas drilling throughout the state.
University of Texas study http://www.seco.cpa.state.tx.us/zzz_re/re_geopower... \
Anadarko drilled 16 test wells at Salt Wells (Nevada) in the mid-1980s and considered going into the geothermal energy business, but later backed out and abandoned the site altogether. According to 10-Ks interest remained through the early nineties but since it was not lucrative.
Chevron has installed production capacity of 1,152 megawatts, primarily geothermal, making it the largest renewable energy producer of any global oil and gas company and the largest producer of geothermal energy.
"A heat seeking investment"
So want to know about investing in geothermal power? Whiskey and Gunpowder gives some insight. Understand that extracting the Earth's heat and selling geothermal power is subject to the same regulatory structures as are almost all other energy generation and transmission entities in the country. So the 50 state-level public utility commissions (PUCs), or whatever else they call them in any given state, control much of the destinies for geothermal producers.
"Geothermal plants offer a continuously available (24/7) base-load power source, with historic reliabilities in excess of 90%, which is comparable to the reliability of many nuclear plants. Compare this with wind-generated power with 25-40% reliability (the wind does not always blow when you need it), or solar-generated power with 22-35% reliability (the sun sets each night, among other drawbacks).
Reliability is a critical issue in terms of operations, because plant owners usually bear the risk of getting charged back by utility customers for what is called shortfall energy, meaning the power that a utility has to go out and purchase on spot market if the designated source is not operating on schedule or up to capacity or promised load.
The policy tide of recent years is shifting in favor of geothermal, and in the future, things might be even better for the industry. In particular, any future carbon tax, or so-called "cap and trade" regime for CO2, will doubtless benefit the geothermal industry, what with its miniscule CO2 footprint. The last major geothermal "exploration" effort was about 30 years ago, during the energy price spikes of the 1970s."
A few stocks cited by Fred Fuld for Stockerblog.com.
Constellation Energy Group (CEG). This 1906 electrical generating company owns and operates generating plants and fuel processing facilities utilizing various types of fuel including nuclear, coal, natural gas, oil, solar, geothermal, hydro and biomass. The P/E is 15.8 and the PEG is 1.43. Yield is 2%.
IdaCorp, Inc. (IDA) This holding company owns Idaho Power Company, which is involved in the generation, transmission, distribution, and sale of electric energy primarily in southern Idaho and eastern Oregon. Their electrical generation comes from hydroelectric, natural gas, diesel, coal, and geothermal plants. The P/E is 12.6 and the PEG is 2.92. The stock yields 3.8%.
Nevada Geothermal Power, Inc. (NGLPF.OB) This company explores for and develops geothermal projects in the United States to provide electrical. They own a 100% leasehold interest in the Blue Mountain, Pumpernickel, Black Warrior projects in Nevada and the Crump Geyser Project in southern Oregon.
Ormat Technologies Inc. (ORA) This Nevada based company, which trades on the New York Stock Exchange, was founded in 1965. It owns and operates geothermal power plants, selling electricity in the United States, Guatemala, Kenya, Nicaragua, and the Philippines. They also provide products and services to other geothermal power generators. The P/E is 70.2, the PEG is 2.67, and the yield is 0.5%.
PG&E Corp. (PCG) This California-based electric and gas utility serves 5 million customers. Their electrical generation comes from natural gas, nuclear, hydro, coal, geothermal, wind, and several other types of renewable sources. The P/E is 15.6 and the PEG is 2.08. The stock yields 3.2%.
Polaris Geothermal (PGTHF.PK) The company is a developer of renewable energy in Latin America. They are currently developing a 66 MW geothermal project on its San Jacinto Tizate concession in Nicaragua.
Raser Technologies (RZ) This Utah based company trades on the New York Stock Exchange Arca exchange, and founded in 2003, develops high performance electric motor and controller technology. In addition, it has secured geothermal rights to certain Nevada properties owned by Truckee River Ranches, LLC, under the terms of a 50-year lease agreement. Earnings have been negative.
Sierra Geothermal Power Corp (SRAGF.PK) This is a developer of renewable power from geothermal sources. They have investments in 15 geothermal projects located in Nevada and California.
US Geothermal Inc. (UGTH.OB) This Boise based company, founded in 2002, is involved in the development of geothermal energy power plants in the Raft River area of Idaho. Earnings for the latest quarter were negative.
Western GeoPower Corp (WGPWF.PK) The company develops geothermal energy projects. They own the Unit 15 Steam Field located in The Geyser Geothermal Field in California and in the South Meager Geothermal Project in British Columbia, Canada.
WFI Industries (WFILF.PK) This Fort Wayne, Indiana company is development and manufacture of geothermal heating and cooling systems, for both residential and commercial customers. The P/E is 35.5.
Geothermal Stocks: Some have been Steaming Hot
A couple of additional ones.
Common stock in Nevada Geothermal is traded on the Toronto, TSX-Venture Exchange, ticker symbol NGP and the Over-the-Counter Bulletin Board under the ticker symbol NGLPF.
Beach Petroleum Limited (ASX Code: BPT) in Australia is getting into these hot rocks.
Green Rock Energy is focused on becoming a major producer of clean, renewable geothermal energy by generating base load electricity from hot dry rocks. Australia code GRK.
Shares of electric motor maker Raser Technologies Inc. soared after the company said it reached a deal to work with industrial giant United Technologies Corp. on power plants that that use the earth's heat to generate electricity. A United Technologies subsidiary, UTC Power, is to provide Raser with up to 135 power systems for geothermal plants that draw heat from deep within the Earth's crust to drive turbines that produce electricity. http://news.moneycentral.msn.com/ticker/article.as...
Hamburger helper of geothermal power
My oil/gas stock interest that I will be talking about soon was highly involved at one time with geothermal energy (80s to 90s) and is a consultant for the process today. This geothermal industry might be a sleeping heat energy giant that has long been considered a liability by the oil and gas industry. Just think of all those exajoules waiting to become electrical power.
The 'hamburger helper' of geothermal power coming down the pike is negativism toward pollution to the environment and renewable energy mandates. Not to mention the speculated shortage of oil and natural gas in the future.
P.S. Nothing should surprise me but this one did. Have you heard of the carbon trading market? Carbon dioxide, generated by power plants and automobiles, is widely considered the worst of the pollutants linked to heat-trapping gases so why not invest in in a Carbon Emissions Credit Stock, a monetary security that is equal to one ton of a greenhouse gas, such as carbon dioxide?
The first article on this page deals with "Shipping Stocks: Are they Sinking?" The fourth one is "Carbon Emissions Credit Trading Stocks."
Fred Fuld at http://stockerblog.blogspot.com
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Geothermal Energy: PETROLEUM INDUSTRY CHALLENGES AND CHANGES
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